Nubank reaches 44% of Brazil’s adult population
The expansion of the customer base combined with the company’s successful cross-selling and up-selling strategies have driven strong profitability in the country while demonstrating the growth potential that still lies ahead
Mar 16 , 2023
São Paulo, Brazil, March 14, 2023 – Nu Holdings Ltd., one of the world’s largest digital financial services platforms, released last February 14 its Fourth Quarter & Full Year 2022 financial results and presented separately the results of its Brazilian operation.
Brazil, the company’s first market, is the largest and most profitable operation for Nu, with 70.9 million customers (44% of the country’s adult population). The Brazilian operation accounted for 93% ($4.5 billion) of the total revenues in 2022, while Adjusted Net Income in FY’22 grew to $282 million, from $50 million in FY’21. In Q4’22, Adjusted Annualized Return on Equity (ROE) reached 40% – among the highest in the industry.
“The profitability of our operations in Brazil has reached an inflection point and already positions us among one of the financial institutions with the highest return on capital in the country. But we believe we are still in the early stages of the development of our model, with significant upside in terms of both top-line growth and operating leverage”, said David Vélez, founder and CEO.
Growing engagement rates demonstrate the growth potential that still lies ahead, as expansion in the country will progressively pivot from customer acquisition into further customer monetization. Having launched over 25 products and features throughout last year, Nu was able to increase up-sell and cross-sell in the country.
“The pace at which we develop and launch new products has accelerated over time, and our product portfolio is well positioned to deliver multiple years of strong growth. While our Digital Account and Credit Cards products have just reached the inflection points of their growth stages with 52.5 million and 30.4 million active customers in Brazil respectively, the rest of our products are at earlier stages of their life cycles. We envision great potential in expanding with disruptive products that further strengthen our relationship with our customers,” said Livia Chanes, Country Manager of Nu Brazil.
Some of the products and features that have already been attracting a larger base are Investments, with more than 7 million active customers (likely positioning Nu as the largest digital investments platform in Latin America), and Insurance, which reached around 1 million active policies at the end of the year and keeps expanding, most recently with Nubank Auto.
The SME base, another growing cohort, expanded 79% YoY to 2.5 million at the end of 2022. In the past year, Nu made it possible for business owners to open SME accounts without having a prior banking relationship with Nu as an individual – opening the doors for thousands of entrepreneurs.
Currently the fifth largest financial institution in number of active customers in Brazil, Nubank has ambitious plans for expansion in 2023, in the country and internationally. One of the priorities is increasing market share across different product verticals, with upmarket at the forefront.
Credit (both secured and unsecured) will also be a top priority. In Q4’22, consumer finance 90+NPL reached 5.2%, and 15-90 NPL ratio dropped 50 points-base to 3.7% – an improvement explained firstly by better credit performance from Nu’s loan portfolio in response to management actions adopted in Q2, and usual positive seasonality in Q4. Nu continues to outperform the industry on a like-for-like basis, across different income bands, and with an even bigger comparative advantage for lower income.
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