Nu Holdings

Thesis

Written 2026-08-23.

Nu is already the dominant bank for an enormous population that traditional banks priced out, and it is compounding at a rate that usually belongs to much smaller companies. This is the position I have least anxiety about.

The scale is the argument. 139 million customers, with about 4 million added in Q2 2026 alone: roughly 118 million in Brazil, 15.8 million in Mexico and more than 5 million in Colombia. Gross revenue of nearly $5.9bn, up 39%. Record net income of $1.1bn. Return on equity of 33% — a figure most established banks would be pleased to report at a fraction of this growth rate.

Dominance here means engagement, not sign-ups. The monthly activity rate is 83.5%, and Brazil passed 86% for the first time. More than four in five customers use it in a given month. That is a primary banking relationship rather than a dormant app, and it is the difference between a customer count and a franchise.

And the relationship deepens over time, which is where the compounding comes from. Revenue per active customer is around $17 and rising each quarter. Nu acquires cheaply, then sells credit, deposits and investment products into a base that already trusts it. Deposits stand at $45.3bn and the credit portfolio at $39.4bn. Meanwhile it is still opening new fronts — a full digital bank launched in Mexico in Q2 2026, where the underbanked opportunity looks like Brazil did several years ago.

A bank earning a 33% return on equity while growing revenue 39% in markets it already leads is not something I expect to find at a comfortable price for long.

What I am watching

I am bullish, and in a lender the risk is never the growth — it is the quality of it.

Credit is growing about twice as fast as deposits. The credit portfolio rose 37% year on year to $39.4bn, while deposits rose 18% to $45.3bn. Inside that book is $10.3bn of unsecured lending. Rapid unsecured growth in consumer credit is the single most reliable way for a bank to look excellent until abruptly it does not, and provisioning is a judgement made by the same management reporting the profit.

A credit cycle I have not seen this company through at this size. Nu has grown through a generally supportive period. Brazilian rates and unemployment are the variables that would test the book, and a 33% ROE is exactly the sort of number that compresses when they turn.

Mexico is early. It is the second growth engine and the reason the runway looks long, but 15.8 million customers is not the position Brazil represents, and a full banking licence brings costs before it brings returns.

Currency. The results are reported in dollars and earned in reais and pesos. A move in either can change what the growth looks like to me without anything changing in the business.

What would make me wrong

• Credit losses rising faster than the loan book, or provisioning being revised upward.
• Return on equity compressing materially while growth also slows.
• The monthly activity rate falling, which would say the primary relationship is weakening.
• Mexico stalling before it reaches the scale that justifies its cost.

Latest movements

• 2026-08-18 — Opened at $14.46. The first Latin-America exposure in the book, and the newest position.