Nubank books record $262M net income on fast-growing user base

Warren Buffett-backed Nubank reported a 44% increase in adjusted net income in the second quarter, up to $262.7 million, as the digital bank continues to expand its customer base in Latin America.

With a market value of approximately $40 billion, Nubank stands as the largest fintech venture in Brazil. It has achieved positive net income for the fourth consecutive quarter, indicating the company’s progression beyond the break-even point and its ascent toward growing profits.

“Nubank’s maintained its positive trajectory showing further decoupling from broader markets,” said CEO and co-Founder David Velez in a statement. The executive said strong customer growth was vital to generating record revenues. “In Brazil, we have almost half of the adult population as clients,” he added.

Revenue grew 60% in the three months to $1.9 billion as total purchases expanded. The company has also rolled out new products to leverage cross-selling possibilities among its growing customer base.

Almost 70 million active customers

Nubank, which made a significant New York listing in late 2021, saw its shares halve last year as global financing conditions worsened. However, the stock has rebounded strongly since the start of the year, up over 100%.

David Velez, CEO and Co-Founder of Nubank
David Velez, Co-founder at Nubank.

The digital bank reported its active customers rose to 68.8 million in the quarter, up from 52.3 million in the year-ago period. It reported $18 billion in customer deposits, of which a third generated interest income.

The company has expanded to Mexico and Colombia in recent years, although customer acquisition in those economies has yet to pick up pace.

The fintech reported 3.6 million clients in Mexico, and 700,000 in Colombia, the latest illustration of how challenging it can be for Latin American neobanks to build a customer base in a neighboring country.

Nubank pivots to profitability

Nubank pivot strategy to profitability is bearing initial results. As the tides turned for fintechs across the globe, the Brazilian neobank was no stranger to a broader push for profitability. The challenge was doing so while upholding growth.

In that regard, the online bank has gradually increased its revenue per customer, up to $9.30 from $7.80 in the year-ago period. All this while sustaining an industry-low average cost of $0.80 per customer. “Our business model continues to compound growth and profitability,” Velez said.

Still, profitability numbers have a long way to go compared to traditional banks. Large heavyweight lenders in Brazil can have as high as $40 of revenue per customer although the cost of serving them is also considerably higher.

At the core of this strategy comes credit. The neobank has strongly focused on initiatives such as payroll lending in Brazil this year. The loan portfolio peaked higher in the quarter. At almost $15 billion, it expanded its loans by $2 billion in the quarter, 15% higher than in March.

Non-performing loans rose by 40 basis points to 5.9% by the end of the quarter. High interest rates in Brazil have led to rising delinquency levels across the board for Brazilian lenders. As a result, many have taken a more cautious approach to the segment.

However, conditions could improve as the central bank began easing rates recently.

  • David Feliba

    David is a Latin American journalist. He reports regularly on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times, and Americas Quarterly.

    He has worked for S&P Global Market Intelligence as a LatAm financial reporter and has built expertise on fintech and market trends in the region.

    He lives in Buenos Aires.