Our “Company of the Month” for April, Nubank, is the largest digital bank in Brazil and Latin America. It was founded in 2013 in Brazil by the Colombian engineer David Veléz, the Brazilian engineer Cristina Junqueira and the American computer scientist Edward Wible.
Named one of the “10 Top Fintech Unicorns” in the world by Fintech Magazine in 2020, Nubank operates in Argentina, Colombia and Mexico as well as Brazil and is considered the largest digital bank in the world outside of Asia and one of the largest fintech companies in Latin America.
The name of the company, Nubank or Nu, comes from the part of the Latin root “nudus” and evokes “being naked” and also refers to “new”, in English, something new and disruptive.
Nubank started with a fee-free credit card available only through a mobile app and then evolved into a full-service banking offering checking accounts, investments and insurance.
The credit card went viral among the Brazilian middle class and in just five years since its launch it was the fifth credit card issuer in Brazil with more than 6 million cardholders. Today it has more than 90 million users.
Important milestones
2014: Received the first round of foreign capital investment for $14.3M.
2017: Launched its digital account, NuConta, and in August its loyalty program, Nubank Rewards. In Brazil, NuConta registered 12 million customers in January 2020.
2018: Became a digital unicorn company, reaching a valuation of US$1 billion.
2019: It had clients in 100% of Brazilian municipalities, the 5,564 cities distributed in a territory of 8.5 million km² and the sixth largest country in the world. According to the company, 20% of those who accessed a credit card in Brazil had never had a card.
- In May 2019, the company announced that it would begin operating in Mexico.
2020: Nubank acquired Plataformatec, a company specialized in software engineering and agile methodologies.
2022: Nubank arrived on the Colombian Stock Exchange.
Key products
2023 marked the tenth anniversary of the company, which today has more than 90 million customers. Over the last ten years it has launched new products to make the lives of its users easier when it comes to managing their finances and here we highlight some of them:
In 2017, Nubank began offering additional products and services, starting with NuConta, a digital savings account that allows free and unlimited transfers. In Brazil, NuConta registered 12
million clients in January 2020 and a year after launching NuConta, Nubank had $628.8 million in deposits in 2018.
In 2019 Nubank launched NubankPJ, a digital bank account designed for small businesses, entrepreneurs and freelancers. This March it reached four million clients, an increase of around 50% compared to the previous year, making Nubank the financial institution with the most corporate accounts in Brazil.
In addition to these products, in the last 12 months alone, the company has launched more than 45 new solutions to help users manage their finances. We highlight some of the innovative solutions here:
- NuBraille: The Nubank card for blind or visually impaired customers, available for both individuals and companies.
- Nubank Auto and Lar Seguro: Seguros was one of the portfolios that grew in Nubank in 2023. The company launched customizable auto insurance and home insurance, with a 100% digital experience and 24-hour support.
- Nubank Crypto: Nubank Crypto’s cryptocurrency offering grew during the year, reaching 14 cryptocurrencies available for trading in the application.
- Alô Protegido: Nubank was at the forefront of security in 2023, launching products and tools that prevent fraud. Alô Protegido identifies and blocks calls from scammers.
In 2019 Nubank was recognized as one of the most innovative companies in the world by Fast Company magazine, and after 10 years of running the company, it continues to innovate with new products that help users access tools they could not access before.
Nubank’s expansion strategy
According to FintechNexus, Nubank’s strategy has three fundamental pillars:
- Accelerate secured lending in Brazil, a huge market serving more than half of the adult population.
- Open new opportunities in the higher income segment.
- Strengthen its presence abroad, particularly in Mexico and Colombia.
Vélez and his team are convinced that all of Latin America has the same banking weaknesses as Brazil and believes that the gateway to unlocking that potential is through Mexico.
The focus on Mexico
Having solved the Brazilian banking sector, Nubank’s next big bet is Mexico, which has a large population of almost 130 million. More than half of Mexican adults do not have a bank account, according to the National Banking and Securities Commission (CNBV).
CEO and Co-Founder David Vélez reinforces his intention to focus on Mexico and says Nubank is winning clients from rivals amid a restructuring of Latin American financial startups, which has helped fuel a 176% rally in its shares .
- In just 7 months of its introduction, Nubank accumulated 1 billion in customer deposits.
- In just four years since its entry, Nubank has become one of the largest card issuers in Mexico by volume and has 5.5 million customers.
- On April 16, 2024, Nubank announced that it will increase the share capitalization of Nu México by US$100 million, raising its investment in the country to more than US$1.4 billion.
- Nu México is the largest SOFIPO (Popular Financial Companies) in the sector in terms of number of clients, and its total assets represent almost 51% of the entire sector.
- In the last quarter of 2023 alone, the operation registered around 1 million new clients, adding 5.2 million clients in the year.
Nubank has expressed its ambitions to be the largest financial services group in Latin America and is valued at $44 billion.
Financial analysis of Nubank
CEO David Vélez reaffirmed at the 2024 results presentation conference the commitment to Nubank’s mission which, in his words, is “to dedicate ourselves to combating complexity and training people.”
With 26% growth in customer base compared to the previous year, Nubank now has more than 93 million customers in Brazil, with a monthly net addition of 1.3 million customers.
In Mexico, the net addition reaches 1 million clients per month, with a total of clients of approximately 5.2 million.
Last year, the bank arrived in Colombia and already has a base of 800 thousand clients.
Nubank presented a 68% growth in annual revenue, which went from USD 4.79 million in 2022 to USD 8.03 million in 2023. This result is due to the focus on the company’s pillars: increasing the customer base and increase in average revenue per client by 26%, which went from USD 8.4 to USD 10.6.
The bank, which reached its break-even point in the third quarter of 2022, continues to increase its net profit quarter by quarter, obtaining a net profit of USD 360.9 million in the last quarter of 2023, with compound annual growth (CAGR) year-on-year of more than 500%, which demonstrates that the bank’s strategy continues to be correct and efficient, generating value for the shareholder.
The delinquency of 15 to 90 days of the loan portfolio in Brazil presented a sequential reduction to 4.1%, in line with expectations, while the delinquency of more than 90 days remained stable at 6.1%, in agreement with the cumulative behavior of delinquency from 15 to 90 days in previous periods.
Looking to the future
In summary, the third Brazilian unicorn is on a consistent growth trajectory and is now delivering value to customers and shareholders. With shares listed on the New York Stock Exchange since September 2021 and on the Bovespa since December 2021 through BDRs (Brazilian Depositary Receipts), the share price has shown some stability in NY and, after a period of decline , a recovery in Brazil.
*This article does not represent an indication to buy or sell shares.
