Nubank sees more credit growth as quality gauges hold up
The fintech, which operates in Brazil, Mexico and Colombia, does not expect to materially decrease its growth for the rest of the year
[SAO PAULO] Nu Holdings, Latin America’s biggest digital bank, reported a decline in credit quality that was roughly in line with analysts’ expectations, and said that it expects credit growth to continue for the rest of the year.
The fintech known as Nubank said that its 90-day delinquency ratio increased 10 basis points in the second quarter from the first three months of the year, to 6.6 per cent, according to a statement on Thursday (Aug 14). The 15- to 90-day delinquency ratio declined 30 basis points to 4.4 per cent.
Shares of Nubank rose as much as 7.8 per cent in postmarket trading in New York on Thursday.
“Absolutely all the asset classes we operate in Brazil, Mexico and Colombia are performing better or marginally better than expected,” chief financial officer Guilherme Lago said in an interview before earnings were released. “The macro deterioration being discussed since the end of last year didn’t materialise in our credit indicators, including the numbers from August until today.”
Nationwide, credit quality has been getting worse in Brazil, Nubank’s largest market. Delinquencies for individuals rose 0.7 percentage point to 4.3 per cent in June from a year earlier, according to the central bank. And most of the deterioration came from credit cards and personal loans, two of Nubank’s most important businesses.
The fintech, which operates in Brazil, Mexico and Colombia, does not expect to materially decrease its growth for the rest of the year. It adjusted its credit model in Brazil for roughly a third of its clients, a shift that allowed it to increase some of its customers’ credit limits, according to industry analysts. Nubank expects to roll out the update to the whole client base in Brazil to the end of this year.
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With a market value of US$57.6 billion, Nubank lost the title of most valuable publicly traded company in Latin America last month to Itau Unibanco Holding, as some investors expressed concern that Nubank’s delinquency rates might deteriorate. Itau’s second-quarter results, which beat analysts’ expectations earlier this month, widened the gap between the two banks.
Nubank has also lost several top executives this year, including chief technology officer Vitor Olivier, who said earlier this week that he’s leaving to start a business focused on artificial intelligence. Chief operating officer Youssef Lahrech and chief product officer Jag Duggal have also left the company this year.
Nubank’s shares are up roughly 15 per cent this year after gaining 24 per cent last year and more than doubling in 2023. The stock has been recovering since late February, when the fintech shed US$12 billion in market value in one day after fourth-quarter results fell short of expectations.
Other key second-quarter results:
- Adjusted net income was US$694.5 million. The average estimate of analysts surveyed by Bloomberg was for US$656.8 million.
- Revenue jumped 40 per cent to a record US$3.7 billion, stronger than the US$3.5 billion expected.
- The fintech added 4.1 million new customers in the second quarter, bringing the total to 122.7 million, just shy of the 122.8 million analysts predicted. BLOOMBERG
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