LATAM: Brazil’s Nubank announces record profits and rapid expansion

Category: Americas Fintech Payments
Posted by
Lea Hogg

In its second year on the public market, Brazilian neobank Nubank,has made significant strides, moving well beyond the break-even point and reporting a substantial increase in net income. This progress is largely due to the growing adoption of Pix, a novel framework that has boosted Nubank’s business in Brazil and Latin America.

In the fourth quarter, the neobank, backed by Warren Buffett, reported a net income of $360.9 million. This figure represents an almost sixfold increase from the $58 million profit reported in the same quarter of the previous year. This impressive growth is a result of the company’s aggressive expansion of its product offerings, which attracted nearly 20 million new clients over the past year.

Towards 100 million customers

David Vélez, the founder and CEO of Nubank, stated, “As we work towards surpassing the 100 million customers milestone in 2024, we are investing heavily in new growth avenues to keep transforming potential into profit.” The company is closing in on the 100 million customer threshold, a significant milestone in its journey.

During an earnings call, Vélez outlined three pillars of Nubank’s strategy. First, accelerating secured lending in Brazil, a massive market where it serves more than half the entire adult population. Second, opening new opportunities in the highest-income segment. Lastly, strengthening its presence overseas, particularly in Mexico and Colombia.

The company introduced payroll loans in Brazil during the year as a key component of its strategy to enhance engagement and capture a larger share of the country’s substantial loan market. By the end of 2023, the total loan portfolio had expanded to $18.2 billion, compared to $11.3 billion in the previous year. Notably, nearly 80% of this portfolio consists of credit card loans.

With over 85 million clients in Brazil, Nubank is already the fourth-largest financial institution by number of clients in the country. It now aims to penetrate the coveted premium segment. “We have rolled out numerous features to cater to this segment,” Velez said, including tailor-made functions for investments and a premium credit card.

Nubank is diligently striving to boost its monthly average revenue per customer, a metric that has shown consistent growth over the past few quarters as the neobank prioritizes profitability. Currently, Nubank generates approximately $10.60 per active customer, compared to $8.20 a year ago.

The Brazilian digital bank kicked off the year with a strong focus on international expansion. It secured a licence from the Colombian regulator, marking a crucial step in enhancing its customer acquisition strategy in the country. Simultaneously, in Mexico, the bank entered the extensive remittance market, a promising yet largely untapped market for financial technology firms. Scaling Mexico is a “top priority” for Nubank as it continues its rapid expansion in Latin America.

 

 

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