Nu Holdings (NYSE:NU) crossed a line in the second quarter of 2026 that few digital lenders ever reach: $1.1 billion in quarterly net income, up 49% from a year earlier on a currency-neutral basis. That’s big-bank money from a company that started out handing Brazilians a no-fee credit card.
Today, Nu runs Nubank, a phone-only bank serving 139 million customers across Brazil, Mexico, and Colombia. Most of its money comes from lending through credit cards and personal loans, funded largely by customer deposits. It has no branches to maintain, so its costs look nothing like a traditional bank’s, a disruptive model that earned it a spot among the 10 Best Bank Stocks to Buy According to Billionaires. The stock, though, trades at a premium to its peers. Whether that premium holds up depends less on customer sign-ups than on something quieter: how reliably Nu’s borrowers keep paying.
Scale Without Branches
Nu’s edge is cheap operations at enormous scale. Its efficiency ratio (operating expenses as a share of revenue) came in at 19.5% in the second quarter, better than the 21.3% it posted a year earlier. Customers aren’t downloading the app and forgetting it, either. 83.5% were active each month, and in Brazil that figure topped 86%.
That engagement turns into earning power. Net interest margin, the spread between what Nu earns on loans and what it pays for funding, reached 22.9%, up 180 basis points. Gross revenue hit nearly $5.9 billion, up 39% currency-neutral, and return on equity reached 33%. Those returns put Nu in a high-growth tier alongside Latin American digital finance peers expanding aggressive lending footprints, even as Mercado Pago keeps issuing credit cards as Brazil worries about debt.
Mexico Gets a Real Bank
The newer chapter is unfolding outside Brazil. Nu launched its bank in Mexico and, by its own account, became the country’s largest digital bank, with 15.8 million customers at quarter-end. Colombia passed 5 million. Mexico’s loan-to-deposit ratio sits at just 35%, so most of the deposits gathered there haven’t yet been lent out. That leaves a sizable runway if underwriting holds up, mirroring the ecosystem strategies driving domestic platforms as strong Cash App momentum drives favorable outlook for Block (XYZ).
Back home, Nu is adding a full banking license to its Brazilian operations. Its in-house AI model, NuFormer, already runs credit decisions for cards in Brazil and Mexico and for unsecured loans in Brazil. The credit portfolio grew 37% currency-neutral to $39.4 billion, deposits reached $45.3 billion, and average revenue per active customer climbed to roughly $17.
Is the Loan Book Growing Too Fast?
Lending this quickly always raises a question about who’s on the other side of the loan. Nu’s 90-day-plus delinquency ratio rose 35 basis points to 6.9%, and cost of credit still came to $1.7 billion for the quarter. A loan book expanding at 37% also means much of it hasn’t been tested through a full downturn. That’s especially true in Mexico, where most customers are new.
The early-warning signs are more reassuring. The 15-to-90-day delinquency ratio improved 16 basis points to 4.8%, and the cost of credit fell 9% from the prior quarter. Risk-adjusted net interest margin jumped to 12.4% from 9.5%. For now, the returns comfortably cover the losses. Credit is still the risk that could change the story fastest.
What 15 Times Earnings Buys
At 14.81 times forward earnings, as of October 9, Nu costs noticeably more than the sector, which trades at 10.83 times. In plain terms, investors pay about $14.81 for each $1 of expected earnings, versus $10.83 for the typical financial stock. Anyone comparing it with traditional Brazilian lenders, such as evaluating Banco Bradesco’s (BBD) economic moat, will spot the gap right away.
So what do you get for the extra cost? Mainly growth. Analysts expect earnings per share to grow 28.48% in 2027, a pace few banks of any size can match. That expansion is backed by a 33% return on equity and a quarter that delivered 49% currency-neutral profit growth. Paying under 15 times earnings for all of that doesn’t look stretched.
The premium also has to absorb risks a domestic US bank doesn’t carry. Nu earns its money in Brazilian reais and in Mexican and Colombian pesos, so currency swings can shrink dollar-reported results even when the underlying business performs well. That’s why the currency-neutral figures above matter more than the headline dollar ones.
Hedge funds have pulled back somewhat, with 92 funds holding the stock in the most recent quarter, down from 104 in the prior one. Short interest stands at 3.50% of the float, which points to relatively limited bearish positioning.
A Premium With Conditions
Nu has graduated from a growth story to a profit story, and its second-quarter numbers make that hard to dispute. At under 15 times forward earnings, the premium over the sector looks reasonable for a lender whose earnings per share are expected to grow 28.48% in 2027, with a 33% return on equity. The setup suits growth-minded investors who are comfortable with emerging-market currencies and credit cycles. A steady climb in 90-day delinquencies, particularly as Mexico’s young loan book matures, would be the clearest sign that the premium has run ahead of the business.
While we acknowledge the risk and potential of NU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NU and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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