Nu Holdings (NU) Q3 2026 earnings review
Nu Holdings profit reaches $1.1 billion, but credit losses climb
Nu Holdings, the parent of digital lender Nubank, earned record profits by lending more to its 143 million Latin American users while launching accounts in the United States. Net income rose 39% from a year ago to $1.09 billion as customers carried higher interest-bearing balances and monthly revenue per active user reached $17.70. Those higher loan yields kept the annualized net interest margin after credit costs at 12.1%, even though loan loss provisions jumped.
| Gross revenue (managerial) | $6.26B +37% from a year ago excluding currency moves |
|---|---|
| Accounting revenue (IFRS) | $5.82B +39% from a year ago in US dollars |
| Net income | $1.09B +39% in US dollars (+31% excluding currency moves) |
| Risk-adjusted net interest margin | 12.1% up from 9.9% a year ago (12.4% last quarter) |
⚖️ Verdict: 🟢 Bullish
The story got better because core lending spreads and cost efficiency held up while the bank funded its first expansion outside Latin America. Operating expenses fell as a share of net revenue compared with a year ago, and record personal loan demand in Brazil absorbed the early costs of opening in the United States and 37 other countries. Two cautions stood out: deliberate credit loosening pushed more balances into high-risk brackets, and Mexican deposits shrank for a third straight quarter to $5.3 billion after Nu cut savings yields.
The question now is whether Nu can keep its net interest margin after credit costs above 12% while reviving deposit growth in Mexico and absorbing higher default reserves. One view is that artificial intelligence credit models are pricing these riskier borrowers accurately and the new Mexican bank license will draw in salary deposits; the other is that rising defaults and a new 10.85% Brazilian consumption tax in January 2027 will squeeze spreads. Fourth-quarter Mexican deposit flows and delinquency bridges will tell.
🐂 Bull Case
Revenue Per Customer Reaches $17.70 on Brazilian Loan Demand
Nu Holdings, the parent of digital lender Nubank, grows by signing up banking users across Latin America and selling them additional credit and fee products over time. The lender reached 143 million total customers this quarter, up from 127 million a year ago, including 120 million in Brazil, 16.6 million in Mexico, and 6.1 million in Colombia.
Average monthly revenue per active customer (ARPAC) rose to $17.70 from $13.80 a year ago, while the monthly cost to serve each active user stayed at $1.10. In Brazil, customers took out a record 22.1 billion reais in unsecured personal loans, up 28% from a year ago, and nearly 1 million users joined Nubank Croma, a tier for middle-income earners, within three months of launch.
This gap between revenue and servicing cost per user matters because older customer groups spend $30.20 a month after eight years on the app, so newer users still have room to borrow and spend more without adding much operating cost.
What to watch: fourth-quarter revenue per active customer and unsecured loan originations in Brazil. Continued gains above the 10% pace in servicing costs would show that newer cohorts in Mexico and Brazil are adopting higher-margin credit products on schedule.
Interest Margins Hold Above 12% as Borrowers Carry Balances
A digital bank earns most of its profit from net interest income (NII), the difference between what borrowers pay on loans and what savers earn on deposits. For Nu, the main driver of lending profit is the share of its credit portfolio that accrues interest, rather than credit card balances that shoppers pay off on time.
That interest-earning share climbed to 61% of the total credit book, up from 58% a year ago and 59% last quarter. Meanwhile, the bank paid savers 87% of local interbank benchmark rates on their deposits, down from 89% a year ago, lifting managerial net interest income to $3.87 billion, up 7% from last quarter excluding currency moves.
Because Nu collects more interest on cards and pays a smaller share of benchmark rates on deposits, its annualized net interest margin after credit costs reached 12.1%, up 2.2 percentage points from 9.9% a year ago.
What to watch: the risk-adjusted net interest margin in the fourth quarter. Holding that margin near 12% during the holiday shopping season, when cardholders normally make more non-interest purchases, would confirm that higher lending yields outweigh credit losses.
Operating Efficiency Improves Year Over Year Despite New Launches
Nu tracks its operating cost discipline through the efficiency ratio, which measures operating expenses as a percentage of net interest and fee revenue after transaction costs and revenue taxes. Management previously told investors that 2026 would bring upward cost pressure from artificial intelligence, office returns, and international expansion.
Even as the group rolled out a nationwide advertising campaign across television, radio, and cinema in Mexico and opened operations in the United States, the managerial efficiency ratio improved to 19.3%, down from 20.3% a year ago and 19.5% in the second quarter. That cost control, paired with an effective corporate income tax rate that fell 10.7 percentage points from a year ago to 19.2% by our math, lifted annualized return on equity to 32%.
What to watch: the managerial efficiency ratio and general overhead expenses in the fourth quarter. A reading below 20% would show that revenue growth in Brazil is still outpacing the fixed costs of building the US and global businesses.
🐻 Bear Case
Higher Credit Provisions Cut Gross Margin as Nu Takes More Risk
In its presentation, Nu attributes rising consumer loan delinquencies to portfolio mix and states that underlying credit trends stay healthy. Yet the accounting statements and credit bridges show that deliberate underwriting changes are pushing more balances into higher-risk tiers and compressing gross profit margins.
