管理層發言
Good evening. My name is Sophia, and I will be your conference operator today. Welcome to PagSeguro Digital Earnings Call for the Second Quarter of 2026. The slide presentation for today's webcast is available on PagSeguro Digital's Investor Relations website at investors.pagbank.com. Please refer to the forward-looking statements and reconciliation disclosure in this presentation and in the company's earnings release appendix. Operator provided instructions. Today's conference is being recorded and will be available on the company's IR website after the event is concluded. Now I will turn the call over to Daniel Spencer Pioner, Head of Investor Relations.
Good evening, everyone, and thank you for joining PagBank's Second Quarter 2026 Earnings Conference Call. We appreciate your time and interest in our company. Joining me tonight are Ricardo Dutra, our Principal Executive Officer; Carlos Mauad, our CEO; and Gustavo Sechin, our CFO. Operator provided instructions. I now turn the call over to Ricardo Dutra for this quarter's highlights and key accomplishments. Dutra, please go ahead.
Good evening, everyone, and thank you for joining our earnings call. Let's start on Slide 4 with some key figures. Q2 was another solid quarter for our company. We continue to increase client engagement while expanding our multiproduct ecosystem across payments, banking and credit, driving resilient profitability and reinforcing the strength of our business model. Total payment volume reached BRL 133 billion, up 3% year-over-year, reinforcing the gradual reacceleration trend we have seen over the past quarters. Our expanded credit portfolio reached BRL 52 billion, while total loans increased an impressive 31% year-over-year, driven mainly by the expansion of working capital and credit cards offering. Total deposits continue to grow, reaching BRL 43 billion, up 15% year-over-year and provide an important foundation to support future credit growth. On the financial side, net revenue, excluding interchange fees, reached BRL 3.4 billion, growing 2% year-over-year, mainly driven by acquiring volumes reacceleration and our credit portfolio. Recurring net income, non-GAAP also grew 2%, reaching BRL 576 million, while diluted non-GAAP EPS increased 10%, supported by earnings resilience and capital optimization initiatives and within our guidance range for the year. Overall, we're seeing the strategy play out as expected, stronger engagement, broader monetization and resilient profitability despite a challenging macro environment. Going to Slide 5. Before moving into the business highlights, it is worth stepping back and looking at the broader value creation journey. Over the last 12 months, PagBank returned approximately BRL 2 billion to shareholders through dividends and share buybacks, representing a last 12-month total yield of around 13.4%. Since our IPO, we have significantly expanded the platform. We started as a payment-led ecosystem and have gradually built a much broader financial service platform around our clients' needs, combining payments, banking, credit, investments, insurance and new digital solutions. This evolution has increased the recurrence of our results, expanded our addressable market and strengthened our ability to monetize client relationships across different products and use cases. With that, I'll now turn the call over to Carlos Mauad.
