By Brasil Stock Guide – PagBank reported first-quarter profit slightly above market expectations, as faster growth in banking and credit helped offset still-soft payments activity, according to a BTG Pactual report dated May 12. The company’s US-listed shares trade under the ticker PAGS.
Net income reached 545 million reais, up 9% from the previous quarter and 4% from a year earlier, 3% above BTG Pactual’s estimate and 1% ahead of consensus. The result was supported by cost control, a lower tax rate and continued non-GAAP EPS expansion, which rose 12% year over year.
Payments remained the weaker part of the business. Acquiring TPV declined 0.3% from a year earlier to 128 billion reais, though the pace improved from a 2.5% drop in the fourth quarter of 2025. Revenue rose 3% year over year to 5 billion reais, helped by higher financial income and banking revenues, but remained 1% below BTG’s model.
The bank’s financial services division showed stronger momentum. Banking revenue rose 41% from a year earlier to 819 million reais, driven by portfolio growth, higher client transactionality, account-service fees, card usage and interest income from deposits. The vertical ended the quarter with 34 million clients, including 17.3 million active clients.
Deposits increased 23% year over year to 41.6 billion reais, while the cost of funding on deposits fell to 83.9% of CDI, down 2.9 percentage points from the prior quarter. BTG said management indicated there may be further room for optimization across deposit products.
Credit growth was another highlight. PagBank’s loan book rose 36% year over year to 5 billion reais, above the top end of the company’s 25% to 35% guidance range for 2026. Secured products continued to dominate, with payroll loans representing 71% of the portfolio, while credit cards and working-capital loans also expanded.
Asset quality remained stable despite Brazil’s credit cycle. The over-90-day nonperforming loan ratio reached 3.05%, up 15 basis points from the previous quarter and 40 basis points from a year earlier, still below the industry average cited by management of 5.7%.
BTG Pactual kept a Neutral rating on PagBank, with a 12-month price target of $12.50, compared with a price of $9.78 in the report. The firm said the stock trades at 5.6 times estimated 2026 earnings and could see upside if PagBank delivers on its targeted credit portfolio growth of more than 40% CAGR through 2029, though BTG said it wants more visibility on execution, asset quality and credit’s earnings contribution.