Sam Badawi
Is This Latam Fintech the Best Setup for 2025 | HE Deep Dive 4
1/4/2025, 4:45:25 PM
Economic Summary
- Nubank (NU) has rapidly scaled to ~110 million customers across Brazil, Mexico, and Colombia, enabling strong revenue growth (56% YoY) and higher RPAC, while still expanding TAM in underserved Latin American markets.
- The bank’s deposits have grown faster than its loan book, leaving an excess-deposit cushion and a healthy balance sheet with roughly $8B cash against $3B long-term debt (net cash ~ $5B), reducing liquidity risk.
- Net interest income rose ~63% YoY to $1.7B, but net interest margin declined about 140 bps to ~18.4%, partly from improving customer creditworthiness and lower lending rates.
- Operational metrics show low cost to serve (~$0.80 per customer) and high engagement (84% monthly active users), but RPAC has slightly declined sequentially due to rapid expansion into Mexico and Colombia.
Bullish
- Massive TAM in Latin America with low digital banking penetration.
- Rapid customer scale — ~110M users — driving strong revenue growth.
- Low cost to serve (~$0.80) vs RPAC (~$11) implies attractive unit economics.
- Large deposit cushion and net cash (~$5B) reduce liquidity risk and support lending.
Bearish
- Rising 90+ day non-performing loans could pressure credit quality and earnings.
- Net interest margin has declined, reducing profitability from lending.
- Revenue growth is decelerating; sustaining high double-digit growth may require margin sacrifice.
- Macro weakness in Brazil could hurt customer behavior and loan performance.
Bullish tickers
NU
Bearish tickers
NU
NU
2 price targets
1110.3
Bullish
Large customer base (~110M), attractive unit economics (low cost to serve), strong deposit cushion and positive net income growth.
Bearish
Higher 90+ day non-performing loans, declining net interest margin, and decelerating revenue growth amid Brazil macro risks.
SOFI
Bullish
Noted as a distinct business; limited overlap with Nubank's LATAM focus.
Bearish
Mentioned as not a direct competitor in current markets.
NTCO
People mentioned
David VelezChris