Nu Holdings Ltd. · NYSE:NU
Nu — Q3 2023 Earnings Presentation
47 slides from Nu's earnings presentation, Nov 14, 2023
Slide 1: Q3 2023 Earnings Presentation
Q3 2023 Earnings Presentation November 14, 2023 Third Quarter 2023 Results 1
Slide 2: Disclaimer
Disclaimer This presentation speaks at the date hereof and the Company is under no obligation to update or keep current the information contained in this presentation. Any information expressed herein is subject to change without notice. Any market or other third- party data included in this present
Slide 3: Continued Growth of the World's Largest Digital Banking Platform
89.1MM Continued Growth of the Customers +18.7MM YoY World's Largest Digital Banking Platform 90MM Oct’23 51% of Adult Population of Brazil 83% Monthly Activity Rate 100.0 Customers (MM) Open Finance SME 1st 89.1 90.0 Street Mode 79.1 83.7 US$ 2.1BN 80.0 Ultraviolet CC Bank Slip Pay 74.6 Revenues +5
Slide 4: Consistently Compounding Growth, with Meaningful Shift to Profitability
Consistently Compounding Growth, with Meaningful Shift to Profitability Customers (MM) Revenues (US$ MM) Gross Profit (US$ MM) Net Income (Loss) (US$ MM) CAGR: 36% CAGR: 103% CAGR: 95% 34% QoQ FXN FXN FXN 914.8 89.1 2,136.8 303.0 ~2x 83.7 ~4x ~4x 79.1 782.0 74.6 1,868.6 70.4 224.9 65.3 1,618.7 650.9
Slide 5: A Business Model That Drives Multi-Product Growth
A Business Model That Drives Multi- Product Growth Active Active Credit NuInvest Active C NuCoin Active Customers Card Customers Customers Customers 73.8MM 38.9MM 12.4MM 10.5MM + 29% YoY + 23% YoY + 100% YoY Launched in March 2023 Active Active Personal Active SME Active Insurance NuAccounts Loan Cu
Slide 6: A Self-Reinforcing Model
A Self-Reinforcing Model Designed to foster differentiation and value creation Extraordinary Mission-Driven Advanced Proprietary Customer Culture Technology Data Science Experiences Third Quarter 2023 Results 6 Source: Nu.
Slide 7: Nu Holdings' Profitability Momentum Continues
Nu Holdings’ Profitability Momentum Continues Despite its Significant Excess Capital, Nu Holdings' ROE Surpassed 21% Financial Performance (US$MM) YoY QoQ Metrics Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 FXN FXN Revenues 1,307 1,451 1,619 1,869 2,137 53% 13% YoY FXN 171% 112% 87% 60% 53% Gross Profit 427 578 6
Slide 8: Q3'23 Results
Q3’23 Results Third Quarter 2023 Results 8
Slide 9: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE Third Quarter 2023 Results 9
Slide 10: Strong Customer Acquisition and Sustained Growth in Activity Rate
Strong Customer Acquisition and Sustained Growth in Activity Rate Customers YoY: +27% Customers (MM) Active Customers YoY: +29% Active Customers 57.4 61.2 64.9 68.8 73.8 (MM) 89.1 83.7 79.1 74.6 70.4 Activity Rate 82.8% (%) 82.2% 82.1% 81.9% 81.6% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Third Quarter 2023 Res
Slide 11: Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount Number of Products Per Monthly ARPAC by Quarterly Cohort as their Primary Banking Account (%) Active Customer (US$ | FX Neutral) US$ month/ Avg. monthly ARPAC of US$10.0/month while som
Slide 12: Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion
Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 18% YoY: 53% FXN FXN 10.0 2,137 9.3 1,869 8.6 7.9 8.2 1,619 1,451 1,307 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Note 1: Amounts are presented in US dollars and growth rates o
Slide 13: Compounding Effect of Customer Growth and Higher Limits Amplifying Purchase Volume
Compounding Effect of Customer Growth and Higher Limits Amplifying Purchase Volume Purchase Volume (US$BN) Purchase Volume (US$) per Customer $400 FXN US$ Prepaid Cards month/ customer Credit Cards YoY: 28% $350 FXN Credit Card: 28% FXN Prepaid Card: 26% FXN 29.0 $300 26.3 23.8 23.3 $250 21.2 10.2 9
Slide 14: Strong Performance for Both Credit Card and Personal Loan Portfolios
Strong Performance for Both Credit Card and Personal Loan Portfolios Total Portfolio (US$BN) Total Portfolio (%) Personal Loans YoY: 48% Personal Loans Credit Cards FXN Credit Cards Credit Card: 46% FXN Personal Loans: 48% FXN 15.4 20% 18% 18% 19% 20% 14.8 12.8 3.1 2.8 11.3 2.3 9.7 2.0 1.9 80% 82% 8
Slide 15: Closing Interest Earnings Portfolio Gap Relative to Market
Closing Interest Earnings Portfolio Gap Relative to Market as Nu Expands Financial Products and Features Credit Card IEP Evolution Nu Interest Earning Installments Balance Nu Revolving Balance Nu Non-Interest Earning Balance (% of Total Receivables – Brazil Only) Market Interest Earning Installments
Slide 16: Personal Loan Origination Accelerated Sequentially
Personal Loan Origination Accelerated Sequentially Origination (R$BN) YoY: 93% BRL 8.9 7.3 6.3 Credit Yield (%) 4.6 5.0 6.8% 6.1% 5.5% 5.7% 5.3% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Third Quarter 2023 Results 16 Note 1: Amounts are presented in BRL. Note 2: Credit Yield is the average rate of the loans ori
Slide 17: Robust Deposit Franchise Driven By Sustainable Volume Growth and Stable Funding Cost
Robust Deposit Franchise Driven By Sustainable Volume Growth and Stable Funding Cost Deposits (US$BN) YoY: 26% FXN 19.1 18.0 15.8 15.8 Cost of Funding as 14.0 a % of CDI 95% 78% 81% 80% 80% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Third Quarter 2023 Results 17 Note 1: Amounts are presented in US dollars and gr
Slide 18: Consistent NIM Expansion Driven by Rising Interest Earning Portfolio
Consistent NIM Expansion Driven by Rising Interest Earning Portfolio and Improving Yields with Stable Funding Cost NII (US$MM) & NIM (%) YoY: 111% FXN 1,195 1,047 18.8% 18.3% NIM 815 (%) 688 527 15.0% 13.3% 11.1% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Note 1: ‘NII’ (Net Interest Income) is calculated as Inte
Slide 19: Stable Cost to Serve Underscores Operating Leverage Potential
Stable Cost to Serve Underscores Operating Leverage Potential Cost to Serve per Active Customer (US$) YoY: 0% FXN 0.9 0.9 0.8 0.8 0.8 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis. For additional detail on calculations please refer
Slide 20: Sustained Gross Profit Growth and Margin Expansion
Sustained Gross Profit Growth and Margin Expansion Gross Profit (US$MM) YoY: 100% FXN 914.8 782.0 650.9 Gross Profit 578.3 42.8% Margin (%) 41.8% 40.2% 427.0 39.9% 32.7% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Third Quarter 2023 Results 20 Note 1: Amounts are presented in US dollars and growth rates on an FX
