Nu Holdings, the Nasdaq-listed company that groups Brazil’s Nubank, Nu México, and Nu Colombia, posted a net income of USD 141.8 million in the first quarter of 2023, reversing the USD 45.1 million losses of the same period last year. More importantly, it recorded USD 1.6 billion in revenues, an all-time record nearly doubling the company’s performance a year ago.
While stressing that Nu reached over 80 million users in Latin America in April, co-founder and CEO David Vélez told analysts on Monday evening that as Nu turns ten, it no longer wants to be purely seen as a neobank.
In its first ten years of existence, Nu has achieved impressive market penetration in Brazil — one in two Brazilian adults use Nubank — and developed an ever-improving, AI-driven set of products and services. These factors will form the basis for the company’s next decade, Mr. Vélez said, as Nu sees itself more as a “money platform,” serving both individual consumers and business customers by connecting them with financial and non-financial (Nu’s marketplace) services. This transformation starts in Brazil.
The Brazilian user base, which represents 95 percent of the company’s total, is seen as a giant launching pad for Nu’s long-term goals — starting with the underwriting credit line Nubank beta-launched in April targeting federal civil servants. The idea is to gradually unroll this service to pensioners and the general population, while reducing the bank’s exposure to its main lending product today, which is credit cards.
“It’s a BRL 500 billion market, with social security beneficiaries accounting for 31 percent of the payroll loans. So we don’t need to go further [in portfolio expansion] to tap into this huge market [in Brazil],” Nu’s CFO, Guilherme Lago, told analysts.
Nu’s loan portfolio grew 54 percent year-on-year to USD 12.8 billion in Q1 2023, which shows that Nubank has not slowed its growth on this front even as it looks to new products. In fact, credit origination expanded 26 percent between January and March this year after recording a slower growth pace in the previous three quarters. As a result, delinquency with 15 to 90 days arrears increased from 3.7 to 4.4 percent, while the share of customers with invoices overdue for more than 90 days rose from 5.2 to 5.5 percent compared to 2022.
According to Mr. Vélez, much of the holding’s cash is being used to accelerate operations in Mexico and Colombia, while the Brazilian business remains well capitalized.
In Brazil specifically, Nu’s net income grew to USD 171 million in the last quarter with an annualized return on equity (ROE) of 37 percent, up 2 percent from the previous quarter, one of the highest in the industry. In addition, its adjusted net income in Brazil grew to USD 200 million, with an adjusted ROE of 43 percent, up from only 6 percent a year ago and way above market expectations.
In Mexico, Nu’s customer base grew 52 percent to 3.2 million, while in Colombia it increased to 635,000 customers, which is triple the figure a year ago. “The growth trajectory in both countries will likely accelerate with the launch of the savings account product in the local markets. In Mexico, Cuenta Nu already has over 500,000 customers less than a week after being officially publicly launched,” the company wrote.
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