Nu Holdings Reports Strong Q3 Profit
SAO PAULO, Nov. 13 – Nu Holdings, which operates the Brazilian digital lender NuBank, announced a significant increase in its net profit for the third quarter, surpassing analysts’ expectations. The results were mainly attributed to its operations in Brazil and Mexico.
The company reported a net income of $783 million for the July-September period, reflecting a 39% year-over-year growth on a currency-neutral basis. This exceeded the anticipated $757 million by analysts, according to LSEG.
Following the announcement, Nu Holdings’ stock experienced a boost of about 3% in after-hours trading.
Guilherme Lago, the company’s Chief Financial Officer, noted that the profit increase was largely driven by ongoing expansion in Brazil, coupled with growth in its credit portfolio in Mexico and reduced deposit payments there.
“The combination of operating leverage in Brazil and asset liability management in Mexico significantly enhanced NuBank’s overall results,” Lago remarked.
The annualized return on equity (ROE) stood at 31%, a slight increase from 30% in the same quarter last year.
Revenue climbed 39% to $4.2 billion, surpassing market expectations of $3.8 billion, while net interest income grew by 32% year over year. However, the closely monitored net interest margin decreased by about one percentage point to 17.3%.
Analysts from Jefferies noted that NuBank’s performance was strong, with no concerns regarding credit quality, and management emphasized that delinquency rates remain on track.
The delinquency rate for 15-90 days in Brazil was reported at 4.2%, a decline of 0.2 points both annually and quarterly.
Meanwhile, the over-90-day delinquency rate was at 6.8%, down from 7.2% a year ago but slightly up from 6.6% in the second quarter, a shift the CFO attributed to seasonal factors.
NuBank has reached 127 million customers across Brazil, Mexico, and Colombia, and recently unveiled plans to expand into the United States. The credit portfolio has seen a 42% year-over-year increase, totaling $30.4 billion.
