Nu Holdings Ltd., one of the world’s largest digital banking platforms, released its Second Quarter financial results. Net income has more than doubled year over year, reaching US$ 487 million this quarter, with expanding risk adjusted margins and one of the highest ROEs in the industry at 28%
Q2’24 performance highlights of Nu Holdings Ltd
Operating Highlights:
Customer growth: Nu added 5.2 million customers in Q2’24, reaching a total of 104.5 million customers globally by June 30, 2024, marking a 25% increase YoY. This reinforces Nu’s position as one of the largest and fastest-growing digital financial services platforms worldwide. Nu has added more customers in the past 12 months than the five largest Brazilian incumbents combined, according to Central Bank data.
Engagement and activity rates: Monthly Average Revenue per Active Customer (ARPAC) reached $11.2 in Q2’24. On a FX neutral basis (FXN)1 it expanded 6% sequentially, with more mature cohorts already at $25. Nu continues to develop principality among its customer base and activity rate2 increased to a new record high of 83% – the eleventh consecutive increase in this metric, demonstrating our proficiency in consistently offering a compelling value proposition to our customers.
Low-cost operating platform: Monthly Average Cost to Serve Per Active Customer remained stable and below the dollar level at $0.9, demonstrating the strong operating leverage of the business model. The company’s efficiency ratio improved 10 basis points QoQ to 32% during Q2’24, and over 340 basis points YoY, positioning Nu as one of the most efficient financial services companies globally.
Asset Quality: in Brazil, consumer credit portfolio’s 15-90 NPL ratio decreased to 4.5%, slightly more than historical seasonality. The 90+ NPL ratio increased to 7%, in line with expectations. The 70 basis point increase in 90+NPL in this quarter is simply a reflection of the 90 basis point, mostly seasonal increase in 15-90 NPL we saw last quarter.
Financial Highlights:
Net & Adjusted Income: At a Holding level, Nu continued to drive increased profitability and posted a Net Income for Q2’24 of $487 million and an annualized ROE of 28%, compared to a $225 million profit in Q2’23. Adjusted Net Income3 for Q2’24 increased to $563 million with an annualized adjusted ROE of 33%, compared to an Adjusted Net Income of $263 million in Q2’23. Nu is achieving these strong levels of profitability and efficiency, despite maintaining a considerable excess capital of $2.4 billion at the holding level and continuing to make substantial investments in future products and geographic expansion, as the company sees tremendous potential to continue building the largest consumer platform in Latin America.
Revenue: Nu’s revenues were up 65% YoY on a FX neutral basis (FXN) to a new record high of $2.8 billion. This showcases the company’s unique ability to consistently expand its active customer base while accelerating revenue growth and profitability.
Gross Profit: Nu’s gross profit reached another quarterly record high of $1.4 billion, up 88% YoY FXN while gross profit margin reached 48% from 42% in Q2’23.
Capital: Nu strengthened its position as one of the best-capitalized players in the region. Its Capital Adequacy Ratios (CARs) have very comfortable margins above regulatory minimums in the countries in which it operates, even without considering the $2.4 billion in excess cash held by Nu Holdings.
Liquidity: On June 30, 2024, Nu had an interest-earning portfolio (IEP) of $9.8 billion which rose 81% YoY FXN. The ramp up of the lending portfolio, which expanded 92% YoY FXN to $4.6 billion, and credit card receivables, which increased 39% YoY FXN to $14.3 billion were the main drivers of growth. Total deposits increased 64% YoY FXN to $25 billion, while a sustained low cost to deposit underscores Nu’s progress in leveraging the local-currency retail deposit franchises in Brazil and Mexico. Nu’s loan-to-deposit ratio was 39%, versus 40% in the previous quarter.
Net interest income: NII surged by 77% YoY FXN reaching another record high of $1.7 billion, driven by our expanding credit card and lending portfolios. The net interest margin (NIM) reached 19.8%, an increase of 30 basis points from last quarter and 150 basis points from a year ago.
Business highlights:
Performance and Growth in Brazil: In Brazil, the customer base reached 95.5 million by June 30, 2024, with an average of 1.2 million new customers monthly. Nu is the fourth-largest financial institution by number of customers in the country, according to Brazilian Central Bank data. In Brazil, Nu has become the institution with the largest number of active customers in credit operations, totalling 55.9 million customers, according to Central Bank data.
International Expansion: In Mexico, Nu’s growth remained strong, with a net-adds of 1.2 million new customers in the quarter, reaching a total of 7.8 million customers at quarter-end. The expansion validates the strategy of increasing deposit yields in the country, boosting the momentum and solidifying Nu’s leadership in the digital banking sector. In Colombia, Nu achieved a milestone this quarter, surpassing the 1 million customers, serving almost 1.3 million customers at quarter-end.
Multi-Product Platform: Nu’s core products, mainly credit cards, NuAccounts, and unsecured personal loans reaching approximately 42 million, 78 million, and 9 million active customers, respectively. The insurance product has nearly 2 million active policies, while investments are utilized by over 18 million active customers.
“Our second quarter 2024 results reaffirm the strength of our business model, efficiency in our execution, and resilience of our credit underwriting. Net income has more than doubled year over year, reaching US$ 487 million this quarter, with expanding risk adjusted margins and one of the highest ROEs in the industry at 28%. Our customer base grew to 105 million customers. The recent launch of checking accounts in Mexico and Colombia has ushered deposits of US$ 3.3 billion and US$ 220 million in those countries, respectively, and fuels our growth expectations in those operations. We believe that this business formula, propelled by exceptional talent, technology investments, and brand love will pave the way for Nu to become the largest consumer technology platform in Latin America”, said David Vélez – founder and CEO of Nubank.
__________
Financial results are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards (IFRS).
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
