1) Executive Summary ( $NU (-2%)
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Nu is in the process of disrupting traditional banking on a rapidly developing continent. It is the largest fintech bank in Latin America, serving 122.7 million customers across three countries per Q2 2025. The company successfully leverages its technology-first approach, and the platform impresses with its simplicity. Market penetration is the key to success in this industry, and Nu wrote the playbook on it: 60% of the adult population in Brazil relies on Nu, 13% in Mexico, and 10% in Colombia. While Nu has matured in the Brazilian market, the rest of Latin America is still untouched. Many opportunities await this company, which offers all services provided by legacy banks but with a more accessible approach.
The company is founder-led, and David Velez’s vision is as clear as ever, which he proves by tapping into new markets and executing strongly on the established moat in Brazil. Nu is positioned as a low-cost digital disruptor in one of the world’s most underbanked regions. If the expansion continues successfully, soon the entire South American continent will be able to profit from Nu’s banking services. The fundamentals of the neobank are strong, with expected annual growth north of 25% over the next several years.
2) Macro Tailwinds
Nu’s expansion relies on an underbanked population. Roughly 70% of adults in Latin America lack access to formal credit, while approximately 45% are still unbanked. The neobank has helped millions of people in Brazil achieve their financial goals and introduced them to a broader range of financial services. However, there is still so much more to achieve looking at Latin America.
Another factor, playing into Nu’s hands, is smartphone adoption: more than 80% penetration in Brazil and Mexico, enabling Nu’s mobile-first strategy. As these countries become more prosperous, smartphones become more prevalent, and Nu’s app is the go-to platform for first-time banking clients.
Building on the previous point: A macro catalyst for all companies across Latin America is the developing economy: GDP growth exceeding the average across most nations, moderating inflation rates, stabilizing governments. Latin America is gaining ground fast, and Nu is in the center of it.
3) Fundamentals
· Customers (Q2 2025): 122.7 million (~37% CAGR since 2020)
· Revenue (est. FY 2025): $14.5 billion (~65% CAGR since 2020)
· Net Income (est. FY 2025): $2.2 billion (profitable since 2022)
· ROIC: 5.2% (Q2 2025)
· Efficiency Ratio: 28.3% (reflecting operating leverage and scale)
· Deposits: $36.6 billion (~43% CAGR 2020-Q2 2025)
· Loan Portfolio: $27.3 billion (~32% CAGR 2020-Q2 2025)
· NIM: 17.7%, with risk-adjusted NIM at 9.2%
· Basel Ratio: ~16% (comfortably above regulatory minimums of approximately 8–10%)
Together, these metrics highlight Nu’s exceptional growth trajectory and disciplined balance sheet management. With revenues, deposits, and customer base growing more than 40–60% annually since 2020, Nu has proven strong scale and market penetration. Its efficiency ratio of more than 28% demonstrates world-class cost leverage, while a 17.7% NIM reflects its ability to monetize lending effectively.
Importantly, Nu achieved profitability in 2022 and has grown net income rapidly since then. The Basel Ratio of approximately 16% shows that Nu combines substantial growth with resilience, which is unique for a neobank. Estimates also project annual revenue growth of more than 25% through FY 2027 and net income growth north of 35% YoY, suggesting analysts are confident that the company can maintain its growth trajectory.
4) Valuation
· Market Cap (Aug 2025): ~$67 billion
· P/E (Forward): ~25x (premium to banks, but below global fintech comps)
· Justified by: growth, ROIC, scalability, and moat
While Nu’s valuation remains elevated with a forward P/E of 25, it is important to take the projected 25% growth rate, wide moat, and strong management into consideration. The macro tailwinds are on Nu’s side, and the company has a proven track record of market penetration, so it is only fair to have a premium over competitors. Nu is an innovator in an extremely attractive market, and if compared to global fintech companies like Adyen, the valuation is not far-fetched.
5) International Expansion
Nu initially launched exclusively in Brazil, but the company is long past that. Management enters new markets thoughtfully, without rushing, which is why the neobank currently only operates in two countries apart from Brazil: Mexico and Colombia.
