Shares of Nu Holdings Ltd. (NYSE:NU) climbed 3.5% to close at $14.07 on Monday, outperforming a Brazil-focused ETF and several financial peers. Trading volume exceeded 75.6 million shares before 1 p.m. EDT, driven by positive signals from the company's Mexican operations.
Mexico Deposit Growth Outstrips Customer Base
First-quarter filings reveal that Mexico accounted for approximately 14% of Nu's total deposits, while representing only about 11% of its customer base. This disparity is a key metric for investors, indicating that Mexican customers are depositing more money on average than those in other markets. The average deposit per customer in Mexico was roughly $393, about 25% higher than the consolidated group average of $314.
This deposit intensity suggests stronger engagement and cross-selling success in Mexico, a market where Nu has been investing heavily. The Mexican business achieved break-even in the first quarter, with its efficiency ratio improving by 78 percentage points. Deposits in the country climbed above $5.9 billion.
Banking License and Investment Plans
On July 10, Mexican authorities granted Nu permission to begin operating as a bank. The subsidiary must complete its transition within a 30-day window. As part of its commitment to the market, Nu plans to invest $4.2 billion in Mexico up to 2030.
Livia Chanes, who now leads Latin America while continuing to oversee Brazil, emphasized the strategic importance of Mexico. “My commitment is to ensure that Mexico and Colombia benefit from everything we’ve built in Brazil,” she said, highlighting the potential for cross-market synergies.
Financial Performance and Valuation
Nu's overall financial health remains robust. First-quarter revenue topped $5 billion, net income rose 41% to $871 million, and return on equity climbed to 29%. The balance sheet expanded rapidly, with deposits up 22% to $42.4 billion and lending up 40% to $37.2 billion.
Analysts project earnings per share of $0.85 for 2026 and $1.11 for 2027. Monday's share price corresponds to price-to-earnings ratios of 16.6 and 12.7, respectively, implying expected earnings growth of about 31% in the coming year. The consensus price target stands at $17.53, roughly 25% above Monday's close, though estimates range widely from $10 to $21.
Index Inclusion and Risks
Nu was added to a global multi-factor ESG index from STOXX on Monday, which is tracked by a passive fund. Some of the trading volume may be related to index rebalancing, but analysts advise investors to distinguish such technical demand from the fundamentals of Mexico's economy.
Risks remain, including early delinquencies that edged up to 5.0% in the first quarter. Credit-loss allowances climbed 33% from the prior quarter, and the risk-adjusted margin slipped 100 basis points to 9.5%. Despite these headwinds, the core foundation appears solid, with Mexico's deposit density serving as a key indicator of sustainable growth.
