Nu Holdings Ltd. (NU) Earnings Call Transcript & Summary

Thanks, operator, and thanks to all of you for being with us on today's earnings call. Joining me today are David Vélez, our founder, Chief Executive Officer, and Chairman, along with Rob Livingston, our Chief Financial Officer. Every financial metric we discuss and present today reflects the managerial P&L framework we introduced in Q4 2025. These managerial measures matter a great deal to how we run the business, but they are not financial measures as defined under IFRS and might not be comparable to other companies. A full reconciliation report to the most directly comparable IFRS figures is available in our managerial P&L reconciliation report and in the appendix to this presentation. Unless we note otherwise, every growth rate discussed today is presented on a year-over-year FX-neutral basis. Today's discussion may include forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those expressed or implied. For additional information, please refer to the forward-looking statements disclosure included in the earnings presentation. With that, I will now turn the call over to David. Please go ahead, David.

Hello, everyone, and thank you for joining us today. During the third quarter we recorded additional growth in each of the markets we operate in; we ended the period with 143 million customers, 3.7 million net additions, and our activity rate increased sequentially to 83.6%. In Brazil, we are approaching 120 million customers, and for a seventh consecutive quarter our activity rate climbed, hitting a record 86.3%. That is impressive considering our position in that country, where more than 65% of adults are already our customers. In Mexico, our first quarter operating as a bank was strong, and we reached 16.6 million customers. In Colombia, we posted a record quarter for customer additions, reaching 6.1 million customers. Our customer base expanded, and average revenue per active user rose to $18, which together drove gross revenue to a record $6.3 billion. We delivered that at a 19% efficiency ratio, all while still putting money into Brazil, Mexico, and Colombia and rolling out Nu U.S and Nu Global in September. The quarter closed with net income at an all-time high of $1.1 billion. That result shows how millions of people are picking Nubank and shifting ever more of their financial activity our way, and it speaks to how hard our team has worked. We are now extending this playbook past Latin America. Brazil, Mexico, and Colombia continue to demonstrate how well our model works, and each is at a distinct point in its evolution, with plenty of room still to grow. I'll start with Brazil. In Brazil, our model keeps proving itself at scale. Today we have about 120 million customers, which is 65% of the adult population there. We're still the top financial app in Brazil, with 86 million monthly active users — close to double the second-biggest competitor, based on Sensor Tower data. What matters is that this scale continues to turn into solid credit growth. When the market had to slow down, our disciplined approach to credit gave us the confidence to speed up in several areas. Unsecured personal loan originations hit a record BRL 22.1 billion this quarter through our credit engine — a 28% increase compared with a year earlier — and September stood out as our best month to date. Then in October, Brazil Central Bank introduced fresh steps aimed at encouraging responsible lending and stopping excessive indebtedness. Those principles already line up closely with the underwriting models we use and the way we extend credit to customers. We stay dedicated to expanding credit in a responsible and sustainable manner. Croma, our new product for Super Core customers, is also advancing considerably; it blends improved credit with everyday perks to strengthen primary banking relationships. Croma went live at the end of July, and in only three months it's nearly at 1 million customers. On engagement, NuCoin, our loyalty program that we brought back, has drawn 6.7 million sign-ups so far. During Q3 we teamed up with over 35 merchants — Amazon, Shopee, Samsung, and Uber among them — so customers get extra perks; this expanding ecosystem lets us reward engagement and strengthen ties with customers. That's compounding at scale in action: we continue expanding the credit business, create additional avenues for monetization, and deepen relationships with a customer base that's already huge. Mexico is the market where we're now replicating that scale. Our customer base reached 16.6 million, which represents 27% growth compared with a year earlier, and we now serve 17% of adults; another significant milestone came in this quarter when we became a full bank. During the quarter we gained 870,000 customers, and our new banking status makes our offering even more attractive, starting with deposit insurance coverage that is 16 times larger—rising from about $12,000 to $195,000 for each customer. It additionally opens new ways to strengthen primary banking relationships, such as through payroll accounts, which supports building a more robust deposit franchise as time goes