Nubank posts first $1 billion quarterly profit, shares surge
Nubank's Q2 net profit crossed $1 billion for the first time, beating estimates and sending shares up 9.5%.
Brazilian digital lender Nubank has reported its first-ever quarterly net profit above $1 billion, surpassing analyst expectations and triggering a sharp rally in its shares after market hours on Thursday.
Nu Holdings posted a net profit of $1.06 billion for the April-June period, a 49% increase year-on-year on a foreign-exchange-neutral basis. The figure came in ahead of the $967.2 million Visible Alpha consensus estimate.
Shares of the lender, which serves nearly 139 million customers across Brazil, Mexico, and Colombia, jumped about 9.5% in extended trading to around $15.25 apiece.
The profit surge was driven by higher revenue and an improved risk-adjusted net interest margin, according to Chief Financial Officer Rob Livingston, who took on the role last month. Revenue rose 39% to $5.88 billion, beating the projected $5.60 billion, while the risk-adjusted net interest margin climbed to 12.4% from 9.9% a year earlier.
Livingston told analysts that the current level of risk-adjusted net interest margin is sustainable in the foreseeable future. JPMorgan analysts noted that bullish investors had been working with an assumption of around 11% risk-adjusted NIM, making the result a solid beat even for those optimistic on the stock.
Cost of credit, which had weighed on shares last quarter after rising to $1.79 billion, declined to $1.69 billion. However, it remained 60% higher than a year earlier. Livingston attributed part of the improvement to Brazil's Desenrola debt-refinancing program, though he said the gains would have materialized even without it, noting the program accounted for only about 5% of total cost of credit.
The credit portfolio stood at $39.4 billion, up 37% year-on-year and 5% quarter-over-quarter. Livingston acknowledged that growth had slowed sequentially compared with the first quarter, but attributed this to an unusually strong recent expansion.
Early delinquency rates came in at 4.8%, up 0.3 percentage point year-on-year but down from 5% in the first quarter.