Nu launched its Mexican operation in 2020, and customer acquisition has been incredibly strong since then. As of Q2 2025, 13% of the adult population are customers of Nu, equating to 12 million people, up from 2.7 million in 2022.
Colombia shows a similar picture, with roughly 10% of the adult population using Nu. Services were introduced just a few months after the highly successful launch in Mexico and show similar results. Deposits alone from customers within these two countries have grown over 280% since Q1 2024 to $8.8 billion.
However, these are just the figures for the ongoing expansion, and there are still many more countries to enter within the Latin American market. Nevertheless, Nu has no rush: In Mexico and Colombia alone, more than 50% of people are still unbanked. That is a huge addressable market in itself. Just imagine how Nu could transform people’s access to banking all across Latin America if execution and growth continue as successfully.
6) Competitive Position / Moat
Nu runs a customer-centric digital model. The app-first approach offers a convenient banking experience designed for mobile-native users. It is one of the most efficient ways to engage with people all over Latin America because all that is needed for the connection is a smartphone. Conversely, the platform is cheap to run for Nu, since digital infrastructure requires much less capital compared to legacy banking services with branches in every town.
Brand loyalty also plays a huge role in Nu’s competitive position. With over 127 million customers across Brazil, Mexico, and Colombia, the neobank has already established itself within the market. According to PYMNTS, Nubank achieved an NPS (Net Promoter Score) of 84 in 2024, especially among high-income Brazilian customers. This score is extremely competitive, suggesting strong customer satisfaction.
Nu had the first-mover advantage and heavily leveraged the underbanked population to scale operations. Through word-of-mouth and solid management, the neobank continued to expand into three countries. More than 60% of Brazil’s adult population already use Nu, which makes an entry for another neobank unattractive and less likely to yield success.
7) Management
As mentioned previously, Nu is a founder-led company. David Velez, who founded the company in 2013, is still at the helm of the neobank. His vision, combined with the talent of countless executives, drives strong execution and successful market penetration, solidifying growth prospects. Nu has attracted multiple high-profile managers with experience in the most successful companies across finance and tech. The world-class leadership has delivered strong capital discipline, consistent profitability, and growing reach for many years.
8) Risks and Mitigation
It is also important to note a few risks that could affect Nu’s business.
First, Latin America is historically volatile, with unreliable governments and deeply embedded corruption. However, that is changing at the moment, at least in the more prominent nations, including Brazil, Argentina, Mexico, and many more. The region is not what it used to be, and with wealth creation comes improved governance. The economy is growing, while structures are stabilizing. Of course, there will always be outliers like Venezuela, but the markets Nu currently operates in are deemed relatively safe.
The second risk is one accompanying every bank. Consumer lending is inherently cyclical and comes in waves, but as emphasized previously, the economies in Latin America are growing, as well as Nu’s customer base. Therefore, this risk should be manageable and offset by other tailwinds.
Regulations are another possible risk for Nu. If governments decide to tighten the rules or impose stricter oversight of digital lenders, it could cause potential headaches for the company, though nothing to lose sleep over.
The last, though negligible risk, is competition. While many fintech companies emerge every year, Nu has built a strong customer base and reputation. It is hard for a newcomer to dethrone Nu after its creation of an immense moat. 60% of Brazilian adults use Nu, and it would need severe mismanagement to drive these customers away from the bank.
9) Conclusion
Nu is more than just a bank, but a regional financial ecosystem spanning Latin America with a huge addressable market. Scale, early-mover, and tech advantage create a strong moat and make it undesirable for customers to leave. The neobank is advancing in one of the fastest developing, though underbanked, regions in the world. Nu is at the forefront of Latin American wealth creation, realizing the dreams of millions of adults accessing their first line of credit or banking services at all.
With founder-led management, projected revenue CAGR of more than 25%, and massive untapped underbanked populations, Nu is one of the strongest long-term fintech stories, capitalizing on the industry’s and the region’s growth. When considering the premium valuation, it would be advisable to refer to Warren Buffet’s quote: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