on. To introduce this next phase, we rolled out Únete al lado Nu — a campaign across the whole country airing on TV, radio, in cinemas, on streaming services, and through social platforms — presenting our bank positioning to customers across Mexico. Conditions around us are shifting in our favor too. Mexico’s Congress approved a new law on October 20 aimed at encouraging digital payments, which marks one more significant move toward digitizing the Mexican economy. The law is designed to make digital payments easier to access and more convenient, broaden how widely they are accepted throughout economic sectors, and reduce dependence on cash. Down the road, wider digital uptake might also yield richer transaction data that enables improved financial services and better credit decisions. For Nu, the biggest digital bank in the country, we see these developments as significant tailwinds—they open up further chances to strengthen engagement and broaden financial inclusion. All of this together reinforces the opportunity we have to reproduce in Mexico the scale, customer engagement, and solid economics we've already shown in Brazil. Mexico isn't the sole market where this is occurring. Colombia is turning into yet another clear demonstration that our model can travel; we closed the quarter with 6.1 million customers, which already amounts to 15% of that country's adult population, and we're growing 62% year-over-year. Crucially, our growth momentum continues to speed up. Credit cards are out in front—with 3 million cardholders, we've become Colombia's leader by cardholder count, and our credit portfolio expanded 80% year-over-year on an FX-neutral basis. Our deposit business is scaling up too. We now hold the country's fourth-largest individual deposit base, and our cost of funding sits at only 76% of the benchmark rate—the cheapest relative funding across our three core markets. There's another notable shift underway in Colombia's financial ecosystem. Bre-B, the nation's new instant payment system, hit 82% penetration of the adult population within its first year—initial adoption that's even quicker than Pix managed in Brazil. Here's another strong chance for us to bring customers closer and become their main bank. Every market sits at its own stage of development. In Brazil, we have a model that's already proven itself; Mexico is copying that model and getting solid economics; and Colombia is picking up speed now. At the same time, Nu U.S. and Nu Global are building the groundwork for the growth phase that comes next. What ties all of this together is a single technology platform, a single operating model, and a single customer-focused approach. We're not building separate businesses from scratch — rather, we're taking a model that has already demonstrated its worth into new markets and putting to use the lessons we learn along the way. This quarter represented a significant move in carrying our model beyond Latin America. On September 10, we introduced Nu U.S., kicking off the rollout of an account featuring 3.5% APY and fee-free transfers to Brazil, Mexico, and Colombia, as well as a credit card with no annual fee and unlimited 1.5% cashback. In just our first few weeks, we were already connecting with customers across all 50 states. The reasoning is simple: we apply our customer-obsessed culture, our cost advantage, and our analytical capabilities to deliver the strongest everyday banking value proposition for mass affluent customers in the U.S. After only a few weeks, early indications of word-of-mouth growth and virality are beginning to emerge, bringing to mind the early growth days in Brazil, Mexico, and Colombia. From the outset, we expect word of mouth to serve as an important growth engine, especially among customers who have ties to Latin America. That is precisely the strategy we're following: reaching communities with connections to our core markets and giving them a natural bridge linking their financial lives in the U.S. with their families and friends back home. Fee-free transfers turn that bridge into something real. Customers can send money straight to Pix accounts in Brazil, to bank accounts in Mexico via CLABE, and to Bre-B-enabled accounts in Colombia. We think that gives them a compelling reason to pick Nu and to recommend it to others. Also on that date, we launched Nu Global — a multicurrency account that runs on stablecoin infrastructure. It became available on October 15, and customers are already present in 37 countries, demonstrating how far our offering reaches globally right from launch. Crucially, we are advancing both efforts with discipline: additional investment will occur only once we confirm product market fit, see unit economics moving toward our hurdle rates, and pass the essential regulatory and risk checkpoints. According to our present plans, Nu U.S. and Nu Global combined remain inside our pledge of up to 100 basis points of efficiency ratio impact in 2026 and in 2027. While we construct this next stage of growth, our core markets continue to serve as the bedrock of our success. So with that said, I'll pass things along to Rob. Hello, Rob. The floor is yours.

