Nubank Exceeds Expectations With $7.8M Q3 Net Profit As Loan Portfolio Swells

The neobank, which has notched up more than 70.4 million clients in Latin America, saw defaults rise during third quarter

Brazilian fintech Nubank released its quarterly results on Monday, and which surpassed analysts’ expectations, with the neobank’s shares rising 7.5% in after-market trading.
November 14, 2022 | 06:05 PM

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Bloomberg Línea — Brazilian fintech Nubank released its quarterly results on Monday, and which surpassed analysts’ expectations, with the neobank’s shares rising 7.5% in after-market trading.

Founder and CEO David Vélez’s bank posted third-quarter net profits of $7.8 million, and gross revenues of $1.31 billion.

Nubank, which surpassed 70.4 million customers in Latin America, said it saw its default rate rise to 4.7% from 4.1% in Q3 2021, and total deposits of $14 billion for the quarter ended September 30.

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Adjusted net revenues increased to $63.1 million.

On Monday’s investor call, Vélez said the bank has already lived through a number of economic and political scenarios in Brazil, and operated in the midst of an impeachment trial in the country, as well as shifts to left-wing and right-wing governments in Latin America.

“It’s a slightly more volatile market than 2021, but technology companies will build the opportunities and the future of financial services,” Vélez said, adding that the bank is growing revenues and will reinvest earnings to spur long-term growth.

Nubank’s loan portfolio grew 83% in third quarter to $9.7 billion. The bank’s CFO Guilherme Lago said during the conference call that personal loan originations are “closely tied to the outlook for the Brazilian economy”.

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He also said Nubank has “built up healthy unit economics across all areas”. “We remain confident in expanding our portfolio. The only bottleneck is our own appetite for credit risk,” he said.

Even with good earnings results, Nubank said it will expand staff at a slower pace than in other quarters, and will launch savings accounts in Mexico.

The bank said that, in terms of market growth, Mexico and Colombia are growing faster than Brazil.

Nubank said its earnings were driven mainly by rapid growth in its customer base, increased revenue per customer, coupled with the low-cost platform. Average revenue per active customer increased to $7.90 in the third quarter from $7.80 in second quarter, and Nubank expects higher revenue per customer as more products are launched and it increase its market share.