Nu Holdings Nets $1.1 Billion in Record Quarter

Nu Holdings reported record net income of $1.1 billion for the second quarter in results released on Aug. 13. The figure is up 17% from the first quarter and 49% compared to the prior year. Revenue climbed 39% year over year to $5.9 billion, while net interest income reached $3.7 billion, up 9% sequentially. Return on equity rose to 33%, up from 29% in the prior quarter, and the net interest margin widened by 180 basis points to 22.9%.

The digital banking company expanded its total user base to 139 million customers after adding 4 million accounts during the quarter. Most users remain in Brazil at approximately 118 million, while Mexico accounts for 16 million and Colombia has 5 million. In January, the company received conditional approval from the Office of the Comptroller of the Currency to launch Nubank NA in the United States.

Customer engagement increased across the network. The monthly activity rate rose to 83.5% overall, up from 83% in the first quarter, and reached 86% in Brazil for the first time. Average revenue per active customer increased to $17 from $16. The bank posted an efficiency ratio of 19.5%, up from 17.3% in the first quarter due to marketing, real estate expenses shifted from earlier in the year, and international expansion costs.

Credit quality showed mixed movements. The non-performing loan rate was 4.8% in the second quarter, improving from 5% in the prior period but up from 4.4% a year earlier. The 90-plus-day non-performing loan rate stood at 6.9%, compared to 6.6% a year ago. Following the earnings release, the stock has gained about 7% since Aug. 13, though it remains down about 13% year to date while trading at 20 times earnings.