What happened
Shares of Brazilian bank Nu Holdings (NU 1.66%) stock gained 13% in June, according to data provided by S&P Global Market Intelligence. It was still riding the wave of an excellent first-quarter earnings report released in May and rising investor confidence in the market.
So what
Nu has been posting very strong growth metrics since it went public in 2021. It's a young, disruptive company that offers a customer-centric and digital experience, and it's catching on.
This can be clearly seen in customer count, which increased 33% from last year, or by nearly 20 million customers, to 79.1 million in the 2023 first quarter. That's a lot of people joining in and using Nu's services.
It continues to post robust growth in its Brazil headquarters, but it's growing even faster in its newer markets of Mexico and Colombia, where it still has only 3% and 2% of the market, respectively.
It's also doing an incredible job of converting current customers to new services. Nu works primarily under the Nubank banner, but it offers a range of financial services beyond personal banking. It's a cross between a standard bank and a fintech company like PayPal, offering a fully loaded app with banking, investing, and more. Revenue increased 87% over last year, and ARPAC, or average revenue per active customer, increased 30%. That's an important measure of customers moving into more and more expensive services.
Even better, Nu posted a $142 million net profit in the first quarter, up from a $42 million loss last year. Cost per customer remained constant year over year and decreased from last quarter despite the increase in customers and services.
The banking side of the business is brisk as well. Deposits increased 34% over last year to $15.8 billion, and loans increased 54% to $12.8 billion. Net interest margin increased by 7.2 percentage points over last year to a record 15.7%.
Now what
This is just a sampling of Nu's recent results. It has incredible future potential as it harnesses this opportunity and continues to capture market share and grow efficiently.
Nu stock is up nearly 100% so far in 2023, and shares still look reasonably priced at 11 times trailing-12-month sales.
Warren Buffett was an early backer of the company when it was still private, and Berkshire Hathaway has a position in the stock. The opportunity here looks very compelling, and investors should consider adding shares to their portfolios.
