Nu Holdings, the parent company behind digital banking platform Nubank, announced Wednesday that its fourth-quarter net earnings jumped 50% compared to the same period last year, fueled by expanding customer numbers.
However, the company’s stock price fell 5.5% during after-hours trading in New York, erasing earlier gains of about 4% that occurred immediately following the earnings announcement. Market analysts expressed concerns regarding the bank’s operational expenses.
The digital banking company, which serves customers in Brazil, Mexico and Colombia while preparing for U.S. market entry, earned $894.8 million in net profit during the October through December period. This represents a significant increase from the $552.6 million recorded in the fourth quarter of 2024.
Chief Financial Officer Guilherme Lago explained to Reuters that the earnings growth stemmed from an expanded customer base, higher revenue per active user, and consistent customer service costs.
“This brings positive leverage to revenue,” Lago stated.
JPMorgan financial analysts noted that while net earnings exceeded both their projections and market forecasts, the outperformance was largely attributed to lower-than-expected tax rates. They warned this “may be the main pushback from bearish investors, even as most operational metrics look good.”
The digital bank reported quarterly revenue growth of 45%, reaching $4.86 billion. Customer numbers across all three operating markets climbed to 131 million, representing a 15% increase.
Citi analysts praised the results, calling it “a strong quarter by Nubank on top-line, with an acceleration in loan portfolio growth and net interest income.” However, they cautioned that “cost of risk and operating expenses mud the picture for Nubank.”
The company’s overall lending portfolio, consisting primarily of credit card loans, grew 40% to reach $32.7 billion. Meanwhile, the rate of loans overdue by more than 90 days decreased slightly to 6.6%, down 0.1 percentage points.
During an analyst conference call, Lago mentioned that delinquency rates typically increase during the first quarter due to “natural seasonality,” a pattern Nubank anticipates will repeat this year.
In January, Nubank obtained the first of three required regulatory approvals for entering the U.S. market within the coming year.
Chief Executive Officer David Velez acknowledged during the call that while the U.S. banking sector appears highly competitive, the company sees potential opportunities in specific market segments.
