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Nu Holdings
NU - N
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Sep 03, 2025
N/A
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Part of our caution is that it is a Brazil company and we do not follow it. Looking at a set of peers (via Bloomberg) it is not undervalued compared with peers, with a P/E ratio of 25X vs 16x to 20x for most peers. It is, however, growing fast, with EPS expected to double from 2024 to 2026 estimates. The last quarter was good. Nubank enters 2H with positive momentum, but macro headwinds in Brazil may test the sustainability of its recent acceleration. In 2Q, it reported a solid beat, with ROE of 28%, driven by net interest margin NIM recovery and a rebound in risk-adjusted NIM. This came alongside robust 40% forex-neutral loan growth and fee expansion. Asset quality held up well, with early delinquencies improving 30 bps and 90+ NPLs up just 10 bps, though Stage 3 formation ticked higher. Total loan growth was sequentially flat in FX-neutral terms, yet credit card loans and lending portfolios accelerated vs. 2Q24. Cost discipline is solid despite a slight deterioration in the efficiency ratio to 28.3% due to marketing and RSUs. Overall, 2Q marked a recovery in key profitability metrics, but questions remain about growth durability as economic conditions soften. We think it is decent and the momentum has improved markedly, but we would not call it hugely compelling.
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