Nu Holdings (NYSE:NU) shares edged higher in U.S. premarket trading on Monday, extending gains from the previous week, after the digital lender obtained a banking license in Brazil. The move is seen as a significant step in reducing the company's regulatory exposure in its home market.
The stock was up 1.1% ahead of Monday's opening bell, building on a 3.7% gain from the prior week. The advance followed Nu's announcement on July 20 that it plans to acquire Banco Porto Real, a transaction that will secure a banking license without imposing any additional capital or liquidity requirements on the company.
The license, once finalized, will bring Nu into full compliance with updated regulations governing brand usage by licensed financial institutions. The company emphasized that the acquisition will not alter its app, product offerings, services, or brand for its 115 million customers in Brazil. The deal remains subject to approval from the Brazilian Central Bank.
Nu's biggest daily gain during the week occurred on the day of the announcement, with shares rising 2.9% to close at $14.51. However, some of those gains were pared by Friday, when the stock finished at $14.09.
In comparison, Nu outperformed key Brazilian fintech rivals. Inter & Co Inc. (NASDAQ:INTR) fell 1.5% last week, while StoneCo Ltd. (NASDAQ:STNE) declined 3.5%. Nu's relative strength—outperforming Inter by 5.2 percentage points and StoneCo by 7.2 points—appears to reflect a regulatory de-risking premium rather than the impact of share repurchases.
Nu's board has authorized a share repurchase program of up to $1 billion, set to expire on June 3, 2027. At the current share price of $14.09, this would allow the company to buy back approximately 71 million shares, representing about 1.8% of the 3.84 billion Class A shares outstanding as of the end of March. The program is discretionary, and the company may modify or discontinue it depending on market conditions.
Beyond the licensing news, Nu's credit economics remain the primary driver of its valuation. In the first quarter, the company reported managerial revenue of $5.32 billion and net income of $871.4 million, with a return on equity of 29%. Revenue per active customer per month rose 23% on a foreign-exchange-neutral basis to $15.90, while the credit portfolio expanded 40% to $37.2 billion. However, early-stage delinquencies increased to 5.0% from 4.1%, and the risk-adjusted net interest margin contracted to 9.5% from 10.5%.
Founder and Chief Executive David Vélez stated in May that Nu is "rebuilding banking around AI," with models already deployed to support card decisions in Brazil and Mexico, as well as unsecured lending in Brazil. Credit-loss provisions rose 33% quarter over quarter to $1.79 billion, making underwriting performance the next key operational test for the company.
Nu's premarket gains also benefited from a broader risk-on mood, as Nasdaq 100 futures rose 1.49% following a temporary halt in hostilities between the United States and Iran. The Federal Reserve's July 28-29 meeting is the key macro event this week, and any unexpected shifts in the rate outlook could impact the U.S. dollar and influence appetite for Latin American risk assets.
Risks remain, including the pending regulatory clearance for the Banco Porto Real acquisition, Nu's expansion into higher-risk credit areas, and the absence of a minimum repurchase requirement under the buyback program.
