Brazilian digital lender Nubank posts 42% profit boost; shares jump
FILE PHOTO: A banner for Nubank, the Brazilian FinTech startup, hangs on the facade at the New York Stock Exchange (NYSE) to celebrate the company's IPO in New York, U.S., December 9, 2021. REUTERS/Brendan McDermid/File Photo
SAO PAULO :Nu Holdings, which runs Brazilian digital lender Nubank, posted on Thursday a 42 per cent increase in its net profit from a year earlier on a foreign exchange-neutral basis, causing its shares to jump more than 8 per cent in after-hours trading.
The firm, which has nearly 123 million clients across Brazil - its main market - Colombia and Mexico, posted a $637 million second-quarter net profit for the April to June period. Revenue stood at $3.7 billion, up 40 per cent year-on-year.
Chief Financial Officer Guilherme Lago told Reuters the profit increase was driven by operational leverage and revenue growth, but said the factors behind that growth are starting to change.
"If in the last three to five years a major part of our growth came from adding new customers, in the next three to five years a major part of our revenue growth in Brazil will come from deepening the relationship with these customers," Lago said.
Nubank's annualized return on equity, a gauge of profitability, came in at 28 per cent, in line with the reported year-ago figure.
Nubank posted a "strong quarter," Citi analysts wrote, noting that net profit came in above expectations while net interest margin showed a recovery.
Shares in Nubank were up 8.3 per cent in extended trade in New York.
The lender's total loan book grew 8 per cent from the first quarter to $27.3 billion, as personal loans expanded within Nubank's overall portfolio, which is largely made up of outstanding credit card debt.
Meanwhile, the early default ratio stood at 4.4 per cent, falling 0.3 per centage points from the first quarter. The over-90 day ratio reached 6.6 per cent, up 0.1 per centage point in the same period, with Nubank saying it reflected both a rise in short-term delinquencies in the first quarter and a seasonal pattern.
"We will continue to grow unsecured lending originations fairly strongly throughout the remainder of 2025 and 2026 as long as it continues to see the asset quality numbers that we are seeing in our book," Lago said in a call with analysts.
"Until today... everything seems to be super on track," he added.
