Nubank’s latest financial results underscore what its major investors Warren Buffett and Cathie Wood seem to have long known: the unicorn fintech is well on track to consolidating its position as the world’s largest digital bank.
In the latest quarter, the firm reported an adjusted net profit of $592.2 million, thanks to increasing geographical reach and improving margins.
The company’s return on equity (ROE) increased from 28% to 30% on a global basis. In its home town, Brazil, ROE surpassed the 50% mark.
“Our third quarter 2024 results highlight the strength of our business model, demonstrating revenue growth and profitability,” David Vélez, founder and CEO of Nubank, said.
Also key was Nubank’s focus on high-quality lending. Against the backdrop of a shifting Latin American interest rate environment, it was able to leverage its capabilities to notch better credit spreads, which is also reflected in the improving engagement in cross-selling efforts.
This led to a drop in credit card portfolio yields, reflecting an improved risk profile on the customer’s side. This was partly due to a continuing rise in secured loans, particularly in Brazil.
The online bank also reported a 23% increase in customers, reaching a total of 109.7 million globally and surpassing 217-year-old Banco do Brasil.
Moreover, the the fintech’s activation rate, which measures the number of clients using the bank over the last month, improved to 83.6%, marking the twelfth consecutive quarter of positive change.
Nubank also significantly improved the metric that tracks how many customers use the bank as their primary financial institution by transferring over 50% of their net monthly income to it.
The Sequoia Capital-backed bank now looks to leverage its thriving business model with further geographic expansion. “Our expansion into Mexico and Colombia continues to deliver impressive results, with nearly 9 million customers in Mexico and over 2 million in Colombia,” says Vélez.
The next step is to consolidate its position as a global leader in the field. “As we advance in our execution, we are preparing to establish Nu as the leading digital services platform in the world, going beyond financial services,” Vélez concluded.
