Nu reported its financial results for Q4’22 and full year 2022, posting Net Income at a holding level for the second consecutive quarter, excluding the one-time non-cash effect of the CSA termination announced last November. 

In this issue of our monthly digest, you will find more details about the results, including how Nu maintained accelerated growth, gained share in products and markets, kept delinquency in check through superior credit underwriting, and improved operating leverage. 

Also featured: Nu is now the third largest lender in Brazil (considering loans above R$ 200), an extra layer of safety for our customers ahead of Carnaval, new investment options, and more.

Nu reported Net Income at a holding level for the second consecutive quarter, achieving $58 million in Q4’22, excluding the anticipated one-time non-cash effects of the CSA termination announced last November. 

The company’s ability to deliver profitability is underpinned by its consistent and scalable expansion – having reached around 75 million customers globally and another historical mark for activity rate, at 82% –, while maintaining one of the most cost-efficient platforms in the market. 

“In Brazil specifically, we saw net income grow to $138 million in the last quarter, with an annualized ROE of 35% (40% annualized adjusted) – among the highest in the industry, providing evidence for the profit potential of our business model”, stated David Vélez, founder and CEO. 

We also kept delinquency in check, a result explained firstly by better credit performance from our loan portfolio in response to management actions adopted in Q2’22, and usual positive seasonality in Q4. We continue to outperform the industry on a like-for-like basis.

Internationally, Nu keeps delivering fast-paced expansion. Nu Mexico registered a 129% growth YoY in its customer base. In Colombia, Nu delivered its strongest growth in relative terms and now accounts for 38% of the new credit cards in the market in 2022, as per the latest available information.

Highlights:

• Net Income | Q4’22: $58 million* 
• Global revenues | Q4’22: $1.45 billion | Full year 2022: $4.8 billion (168% annual expansion YoY FXN)
  • Brazil revenues | FY2022: $4.5 billion (93% of total revenues)
     
• Adjusted Net Income in Brazil | Q4’22: $158 million | FY2022: $282 million (from $50 million in 2021) 
• Adjusted Annualized Return on equity (ROE) in Brazil | Q4’22: 40% | FY2022: 23%
• Adjusted capital position: $3.8 billion 
• Consumer finance asset quality | Q4’22: 3.7% 15-90 NPL ratio (50 points-base drop) | 5.2% 90+NPL
   
• Customers (total): 74.6 million 
  • 4.2MM added in Q4’22 | 20.7MM added in FY2022
  • Total customers Brazil: 70.9MM (2.5MM SMEs) | Mexico: 3.2MM | Colombia: 565,000
• Primary banking relationship for over 58% of the monthly active customers who have been with Nu for over a year
• Monthly Average Revenue per Active Customer (ARPAC): $8.2, while mature cohorts already reach ~$23

*Excluding the one-time non-cash effects of the CSA termination.

Growing in lending. Nubank is now the third largest lender in Brazil in number of customers with loans above R$ 200, as well as the top lender among fintechs, according to Brazilian Central Bank (BCB) data analyzed by UBS BB. Our credit penetration (clients with loans over total clients) is 53%, 38pp higher than that of the second-largest fintech, and we registered the highest net growth in number of overall customers in Brazil during Q4’22. In 2023, Nubank aims to further expand its lending book, both secure and unsecured. 

Awards and recognition. Trust and admiration towards our brand, as well as our innovation, were recognized in multiple awards throughout the past month. 

• #1 among financial companies in the trust and admiration indicator in Caliber's index for the second consecutive quarter, being the only financial institution in the top 10 of the overall ranking. 
• #1 platform in the category Quality of Service – Realization of FGV’s Best Bank and Investment Platform of 2022. 
• Placed among the Top 500 Banking Brands 2023, by The Banker.
• Winner of LatinFinance's 2022 Deals of the Year Award in the category IPO of the Year.
• #1 CEO to watch in 2023 by Fintech Magazine: David Vélez. 

Safety. Modo Rua, an innovative Nubank feature that limits transactions in the app when the customer leaves their house, is now available to all Nubank clients in Brazil. The rollout comes in time for Carnaval, offering an extra layer of protection for customers to enjoy the street parties – which normally register increases in mobile thefts and fraud. Anitta, an international artist and Nubank’s brand ambassador, is promoting Modo Rua and our other safety features in her Carnaval rehearsal concerts to thousands of fans across Brazil.

Investments. Customers can now invest in Tesouro Direto, a Brazilian fixed-income investment program in government bonds. There are multiple options available for investors according to their profile, with investments starting at R$ 30 and with a simple and clear in-app flow.

Car insurance. Nubank is reducing bureaucracy and costs in new territory with the launch of car insurance (Nubank Auto). Customers in the city of Curitiba will be the first to test the product – a practical, reliable, and bureaucracy-free option that is customizable to fit the needs of each individual client. The new product complements our fast-growing insurance portfolio, currently composed of Nubank Vida (life) and Nubank Celular Seguro (mobile phone). Two years after the official launch of its first insurance product, Nubank now has around 1 million insurance customers.

• “The digital bank model should generate more profit than the traditional industry. Our operational cost is 85% lower, so profit should be higher. We didn’t have a way to prove that – until now”, said David to Exame about Nu’s financial results, with the second consecutive quarter posing net income at a holding level.
   
• Media outlets in Brazil and internationally highlighted Nu’s income beating market expectations, ROE higher than the industry incumbents, and growth in customer base. Read more in Reuters (English), Brazil Journal (Portuguese), and Forbes Mexico (Spanish).
   
• David talked to Brazil Journal in late January about Nubank’s performance and strong business fundamentals, reinforcing the growth opportunities for the years to come: “To stop growing would be a big strategic mistake for Nubank.”
   
• With over 70 million customers in Brazil, Nu is the third largest lender in the country – a key point for customer monetization, shows Estadão.
   
• A recent report by Goldman Sachs highlights Nubank’s opportunities for growth in personal loans, shows Valor.
   
• At a time with a high Selic rate in Brazil, Nubank makes Tesouro Direto available in its app, leveraging the opportunity to offer returns on fixed income for investors, Estadão points out.
   
• Folha de S.Paulo used Nubank’s Modo Rua as an example of how to add extra layers of protection against fraud and theft during Carnaval celebrations.
   
• “Auto insurance in Brazil is bureaucratic and expensive. This leads to both poor customer experiences for insured customers and low accessibility”, states Burke Deutsch, general manager of Nubank’s insurance area. He contrasts this bad experience with what Nu offers in the recently-launched Nubank Auto in an article by Valor.

(Articles in this section may be subject to a paywall and available to subscribers only, depending on the news outlet.)

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