Nu Holdings Slumps 17% Despite Strong Q4 Revenue as Investors Focus on Margin Pressure

Nu Holdings (NYSE:NU) delivered better-than-expected fourth-quarter revenue, but its stock tumbled 17% intra-day today as investors reacted to a sharp decline in net interest margins (NIM), overshadowing strong customer growth and profitability.

For Q4, the Brazilian fintech giant reported revenue of $2.99 billion, surpassing analyst expectations of $2.74 billion. However, NIM contracted by 70 basis points sequentially to 17.7%, with management attributing the decline to foreign exchange volatility and strategic shifts in its deposit approach in Mexico and Colombia.

Nu continued expanding its customer base, adding 4.5 million new users in Q4, bringing its total to 114.2 million, a 22% year-over-year increase. Net income surged 85% YoY on an FX-neutral basis to $552.6 million, while annualized return on equity (ROE) reached 29%, reinforcing its profitability momentum.

Despite the strong expansion, the company’s monthly activity rate dipped to 83.1%, as aggressive growth in Mexico and Colombia outpaced its more mature Brazilian market. Still, operational efficiency improved, with the efficiency ratio falling by 150 basis points sequentially to 29.9%. Nu's lending portfolio more than doubled year-over-year to $6.1 billion, while its credit card portfolio expanded 28% to $14.6 billion. Total deposits surged 55% to $28.9 billion, reflecting strong customer trust in its banking services.