Nu Holdings Ltd. · NYSE:NU
Nu — Q4 2023 Earnings Presentation
49 slides from Nu's earnings presentation, Feb 22, 2024
Slide 1: Q4 2023 Earnings Presentation
Q4 2023 Earnings Presentation February 22, 2024 Fourth 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 One of the World's Largest Digital Banking Platforms
Continued Growth of One of the World's Largest Digital Banking Platforms Q4’23 Main Highlights Customers (MM) 95MM Jan’24 93.9 93.9MM US$ 1,143.2MM 89.1 Customers +19MM YoY Gross Profit +87% FXN YoY 83.7 79.1 53% of Adult Population of Brazil Gross Profit Margin 47.5% 74.6 70.4 83% Monthly Activity
Slide 4: Compounding Growth, with Meaningful Shift to Profitability
Compounding Growth, with Meaningful Shift to Profitability Customers (MM) Revenues (US$ MM) Gross Profit (US$ MM) Net Income (Loss) (US$ MM) CAGR: 32% CAGR: 82% CAGR: 111% 20% QoQ FXN FXN FXN 93.9 89.1 ~1.7x ~3.3x ~4.4x 360.9 83.7 2,404.9 1,143.2 79.1 303.0 74.6 70.4 2,136.8 65.3 914.8 1,868.6 224.9
Slide 5: Nu Holdings' Profitability Momentum Continues
Nu Holdings’ Profitability Momentum Continues Despite its Significant Excess Capital, Nu Holdings' ROE Reached 23% Financial Performance (US$MM) Metrics Q4’22 Q1’23 Q2'23 Q3'23 Q4'23 FY22 FY23 Revenues 1,451 1,619 1,869 2,137 2,405 4,792 8,029 YoY FXN 112% 87% 60% 53% 57% 167% 62% Gross Profit 578 6
Slide 6: How Did We Perform in 2023 Against Our Company Priorities?
How Did We Perform in 2023 Against Our Company Priorities? Build meaningful Accelerate Progress in High deposit base in personal loans in Company Brazil, both Income, allowing Mexico and Priority us to crack Colombia, allowing secured and upmarket us to accelerate unsecured assets origination Quarte
Slide 7: Q4'23 Results
Q4'23 Results Fourth Quarter 2023 Results 7
Slide 8: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE Fourth Quarter 2023 Results 8
Slide 9: Strong Customer Acquisition and Sustained Growth in Activity Rate
Strong Customer Acquisition and Sustained Growth in Activity Rate Customers YoY: +26% Customers (MM) Active Customers YoY: +27% Active Customers 61.2 64.9 68.8 73.8 78.0 (MM) 89.1 93.9 83.7 79.1 74.6 Activity Rate 83.1% (%) 82.8% 82.2% 82.1% 81.9% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Fourth Quarter 2023 Re
Slide 10: Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount Number of Products Per Monthly ARPAC by Quarterly Cohort as their Primary Banking Account (%) Active Customer (US$ | FX Neutral) US$ month/ Avg. monthly ARPAC of US$10.6/month while som
Slide 11: Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion
Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 23% YoY: 57% FXN FXN 2,405 10.6 2,137 10.0 9.3 1,869 8.6 8.2 1,619 1,451 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Note 1: Amounts are presented in US dollars and growth rates
Slide 12: Compounding Effect of Customer Growth and Higher Limits Amplifying Purchase Volume
Compounding Effect of Customer Growth and Higher Limits Amplifying Purchase Volume Purchase Volume (US$BN) Purchase Volume per Customer (US$) $400 FXN US$ Prepaid Cards month/ For constant risk mix analysis, please refer to the Appendix. customer Credit Cards YoY: 29% $350 FXN Credit Card: 29% FXN P