Thanks, David, and I appreciate everyone being on the call. I'll begin with the consolidated credit portfolio. It hit $41.6 billion, which is a 33% increase year-over-year and 6% higher sequentially on an FX-neutral basis. Credit cards were up 32% year-over-year, reaching $27.2 billion. Unsecured lending climbed 39% to $11.0 billion, while secured lending advanced 23% to $3.4 billion. During this quarter, unsecured lending rose 7.5% sequentially on an FX-neutral basis. As David noted, we achieved record unsecured personal loan originations in Brazil, and September was our strongest month on record, all while keeping underwriting discipline intact. Secured lending picked up momentum too, going from $3.1 billion to $3.4 billion during the quarter, with originations at an all-time high. Gains in both public and private payroll lending let us counterbalance the headwind coming from FGTS-backed loans, and total originations now exceed the pace seen before that drop. Private payroll originations keep speeding up month-over-month as our confidence in scaling the product grows, backed by better underwriting models and processes across the market that are increasingly mature, which helps lower operational risk. With such strong growth across products, our portfolio mix stayed broadly stable, and credit cards account for 65% of the total. Let me now move to deposits. Total deposits came to $47.5 billion, a 19% rise year-over-year on an FX-neutral basis. Brazil finished the quarter at $38.6 billion, Mexico at $5.3 billion, and Colombia at $3.5 billion. In Mexico, we keep intentionally optimizing the deposit base toward lower-cost funding while holding ample liquidity. Becoming a bank makes our position even stronger. Deposit insurance coverage now stands 16x above where it was previously, and being able to offer payroll accounts gives us a chance to build a stickier funding base as we deepen primary banking relationships. Our consolidated cost of deposits came in at 87% of the interbank rate, which is one percentage point below last quarter and two points below a year ago. That shows we can keep growing the deposit franchise while its underlying funding economics improve. Net interest income came to $3.9 billion, up from $3.7 billion in the prior quarter, with net interest margin of 22.5%. Cost of credit was $1.8 billion versus $1.7 billion in the second quarter. Consequently, on a reported basis, risk-adjusted NIM was 12.1% this quarter against 12.4% in the second quarter, which is consistent with what we expected. I'd also like to flag two one-off items that hit reported risk-adjusted NIM in the second and third quarters. In Q2, Desenrola added 55 basis points to risk-adjusted NIM and had only an immaterial benefit in Q3. During the third quarter, we took a one-time charge on receivables acquired from payment institutions that Brazil's central bank subsequently placed under extrajudicial liquidation, which cut risk-adjusted NIM by 63 basis points. That had nothing to do with the credit performance of our customer loan portfolio. Setting these events aside, recurring risk-adjusted NIM went from 11.9% in Q2 to 12.7% in Q3. That supports the fundamental durability of the risk-adjusted returns we generate and the sustainability of where those levels stand now, which comes from offering customers competitive and fair terms, applying disciplined underwriting, optimizing the portfolio, and managing the balance sheet with growing efficiency. Because credit quality sits at the heart of these economics, I will now move to the trends in our asset quality. The charts at the top of this page display our delinquency ratios for the total portfolio. The 15 to 90 day ratio came in at 4.9% versus 4.8% in the prior quarter, and our 90+ ratio rose to 7.3% from 6.9%; to read these figures correctly, one structural shift is important. As we optimize for risk-adjusted returns, a larger portion of our portfolio earns interest. Interest-earning balances made up 61% of the total portfolio in this quarter, compared with 59% last quarter and 44% three years ago; this is significant because delinquency is concentrated in interest-earning balances rather than in credit card purchases that customers repay in full each month. As that share expands, delinquency as measured across the total portfolio naturally rises, even absent any weakening in underlying credit performance or any growth in exposure. The charts at the bottom of this page present the same delinquency ratios, except measured against our interest-earning portfolio, IEP; on that measure, our 15 to 90 day ratio improved to 8.0% from 8.2% in the prior quarter, while our 90+ ratio rose to 12.1% from 11.6%. Importantly, both ratios are still below where they stood three years ago, even as we have purposely extended credit to more customers. Put differently, headline NPLs reflect both delinquency trends and the structural evolution of our portfolio toward greater interest-earning penetration; I will now take you through what drives early delinquency and our allowance. All right, let's go deeper. Comparing the prior quarter with this one, our 15 to 90 day delinquency ratio was basically flat, going from 4.83% to 4.86%. Seasonality lowered the ratio by nine basis points. Partly offsetting that were 13 basis points from intentional risk expansion. That is the deliberate trade-off reflected in the risk-adjusted NIM expansion I mentioned earlier. Product mix and other factors had minimal net effect. The allowance bridge offers a complementary perspective. Our allowance rose from $6.6 billion to $7.1 billion. Portfolio growth was by far the biggest driver, adding $332 million, since under IFRS 9 we recognize expected credit losses at origination before the related income is earned. Intentional risk expansions contributed another $135 million, while all other movements were comparatively small. The credit dynamics this quarter mainly reflect portfolio growth and deliberate risk expansions. That is still consistent with our strategy of optimizing risk-adjusted returns. Our approach to provisioning stays disciplined and consistent. Beginning with the chart on the left, our allowance build represented 102% of new 15+ day delinquency formation in the quarter, matching the level of a year ago. We have stayed at or above 100% in each quarter shown, consistently building allowances in line with or ahead of early delinquency formation. On the right-hand side, the chart presents total coverage over NPL 90+ at 234%, versus 244% in the prior quarter. Allowances we hold remain above two times our 90+ delinquent balances, staying inside the range kept over the last three years. Such ratios, of course, move around from one quarter to the next. The important point is that provisioning keeps up with newly formed delinquency while substantial coverage is preserved as our credit portfolio grows. I'll wrap up the credit portion with a wider view of how our performance stacks up against the Brazilian banking industry. As mentioned, we keep growing the credit portfolio, intentionally accepting somewhat more risk where expected returns make it worthwhile. Our confidence in this approach rests on the strength of our underwriting and on how resilient our credit performance has been. These charts display credit card delinquency across three income segments in Brazil. Although industry benchmarks have broadly worsened in all three segments, our 90+ day delinquency has stayed comparatively steady across multiple income segments. A major source of this resilience is our primary banking relationships. The more that customers concentrate their financial lives with Nu, the richer the data we generate, the better we can assess their credit risk, and the more important our position becomes in their payment priorities. That produces a powerful reinforcing cycle.

