Nubank has another good quarter and is already the fourth largest bank in terms of number of customers

Nubank continued its positive results in the third quarter, in a period not only marked by continued profit and rising profitability, but also with the highest revenue in its history.

The roxinho card bank recorded revenue of US$2.1 billion in the period from July to September, an increase of 53% compared to the third quarter of 2022, thanks to the continued expansion of the customer base and the achievement of customer preference .

As a result, Nubank closed the third quarter with a net profit of US$303 million, an increase compared to the gain of US$8.4 million in the same period in 2022. In relation to the second quarter, the result of the final line of the balance sheet increased by 33.7%. Annualized ROE reached 21%, while annualized adjusted ROE reached 25%, above the 19% recorded in the previous quarter.

“Despite having 52% of the Brazilian adult population, we continue at a very strong pace in customer acquisition”, says Guilherme Lago, CFO of Nubank, to NeoFeed. “And average revenue per active customer has been rising.”

The balance shows that Nubank added 5.4 million customers in the third quarter of 2023, and 18.7 million in one year, reaching a total of 89.1 million customers globally, with this number already reaching 90 million in October. In Brazil, the customer base reached 84 million at the end of the third quarter, making Nubank the fourth largest financial institution in terms of number of customers, according to the Central Bank.

At the same time, average revenue per active customer (Arpac) continued to grow. After US$8.60 in the first quarter and US$9.30 in the second quarter, the indicator reached the double-digit mark for the first time, US$10, an expansion of 18% compared to the previous year.

This is a point that many analysts were keeping an eye on in Nubank’s balance sheet, to assess the sustainability of the results. “The most mature crops are already priced at US$26 per month”, says Nubank’s CFO.

According to him, Arpac’s progress is explained by its principality, a current topic among banks, which seek to retain their customers and ensure that they transact only with the institutions.

In the case of Nubank, principality has been increasing every quarter, with practically 60% of active customers seeing the bank as their main institution. Lago says this is happening faster and faster, with customers entering Nubank with almost four products on average.

“If you pay for the 2018 and 2019 harvest, it would take more or less 50 months for us to earn the majority of more than half of the harvest”, he says. “Now, it’s taking just over 12 months and it’s accelerating, with the population increasingly embracing digital banks and with us launching more products.”

Within this strategy of achieving principality, Nubank is dedicating itself to achieving high income, as are other institutions. Increasing the share of customers who have a monthly income from R$12 thousand and who can invest between R$100 thousand and R$150 thousand is one of Nubank’s priorities in 2023.

According to Lago, more than 60% of the public who earn more than R$12 thousand per month joined Nubank, but it is necessary to expand the main focus. To this end, the bank wants to meet payment demands, already providing bank accounts. Another front is the credit part, adjusting the average limit for this audience on the Ultravioleta card.

The third front to gain space in the high-income portfolio is investments, which was remodeled and ended the third quarter with more than R$61 billion in assets under management, growth of approximately 50% on an annual basis. Recently, Nubank presented two dividend ETFs to the market, in partnership with B3.

In terms of credit, the main driver of growth in recent years, the total portfolio, which includes credit cards and personal loans, totaled US$15.4 billion, an increase of 4% on a quarterly basis and 58.7% on an annual basis.

The default rate between 15 and 90 days reached 4.2%, decreasing 10 basis points compared to the second quarter. The index for more than 90 days increased by 20 basis points, with the bank attributing the behavior to the migration of the 15 to 90 day portfolio from previous periods. “From a credit quality point of view, it was not only stable, but also exceeded expectations”, says Lago.

Asked about the strategy in front of consignees, he says that it is still very early, considering that it is an initiative that began to be implemented this year.

Amidst the maintenance of positive results, Nubank has a high capitalization index. In the balance sheet, the bank reported that the Capital Adequacy Index (CAR) in Brazil was 11%, above the minimum required of 6.75% by the BC. As a result, the holding company ended up with US$2.3 billion in cash surplus.

Asked about the possibility of distributing this amount in the form of dividends, Lago states that the amounts will be reinvested in operations, especially in Colombia and Mexico, but highlights that the bank is well supplied, with no need to raise more capital. “We think we will have good growth opportunities to reinvest in these countries we are in,” he says.

Nubank shares closed the trading session on Tuesday, November 14, up 4.50%, at US$8.83. During the year, they registered an increase of more than 2.1 times, taking the market value to US$ 40.1 billion.