(Bloomberg) – Shares of NU Holdings Ltd., one of the world’s largest digital banks, fell after reporting first-quarter results.
According to data compiled by Bloomberg, the company is well known to have revenue of $3.2 billion in the quarter ended March 31, compared with a median estimate of $3.1 billion. Net income was $557.2 million, up 74% year-on-year, and its deposit and loan book growth exceeded expectations, which was also higher than expected.
Still, gross profit was lower than estimates, which the company said was due to higher credit loss allowances and increased interest expenses.
NU shares received 27% of stocks year by year, down more than 6% in post-market trading.
The bank added 4.3 million customers in the quarter, with a total of 118.6 million customers in its three Brazil, Mexico and Colombia locations.
“In the past four quarters, we have acquired more customers than all of Brazil’s five existing banks,” Chief Financial Officer Guilherme Lago said in an interview before his release. “So the customer growth machine continues to stir at a healthy pace.”
Nubank, who competes with Handing SA’s Itau Unibanco for the title of Latin America’s most considerable publicly traded finance company, highlighted the significant acceleration of Brazil’s unsecured loans in Brazil while keeping crime rates stable and controlled.
The overall loan book rose to $24.1 billion, while deposits reached $31.6 billion. Of these deposits, $5.4 billion comes from Mexico, with the number of customers reaching 11 million in the quarter. Nubank usually pays interest rates higher than the current bank to attract and maintain customers.
Lago said the current opportunity to increase personal loans in Brazil is a larger loan, as Nubank already has a large market share on credit cards, a percentage of the market.
He said that “only fishing in our fishing bowls” can enable NU to increase its personal loan holdings ten times.
“It’s not only because I think our model works well, but because it’s a segment with less penetration than credit cards,” he said.
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