Thank you, Dutra, and good evening, everyone. Before going into the business update, I would like to start on Slide 7 with the key messages that frame our performance this quarter and our long-term ambition. Q2 reinforces the consistency of our strategy. We continue to evolve our ecosystem with broader monetization across payments, banking and credit, while deepening our relationship with our active client base. This evolution is reflected in our operational performance with acceleration in all business from TPV to credit portfolio and most importantly, with increasing penetration of our banking products across our active client base. At the same time, execution and discipline are central to how we manage the business, demonstrating the resilience of our business model. On the second quarter of this year, we protected profitability supported by financial cost efficiency, operating leverage and disciplined capital allocation. Finally, as we move forward, our focus remains on strengthening our competitive position, capturing the opportunities ahead and consistently executing against both our 2026 commitments and our long-term strategic ambition. With that context, let me move to the business overview and the opportunity ahead of us. Starting with the market opportunity, we continue to see significant room for growth across our core verticals. PagBank has built an integrated platform across payments, banking and credit, serving individuals and micro, small and medium-sized businesses in markets where penetration remains low and growth potential is still meaningful. Our ecosystem gives us several avenues for growth. We have opportunities to increase share in PIX, deposits, expanded credit and other financial services. In several of these markets, our current share remains below 1%, which reinforces how much room we have to expand. Moving to Slide 9. Product innovation continues to support engagement and monetization across the ecosystem. During the quarter, we advanced several initiatives designed to make PagBank more useful in our clients' daily lives. These include Minizinha Voz, the first terminal in Brazil featuring an AI-powered sales assistant launched in January of this year; IOF cashback on international credit card transactions; private payroll loans; and PIX Finance, an integrated PIX installment solution, both products launched earlier this year and to be rolled out in the next months; zero-fee investments; private pension plans; collections management tools and new insurance products. What is important here is that these products expand our relationship beyond payments. They strengthen our banking and financial service offering, create additional cross-sell opportunities and support our long-term ambition of building a more complete financial platform for both merchants and individuals. As we have discussed before, the more products the clients use, the more engaged they become with the platform. That drives transaction activity and creates additional monetization opportunities over time. Turning to banking on Slide 10. Engagement continues to translate into higher transactionality and broader product adoption. Cash-in volumes, excluding acquiring-related inflows, reached almost BRL 100 billion in the quarter, increasing 23% year-over-year and 19% quarter-over-quarter. Cash-in per active banking client reached BRL 5,700, up 27% year-over-year. We also continue to see stronger usage of our daily banking features, including bill payments and PIX transactions, with an increase of 12% year-over-year. In parallel, product penetration expanded across the active client base. Investment penetration increased from 23% to 28%, while insurance penetration increased from 11% to 16% year-over-year. Credit products penetration, excluding payroll clients, also increased from 4% to 6%, a strong 43% expansion that shows not only our capacity to perform, but most important, the growth potential in this avenue. What we are seeing is simple. Clients are bringing more activity into PagBank and using a broader mix of products. This deeper relationship is central to our strategy, and it supports higher engagement, broader monetization and stronger lifetime value. Moving to Slide 11. Credit remains one of the key growth levers. It deepens client relationships and gives us additional opportunities to monetize the ecosystem. Our total credit portfolio reached BRL 5.1 billion, increasing 31% year-over-year. Growth was mainly driven by working capital and credit cards, both of which are important in the long-term strategy and to the 2029 ambition we have shared with the market. Working capital reached BRL 0.6 billion in credit outstanding, growing 204% year-over-year, while credit cards reached BRL 1.1 billion, up 35% year-over-year. Payroll loans and other credit products totaled BRL 3.4 billion, increasing 18% year-over-year. It is also worth highlighting the origination trend. While working capital origination was lower on average in Q2 compared to Q1, July already shows a stronger run rate at approximately BRL 80 million in credit production. This is above the Q2 average and also above the average levels seen in the prior quarters, which gives us confidence in the continued momentum and scalability of the product. When we include financial operations linked to merchants prepayment, the expanded credit portfolio reached BRL 52.4 billion, up 9% year-over-year and 3% quarter-over-quarter. Just as important, we are growing the portfolio while maintaining a prudent risk profile. NPL90 stood at 3.4%, remaining well below the Brazilian market average of 6.2%. This reflects the strength of our underwriting, enhanced analytics, risk governance and the proximity we have with our clients through the ecosystem. As expected, the portfolio mix continues to evolve gradually with unsecured products increasing as a share of the total portfolio. This is consistent with our strategy and remains supported by prudent risk management across cycles. Let me move to funding on Slide 12, which remains one of our key competitive advantages. Total deposits reached almost BRL 43 billion, growing 15% year-over-year, while total funding reached BRL 47 billion, up 10% year-over-year. More than 90% of our total deposits are generated on-platform, which reinforces the strength of our ecosystem and the relevance of our digital channels. The growth of our deposit base, combined with a high on-platform concentration and lower funding cost, provides a scalable and efficient foundation to support credit expansion. During the quarter, we continued to optimize the cost of funding. The company has now delivered nine consecutive quarters of funding cost reduction as a percentage of the CDI, reflecting disciplined liability management and improvements in product pricing and remuneration conditions. This funding structure gives us flexibility to continue to grow credit while maintaining a healthy balance sheet and strengthening client relationships. Now I will hand it over to Gustavo to cover how these business trends translated into financial performance. Gustavo, please.
