NU Q1 Earnings Call Highlights
NU (NYSE:NU) executives said the digital banking company delivered another quarter of customer growth, revenue expansion and operating leverage, while emphasizing that higher credit provisions in the first quarter reflected seasonality, portfolio growth and product mix rather than deterioration in underlying asset quality.
Founder, Chief Executive Officer and Chairman David Vélez said Nu ended the first quarter of 2026 with more than 135 million customers, including more than 115 million in Brazil, where he said the company is now the largest private financial institution by customer base. In Mexico, Nu crossed 15 million customers, becoming the third-largest financial institution in that market, while Colombia approached 5 million customers.
Vélez said the company’s monthly activity rate held at 83% despite typical first-quarter seasonality, and that Brazil is approaching 100 million monthly active customers. Average revenue per active customer, or ARPAC, reached about $16, continuing what management described as sequential expansion every quarter since the company began reporting the metric. Revenue reached $5 billion for the first time, according to Vélez.
“For several years now, our results have followed the same earnings-generating formula: a growing, more engaged customer base, monetized at higher ARPAC on a scalable low-cost platform translating into outsized earnings,” Vélez said.
Credit Portfolio Expands as Management Addresses Provisioning
Chief Financial Officer Guilherme Lago said Nu’s consolidated credit portfolio ended the quarter at $37.2 billion, up 40% year over year on an FX-neutral basis and 7% from the prior quarter. Credit cards grew 36% year over year, unsecured lending increased 53% to reach a $10 billion portfolio, and secured lending grew 38%, maintaining an 8% mix of the total book.
Total deposits reached $42.4 billion, up 22% year over year on an FX-neutral basis. Lago said deposits in Brazil declined modestly due to seasonality, Colombia continued growing, and Mexico saw outflows tied to a sharper-than-expected reversal of seasonal year-end inflows and a deliberate effort to optimize funding costs amid low loan-to-deposit ratios.
Net interest income reached a record $3.25 billion, up 12% quarter over quarter on an FX-neutral basis. Nu’s net interest margin rose to 21.1%, while risk-adjusted NIM declined to 9.5% from 10.5% as credit loss allowance increased.
Lago said credit loss allowance closed at $1.79 billion for the quarter, up 33% sequentially on an FX-neutral basis. He attributed the increase to three factors: seasonality, portfolio growth and mix. Nu’s 15- to 90-day nonperforming loan ratio rose to 5.0% from 4.11% at year-end, which Lago said was consistent with seasonal patterns seen in prior years. Late-stage delinquencies, or 90-plus day NPLs, declined to 6.5% from 6.6% in the fourth quarter of 2025.
“There was no sign of credit portfolio degradation,” Lago said, adding that growth and seasonality accounted for 86% of the increase in expected credit loss allowance. He said Nu manages credit to maximize long-term resilient risk-adjusted returns rather than minimize NPLs in any single quarter.
Efficiency Ratio Falls, but CFO Warns Against Extrapolating
Nu reported net income of $871 million, which Lago described as the company’s highest ever for a first quarter and up 41% year over year on an FX-neutral basis. Gross profit reached $1.88 billion, up 27% year over year.
The company’s efficiency ratio improved to 17.6% on a reported basis and 16.6% on what management called a core basis, excluding return-to-office investments, international expansion and AI infrastructure. Lago said the first-quarter efficiency ratio was better than expected, but cautioned that it should not be viewed as a run rate.
According to Lago, about one-third of the efficiency outperformance reflected structural gains, including AI-driven improvements in operations and collections, software platform consolidation and hiring discipline. The remaining two-thirds reflected timing items, including real estate and marketing phasing, that are expected to normalize in coming quarters.
For full-year 2026, Lago said Nu expects its consolidated efficiency ratio to be approximately 20%, broadly in line with where it ended 2025, while its core efficiency ratio continues trending lower.
AI Transformation and International Expansion Remain Priorities
Vélez said AI is a core priority for Nu and described the company as rebuilding banking around AI rather than simply adding AI tools to existing processes. He said the first phase of the company’s AI transformation, AI assistance, is “largely complete,” with close to 100% utilization of AI tools among employees.
He cited engineering throughput up more than 50% year over year, weekly token consumption nearly 10 times higher than at the start of the year and testing cycles 90% faster. Vélez said AI-native customer experiences are expected to reach customers this year, and that Nu’s proprietary foundation models, called NuFormer, are already in production for credit card decisioning in Brazil and Mexico and unsecured lending in Brazil.
On international expansion, Vélez said Nu remains focused on deepening Brazil, scaling Mexico and Colombia, and pursuing U.S. expansion at a measured pace. He described the U.S. effort as a “call option,” with limited upfront capital and resources.
Vélez said the maximum operating expense headwind expected from U.S. investment in each of 2026 and 2027 is less than 100 basis points on the company’s consolidated efficiency ratio and is included within the roughly 20% efficiency ratio level discussed by Lago. Additional investment, he said, would depend on evidence of product-market fit and a credible path to profitable scale.
Executives Highlight SME, Payroll and Affluent Opportunities
During the question-and-answer session, Morgan Stanley analyst Jorge Kuri asked about Nu’s small and medium-sized business offering in Brazil. Vélez said the company has built what he described as the largest SME base in Brazil, with more than 5 million SME customers, effectively with zero customer acquisition cost through cross-selling to existing customers. He said Nu has surpassed 2 million credit cards for small businesses and recently announced new secured and unsecured credit lines.
Several analysts also asked about secured lending and private payroll loans in Brazil. Vélez said Nu continues to see growth opportunities across both unsecured and secured products, but has taken a slower approach to private payroll by design. He said the product began with more risk than some market participants anticipated, citing 10% to 15% first-payment default levels as high for a supposedly secured product. Lago added that private payroll could give Nu access to data historically available to incumbent banks through corporate payroll relationships, potentially improving acquisition, underwriting and cross-selling.
Goldman Sachs analyst Tito Labarta asked about Nu’s progress with higher-income customers. Lago said the company has seen traction in both its “super core” and high-income segments, with two out of every five high-income Brazilians now Nu customers and that customer base growing about 24% year over year. Vélez added that transaction volume growth in the high-income and Ultravioleta segments is among the company’s fastest, growing above 40%.
Vélez closed by saying Nu still sees significant room for growth in Brazil despite its scale. He noted that while Nu has more than 110 million customers in the country, its share of the profit pool stands at roughly 7%, which he described as evidence that it remains early in the company’s expansion.
About NU (NYSE:NU)
Nu Holdings Ltd (NYSE: NU), commonly known by its consumer brand Nubank, is a Latin American financial technology company that provides digital banking and financial services through a mobile-first platform. The company’s core offerings include no-fee digital checking accounts, credit cards, personal loans, payments and transfers, and a range of savings and investment products. Nubank emphasizes a streamlined customer experience delivered via its smartphone app, combined with data-driven underwriting and automated customer service tools.
Founded in 2013 by David Vélez, Cristina Junqueira and Edward Wible, Nu grew rapidly by targeting underbanked and digitally savvy consumers in Latin America with low-fee, transparent products.
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