Stock Surge in Response to Stellar Earnings
Nu Holdings Ltd. (NYSE: NU) saw its stock price rise significantly on Tuesday. The stock closed up 1.68% at $12.71 during the trading session, and in after-hours trading, it surged another 3.38% to close at $13.14. This sharp increase comes following the company’s release of its impressive Second Quarter 2024 financial results.
Record Financial Performance
Nu Holdings, one of the world’s largest digital banking platforms, delivered a robust performance for the second quarter of 2024, underscoring the company’s growth trajectory and operational efficiency. Here are the key financial highlights from the report:
Sponsored
Net Income and Profitability
- Net Income: Nu Holdings reported a net income of $487 million for Q2 2024, more than double the $225 million profit from Q2 2023. The company achieved an annualized Return on Equity (ROE) of 28%.
- Adjusted Net Income: Adjusted net income reached $563 million with an annualized adjusted ROE of 33%, up from $263 million in the same quarter last year. This reflects the company’s strong profitability even with substantial investments in future growth.
Revenue and Gross Profit
- Revenue: The company’s revenue surged 65% year-over-year on a foreign exchange-neutral basis, hitting a new record of $2.8 billion. This growth highlights Nu’s ability to expand its customer base while boosting revenue.
- Gross Profit: Gross profit reached another record high of $1.4 billion, marking an 88% increase year-over-year on a foreign exchange-neutral basis. The gross profit margin improved to 48%, up from 42% in Q2 2023.
Capital and Liquidity
- Capital Adequacy: Nu Holdings is well-capitalized, with capital adequacy ratios comfortably above regulatory minimums. This is in addition to $2.4 billion in excess cash held at the holding level.
- Liquidity: As of June 30, 2024, Nu’s interest-earning portfolio rose 81% year-over-year to $9.8 billion. The lending portfolio expanded 92% year-over-year to $4.6 billion, and total deposits increased 64% year-over-year to $25 billion.
Net Interest Income
- Net Interest Income: The company achieved a record net interest income of $1.7 billion, a 77% increase year-over-year on a foreign exchange-neutral basis. The net interest margin (NIM) improved to 19.8%, reflecting the growth in credit card and lending portfolios.
Business Highlights
Performance in Brazil
Nu Holdings continued its impressive performance in Brazil, where its customer base grew to 95.5 million by June 30, 2024. The company added an average of 1.2 million new customers per month. Nu is now the fourth-largest financial institution in Brazil by customer number and has the largest number of active credit customers.
Expansion in Mexico and Colombia
- Mexico: Nu’s growth in Mexico was substantial, with 1.2 million new customers added in the quarter, bringing the total to 7.8 million. This growth is driven by increased deposit yields.
- Colombia: In Colombia, Nu surpassed 1 million customers, reaching nearly 1.3 million by the end of the quarter.
Multi-Product Platform
Nu’s diverse product offerings are thriving, with approximately 42 million active credit card users, 78 million NuAccounts, and 9 million unsecured personal loans. The company also boasts nearly 2 million active insurance policies and over 18 million active investment accounts.
Comparing Stock Performance
Year-to-Date (YTD) Performance
- Nu Holdings Ltd. (NU): +52.58%
- S&P 500: +13.93%
Nu Holdings’ stock has experienced a remarkable increase of 52.58% year-to-date, significantly outperforming the S&P 500, which has risen 13.93% over the same period. This outperformance highlights the strong market confidence in Nu’s growth prospects and financial stability.
Conclusion
Nu Holdings Ltd.’s stellar Q2 2024 financial results reflect the company’s successful expansion and robust operational execution. With record-breaking revenues, profits, and impressive growth in customer base across multiple regions, Nu Holdings is solidifying its position as a leading digital banking platform in Latin America. As the company continues to leverage its technology and expand its product offerings, investors will be keenly watching to see how Nu maintains this momentum in the coming quarters.
