NuBank said artificial intelligence capabilities it started rolling out in Brazil helped some customers raise their credit card limits, boosting sales and profits in the third quarter.
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The company announced that its credit portfolio increased by 42% to US$30.4 billion in September, according to financial statements released on Thursday. Finance Director Guilherme Lago said that AI is contributing to improved credit analysis, which will enable business growth without proportionally increasing risk.
— The improvement that has had the biggest impact so far has been in credit analysis, which can help accelerate growth at the same level of risk, Lago said in an interview before the earnings release.
Thanks to the credit boost, adjusted net income for the quarter reached US$829 million, up 40% year over year and beating the average consensus estimate of US$770.4 million among analysts surveyed by Bloomberg.
Nubank has started implementing a new risk analysis model. This was partially fueled by the acquisition of Silicon Valley data intelligence company Hyperplane, which was acquired in June 2024.
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Lago said the new model is more accurate in identifying risks than previous models, which means banks can offer higher limits to customers with less exposure.
The new model was first introduced in Brazil for credit cards, and after several months of development, it should start being used for credit decisions in Mexico by December, Lago said. In the second stage, Nubank plans to use it in the initial customer approval process.
In Brazil, the default rate for loans over 90 days past due in the fintech portfolio reached 6.8% in the third quarter, down 0.4 points year-on-year.
NuBank will begin operating as a bank in Mexico next year, with the aim of expanding its product offering in Mexico and acquiring new customers. The company operates in Mexico with a nonbank financial institution license that allows it to offer credit cards and accept deposits. Once fully licensed, the agency will seek to expand its payroll accounts.
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Lago said Mexico already has better numbers than Brazil in some product lines compared to 2019, when the Brazilian division had similar customer numbers.
— I would never say that Mexico is exactly the same as Brazil, but the business model that we developed in Brazil and adapted to Mexico worked very well, — he said.
The company reached 127 million customers in September and added 4.3 million new customers in the third quarter.
Nubank is also eyeing markets outside of Latin America. The company applied for a U.S. banking license in late September, which it said would open the door to expatriates in Latin America and a broader customer base domestically.
Fintechs are not the only ones paying attention to the American market. British company Revolut has also entered the country and plans to continue its expansion in the United States. In October, Revolut received approval to operate a bank in Mexico and establish a bank in Colombia, expanding into two other countries where Nubank already operates.
NuBank recently hired Michael Rihani as Head of Cryptocurrency and aims to strengthen its services in the short term and build bridges between traditional banking services and digital assets.
— Michael will play a fundamental role within the bank in developing the company’s operational strategy, not just in Brazil and Mexico, but globally — Lago added.
Other important numbers for Q3:
- Sales increased 39% from the previous year to $4.2 billion, exceeding expectations.
- Customer numbers increased to 110.1 million in Brazil, 13.1 million in Mexico, and 3.8 million in Colombia.
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