- Expected credit loss expense: $1.67 billion, up 70.7% from a year ago, rising by 5.2 percentage points of revenue to 28.7% by our math
- Intentional risk expansions: added 0.13 percentage points to early 15-to-90-day delinquencies and $135 million to total loss reserves in a single quarter
- Higher-risk card balances (default probability above 20%): 26.8% of gross credit cards, up from 22.9% in December 2025
- Stage 3 defaulted personal loans: 8.4% of gross loans, up from 6.2% in December 2025
Because loan loss provisions grew faster than revenue, accounting gross margin fell 1.6 percentage points from a year ago to 41.9% by our math. Taking on riskier borrowers boosts interest income first, but if defaults keep climbing into Stage 3, reserve builds will eat a larger share of lending spreads.
What to watch: the quarterly credit bridge for intentional risk expansions and the share of credit cards with a default probability above 20% in the fourth-quarter report. Another jump above 27% would indicate that loan growth is relying on lower-credit-quality borrowers.
Mexican Deposits Shrink for a Third Quarter After Yield Cuts
Mexico is Nu's second-largest market with 16.6 million customers, and the company wants to replicate its Brazilian model there by gathering local deposits to fund high-margin consumer credit. In July, Mexican regulators notified the subsidiary that it "received the Operations Authorization to commence operations as a multiple bank, and effectively began operating as a digital bank on August 6, 2026".
Operating as a full bank raised customer deposit insurance 16-fold to about $195,000, yet Nu's Mexican deposit balances fell to $5.3 billion in the third quarter, down from $5.7 billion in the second quarter, $5.9 billion in the first, and $6.7 billion at the end of 2025. The lender lowered the maximum yield on its Mexican Cajitas savings accounts to a range of 6.5% to 13.0%, down from 7.3% to 15.0% in December 2025, prompting rate-sensitive savers to pull funds.
What to watch: fourth-quarter deposit balances in Mexico. A fourth straight quarterly drop despite the new $195,000 deposit protection and the ability to offer salary accounts would show that Mexican users still treat Nu primarily as a high-yield savings app rather than a primary bank.
Failed Counterparties and Overhead Costs Weigh on Operating Margins
Beyond consumer loan defaults, Nu faced credit losses from financial counterparties and a jump in corporate overhead that reduced its accounting operating profit margin by 3.4 percentage points from a year ago to 23.3% by our math.
The company booked a $132.8 million allowance on other receivables "related to credit card receivables acquired from certain payment institutions that were placed under extrajudicial liquidation by the Central Bank of Brazil", including $112.0 million charged in the third quarter alone, and stopped buying those merchant portfolios in August. Separately, Nu advanced $175.1 million to Brazil's deposit guarantee fund "pursuant to an emergency recapitalization plan approved by the FGC's Board in February 2026".
At the same time, general and administrative expenses rose 69.1% from a year ago to $590.7 million, climbing by 1.8 percentage points of revenue to 10.1% on higher cloud data processing, salaries, and stock compensation, while marketing rose 0.5 percentage points to 2.2% of revenue.
What to watch: fourth-quarter other credit loss expenses and general and administrative costs. Stopping merchant receivable purchases in August should return other credit losses toward zero next quarter unless the remaining 69.1% of that $449.6 million portfolio suffers further defaults.
👓 Other Themes
Nu Launches in the US and Prepares for Brazilian Tax Reform
On September 10, Nu "commenced operations in the United States, through Nu United States LLC" in partnership with Lead Bank across 50 states, and launched Nu Global, a multi-currency account in 37 countries. In Brazil, the company "entered into an agreement to acquire 100% of Banco Porto Real de Investimentos S.A." to add a bank license, while evaluating a consumption tax reform that sets a 10.85% combined tax rate on financial services starting January 2027.
💲 Other KPIs
Total credit card and loan balances before loss reserves rose 36.8% in US dollars and 33% excluding currency shifts from a year ago. Quarter-over-quarter growth excluding currency moves was 8%, compared with 9% in Q2 and 11% in Q1. Credit cards make up 65% of the book, unsecured loans 27%, and secured loans 8%.
Customer deposits grew 22.4% in US dollars and 19% excluding currency moves from a year ago, adding $2.2 billion in the third quarter. Brazil holds $38.6 billion of total deposits, Mexico holds $5.3 billion, and Colombia holds $3.5 billion. Available funding of $43.7 billion remains nearly double the $24.7 billion net credit portfolio, putting the loan-to-deposit ratio at 57%.
Weighted average diluted shares fell 0.5% from 4,905 million a year ago. During the first nine months of 2026, the parent company spent $500.4 million to repurchase shares, compared with zero buybacks in the same period of 2025, more than offsetting new stock grants to employees.
❓ Key Questions
When will Mexican deposits stabilize after the savings rate cuts?
Deposits in Mexico have fallen for three consecutive quarters from $6.7 billion to $5.3 billion. Investors need to know how much money has flowed in since full bank operations began on August 6 and when payroll accounts will launch.
Why did Nu underwrite more high-risk cardholders this quarter?
Intentional risk expansions added 0.13 percentage points to early delinquencies and $135 million to loss provisions in Q3, lifting the higher-risk card bucket to 26.8%. Management did not explain which countries or products drove this credit loosening.
How much capital and marketing will the US launch require?
Nu launched across all 50 US states with Lead Bank and in 37 countries via Nu Global on September 10, but the filings do not disclose customer counts, deposit balances, or the expected operating losses for these new ventures in 2027.
How will Brazil's 10.85% consumption tax affect 2027 margins?
Brazil's new tax regime replaces existing revenue taxes with a combined 10.85% rate on financial services starting January 1, 2027. Management states the impact is under assessment, leaving next year's revenue-based tax burden open.