Nu Holdings Ltd. Q4 FY2024 earnings call

Customer Growth and Geographies

• Served over 114 million customers in 2024 with 20.4 million net additions. Active customer base grew 22% YOY to nearly 95 million.
• Brazil added over 1 million customers per month, serving 58% of the population and being the third-largest financial institution in terms of customers. Mexico surpassed 10 million customers, and Colombia made progress.

Deposit and Interest-Earning Portfolio

• Total deposits grew 55% FX Neutral to $28.9 billion, with strengthening in Mexico and Colombia.
• Interest-earning portfolio expanded 75% to $11.2 billion FX Neutral.

Revenues and Profitability

• Revenues grew 58% YOY FX Neutral to $11.5 billion in 2024, driven by ARPAC growth of 23% YOY FX Neutral to $10.7.
• Efficiency ratio ended 2024 at 29.9%, and net income nearly doubled from 2023 to close to $2 billion with an annualized ROE of 28%.

Strategic Priorities

• Mexico: Reached 10 million customers, deposits up 438% to $4.5 billion, credit card base up 70%, and expanded cash-in/out access to over 30,000 points.
• Brazil: Secured lending portfolio grew 615% YOY to $1.4 billion, Ultravioleta customers up 132%, and Money Platform developments including NuMarketplace, NuTravel, and NuCel.

Ecosystem Expansion

• Launched NuCel, NuMarketplace, and NuTravel, expanding the addressable market and strengthening the ecosystem.

Nu Holdings saw significant growth in 2024. They served over 114 million customers with 20.4 million net additions. Active customer base grew 22% YOY to nearly 95 million. Total deposits grew 55% FX Neutral to $28.9 billion, and the interest-earning portfolio expanded 75% to $11.2 billion FX Neutral. Revenues grew 58% YOY FX Neutral to $11.5 billion, with ARPAC up 23% YOY FX Neutral to $10.7. The efficiency ratio ended 2024 at 29.9%, and net income almost doubled from 2023 to close to $2 billion with an annualized ROE of 28%.

2025 Priorities

• Act 1: Focus on building the largest retail banking franchise in Latin America, with continued focus on Brazil, Mexico, and Colombia.
• Act 2: Expand beyond financial services, leveraging the customer base and data to enter new verticals.
• Act 3: Develop a global AI-driven digital banking model, with investments in technology to support international expansion in the coming years. Continued investment in technology and automation to support growth in existing and new markets.

• Macro and Credit Risks: Concerns about potential adverse selection in a challenging macroeconomic environment, including inflation and interest rate impacts.
• Product Risks: Deliberate deceleration of PIX financing eligibility expansions in 2024 to monitor performance and second-order effects on customer engagement and asset quality.

Q: Could you please clarify what not expanding PIX in the short-term means?

A: Lago explained that it means not growing PIX financing as a percentage of the overall portfolio to address second-order impacts on NPS, churn, and engagement, while still seeing strong profitability in PIX products.

Q: How do the different moving parts impact risk-adjusted NIM?

A: Lago explained that factors like FX, drop in yields in credit portfolio, and growing deposits in Mexico and Colombia contributed to the 70 basis point drop in NIM, with FX accounting for ~44-45% of the contraction.

Q: Can Nu achieve the same outperformance in unsecured personal loans as in credit cards?

A: Youssef stated that the same credit underwriting dynamics apply to unsecured personal loans, with similar risk assessment and growth potential as credit cards.

Q: What's the growth strategy for unsecured personal loans in Brazil?

A: Jag explained that growth is from increasing mix of loans to existing customers, expanding to new segments like high-income and small businesses, and incrementally increasing duration while maintaining credit discipline.

Q: What are the plans for international expansion and associated costs?

A: David explained that Nu is investing in technology and infrastructure for internationalization, with a careful approach, and current investments in internationalization are a small percentage of capacity, with over 90% focus on Act 1 markets.