According to Reuters, Brazilian digital lender Nubank just posted some seriously impressive third-quarter numbers that beat analyst expectations across the board. The company reported $783 million in net income for July through September, which is up 39% year-over-year and above the $757 million analysts were predicting. Revenue jumped to $4.2 billion, beating estimates of $3.8 billion, while their annualized return on equity hit a record 31%. Nubank now serves 127 million customers across Brazil, Mexico, and Colombia, with a credit portfolio that grew 42% to $30.4 billion. The stock immediately rose about 3% in after-hours trading following the announcement.
The profit engine keeps humming
Here’s the thing about Nubank – they’ve basically cracked the code on scaling digital banking in emerging markets. CFO Guilherme Lago told Reuters the profit surge came from two main drivers: operating leverage in their core Brazilian market and better asset-liability management in Mexico. Basically, they’re getting more efficient as they grow while simultaneously paying less for deposits in newer markets. That’s a powerful combination that traditional banks would kill for.
And get this – their delinquency rates actually improved in most categories. The 15-to-90-day late payment rate in Brazil fell to 4.2%, while the over-90-day rate dropped year-over-year to 6.8%. Now, that longer-term delinquency number did tick up slightly from last quarter, but management attributed it to seasonal effects. The fact that Jefferies analysts called it a “solid beat with no red flags” tells you everything you need to know.
What this means for the competition
So where does this leave traditional Latin American banks? Honestly, looking pretty vulnerable. Nubank’s proving that digital-first banking isn’t just a niche play – it’s becoming the mainstream choice for millions. Their ability to grow both customers and profitability simultaneously is something most traditional banks can only dream of.
Think about it – they’re expanding into the US while maintaining this growth trajectory. That’s ambitious, to say the least. But given their track record of execution, who’s going to bet against them? The digital banking revolution in emerging markets appears to have found its champion, and traditional players are scrambling to keep up.
The one number to watch
Now, if there’s one slightly concerning metric, it’s the net interest margin compression. That dropped about one percentage point to 17.3%. Still ridiculously high by developed market standards, but worth monitoring. As Nubank scales and competition potentially intensifies, maintaining those juicy margins will be crucial.
But honestly, when you’re growing revenue at 39% and hitting record profitability, a slight margin dip feels like nitpicking. The bigger story here is that Nubank continues to execute its growth playbook nearly flawlessly. They’re not just winning customers – they’re making serious money doing it. And in the fintech world, that combination has been surprisingly rare.
