Nu Holdings Ltd. (NYSE:NU) shares advanced approximately 3% in premarket trading on Tuesday, building on a six-session winning streak that has seen the stock gain 6.9% since July 17. The stock closed Monday at $14.53, up 3.12%, and was trading near $14.50 in early premarket activity.
The recent rally has had a notable effect on the company's share buyback program. Based on a hypothetical $1 billion allocation at Monday's closing price, the buyback would retire roughly 68.8 million Class A shares, representing about 1.8% of total Class A shares outstanding as of June 26. In contrast, the same cash amount at the June 4 closing price of $12.12 would have secured approximately 82.5 million shares—a 17% reduction in the theoretical share count due to the price appreciation.
Nu's buyback program, authorized until June 3, 2027, remains flexible, with the company retaining the right to modify, pause, or terminate it at any time. No mandatory participation is required.
The company reported strong first-quarter financial results, with net income rising 41% to $871 million and return on equity reaching 29%. Revenue topped $5 billion, supported by a customer base exceeding 135 million. The credit portfolio expanded 40% to $37.2 billion, while deposits grew 22% to $42.4 billion, pushing the loan-to-deposit ratio to 58.3% from 49.1% in the prior quarter.
However, credit quality metrics showed some deterioration. Credit-loss allowances totaled $1.79 billion in Q1, surpassing the full authorized amount and representing a 33% increase from the previous quarter. The nonperforming-loan ratio for the 15-to-90-day window rose to 5.0%. The risk-adjusted net interest margin declined by 100 basis points to 9.5%, though the headline margin improved to 21.1%.
Nu's international expansion continues to gain traction. The company reached break-even in Mexico during Q1, achieving 15 million customers, and received full approval on July 10 to commence banking activities in the country. Additionally, Nu announced a deal to acquire Banco Porto Real, securing a Brazilian banking license, subject to central bank approval. The company stated the acquisition does not create additional capital or liquidity needs.
In a notable insider transaction, SEC filings on Monday revealed a code-F transaction on July 23 involving Cristina Junqueira, who serves as both U.S. CEO and chief growth officer, covering 8,048 shares for tax or exercise liability settlement. No discretionary insider sales were reported.
Nu outperformed its Brazilian financial peers on Monday, with StoneCo Ltd. (NASDAQ:STNE) rising 1.21% to $10.89, PagSeguro Digital Ltd. (NYSE:PAGS) gaining 1.96% to $9.38, and Itaú Unibanco Holding S.A. (NYSE:ITUB) advancing 1.09% to $8.37. The broader S&P 500 was nearly flat, closing up 0.02%.
Investor attention is now turning to the Federal Reserve's upcoming decision on Wednesday, with markets pricing a 65% probability of rates being maintained at 3.50%-3.75%. Nu's annual meeting is scheduled for August 6, and the key focus for upcoming earnings will be whether margins can stabilize amid ongoing investments in international operations and artificial intelligence.
