Nubank reverses losses and makes a profit of US$ 142 million in the 1st quarter – 05/15/2023 – Market

Nubank, the largest digital bank in Latin America, released this Monday (12) a net profit of US$ 142 million (R$ 695 million) for the first quarter, surpassing a negative result of US$ 45.1 million in the same period last year, amid a strong expansion of its customer base in the region.

In Brazil, Nubank’s largest market, adjusted net income was US$ 200 million in the first quarter. With an adjusted return on equity (ROE) of 43%

The bank, which ended March with 79.1 million customers in Brazil, Mexico and Colombia —a growth of 33% over March 2022— had a return on equity of 37%. And the efficiency index —the lower, the better— was also at 37%, down from 47.4% at the end of 2022.

Unemployment has gone up. The index of operations overdue for more than 90 days in the quarter was 5.5%, a level classified by the bank in comments to the press as within expectations given the seasonality of the period. At the end of 2022, the index was 5.2%.

“Delinquency is well controlled”, said the chief executive and one of the founders of Nubank, David Vélez, citing the seasonal effect of the first quarter in Brazil, in which customers are pressured by tax payments and year-end debts .

Asked about the eventual impact of the banking crisis in the United States on the group, Vélez stated that “we haven’t seen any effect. The quarter was very strong, above any expectations”, said the executive. “On deposits, we haven’t seen any kind of change,” he added.

Nubank’s Basel Ratio ended the quarter at 18.7% in Brazil, above the required minimum of 10.5%, and stated that it has more than US$2 billion in surplus cash flow.

Nubank had record net revenue of US$1.6 billion, almost double the amount of a year earlier.

“This comes as a result of a compounding effect of customer growth and higher levels of customer monetization in Brazil, which alone accounted for $1.5 billion of revenue for the quarter,” the company said.

Vélez stated that Nubank continues to focus its operations in Brazil.

Pix’s advance, cannibalizing physical money, has helped the institution’s operations, which claims to hold 40% of all transactions with the modality launched by the Central Bank at the end of 2020.

In Mexico, where the group started offering current accounts at the end of last year, Nubank has opened more than 500,000 accounts so far.

“There, it is a combination of a more prepared market for neobanks and the fact that we already have a solid brand”, said the executive. At the beginning of the operation in Brazil, the same level was reached after four months, according to the digital bank.

Asked about acquisitions, Vélez mentioned that a scenario of high interest rates and reduced liquidity facilitates purchases by start-ups. “We are looking at Brazil, Mexico and Colombia, it makes sense when there is less capital available for startups. But in general, we like to grow organically”, said the executive, discarding any interest in the Mexican Banamex, which is being sold by Citi.

Regarding discussions around the possible creation of an interest cap for credit card revolving credit cards, Nubank’s financial vice-president, Guilherme Lago, stated that it is a complex discussion, but that “we have had constructive dialogue with the government … there is goodwill (between the parties) for a solution later this year”.