Thank you, Mauad. Hello everyone, and thank you for joining us today. I will now cover our consolidated financial performance for the quarter. This slide shows the contribution of business execution and funding efficiency to revenue and gross profit. Total revenue and net income, excluding interchange fees, reached BRL 3.4 billion in the quarter, increasing 2% year-over-year and 1% quarter-over-quarter. Gross profit reached approximately BRL 2 billion, growing 3% year-over-year and 6% quarter-over-quarter. This performance reflects business execution, continued contribution from banking and credit, and a sequential improvement in financial costs. At the same time, it's important to note that interest rates remain high for the year, and the rate cuts have not come in the magnitude initially expected. So we continue to manage pricing, funding and capital allocation with discipline. The banking business is an important driver of our results. Higher transactionality, credit expansion and broader product penetration are contributing to a more diversified gross profit base and reinforcing the value of our integrated ecosystem. Now on Slide 15, we provide more details on the cost and efficiency drivers behind the quarter. Financial costs declined 5% quarter-over-quarter, primarily reflecting management initiatives to optimize the company's funding cost despite still elevated Selic levels. Total losses increased 9% year-over-year, mainly reflecting the expansion and mix evolution of the credit portfolio. This is consistent with our strategy to scale credit in a disciplined way while maintaining strong asset quality indicators. Operating expenses represented 25.9% of our total revenue and income, excluding interchange fees, in the quarter. On a year-to-date basis, operating expenses improved as a percentage of revenues, reinforcing again our focus on operating leverage, even considering second quarter effects related to the World Cup broadcast sponsorship in Brazil and the annual collective bargaining agreement. D&A plus POS write-off also improved as a percentage of revenues in the first quarter of the year, reflecting better allocation and POS management. Looking ahead, we still see room for additional efficiency gains and this remains an important part of our value creation. Next slide, we summarize how these dynamics translate into bottom line performance and returns. Non-GAAP net income reached BRL 576 million, up 2% year-over-year. Diluted non-GAAP EPS reached BRL 2.06, increasing 10% year-over-year, supported by earnings resilience and the reduction in average shares outstanding following the execution of our share buyback program. Annualized non-GAAP ROE reached 15.6%, increasing 30 basis points year-over-year and remaining in line with our solid capital structure and disciplined approach to profitability. These results show that we continue to protect profitability while we invest in technology, product innovation and long-term growth of the business. Moving to the next slide. I would like to reinforce the strength of our capital position and our commitment to disciplined shareholder returns. We have continued to advance our capital optimization agenda, pursuing a Basel ratio within our target range of 18% to 22% over time. At the end of this quarter, our adjusted Basel ratio stood at 22.5% compared to 24.1% in the first quarter and 29.6% in the second quarter of a year ago. This movement brings us closer to our target range while preserving all the flexibility and capabilities to support the company's growth. Over the last 12 months, PagBank returned BRL 2 billion to shareholders through dividends and share buybacks. In this first half of 2026, we completed our third repurchase program, authorized for up to $200 million with more than BRL 370 million repurchased during this period. In addition, the second tranche of our 2026 dividend was paid in June and a third tranche of BRL 0.28 per common share will be paid on September 30 with a record date on September 16. We continue to expect total cash dividends paid in 2026 to reach approximately BRL 1.4 billion subject to the relevant approvals, market conditions and the company's financial position. As we said before, we manage the use of dividends and buybacks, and dividends remain the most effective way to optimize capital while continuing to support business growth. Moving to the next slide, we show where we stand against our 2026 commitment after the first half of the year. At this point, we are maintaining our targets for the year, recognizing that year-to-date performance is reasonably in line with our strategy. We have been observing a much more challenging year than we were expecting with risks coming both internally and externally. The macroeconomic environment remains clearly uncertain, and it's very important to recognize that current Selic rate levels create additional pressure for the performance of the business. At the same time, we have been focusing on running the business with efficiency and discipline, looking for different initiatives to boost our profitability. For that reason, we continue to expect to deliver a full year performance in line with the guidance range. Now starting with credit, total credit portfolio growth reached 31% year-over-year in the first half within our expected range for the full year. We expect to keep this growth within the expected range for the year as we further evolve our credit offering with the rollout of new products in the next quarters, such as private payroll and PIX Finance. Gross profit grew 2% year-over-year in the first half, highlighted by the positive contribution coming from financial cost efficiency. Again, we managed the business to reduce our financial costs. Diluted non-GAAP EPS increased 11% year-over-year in the first half within the guidance range for 2026. This reflects resilient profitability and the positive effect of capital optimization initiatives. Finally, CapEx reached BRL 1.1 billion in the first half of this year, and we continue to manage investments with discipline aligned with our full year commitment. With that, I will turn the call back to Mauad for his final announcement.