Slide 13: Strong Performance for Both Credit Card and Personal Loan Portfolios
Strong Performance for Both Credit Card and Personal Loan Portfolios Total Portfolio (US$BN) Total Portfolio (%) Personal Loans YoY: 49% Personal Loans Credit Cards FXN Credit Cards Credit Card: 44% FXN Personal Loans: 76% FXN 18.2 18% 18% 19% 20% 20% 15.4 3.7 14.8 12.8 3.1 2.8 11.3 2.3 2.0 82% 82%
Slide 14: Interest Earning Portfolio over Total Portfolio Surpasses Market
Interest Earning Portfolio over Total Portfolio Surpasses 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 Instal
Slide 15: Sequential Acceleration of Secured and Unsecured Loan Origination
Sequential Acceleration of Secured and Unsecured Loan Origination Originations (R$BN) YoY: 100% Brazil Only BRL Unsecured Personal Loans 10.0 Secured Personal Loans 8.9 1.0 0.3 9.0 7.3 8.6 Credit 6.3 0.1 7.2 Yield (%) 5.0 6.3 5.0 6.8% 6.1% 6.4% 5.7% 5.3% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Fourth Quarter
Slide 16: Robust Deposit Franchise Driven By Sustainable Volume Growth
Robust Deposit Franchise Driven By Sustainable Volume Growth and Stable Cost of Deposits Deposits (US$BN) YoY: 38% Brazil FXN Mexico 23.7 1.0 19.1 22.7 18.0 0.2 Cost of 15.8 15.8 0.1 17.9 18.9 Deposits as a % of Interbank Rate 15.8 15.8 81% 80% 80% 80% 78% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Fourth Quarte
Slide 17: Net Interest Income Expansion Driven by Growth of Interest Earning Portfolio
Net Interest Income Expansion Driven by Growth of Interest Earning Portfolio NII (US$MM) & NIM (%) YoY: 85% FXN 1,345.7 1,195.0 1,046.8 NIM (%) 18.8% 815.3 18.3% 18.3% 688.0 15.0% 13.3% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest income and gains (loss
Slide 18: Stable Cost to Serve Underscores Operating Leverage Potential
Stable Cost to Serve Underscores Operating Leverage Potential Cost to Serve per Active Customer (US$) YoY: 0% FXN 0.9 0.9 0.9 0.8 0.8 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis. For additional detail on calculations please refer
Slide 19: Sustained Gross Profit Growth and Margin Expansion
Sustained Gross Profit Growth and Margin Expansion Gross Profit (US$MM) YoY: 87% FXN 1,143.2 Gross Profit 914.8 Margin (%) 782.0 650.9 47.5% 578.3 42.8% 41.8% 39.9% 40.2% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Fourth Quarter 2023 Results 19 Note 1: Amounts are presented in US dollars and growth rates on an F
Slide 20: Strong Track Record of Driving Operating Leverage as Business Scales
Strong Track Record of Driving Operating Leverage as Business Scales Efficiency 91.6% NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio 1,799.3 75.8% 72.7% 72.3% 1,599.1 1,415.2 65.6% 1,178.5 58.2% 1,043.0 55.1% 750.0 604.2 847.0 47.4% 459.0 379.5 213.3 278.9 39.0% 35.4% 35.0% 36.0% (195.3) (202.7) (
Slide 21: Driving Sustained Growth in Both Net Income and Adjusted Net Income
Driving Sustained Growth in Both Net Income and Adjusted Net Income Adjusted Net Income YoY: Net Income (US$MM) +229% Adj. Net Income (MM) 113.8 182.4 262.7 355.6 395.8 8% 11% 14% 17% 17% Adj. Net Income Margin (%) YoY: 489% FXN 360.9 303.0 Net Income Margin 224.9 (%) 141.8 14% 15% 12% 9% 58.0 4% Q4
Slide 22: 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% $23.7Bn Per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquenc
Slide 23: Q4'23 Credit Underwriting
Q4'23 Credit Underwriting Fourth Quarter 2023 Results 23
Slide 24: Delinquency Ratios Tracking Expectations
Delinquency Ratios Tracking Expectations 15-90 NPLs 90+ NPLs Brazil Credit Portfolio 6.2% 6.1% 6.1% 5.9% 5.6% 5.5% 5.0% 5.1% 5.1% 5.1% 5.0% 5.2% 5.2% 4.4% 4.7% 4.5% 4.2% 4.3% 5.1% 4.1% 4.2% 4.1% 4.9% 5.0% 3.7% 3.7% 3.7% 3.7% 3.4% 3.5% 3.1%3.0% 3.0% 3.2% 3.0% 2.6% 2.5% 2.5% 2.4% 2.2% 2.3% 3.1% 3.0% 2
Slide 25: Proactive Renegotiation Approach Leads to Limited Impact on 90+ NPL Ratio
Proactive Renegotiation Approach Leads to Limited Impact on 90+ NPL Ratio Renegotiated Balance (US$BN) Coverage Ratio & NPLs of Renegotiated Balance (%) Brazil Credit Portfolio % Renegotiated Before 15 Days Overdue Coverage Ratio 90+ NPLs 5 0% 427.0% 450. 0% % Renegotiated Between 15 & 90 Days Overd
Slide 26: Sequential Risk-Adjusted NIM Improvement Shows Effective Risk Pricing
Sequential Risk-Adjusted NIM Improvement Shows Effective Risk Pricing Credit Loss Allowance & Risk Adj. NIM 628 590 592 475 10.2% 415 9.0% Risk Adj. NIM (%) 8.0% 6.3% 5.3% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Note 1: ‘CLA’ stands for Credit Loss Allowance Expenses. Note 2: ‘Risk Adj. NIM’ stands for Risk A
Slide 27: Wrapping Up
Wrapping Up Fourth Quarter 2023 Results 27
Slide 28: Looking Ahead
Looking Ahead 2024 Priorities 1 Win in Mexico 2 Ramp up Secured Lending in Brazil 3 Progress in High Income and Supercore in Brazil 4 Money Platform becoming a reality Fourth Quarter 2023 Results 28 Source: Nu.
Slide 29: Q&A
Q&A Fourth Quarter 2023 Results 29
Slide 30: Appendix
appendix 30 Fourth Quarter 2023 Results
Slide 31: A Business Model That Drives Multi-Product Growth
A Business Model That Drives Multi- Product Growth Active Active Credit Active Investments Pix Financing Customers Card Customers Customers Active Customers 78.0MM 40.6MM 15.0MM 13.6MM + 27% YoY + 21% YoY + 103% YoY + 166% YoY Active Active Unsecured Active SME Active Insurance NuAccounts Lending Cu
Slide 32: Comfortable Capital and Liquidity Positions
Comfortable Capital and Liquidity Positions Capital Position (US$Bn) Liquidity Position (US$Bn) Nu Holdings Cash & Equivalents 5.4 Capital Excess LDR 1.8x 34% 23.7 Capital Requirement 2.4 3.0 1.5 1.5 8.2 1.6 1.6 Capital in our Geos Nu Holdings Interest Earning Portfolio Total Deposits Fourth Quarter
Slide 33: 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% 3.0% 3.4% 2.9% 3.4%3.3%3.4% 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%
Slide 34: Rising Coverage Ratios Denote Conservative Risk Management
Rising Coverage Ratios Denote Conservative Risk Management Coverage Ratio Over Total Balance Coverage Ratio Over NPL 90+ Brazil Credit Portfolio 13.5% 13.7% 12.6% 262.6% 263.9% 257.5% 11.6% 242.5% 10.9% 235.2% 10.6% 223.0% 222.2% 225.4% 9.7% 213.3% 199.0% 238.0% 9.0% 9.1% 8.8%8.7% 8.6% 213.9% 180.3%
Slide 35: 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$MM, FXN) (107) 400 262600% 233300% 2,626 2,333 0% 0% Q3'23 ECL Growth Other Q4'23 ECL Note 1: The information presented is for Nu Holdings and includes both credit card and personal loans provision b
Slide 36: Consistent Growth and ARPAC Acceleration Across All Cohorts
