Nu Holdings Ltd. (NYSE:NU) is shifting its strategic focus toward deposit accumulation as it prepares to launch full banking operations in Mexico on August 6. The move marks a significant milestone for the digital banking giant, which already serves over 15 million customers in the country.
According to preliminary figures from the first quarter, Mexico accounts for approximately 14% of the group’s total deposits, contributed by about 11% of its overall customer base. This disparity underscores the higher deposit per customer in Mexico compared to the group average, with Mexican customers holding roughly $393 per disclosed customer versus $314 for the entire group.
The new banking charter will allow Nu to offer a wider range of credit, payments, and savings services, including payroll deposits and higher account thresholds. However, the company will need to maintain elevated deposit balances to meet funding requirements and initial operational expenses.
On Thursday, Nu shares closed at $14.19, down 2.21%, nearly matching the Nasdaq’s 2.15% decline. Despite the daily drop, the stock has gained 4.42% over the past five trading sessions. Trading volume surged to 181.3 million shares, more than double the 65-day average.
Nu Mexico achieved break-even in the first quarter, with its efficiency ratio improving by 78 percentage points over four years. Average revenue per active customer nearly doubled during that period. Founder David Vélez described Mexico as “a key market for Nubank.” The company plans to invest $4.2 billion locally by 2030 and is adding roughly 12,000 new customers daily in Mexico.
The final regulatory approval for the banking license was granted on July 10, allowing Nu 30 days to complete the conversion. The technical migration is scheduled ahead of the August 6 debut.
Group-wide, first-quarter revenue surpassed $5 billion, with net income of $871 million and a return on equity of 29%. Monthly ARPAC stood near $16, and activity remained at 83%. However, credit risk and funding costs remain areas of focus. Loss provisions rose 33% from the previous quarter to $1.79 billion, and the risk-adjusted margin declined by 100 basis points to 9.5%. Deposit expenses accounted for 88% of interbank rates.
Nu ended Thursday with a market capitalization of approximately $68.5 billion, trading at 21.9 times trailing earnings. Year-to-date, the stock has fallen 15.2%, but it has gained 11.5% over the past year.
Competition in the Mexican market is intensifying. Revolut launched comprehensive banking services in Mexico in January after investing over $100 million locally. While Nu commands significant scale, it does not have assured pricing power.
The Federal Reserve is scheduled to meet on July 28-29, with markets expecting rates to remain at 3.50%-3.75% through 2026, though some survey participants note the rising possibility of a rate hike. A stronger dollar could impact translated earnings in Latin America. With the license issue resolved, investors are now looking for proof of payroll inflows, average balances, and deposit expenses. Monetization scrutiny begins August 6.