Thank you, Gustavo. Before we move to Q&A, I would like to share a recent leadership update. We are pleased to welcome Enrique Fragata as PagBank's new COO. Enrique brings strong experience in the financial sector and his arrival strengthens our focus on execution, efficiency and operational excellence. Enrique comes at an important stage as we continue to expand our ecosystem and advance our long-term strategy. With that, I thank you all for joining us today. We appreciate your continued trust and partnership.
Thank you all for the presentation. We will now begin the Q&A session for investors and analysts. Our first question comes from Arnon Shirazi with Citi.
分析師問答
My question is related to credit and the 2029 goals. Remember that the expectation was to accelerate the credit portfolio, especially in '27. But for '26, you are testing the product. From the current scenario that we are seeing today with every day surprisingly negative news on the delinquency levels, do you see any change in plans reducing the growth pace or revising the 2029 goals?
This is Mauad. Thank you for your question. No, we are still quite confident on everything that we are doing here. In fact, we see the 31% increase on the credit outstanding as a very good number in terms of volume and performance. There is a long way to go before 2029. Of course, there is going to be different macro cycles that we're going to have to face. There's going to be regulatory milestones that can change the credit landscape in Brazil, especially on the collateral products. But again, it is our mission here to find workarounds, find new products and to scale up the credit strategy of the company. So far, despite the fact that the macro is tougher than we thought at the beginning of the year, we're still quite confident on everything that we are doing and confident on the long-term guidance that we published last year.
Just to complement, Arnon, part of the answer here is to remember that looking at Slide 11, we have very low NPLs that give us the comfort to keep growing the credit portfolio in a sustainable way. We are still far below the industry, 3.4% compared to 6.2%. So we do have the comfort to keep growing in a sustainable way, the same way we've been doing so far.
Great. If I may, a follow-up on credit. Regarding the private payroll loans, remember that the company was testing internally. How is this advancing and the rollout to other companies — have you started yet?
Yes, we already started to produce credit outside of the group, the economic group that we have here. We already produced the first few millions in terms of credit outstanding, and we're going to keep pushing up these volumes as we get confident on everything related to the operational risks on the product. We are confident on the first signs that we saw that everything that we designed and implemented is solid. But of course, there are some parts of the credit cycle that we need to still test. But again, answering straightforward your question, we are already creating credit production outside of the group on the payroll loans.
And how is the quality so far? Sorry for the follow-up.
So far, it's been perfect. But of course, we started with the top tiers in terms of credit quality, so it's coming in at the levels of delinquency that we expected.
Our next question comes from Daniel Vaz with Safra.
