Nu Holdings - Q1 2026 Earnings Analysis

Performance Highlights

Nu Holdings reported Q1 2026 revenues of $5.32 billion, surpassing the $5 billion threshold for the first time and growing 42% year-over-year on an FX-neutral basis, a clear beat against expectations. Net income of $871 million rose 41% year-over-year, compounding at more than 80% annually since 2022, with ROE closing at 29% and adjusted ROE at 31%.

The single most important operating driver was credit portfolio expansion, which grew 40% year-over-year and 7% quarter-over-quarter to $37.2 billion, led by credit cards at $24.3 billion and unsecured lending at nearly $10 billion; the Loan-to-Deposit Ratio rose to 58.3% from 49.1% in Q4 2025, reflecting the accelerating monetization of Nu's deposit franchise. ARPAC reached $15.90, up 23% year-over-year, while the efficiency ratio improved to 17.6% from 21.4% a year earlier, underscoring the platform's operating leverage.

Management Outlook and Forward Catalysts

Management signaled that the full-year efficiency ratio is expected to land roughly in line with where it ended 2025, as return-to-office costs scale alongside investments in international expansion and AI infrastructure, with US market entry capped at under 100 basis points on the consolidated efficiency ratio in each of 2026 and 2027. Mexico reaching break-even with 15 million customers and an efficiency ratio improvement of 78 percentage points over four years validates the replication of the Brazil earnings formula and frames the next leg of international monetization.

The central investor debate heading into Q2 centers on whether the 89-basis-point sequential rise in the 15-90 NPL ratio to 5.0% reflects manageable seasonality or signals broader credit stress from intentional higher-risk segment expansion; bulls will point to the 90-plus NPL declining 10 basis points to 6.5% and coverage ratios of 249%, while bears will watch whether risk-adjusted NIM, which compressed 100 basis points sequentially to 9.5%, stabilizes as credit loss allowances of $1.79 billion ease from their seasonal peak.