Consistent Growth and ARPAC Acceleration Across All Cohorts Adjusted By Constant Risk Mix Adj. Purchase Volume (US$) Adj. ARPAC (US$) per Customer $30 $500 FXN US$ FXN US$ month/ Brazil Only month/ Brazil Only customer customer $450 $25 $400 $350 $20 $300 $15 $250 $200 Q1’17 2017 $10 Q1’17 2017 $150
Slide 37: Loan Portfolio (FX Neutral) (1/4)
Loan Portfolio (FX Neutral) (1/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q4'23 includes the PV adjustment YoY: 49% Personal Loans FXN Credit Card IEP Personal Loans: 76% FXN Credit Card non-IEP Credit Card IEP: 96% FXN 14% 18.2 Credit Card non-IEP: 28% FXN FXN 10% FXN 16.0 9% 10% F
Slide 38: Loan Portfolio (FX Neutral) (2/4)
Loan Portfolio (FX Neutral) (2/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q4'23 excludes the PV adjustment YoY: 51% Personal Loans FXN Credit Card IEP Personal Loans: 76% FXN Credit Card non-IEP Credit Card IEP: 96% FXN 14% 18.4 Credit Card non-IEP: 31% FXN FXN 10% FXN 16.1 10% 14.7
Slide 39: Loan Portfolio (FX Neutral) (3/4)
Loan Portfolio (FX Neutral) (3/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q4'23 includes the PV adjustment YoY: 49% Personal Loans FXN Credit Card IEP Personal Loans: 76% FXN Credit Card non-IEP Credit Card IEP: 96% FXN 14% 18.2 Credit Card non-IEP: 28% FXN FXN 10% FXN 16.0 9% 10% F
Slide 40: Loan Portfolio (FX Neutral) (4/4)
Loan Portfolio (FX Neutral) (4/4) Steady Credit Book Expansion Total Portfolio (FXN US$BN) Q4'23 excludes the PV adjustment YoY: 51% Personal Loans FXN Credit Card IEP Personal Loans: 76% FXN Credit Card non-IEP Credit Card IEP: 96% FXN 14% 18.4 Credit Card non-IEP: 31% FXN FXN 10% FXN 16.1 10% 14.7
Slide 41: Deposits (FX Neutral) Steady Growth Over The Past Year
Deposits (FX Neutral) Steady Growth Over The Past Year Deposits (FXN US$BN) YoY: 38% FXN 23.7 19.8 20% 17.2 17.8 FXN 16.4 11% (5)% 9% FXN Cost of FXN FXN Deposits as a % of Interbank Rate 81% 80% 80% 80% 78% Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Fourth Quarter 2023 Results 41 Note 1: Amounts and growth rate
Slide 42: 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 43: 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 December 31, For the year ended December 31, Adjusted Net Income (US$ million) 2023 2022 2023 2022 Profit attributable to shareholders of the parent company 360.9 (29
Slide 44: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Q4’22 and FY22 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 Ne
Slide 45: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Equity and Annualized ROE/Adjusted ROE US$ million Reconciliation - ROE Nu Holdings - Consolidated Q4’22 Q1'23 Q2'23 Q3'23 Q4'23 FY22 FY23 Total equity at the end of the period/year 4,890.8 5,208.5 5,644.6 5,889.3 6,406.4 4,890.8 6,406.4 Net Income for
Slide 46: 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 47: 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$"), following the requirements of IAS 21 "The Effects of Changes in Foreign Exch
Slide 48: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations As of August 31, 2023, income statement figures were divided by the average FX Rate of the month (R$ 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 49: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br Fourth Quarter 2023 Results 49