Brazil's Pagbank reports 8% profit growth on lower financial expenses

PagSeguro Digital

16/11/2023 21:19

SAO PAULO, Nov 16 (Reuters) - Brazilian financial
technology firm Pagbank  PAGS.N  said on Thursday its
third-quarter profits grew 8% from a year earlier, lifted mainly
by a decline in financial expenses.
    The firm posted net profit of 411 million reais, beating out
the estimated 398.58 million reais from analysts polled by LSEG.
    In recurring terms, which excludes the effects of a stock
bonus program for executives carried out over the quarter,
profit came in at 440 million reais, up 7% and also above
analysts' expectations. 
    For Pagbank, which operates as a payment processor and a
digital bank, the profit growth comes even as revenue for the
period was nearly flat from a year earlier at 4 billion reais
and in line with estimates. 
    "We expect to resume revenue growth starting in the fourth
quarter of 2023," Eric Oliveira, executive director of investor
relations, told Reuters. 
    The firm's payment-processing segment, its main business,
reported total payment volume (TPV) of 99.8 billion reais, up
11% from the previous year. 
    "The trend for the coming months is positive," said CEO
Alexandre Magnani about the metric.
    "(TPV) accelerated as the months went by in the third
quarter, and we've seen the same trend in the fourth quarter,"
added CFO Artur Schunck, without going into further detail.
    Financial expenses fell 11% to 820 million reais, the first
year-on-year decline since 2021, when Brazil's Selic interest
rate hike cycle began. 
        Brasil's central bank raised rates up to a high of
13.75%, which was held from August 2022 until June of this year,
when it kicked off a rate-cut cycle which is 
    expected to continue
    .
  
        Pagbank's drop in financial expenses is not only related
to the start of Brazil's rate-cutting cycle, but also the the
increase in the share of clients' deposits in the firm's
funding, "because deposits are now a cheaper source of funding
for the company," Oliveira added.
  
    Deposits grew 11% to 21.6 billion reais, compared to a year
earlier.  

 (Reporting by Andre Romani; Writing by Peter Frontini; Editing
by Kylie Madry)
 ((Peter.Siqueira@thomsonreuters.com; +55 11 56447727;))