Stronger ties with customers enable improved underwriting, and that in turn lets us continue growing credit while fine-tuning risk-adjusted returns. This is precisely why customer primacy is viewed by us as a core element of our credit superpower. That leads us into the income statement. Gross revenue hit a record $6.3 billion, rising 37% year-over-year on an FX-neutral basis. Gross profit came in at $2.6 billion, climbing 35% year-over-year and up from $2.4 billion in the prior quarter. A healthy, diversified mix of fees, credit, and float keeps benefiting our gross profit. Each of the three increased in absolute dollars year-over-year, even though the specific counterparty event mentioned earlier weighed on credit profitability during this quarter. Now on to operating leverage. Net revenues were $4.4 billion, up from $4.1 billion last quarter, with operating expenses of $846 million. Our efficiency ratio thus came to 19.3%, versus 20.3% a year ago. Expenses landed somewhat under our expectations. Personnel costs ran below plan because we hired carefully, given the capacity gains we are seeing from AI and other factors. Certain expenses also moved later into the year, including spending tied to our new in-office working model and other discretionary items. Higher technology costs partially offset these. Since some of this spending has shifted into the fourth quarter, we do expect the efficiency ratio to rise sequentially. Looking at the whole year, we now anticipate an efficiency ratio in the 19% to 19.5% range, slightly under the roughly 20% we previously guided for the full year — and that leads me to the bottom line. To wrap up, net income reached a record $1.1 billion, a 31% increase year-over-year on an FX-neutral basis, alongside a 32% return on equity. That figure did incorporate the effect of the non-recurring items we covered earlier. All told, those items reduced net income by about $53 million. The result also mirrors the quarter-over-quarter increase in our effective tax rate, which came in at 19.2%. Following an unpredictable 2026, we anticipate our 2027 ETR landing somewhere between the low and mid-20% range; those third-quarter results were achieved even as we kept putting money into our markets and building the groundwork for the coming stage of expansion. Which leads me to our Investor Day. December 8th marks our inaugural Investor Day, and there we'll go into greater detail on our long-range strategy, the opportunities for growth we see, and what creates value. We hope you'll join us. With that said, let's begin taking your questions.

