Nu Holdings Ltd - Ordinary Shares Class A

Strong operating momentum & record profitability (good / surprising): Q1 2026 delivered a customer- and revenue-led compounding story: 135M+ customers consolidated (Brazil 115M+, Mexico 15M+, Colombia nearing 5M). Despite typical Q1 seasonality, consolidated monthly activity rose sequentially to 83% and Brazil activity is approaching ~100M monthly active customers. Revenue hit $5.0B for the first time (record), efficiency improved to <18% (below 18%), and net income reached $871M (company’s highest ever for a first quarter), +41% YoY FX-neutral.

Credit provisioning was higher but management says it’s “seasonality + growth + mix,” not deterioration (mixed / key risk to watch): Provisions/allowance increased: CLA $1.79B (+33% QoQ FX-neutral), driven by (1) seasonality (15–90 day ratio peaking; print ~5%, +89 bps vs year-end), (2) portfolio growth, and (3) mix shift toward credit cards + unsecured lending (together 98% of new exposure, up from 88% a year earlier; unsecured carries higher expected losses). Management emphasized NPL easing at late stage: 90+ NPLs ~6.5%, down 10 bps QoQ and well below 7% peak (Q3’24). They argued NPLs are not the whole story—pricing discipline and NPV-positive cohorts matter.

Balance sheet resilience & conservative stance (good / but implies watch future normalization): Despite higher provisioning, the company highlighted buffers: total coverage 16.2% of the portfolio (≈ 2.5x 90+ balance) and gross CLA vs new 90+ NPL formation ~153.8% (provisions running ahead of new late delinquencies). They reiterated that underwriting/provisioning assumes the future is “worse than the past” via cohort stress tests and they do not claim a directional worsening of asset quality. Outlook: they expect risk-adjusted NIM to move back toward 2H’25 levels as Q1 normalization fades.