Q3 2026 earnings call, November 12, 2026
Nu Holdings reported record third-quarter net income of $1.1 billion, up 31% year-over-year on an FX-neutral basis, with a return on equity of 32%. Gross revenue reached a record $6.3 billion, up 37%, and gross profit rose 35% to $2.6 billion. The quarter also carried some visible blemishes in credit: the 90-plus-day delinquency ratio rose to 7.3% from 6.9%, and a one-time charge tied to a counterparty failure cut risk-adjusted net interest margin by 63 basis points. Management attributed the delinquency increase to portfolio mix and deliberate risk expansion rather than to credit deterioration.
Credit Quality: Higher Headline NPLs, Explained by Mix and Intentional Risk-Taking
The 15- to 90-day delinquency ratio was 4.9% versus 4.8% in the prior quarter, while the 90-plus ratio increased from 6.9% to 7.3%. CFO Rob Livingston said the shift reflects a structural change in the book. Interest-earning balances reached 61% of the total portfolio, up from 59% last quarter and 44% three years ago. Because delinquency is concentrated in interest-earning balances rather than in card purchases paid in full each month, Livingston said delinquency measured over the total portfolio "naturally increases even without a deterioration in underlying credit performance."
Measured against the interest-earning portfolio, the 15- to 90-day ratio improved to 8.0% from 8.2%, while the 90-plus ratio rose to 12.1% from 11.6%. Livingston said both remain below their levels of three years ago despite credit having been extended to more customers. In the 15- to 90-day bridge, seasonality reduced the ratio by 9 basis points, while 13 basis points came from intentional risk expansion, which Livingston called "a deliberate trade-off reflected in the risk-adjusted NIM expansion."
The allowance rose from $6.6 billion to $7.1 billion, with portfolio growth contributing $332 million, as IFRS 9 requires expected losses to be recognized at origination, and intentional risk expansion adding $135 million. The allowance build equaled 102% of new 15-plus-day delinquency formation, in line with a year ago. Coverage of the 90-plus balance fell to 234% from 244% last quarter, which Livingston said is within the range of the past three years. He also noted that while industry credit card delinquency benchmarks in Brazil have deteriorated across three income segments, Nu's 90-plus delinquency has remained relatively stable.
Risk-Adjusted NIM: Reported Dip, Stronger Recurring Trend
Net interest income rose to $3.9 billion from $3.7 billion, with NIM at 22.5%. Cost of credit was $1.8 billion versus $1.7 billion in the second quarter. Reported risk-adjusted NIM was 12.1%, compared with 12.4% in Q2. Two one-offs distorted the comparison. In Q2, the Desenrola debt renegotiation program added 55 basis points, and its contribution in Q3 was immaterial. In Q3, the company took a one-time charge on receivables acquired from payment institutions that Brazil's Central Bank subsequently placed under extrajudicial liquidation, reducing risk-adjusted NIM by 63 basis points. Livingston said this was unrelated to the performance of customer loans. Excluding these items, recurring risk-adjusted NIM expanded from 11.9% to 12.7%. Together the nonrecurring items reduced net income by about $53 million.
On sustainability, Livingston said the company expects risk-adjusted NIM to "keep its underlying economic strength into Q4" and sees "no reason why that would be shifting." He declined to give 2027 guidance, noting that Q1 carries seasonally higher cost of risk and that faster portfolio growth would bring more upfront provisions.
Lending Accelerates Into a Slowing Brazilian Market
The consolidated credit portfolio reached $41.6 billion, up 33% year-over-year and 6% sequentially. Credit cards grew 32% to $27.2 billion, unsecured lending grew 39% to $11.0 billion, and secured lending rose 23% to $3.4 billion. Unsecured lending grew 7.5% sequentially. Brazil unsecured personal loan originations hit a record BRL 22.1 billion, up 28%, with September the strongest month ever. CEO David Velez said that "in an environment where the market had to decelerate, our disciplined credit methodology gave us the conviction to accelerate in a number of areas."
Private payroll lending is the newest lever. Nu did not launch alongside other banks last year because of credit and operational risk concerns, but Livingston said the company now has enough performance data and the market has improved enough to accelerate. The product is "doubling quarter-over-quarter off of a small base," and he sees no reason Nu should not be "one of the leading, if not the leading private payroll providers at some point in the next year." He said Nu has seen no negative impact on its existing portfolio from subordination to payroll loans at other banks. Secured lending also benefited from record originations, which offset the headwind from the decline in FGTS-backed loans.
Asked about macro risk, Velez said Nu does not take a macro view. "We just simply assume that the future is going to be much worse than the past," he said, adding that every credit decision must be NPV-positive under a worsening scenario. He argued Nu is still small in Brazil and can keep growing by taking share, and that being the primary account for about 60% of customers gives it positive selection and a senior position in customers' payment priorities. "We're not the marginal lender," he said. Livingston said the company assumes losses could double and must still remain profitable.
On Brazil's Central Bank measures announced in October to curb excessive indebtedness, Livingston said Nu believes the rules "reward responsible underwriting and transparency" and that the company is well prepared. The recent ban on sports betting led to a complete curtailment of activity in that sector but no material effect on Nu's spending volumes, balances or delinquency.