Maybe two questions on my side. I'm looking at your TPV, it improved sequentially, but we didn't see the revenues budged at the same pace, right? So you have a beat on TPV and miss on revenues, maybe on consensus and also my side. This can mean your take rate — is the margin compressing? Can you give some comments on if that has to do with pricing, maybe a seasonal World Cup volumes with more bets at your mix or more PIX while cards are struggling, client mix? So that's my question number one. And the question number two, trying to look at your gross profit guidance for 2026, you're currently at 2% and your guidance is unchanged at between 6% and I guess 11%, 6% and 9%. Any expectations of pickup in the gross profit for the second half of the year to meet guidance?
This is Mauad. I'm going to answer your first question, and then I hand over to Gustavo to give you some light on the gross profit question. So in terms of the TPV, there is a small dilution when we saw the growth of the net revenue and the TPV itself. There is an impact in terms of product mix driven by the World Cup, as you mentioned there, but that is nothing that really worries us. Of course, we keep pushing TPV. We are being very careful about pricing, and that is, as probably you remember, there is also a base, let's say, a tough comp when you look at the second quarter of last year, where we had a massive repricing of the entire customer base due to the hike of Selic. So if you take a look at the evolution of the net revenues from the first quarter of last year to the second quarter, it is quite strong. So we created this step and it's a little bit harder to push up the net revenue growth in the second quarter. But again, there is a price to be paid on the churn that we had to manage later last year. Here, we are much more confident on this balance that we are creating between growth and defending the profitability of the company. I will pass the floor here to Gustavo so he can answer your second question.
Daniel, it's Gustavo here. So talking about the guidance, especially the gross profit guidance, we know that we have a lot of moving parts, and we have a lot of headwinds coming from the macro scenario, which give us some level of uncertainty. But at the same point, as we have been saying, the second part of the year, the second half of the year should be the most important in terms of guidance achievement. Talking about the gross profit, we considered some contribution coming from credit origination, the credit acceleration as we posted in this presentation. Also, as Mauad said, related to the TPV, remember that we said that the third and fourth quarter of last year were the worst part of the cycle for us. Gradually, we have been posting an increase in payment activity. Also in terms of financial costs, despite the headwinds of this higher Selic when compared to what we were expecting, we have maybe easier comps in the second half of the year. I can say that we are always looking for different initiatives that could give us the ability to deliver the guidance. But again, probably not by the top of the range, but probably reaching the bottom of the gross profit guidance as we posted.
Our next question comes from Kaio Prato with UBS.
I have one question on costs, please. This quarter — actually, in the last two quarters, we noted, I would say, better-than-expected POS write-offs. I think those were lower than expected in the first quarter, and now I think we had a reversal in the second quarter. Can you give us any color around that? Anything that's happening different than expected on the POS write-offs? And what can we expect going forward as well? And still on this topic, if you are seeing anything related to costs related to POS? We note that some players are claiming about higher costs related to POS. Just wondering if you have anything on your side as well.
Okay. Gustavo here to talk to you. So talking about the write-off of POS or the POS in general, we have implemented a series of different initiatives to organize our logistics and also how we can deploy different initiatives in terms of how we can get the POS that we had in the street and our merchants are not using anymore and how we can deliver a different approach, a different solution on that. That's the main reason that you are seeing the improvement. Considering going forward, probably we are going to seek continuous improvement in that line. I would say that probably it's not going to be something linear, but the idea is to continuously improve our POS database, and we are looking to generate initiatives. Talking about efficiency or other expense lines in general, as we said, we are managing the business into getting some operational leverage, so we have implemented initiatives in terms of how we can redesign processes and implement automation. We have used AI to help us not only in the back office, but also in customer care and customer assistance. So we have been deploying different kinds of initiatives to give us the opportunity to continue to generate operational leverage. That's the idea. We are managing the company, trying to seek different opportunities to improve our profitability through efficiency gains.
Okay. Anything on the cost related to POS?
This is Mauad. There is nothing major. We do have a memory shortage in the global market, so that kind of pressure determines prices a little bit. On the other hand, FX is helping a little bit. The efficiency that we are building, as Gustavo mentioned, on how to recover the POS that are with churning customers. So everything that we are putting together here, we are not feeling this impact at a unit perspective. So, so far, so good on our side when we talk about the POS cost.
