Nu Holdings Ltd., the parent company of digital banking platform Nubank, reported first-quarter managerial revenue of $5.32 billion—a new milestone for the firm—while net income jumped to $871.4 million from $557.2 million a year earlier. The results underscore the company's rapid growth in Latin America, but also highlight mounting credit risks that could temper investor enthusiasm.
Revenue and Customer Growth
Managerial revenue, which Nu uses to reflect underlying business drivers, surpassed the $5 billion mark for the first time. Under IFRS accounting standards, however, revenue stood at $4.97 billion. The company added approximately 4 million new customers during the quarter, bringing its global total to over 135 million. In Brazil, the customer base exceeded 115 million, while Mexico accounted for over 15 million and Colombia nearly 5 million. Nu also noted that its Mexican operations reached break-even and have become its third-largest market by financial-institution customers.
Credit Quality Under Scrutiny
Credit-loss allowances surged 33% sequentially to $1.79 billion, while early-stage delinquencies—loans overdue by 15 to 90 days—rose by 89 basis points to 5.0%. Loans more than 90 days past due edged down to 6.5%. Chief Financial Officer Guilherme Lago attributed the increase in provisions to seasonality, portfolio expansion, and a shift toward higher-yield, higher-loss products such as credit cards and unsecured loans, rather than a deterioration in the credit cycle. He reiterated the company's "extremely conservative" approach to provisioning.
Net Interest Margin and Portfolio Details
Net interest income reached $3.25 billion, and net interest margin expanded to 21.1%, driven by faster growth in the credit portfolio compared to liabilities. Deposits totaled $42.4 billion, while the credit portfolio stood at $37.2 billion, split between $24.3 billion in credit cards and just under $10 billion in unsecured loans.
Market Context and Rate Outlook
Brazil's central bank continues to trim interest rates, with inflation hovering near the upper end of its target. Traders on Polymarket are pricing roughly an 83% probability of a rate cut in June, which could ease funding costs for Nu and provide relief to stressed borrowers. However, if inflation forces a slower pace of easing, the company's high-growth credit strategy may face margin pressure later this year.
CEO Commentary and Investor Reaction
CEO David Vélez called the quarter "another strong quarter," highlighting the expanding customer base, record revenue, net income of $871 million, and a 29% return on equity. Despite the revenue beat, earnings per share of $0.18 missed the consensus estimate of $0.20, according to MarketBeat. Nu's shares traded at $12.93 in New York following the results.
Competitive Landscape and Strategic Investments
Nu's growing customer base intensifies its rivalry with traditional Latin American lenders. According to S&P Global, Itaú Unibanco remains the region's largest lender by assets, while BBVA's Mexican arm ranks sixth. Nu continues to invest in artificial intelligence, with its AI Private Banker tools now reaching over 15 million active users monthly. The company also expects its U.S. spending to remain below 100 basis points of its consolidated efficiency ratio for both 2026 and 2027.
Outlook
While Nu's top-line growth remains impressive, the rising credit-loss allowances and early delinquencies serve as a cautionary note. The company's ability to manage credit risk while sustaining rapid expansion will be key to maintaining investor confidence, especially as Brazil's monetary policy path remains uncertain.