Thanks, operator. Could you open the line for Mr. Tito Labarta over at Goldman Sachs, please?

Hello there, and good evening. Thank you, Souto. Hi David, hi Rob. I appreciate the call and for taking my question. Congratulations on another strong quarter. I suppose the key question we've been hearing, especially looking ahead from here, given the tough macro backdrop in Brazil. I mean, quite impressive, Rob, you said, I believe this was a record quarter for, or a record month in September for unsecured personal loan origination. But how should we think about further growth in credit quality through 2027, with all the worries about macro and, I suppose, the sustainability of earnings, particularly, I guess, on the risk-adjusted NIM, right? I mean, if we exclude the one-Tyme item, 12.7, much higher than what you had previously, is that something that can be sustained? I mean, I realize you might not have guidance for next year, but how should we think about some of those macro risks given the strong growth you've been delivering? Thank you.

Hey, Tito, David here. Thanks for your question. A few things I think are important to keep in mind, to consider as they sort of guide the way we operate and make credit decisions. The first thing is, from the very start, we've never, unlike the big incumbent banks, we don't take a position on Sorry, there's some echo somewhere.

I'll —

I'm not sure. All right, thanks; we don't really adopt a macro stance on the economy. Our simple assumption is that things ahead will be considerably worse than what came before, since sadly that is exactly what we have observed from 2013 onward. The macro backdrop across the last 13 years has been not great, to borrow a useful word. What we have witnessed, sadly, is only bad macro, and whenever we make a credit call, we presume what lies ahead will be worse than what lies behind, so we must apply a substantial buffer to underwriting choices. Even so, that choice still has to be positive NPV; we don't decide based on some particular NPL or delinquency figure we must reach; we decide based on whether this choice, this credit loan, this credit limit, is NPV positive under a worsening scenario, yes or no? That is the way we decide. Seen that way, every credit decision we are making now, and how we keep going, carries a substantial buffer so that they remain good decisions. The second thing to consider is that we remain quite small relative to the overall Brazilian market, which means we have in effect grown and keep growing by cherry-picking some of the finest credit and risk-adjusted opportunities available in the market; in effect we operate in products with very short-term duration, that are very information-rich, and that let us speed up or slow down fairly quickly as different opportunities appear. So, being small, we can keep growing mainly by capturing market share from rivals in the market, and that opportunity will persist in 2027 and beyond, just as it is. Everything we have done in a challenging scenario has in effect been capturing market share, and we expect to keep capturing market share given the substantial operating advantages and comparative advantages that our model has. Lastly, I think it is worth stressing just one point that Rob made, namely that we have arrived at a position that is very unique in the Brazilian market, and very soon also in Mexico and Colombia, namely that we are the largest primary bank account in the country, 2x largest, we believe, than the other, the second player. Being the primary bank account means in effect you get positive selection, not negative selection. You get positive selection, and you are, in a sense, senior in the customer's credit stack. You are the card that consumers will pay first. That hands us a huge advantage in underwriting credit and managing delinquency in a tougher scenario. We're not the marginal lender; we're not the one handing out the fifth card or the sixth card or the sixth loan; we're the primary relationship for most of our customers, for 60% of our customers. That puts us in a really strategic spot, since we capture that positive selection, and clearly it also generates a great deal of proprietary data that then feeds into what may be the most sophisticated credit stack anywhere in the world, which we believe we are increasingly constructing here across the markets where we do business. A meaningful edge in credit underwriting. In any case, all of those data points tell you something, and I won't hand you specific guidance on growth rates, but our view is that, just as we have managed through every cycle, should a cycle be on its way, we keep believing our growth is more secular in nature, is more, in a sense, somewhat uncorrelated with the market, because people keep moving between markets, keep shifting market share away from some of the large incumbent banks toward Nubank, and that trend will persist no matter what the macro scenario turns out to be.

Good. And perhaps, Tito, if I may come in here to address what you asked about risk-adjusted NIM. Q3 was strong for us, on an adjusted basis and on a recurring one alike, and we anticipate that risk-adjusted NIM will retain its underlying economic strength as we move through Q4. Nothing suggests to us that this would change. Bear in mind that any risk we take is deliberate. We move into segments when the risk-adjusted returns make it worthwhile, and where market-leading pricing is something we can provide. That is how we operate. Turning to next year, no guidance is being provided, and I would remind everyone listening that Q1 carries a higher seasonal cost of risk, and should our portfolio grow faster, upfront provisions would be larger; that is one more reason we prefer not to look too far ahead on this metric, though over the near term it appears fairly sustainable.