Our next question comes from Marcelo Mizrahi.
I have two questions. So the first question is regarding the take rate, so the financial revenues. And looking forward, with this dynamic of having a lower impact of credit cards, so having more PIX, is it possible to see this dynamic maintained, so stable going forward? This is the first question. And the second question is regarding the expenses side. We saw some expenses related to the World Cup, so is it possible to see better profitability or even a reduction of operational expenses in the third quarter looking forward?
Marcelo, it's Gustavo here. I will start from your second question. I wouldn't say that we could expect a reduction in absolute expenses, but the idea is to manage the company to grow expenses below revenues. That's the main idea or at least below inflation. As I said in the previous question, we are looking for opportunities on the operational side. We are looking for opportunities on customer experience, both trying to gather and to generate operational leverage to the business and also give us space to improve our profitability in general. Talking about the take rate or the mix between different kinds of transactions, we are seeing in general that they are pretty much similar. Of course, we are observing an increase in PIX that contributes not only on the payment business itself, but also through banking. It is very important to highlight the performance of the cash-in. Remember that we now reached almost BRL 100 billion in cash-in in the quarter. Mainly that cash-in comes from PIX and that gives us the capability to monetize that kind of inflow of money from customers that choose our platform as their main platform through different products. So when we look at the take rate, it gives us only a portion of the relation with customers. It's important to look at transactionality as a whole, the inflow of money that comes from the payment side, the inflow that comes on the bank side and all the opportunities to monetize that inflow.
But the question here is, looking forward, this dynamic of mix — will we see the gross profit yield, gross profit compared to revenues, going up? So that's definitely what we have to see to deliver and to achieve the low end of the guidance. Probably the idea here is that it's accretive in terms of gross profit yield.
Yes. The short answer is yes — it relates to that, but also relates to an increase in transactionality in general.
Our next question comes from Neha Agarwala with HSBC.
I have a question on the credit business. Could you expand a bit more and tell us what are the kind of NPLs and cost of credit that you're seeing for your working capital loans at the moment? It's considerably small right now, but just to get a sense of how things are going and where should the NPL and cost of risk normalize as you grow the book? And what gives you comfort regarding accelerating in July? Was the deceleration in 2Q more a conscious effort to control risk given the environment? And if that is the case, why the acceleration in July? Has there been any benefit from the Desenrola program in your customer base?
Neha, thank you for your question. We do not disclose information regarding individual products in terms of credit appetite or specific metrics, so I'm going to skip the first part of your question and go straight to the second part. In the second quarter, we had lower credit production on average due to a new credit model that we deployed at the beginning of the quarter. We were waiting for the first cohorts to see if the cohorts would come within our credit appetite and deliver the performance we want before rolling out to the entire customer database. That's why you see the higher credit production in July, and you see a more conservative approach in the second quarter. That explains the movement between the average of the second quarter and the credit production of July.
Neha, it's Gustavo here. Just to complement Mauad, it's important to highlight that we are not seeing any deterioration in our asset side in any of the products that we operate, which gives us confidence that we have developed the capabilities to continue to grow prudently and with solvency. Despite not providing product-level references in NPLs, you could expect that growth will continue at a sustainable pace and will be more related to the evolution in our product mix than to a deterioration itself.
And just to clarify, there's not been any impact from the Desenrola program, and you don't plan to do secured working capital loans? It's going to be secured more from the funding side. You would focus on unsecured working capital, right?
There is no major impact from the second Desenrola program for us. The first program had a much bigger impact due to the stock of nonperforming assets at the time. The second one has a much lower impact. Working capital is still a priority because it is where we have a very clear right to win with the kind of customers in our client base.
Our next question comes from Mario Pierry with Bank of America.