Slide 21: Strong Track Record of Improving Operating Leverage as Business Scales
Strong Track Record of Improving Operating Leverage as Business Scales Efficiency 91.6% NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio Efficiency Ratio Ex. SBC 75.8% 72.7% 72.3% 1,599.1 68.6% 1,415.2 65.6% 60.7% 1,178.5 57.4% 58.2% 1,043.0 56.1% 55.1% 52.7% 50.2% 604.2 47.4% 45.8% 459.0 379.5 41.0
Slide 22: Driving Sustained Increases in Both Net Income and Adjusted Net Income
Driving Sustained Increases in Both Net Income and Adjusted Net Income Net Income (US$MM) YoY: 426% Net Income FXN Adj. Net Income 355.6 262.7 182.4 113.8 303.0 63.1 224.9 141.8 7.8 58.0 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Third Quarter 2023 Results 22 Note 1: Amounts are presented in US dollars and growt
Slide 23: Best-In-Class Cost Structure Lays Foundation for Sustainable Long-Term Differentiation
Best-In-Class Cost Structure Lays Foundation for Sustainable Long- Term Differentiation The Four Cost Pillars of Retail Financial Services COST TO ACQUIRE COST TO SERVE COST OF RISK COST OF FUNDING $7 <$1 6.1% $19.1Bn Per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquenc
Slide 24: Q3'23 Credit Underwriting
Q3’23 Credit Underwriting Third Quarter 2023 Results 24
Slide 25: Delinquency Ratios Tracking Expectations
Delinquency Ratios Tracking Expectations 15-90 NPLs 90+ NPLs Brazil Credit Portfolio 6.2% 5.9%6.1% 5.6% 5.5% 5.0% 5.1% 5.1% 5.1% 5.2% 5.2% 5.0% 4.4% 4.7% 4.5% 4.2% 4.3% 5.1% 4.1% 4.2% 4.9% 5.0% 3.7% 3.7% 3.7% 3.7% 3.4% 3.5% 3.1% 3.0% 3.0% 3.2% 3.0% 2.6% 2.5% 2.5% 2.4% 2.2% 2.3% 3.1% 3.0% 2.3% 2.6% 2
Slide 26: Nu has Shown Superior Credit Underwriting Across Income Bands for Credit Cards
Nu has Shown Superior Credit Underwriting Across Income Bands for Credit Cards NPL 90+ By Income Band Nu % Adult Population Defined by Minimum Wage (MW) Market <1x MW 34% 1x to 2x MW 38% 2x to 3x MW 11% 14.3% 10.6% 11.8% 8.8% 6.7% 8.3% 7.1% 8.3% 7.9% 5.3% 5.5% 5.8% Jan 19 Sep 23 Jan 19 Sep 23 Jan 19
Slide 27: Sequential Risk-Adjusted NIM Improvement Shows Effective Risk Pricing
Sequential Risk-Adjusted NIM Improvement Shows Effective Risk Pricing Credit Loss Allowance & Risk Adj. NIM 628 590 9.0% 475 8.0% 415 Risk Adj. NIM 376 (%) 6.3% 5.3% 3.2% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Note 1: ‘CLA’ stands for Credit Loss Allowance Expenses. Note 2: ‘Risk Adj. NIM’ stands for Risk Ad
Slide 28: Q&A
Q&A Third Quarter 2023 Results 28
Slide 29: Appendix
appendix 29 Third Quarter 2023 Results
Slide 30: Comfortable Capital and Liquidity Positions
Comfortable Capital and Liquidity Positions Capital Position (US$Bn) Liquidity Position (US$Bn) Nu Holdings Cash & Equivalents 4.5 Capital Injection Under Approval Capital Excess 2x LDR Capital Requirement 35% 2.3 2.2 0.1 0.1 19.1 0.7 0.7 1.4 1.4 6.7 Prudential Conglomerate Nu Holdings Interest Earn
Slide 31: Formation Ratios Remain Virtually Stable
Formation Ratios Remain Virtually Stable NPL Formation Stage 3 Formation Brazil Credit Portfolio 2.9% 3.0% 3.2% 2.9% 3.2%3.0% 3.4% 2.9% 3.4%3.3% 2.5% 2.6% 2.6% 3.1% 3.2% 3.1% 2.9%2.7% 2.1% 2.5% 2.6% 1.9% 2.0% 1.9% 1.8% 1.7% 1.6% 2.3% 1.6% 1.6% 1.9% 2.0% 1.9%2.0% 2.0% 1.9% 1.7% 1.6% 1.1% 0.9% 1.1% 0.