That's quite clear. Thank you, David and Rob. Congratulations once more.

Operator, would you kindly open the line for Mr. Yuri Fernandes with JP Morgan?

Hi, David. Thanks, Souto. Hi, Rob. I've got a question for David about inorganic opportunities. I believe this came up during the quarter, with some headlines about potential M&A. David, could you walk us through how you're viewing inorganic? In the past, I think you never ruled out M&A; it was more strategic in nature, if something could support your future growth, like your long-term goals. But for some investors, I think depending on the size, maybe that's the question, right? Are you open to large M&As, or is it usually smaller ones? I'm just trying to get a better sense of the appetite for inorganic acquisitions. Thank you.

Sure. A few points. To start, as we've increasingly emphasized since day one, we see the opportunity in front of us as worldwide. The prospect of reshaping financial services across the globe into a model centered on consumers and built digital-first is international in scope, and throughout the last 13 years we've consistently followed a highly disciplined approach, concentrating on a select set of countries. With the launch of Nu U.S. and Nu Global, we're now beginning to look past those original core markets too. That's the first point worth remembering. The second point is that right now we're producing substantial capital and substantial cash, which affords us a great deal of optionality and many opportunities to consider how we carry out that thesis. So we'll examine possible M&A. We've done so before. We've announced, for example, an investment in Tyme in South Africa and the Philippines; we made a small investment in India. We've made quite a few investments along those lines. We will consider, and we can consider, M&As, though I'd say organic growth is strongly preferred by us. I won't say never say never. For us to pursue a full M&A, the bar would have to be extremely high. I'd stop short of calling it impossible—though the bar would be extremely, extremely, extremely high. As I've said, growing organically remains what we favor. That said, it's one possible lever, but only for something we'd hold deep conviction around in terms of speeding up our mission and our thesis, and clearly that would be a remarkable chance to put capital to work. My expectation is that should such a thing occur, it would be an extremely, extremely uncommon opportunity.

That's crystal clear. Thanks, and congratulations, David. Really solid EBT, particularly once we account for the one-Tyme provisions tied to the payment company. Appreciate it.

Thanks.

Operator, could you please open the line for Mr. Thiago Batista from UBS?

Hey, everyone. Hey, David. Hey, Rob, Souto. Once again, congratulations on the strong results. I wanted to ask about the Brazilian segment's over-leverage; we're seeing the Central Bank talking about possible macroprudential measures, partly in an effort to lower this over-leverage in the household segment. Would you agree that in Brazil we have a situation where individuals are over-leveraged? And linked to that, are you already seeing any effect from the sporting bets ban that happened in Brazil a couple of months back, a couple of weeks back?

Sure. Thanks a lot for that question. I'll handle this one. I think we're watching indebtedness in the marketplace very closely, and of course this is something that concerns us holistically, but even more importantly, individually, at the level of each customer, because that's where lending decisions get made, for each individual, one at a time. As David said earlier, our underwriting philosophy has always been pretty conservative. We assume a downturn is coming the next day, that losses will double, and we still need to stay profitable even in those conditions. That's been among our core underwriting philosophies from day one. As for the actual macroprudential measures the Central Bank has just announced, we think these rules reward responsible underwriting and transparency, which has always guided how we extend credit; we're waiting for these rules to take effect, of course, but at this point we're very well prepared for them, again, both individually and holistically in terms of the impact on our business. Your other question was about the effect of the betting ban that happened a few weeks ago. We have seen an effect there in terms of, obviously, as you'd expect, a complete curtailment of any activity in that sector. We haven't seen any material effect on our TPV or our spending, nor on our balance in or balance out across the entire portfolio. As of right now, I wouldn't say there's been any effect, positive or negative, for example on delinquency, no material positive effect. On spend, no material negative effect.

Very clear, and congrats again.

Thank you.

Operator, could you please open the line for Mr. Eduardo Rosman from BTG?