Let me ask you a question on capital distribution. Your capital ratio is about 22.5% above your target of 18% to 22%, and you have completed your buyback program. You mentioned that you'd rather pay dividends than buy back shares. I just wanted to explore that a little bit more — why you think paying dividends is better than buying back shares, especially because when we look at your share price, it's back to the levels where it was in September of last year when you announced your strategic plan. So just wondering why you'd rather pay dividends and buy back shares.
Mario, Gustavo here. The first part of the answer is that dividends provide a more regular and predictable stream to investors. We can set a target for the capital ratio between 18% and 22%, and through dividends we have been deploying a clear capital optimization in a predictable way. It doesn't mean we cannot use buybacks in the future, but we chose dividends because of that predictability. At the same time, as you said, we used buybacks in the last 12–18 months with two programs that we executed in a short period, but with limited effect and without predictability, so that's why we are now focused more on dividends than buybacks.
Okay. That's clear. So just to be clear, then on your EPS guidance, where you talk about EPS growth of 9% to 13% for the year, that does not contemplate any more buybacks this year, correct?
Yes, correct.
Our next question comes from Guilherme Grespan with JPMorgan.
I'll keep my question to one. It's more looking into 2027 already, a little bit coupling with the guidance for the rest of the year on gross profit, but more looking throughout the year and into 2027. I think there's a growing risk that we start to get into a scenario in which you have — you mentioned two tailwinds to gross profit, but maybe eventually in 2027, they're going to move in the opposite direction. So it's basically rates moving lower in the second half, we don't know what is going to happen in 2027, and then you have the accretion of credit as you recognize credit revenues. But maybe we have been discussing an eventual credit cycle and you need to pull back on credit. With all that said, assuming you don't have those benefits next year, what levers can you pull to deliver earnings growth next year?
It's Gustavo here. I think it's too early to discuss 2027. As I said in previous questions, we have a lot of moving parts right now. We are managing the business to deliver the 2026 guidance. That's our main focus — to mitigate headwinds, especially coming from the Selic, and to mitigate uncertainty or volatility that comes from both internal and external environments. The time to discuss 2027 should be a little bit later. We have uncertainty, and when we start to discuss alternatives to deliver continuous growth, especially continuous growth of the business, that discussion will happen at the appropriate time.
Our next question comes from Pedro Leduc with Itaú BBA.
Question on financial costs this quarter, down a little bit. I know you mentioned working days and such, but you also didn't have an impact of a lower average Selic even though it's slightly lower, and we saw good dynamics in deposits. So looking at least until the end of this year, how should we think about financial expenses, especially relative to revenues? And what levers are you pulling there?
Pedro, it's Gustavo again. When we consider the second half of the year, probably we're going to see easier comps in financial expense. This is the first quarter that we are seeing a reduction, at least in nominal terms, in our financial cost after several quarters. So that trend should remain in the second part of the year. Despite the lower pace in rate reductions in Brazil, remember that we assumed in our guidance year-end Selic around 12.5% and now we are looking closer to 13.75%–14%. We have better comps when compared to the second half of last year.
Our next question comes from Tiago Binsfeld with Goldman Sachs.
Also on the deposit franchise, we see your deposit costs coming down annually to 83% of CDI. So from here, when you look forward, how much more do you think there's space to lower your deposit costs? Would you say it stabilizes around this low 80s, 83%? And what kind of initiatives are you implementing to lower that cost?
Tiago, it's Gustavo here. We are seeing our deposits growing 15% year-over-year, and that pace could be higher, for sure. We have a healthy pace in terms of deposit growth, especially considering we have implemented initiatives to mitigate the increase in rates and to reduce the remuneration we pay on deposits, both CDBs and Conta Rendeira. Most important and connected to deposits is the inflow of money connected to cash-in and the banking business, combined with payment inflows, which gives us the ability to continue growing our deposit franchise. That's a clear advantage we have. We are always identifying opportunities and using different instruments in our funding structure to deliver a continuous reduction in our funding cost and maintain that advantage.
This concludes the question-and-answer section and today's presentation. You may now disconnect, and have a nice evening.