Latin America Nu Holdings Ltd. Reports Third Quarter 2022 Financial Results
Nu Holdings Ltd. (NYSE: NU | B3: NUBR33), (“Nu” or the
“Company”), one of the world’s largest digital financial services platforms,
released today its Third Quarter 2022 financial results. Financial results are
expressed in U.S. dollars and are presented in accordance with International
Financial Reporting Standards (IFRS).
Source: Business Wire
“Nu reported a net profit of $7.8 million in the third quarter, breaking even at the holding level with record revenues of $1.3 billion and year-on-year growth of 171%. Our customer base grew to over 70 million with a record high activity rate of 82% and a leading customer satisfaction score in our industry. We continue to launch and cross sell best-in-class products, while keeping a low-cost tech platform with low cost of funding and a widening profit margin. While we saw increased delinquency in the quarter, consistent with the market trend, our risk-adjusted margins expanded by 100bps, showing we are being able to price increased risk appropriately. Nu is well capitalized and is positioned to deliver growth at scale in the long term,” said David Vélez, founder and CEO.
Customer
growth: Nu added 5.1 million customers in the quarter reaching a total of 70.4
million customers in Brazil, Mexico and Colombia. This represents a 46% growth
year-over-year (YoY) and positions Nu as one of the largest and fastest-growing
digital financial services platforms worldwide, as well as the sixth largest
financial institution in Latin America by number of active customers.
Engagement
and activity rates: Monthly Average Revenue per Active Customer (ARPAC)
expanded to $7.9, growing by 61% on a FX neutral basis (FXN)1, reflecting the
maturation of Nu’s customer cohorts, increasing customers’ activity rate and
the rollout of new financial and non-financial products. Activity rate2 hit a
new historical high mark growing to 82%. Nu has become the primary banking
relationship for over 55% of the monthly active customers that have been with
Nu for over a year.
Low-cost
operating platform: Staying consistently stable throughout the quarters,
Monthly Average Cost to Serve Per Active Customer remained at $0.8,
underscoring the Company's ability to scale its platform leveraging sustainable
cost advantages.
Asset
Quality: 15-90 NPL ratio at 4.2% while 90+NPL reached 4.7%. These come as the
result of two main factors: first, the deceleration of personal loan
origination to increase credit resilience, and the subsequent mathematical increase
on NPL ratio as the volume of originations decreases and therefore the
denominator in the equation. Second, the general macro-trend deterioration
observed across financial institutions in the region.
Financial Highlights:
Net
& Adjusted Income: Nu reported breakeven at a holding level, posting a Net
Income of $7.8 million in Q3’22 and Adjusted Net Income3 of $63.1 million.
These results reflect the sustained increase in the number of active customers
and higher consumer engagement, which bolstered the revenue growth, combined
with operating leverage and scale benefits of our low-cost platform.
Revenue:
we delivered another record quarter with $1.3 billion in revenues, increasing
171% YoY FXN, as Nu continues to effectively upsell and cross sell its expanding
portfolio of products across different segments.
Gross
Profit: Nu reached a record high gross profit in Q3’22 with $427.0 million,
increasing 90% YoY FXN. On a sequential basis, the company’s efforts to
continuously reduce funding costs positively impacted gross profit margin,
which expanded 2pp to 33%, after four quarters of compression.
Capital:
Nu reinforces its positioning as one of the best capitalized players in the
region with its adjusted capital reaching 4x the minimum regulatory capital in
the countries in which it operates.
Liquidity:
Nu maintains significant excess liquidity with a loan-to-deposit ratio of 25%.
On September 30, 2022, Nu had an interest-earning portfolio of $3.5 billion,
while total deposits were four times this amount at $14.0 billion.