NU Holdings Ltd (NU)

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https://finance.yahoo.com/news/nu-holdings-ltd-reports-third-211400878.html
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Business Wire
Nu Holdings Ltd. Reports Third Quarter 2022 Financial Results
Mon, November 14, 2022 at 4:14 PM·8 min read
In this article:

SÃO PAULO, November 14, 2022--(BUSINESS WIRE)--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). The full earnings release has been made available on the Company’s Investor Relations website at www.investors.nu, as well as the details of the Earnings Conference Call Nu will hold today at 5:00pm Eastern time/7:00pm Brasília time.

"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.

Q3’22 Results Snapshot
Below are Q3’22 performance highlights of Nu Holdings Ltd.:

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Operating Highlights:

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

Business highlights:

Multi-Product Platform: Nu achieved milestones across the different products of its portfolio with credit cards, NuAccounts and Personal loans reaching approximately 32 million, 50 million and 5 million active customers, respectively. Furthermore, NuInvest reached 6 million active customers, likely positioning itself as the largest digital investments platform in Latin America. NuCripto grew to 1.3 million active customers since its full rollout in July 2022, and the base of active SMEs customers expanded to 2.3 million.

Customer Base Growth: Nu became the fifth largest financial institution in Brazil in terms of numbers of active customers, according to the Brazilian Central Bank. In terms of total customers, Nu expanded its customer base to 66.9 million, which represents 39% of the country’s adult population. Purchase volume increased 75% YoY FXN, reaching US$21.2 billion in Q3’22, already reaching a market share of approximately 12% of the total for the industry in Brazil.

International Expansion: In Mexico, our second largest market, Nu’s customer base increased to 3 million, consolidating its position as the largest issuer of net new credit cards in the country since H2’21. In Colombia, we reached 439,000 customers. Together, both Mexico and Colombia contributed with 500,000 new unique customers in the third quarter.