Slide 32: Rising Coverage Ratios Denote Conservative Risk Management
Rising Coverage Ratios Denote Conservative Risk Management Coverage Ratio Over Total Balance Coverage Ratio Over NPL90+ Brazil Credit Portfolio 13.5% 12.6% 262.6% 263.9% 11.6% 257.5% 10.9% 242.5% 10.6% 235.2% 223.0% 222.2% 9.7% 213.3% 9.1% 199.0% 238.0% 8.8%8.7% 9.0% 8.6% 8.1% 180.3% 208.6% 213.9% 7
Slide 33: Credit Card: Superior Asset Quality Even Adjusted by Growth
Credit Card: Superior Asset Quality Even Adjusted by Growth LAGGED NPL 90+ By Income Band Nu % Adult Population Defined by Minimum Wage (MW) Market <1x MW 34% 1x to 2x MW 38% 2x to 3x MW 11% 13.8% 14.4% 11.7% 10.0% 8.5% 11.1% 10.5% 8.2% 8.0% 5.9% Jan 20 Sep 23 Jan 20 Sep 23 Jan 20 Sep 23 3x to 5x MW
Slide 34: Portfolio Growth Continues to be the Main Factor of Provision Balance Increase
Portfolio Growth Continues to be the Main Factor of Provision Balance Increase Provisions Bridge (US$MM, FXN) 301 (7) 194500% 187900% 2,253 1,945 0% 0% Q2'23 ECL Growth Other Q3'23 ECL Note 1: The information presented is for Nu Holdings and includes both credit card and personal loans provision bal
Slide 35: Loan Portfolio (FX Neutral) (1/4)
Loan Portfolio (FX Neutral) (1/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q3’23 includes the PV adjustment YoY: 48% Personal Loans FXN Credit Card IEP Personal Loans: 48% FXN Credit Card IEP: 100% FXN 9% Credit Card non-IEP Credit Card non-IEP: 32% FXN 9% FXN 15.4 FXN 14.1 15% 9% 13
Slide 36: Loan Portfolio (FX Neutral) (2/4)
Loan Portfolio (FX Neutral) (2/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q3’23 excludes the PV adjustment YoY: 50% Personal Loans FXN Credit Card IEP Personal Loans: 48% FXN Credit Card IEP: 100% FXN 11% Credit Card non-IEP Credit Card non-IEP: 35% FXN FXN 15.6 9% FXN 14.1 15% 9% 1
Slide 37: Loan Portfolio (FX Neutral) (3/4)
Loan Portfolio (FX Neutral) (3/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q3’23 includes the PV adjustment YoY: 48% Personal Loans FXN Credit Card IEP Personal Loans: 48% FXN Credit Card IEP: 100% FXN 9% Credit Card non-IEP Credit Card non-IEP: 32% FXN 9% FXN 15.4 FXN 14.1 15% 9% 13
Slide 38: Loan Portfolio (FX Neutral) (4/4)
Loan Portfolio (FX Neutral) (4/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q3’23 excludes the PV adjustment YoY: 50% Personal Loans FXN Credit Card IEP Personal Loans: 48% FXN Credit Card IEP: 100% FXN 11% Credit Card non-IEP Credit Card non-IEP: 35% FXN FXN 15.6 9% FXN 14.1 15% 9% 1
Slide 39: Deposits (FX Neutral) Steady Growth Over The Past Year
Deposits (FX Neutral) Steady Growth Over The Past Year Deposits (FXN US$BN) YoY: 26% FXN 12% 19.1 16.6 (5)% 8% 17.1 FXN 15.1 10% FXN FXN 15.8 FXN Cost of Funding as a % of CDI 95% 78% 81% 80% 80% Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Third Quarter 2023 Results 39 Note 1: Amounts and growth rates are present
Slide 40: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations This presentation includes financial measures defined as “non-IFRS financial measures” by the SEC, including: Adjusted Net Income and certain FX Neutral measures and provides reconciliations to the most directly comparable IFRS financial measure. A non
Slide 41: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Adjusted Net Income As reported Nu Holdings - Consolidated For the three months ended September 30, Adjusted Net Income (US$ million) 2023 2022 Profit attributable to shareholders of the parent company for the period 303.0 7.8 Share-based compensation
Slide 42: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Q4’22 Metrics adjusted by the CSA cancellation Nu Holdings - Consolidated For the three months ended December 31, 2022 As presented in the financial CSA termination As presented in the earnings US$ million statements adjustment presentation Net income
Slide 43: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Equity and Annualized ROE US$ million Reconciliation - ROE Nu Holdings - Consolidated Q3’22 Q4'22 Q1'23 Q2'23 Q3’23 Total equity at the end of the period 4,752.7 4,890.8 5,208.5 5,644.6 5,889.3 Net Income for the period 7.8 58.0 141.8 224.9 303.0 Adjus
Slide 44: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations FX Neutral measures are prepared and presented to eliminate the effect of foreign exchange, or “FX,” volatility between the comparison periods, allowing management and investors to evaluate financial performance despite variations in foreign currency e
Slide 45: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations FX Rates - On a monthly basis, Nu translates its subsidiaries figures from their individual functional currency into Nu Holdings functional currency, the U.S. Dollars ("US$"), following the requirements of IAS 21 "The Effects of Changes in Foreign Exch
Slide 46: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations As of August 31, 2023, income statement figures were divided by the average FX Rate of the month (R$ 4.9080, MXN 16.9940 and COP 4,073.3230 to US$ 1.00) and balance sheet figures were divided by the last price FX Rate of the month (R$ 4.9550, MXN 17.03
Slide 47: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br Third Quarter 2023 Results 47