Nubank Posts Record Q1 2025 Profit Amid Expansion Pressures, Shares Drop 4.6%

Nu Holdings Ltd. (NYSE: NU), Latin America’s largest digital financial platform, announced a first-quarter net income of $557.2 million on May 13, 2025, marking a 74% year-over-year surge under currency-neutral terms.

The São Paulo-based fintech achieved a 27% annualized return on equity (ROE), outpacing Brazil’s 14.75% benchmark rate and traditional rivals like Itaú Unibanco.

Despite record profitability, shares fell 4.6% to $12.53 post-announcement as ROE missed Goldman Sachs’ 28.5% forecast and margin pressures emerged.

Revenue climbed 40% to $3.2 billion, fueled by a 62% expansion in interest-earning assets and a global customer base of 118.6 million, including 104.6 million in Brazil-59% of the adult population.

Monthly active users hit 98.7 million, with an 83% engagement rate. Average revenue per customer rose 17% to $11.20, though trailing traditional banks’ $40+ averages. Costs to serve fell 12.5% quarterly to $0.70 per user, reflecting operational efficiency gains.

The credit portfolio grew 23% to R$24.1 billion ($4.23 billion), while defaults over 90 days dipped to 6.5% from Q4’s 7%. Provisions for credit losses rose 17% to R$973.5 million ($170.8 million), aligning with portfolio growth and conservative risk management.

Net interest income reached $1.8 billion, though net interest margin (NIM) slid to 17.5% due to delayed repricing of Brazilian assets and deposit growth in Mexico, where Nu holds $4.3 billion in excess capital for expansion.

Nu Holdings Q1 2025 Financial Update

Gross profit fell 3% sequentially to $1.3 billion as Brazil’s SELIC rate hikes increased funding costs. Adjusted net income hit $606.5 million, below analyst estimates of $630.5 million, partly due to a $47 million tax adjustment.

CFO Guilherme Lago attributed profitability to Brazil’s personal loan growth and operational leverage, while CEO David Vélez emphasized “disciplined boldness” in scaling Nu’s model across Mexico and Colombia, where customers grew to 11 million and 3 million, respectively.

Investors flagged concerns over short-term margin compression against a 19% annual customer growth rate. Deposits surged 48% to $31.6 billion, with funding costs at 90% of local bank rates.

Nu’s stock decline reflects skepticism about sustaining high ROE amid aggressive reinvestment, though its $0.70 cost-to-serve and 27% ROE remain industry benchmarks.

Analysts now watch for margin recovery as Mexico matures and SELIC impacts stabilize-a balance between growth and profitability defining Nu’s 2025 trajectory.