Operating Highlights:
¦ Customer growth: Nu added 4.5 million customers in Q1’23 and 19.5 million year-over-year (YoY), reaching a total of 79.1 million customers globally. This represents a 33% growth YoY, which underscores Nu's position as one of the largest and fastest-growing digital financial services platforms worldwide and the fifth-largest financial institution in Latin America by number of active customers.
¦ Engagement and activity rates: Monthly Average Revenue per Active Customer (ARPAC) increased to $8.6, expanding 30% YoY on FX neutral basis (FXN)1. This was the result of a higher number of active customers and primary banking relationship customers (PBA), which consumed a larger and more profitable set of financial products, driving record-high revenues. Nu has become the primary banking relationship for over 57% of the monthly active customers that have been with Nu for over a year. Activity rate2 hit 82.1%, striking the ninth consecutive quarterly increase.
¦ Low-cost operating platform: Monthly Average Cost to Serve Per Active Customer remains below the dollar level at $0.8, underscoring the Company’s ability to scale its platform by leveraging sustainable cost advantages. The company’s efficiency ratio, which reflects Nu’s operating leverage, has reached an all-time low at 39%, which would position Nu as one of the most efficient players in Latin America.
¦ Asset Quality: Nu’s 15-90 NPL ratio reached 4.4%, remaining 10 basis points lower than the historical trend, as traditionally this indicator has increased by 80 basis points in the first quarter of each year. Delinquency in the period was also aided by improved performance in the personal loan portfolio. The 90+ NPL ratio increased to 5.5%, in line with the expected stacking behavior of the buckets. Much like in other quarters,
Financial Highlights:
¦ Net & Adjusted Income: At a Holding level, Nu posted a Profit of $141.8 million, compared to a $45.1 Loss in Q1’22, delivering another quarter of recurring Net Income. Adjusted Net Income3, reached $182.4 million compared to an Adjusted Net Income of $10.1 million in Q1’22. In Brazil specifically, Net Income grew to $171 million in the last quarter with an annualized ROE of 37%, one of the highest in the industry. Adjusted Net Income in Brazil grew to $200 million, with an Adjusted ROE of 43%.
¦ Revenue: Nu posted $1.6 billion in revenues, another all-time record high, which nearly doubles what the company posted in Q1’22, on a FX-neutral basis. This comes as a result of the compounding effect of customer growth and higher levels of customer monetization in Brazil, which alone responded to $1.5 billion of the quarter’s revenues.
¦ Gross Profit: Nu’s Q1’23 gross profit expanded to $650.9 million, with a 124% increase YoY FX neutral. Gross profit margin expanded to 40% from 34% in Q1’2022, reaching its highest level since 2021 and reinforcing Nu’s operational leverage capacity.
¦ Capital: Nu strengthened its position as one of the best-capitalized players in the region with a Basel Index in Brazil of 18.7%, well above the minimum required of 10.5%. In addition, Nu Holdings has $2.4 billion in excess cash.
¦ Liquidity: On March 31st, 2022, Nu had an interest-earning portfolio of $5.2 billion, while total deposits were three times this amount at $15.8 billion. Nu continues optimizing the use of deposits quarter after quarter, as reflected in its 33% loan-to-deposit ratio. The rise in the interest-earning portfolio reflects the ramp-up of personal loans and credit card receivables, as Nu continues to pursue the strategy of increasing the share of non-revolving credit card loans that earn interest, and given the improvement of the performance of personal loan cohorts over the last months.
Business highlights:
¦ Performance and Growth in Brazil: The profitability of the Brazilian operation is accelerating with revenues reaching $1.5 billion in Q1’23, Net Income growing to $171 million, and annualized ROE reaching 37%. Nu’s low-cost business model has consistently demonstrated massive operating leverage, with a best-in-class efficiency ratio reaching 37% this quarter in the country. Fueling this position is the continued growth of the customer base (75.3 million, 31% YoY growth), a monthly cost to serve flat at less than $1, and ARPAC at $ 8.4 in Brazil–with more mature client cohorts already averaging above $ 20. The company has a large runway ahead as it grows its share of market in different verticals (including new secured credit products) while setting efficiency and profitability records in the industry.
¦ International Expansion: In Mexico, Nu’s customer base grew 52% YoY to 3.2 million, and in Colombia, to 635,000 customers, which represents a 200% increase YoY. The growth trajectory in both countries will likely accelerate with the launch of the savings account product on the local markets. In Mexico, Cuenta Nu has already over 500,000 customers less than a week after being officially publicly launched.
¦ Multi-Product Platform: Nu keeps expanding its products portfolio with credit cards, NuAccounts and Personal loans reaching approximately 35 million, 56 million, and 6 million active customers, respectively. Insurance reached over 1 million active policies while NuInvest reached over 9 million active customers, likely positioning itself as the largest digital investments platform in Latin America. NuCripto grew to 1.4 million customers since its full rollout in July 2022, and the base of SMEs customers expanded 69% YoY to 2.7 million.