Efficiency Ratio Beats, But Spending Shifts Into Q4
Net revenues were $4.4 billion against operating expenses of $846 million, for an efficiency ratio of 19.3% versus 20.3% a year ago. Expenses came in below plan as personnel hiring was restrained given AI-driven capacity gains, and as spending on the new in-office working model and other discretionary items slipped later in the year. Management had previously guided to a step-up in Q3 that did not materialize, but expects the ratio to rise sequentially in Q4 as offices come online and hiring returns closer to prior plans. Full-year efficiency ratio guidance is now 19% to 19.5%, versus around 20% previously. The effective tax rate rose to 19.2% in the quarter, and Livingston expects 2027 to settle in the low to mid-20% range after what he called a volatile 2026.
Customer Growth and Deposits
Nu ended the quarter with 143 million customers after 3.7 million net additions, and its activity rate rose to 83.6%. ARPAC reached $18. Brazil is approaching 120 million customers, equal to more than 65% of adults, with an activity rate of 86.3%, up for a seventh straight quarter. Nu counts 86 million monthly active users in Brazil, nearly twice the second-largest player according to Sensor Tower. The Croma offering for Super Core customers is approaching 1 million customers after three months, and the relaunched NuCoin loyalty program has 6.7 million sign-ups.
Total deposits reached $47.5 billion, up 19%, comprising $38.6 billion in Brazil, $5.3 billion in Mexico and $3.5 billion in Colombia. The consolidated cost of deposits improved to 87% of the interbank rate, 1 point lower sequentially and 2 points lower than a year ago.
Mexico and Colombia: Regulatory Tailwinds
Mexico reached 16.6 million customers, up 27%, with 870,000 added in the first quarter operating as a bank. Deposit insurance coverage rose 16-fold, from about $12,000 to $195,000 per customer, and payroll accounts are now possible. Velez described the digital payments legislation approved by Congress on October 20 as "super positive." He said the base case is Mexico reaching about 70% of the size of Brazil for Nu, with an upside case of matching Brazil depending on how far the economy digitalizes. "When a company like ours is forced to compete in the offline world with physical cash, we're very uncompetitive," he said. He noted Mexico's credit card penetration is only 12% and that the government is considering moves ahead of Brazil, such as requiring digital-only payments in some sectors. He cautioned it "won't happen overnight, but this could grow very fast."
Colombia added a record number of customers, reaching 6.1 million, up 62% and equal to 15% of adults. Nu is now number one by credit card holders at 3 million, its credit portfolio grew 80% FX-neutral, and it holds the fourth-largest individual deposit base at a funding cost of 76% of the benchmark rate, the lowest across its three core markets. Bre-B, the instant payment system, has reached 82% adult penetration in its first year. On the interest rate cap, Velez said there is "a good chance" the calculation method will change, though full removal is less likely. He said the cap, based on an average of consumer and corporate credit, pushes the majority of borrowers to loan sharks charging around 1,000%, and that a loosening could significantly expand credit access given card penetration of about 14% versus 75% to 80% in Brazil.
Nu U.S. and Nu Global: Early Days, Capped Investment
Nu U.S. launched on September 10 with an account paying 3.5% APY, fee-free transfers to Brazil, Mexico and Colombia, and a no-annual-fee card with unlimited 1.5% cash back. Within weeks it had reached customers in all 50 states, and Velez said early word-of-mouth growth "reminds us of our early days." Nu Global, a stablecoin-based multicurrency account, went live October 15 and already has customers in 37 countries. Management said investment will scale only as product-market fit, unit economics and regulatory checkpoints are validated, and that the two initiatives remain within the commitment of up to 100 basis points of efficiency ratio impact in each of 2026 and 2027.
Velez argued the U.S. resembles early Brazil and Mexico, with 60% to 70% of U.S. deposits earning zero at banks, high fees on checking, overdraft and remittances, and remittances costing 5% to 10%. He said AI agents are "the beginning of the end for a lot of those profit pools" as they bring transparency. On credit, he said Nu starts without years of local data but with a better-tuned system and a U.S. credit bureau and FICO scores available, unlike Brazil. "Losses tend to be the CapEx, the R&D investment," he said, adding that models need losses to learn and that the market will take time. He said Nu is on version 3 of its nuFormer foundation model, which may help it learn new markets faster, although "we still need to prove out" that benefit. Nu can also use credit data on Mexican, Colombian and Brazilian customers to help them obtain U.S. cards faster. He said the product is "not your traditional consumer internet product that you can scale to millions of customers on day 1."
M&A Stance and Investor Day
Asked about inorganic growth after press reports during the quarter, Velez said Nu is generating significant capital and will consider M&A, citing prior investments in Tyme in South Africa and the Philippines and a small investment in India. But the preference is organic growth, and "the bar would have to be extremely high for us to do a full M&A," which he said would be "very, very rare." Nu will hold its first Investor Day on December 8 to detail its long-term strategy and growth opportunities.