S&P Assigns Nu BB- International Rating, Highlights Strong Growth and Better Efficiency

S&P Global Ratings assigned a BB- international rating to Nu Financeira and Nu Holdings. The main drivers for the decision were the growth prospects supported by an expanding customer base (85 million customers in Latin America as of July 2023), the company’s solid capital structure (Basel Index of 20.2% in Brazil in Q2’23), and efficiency rate.

S&P is one of the most relevant credit rating agencies worldwide, and its evaluation reflects companies’ capability to meet their financial obligations on time. It reflects trustworthiness and reputation by assessing the current solidity and future expectations of the entities.

“The rating on Nubank reflects an improvement of its financial metrics thanks to strong growth and better efficiency. In September 2022, Nubank achieved breakeven at the holding level and has been reporting stronger results since then,” states the S&P report.

“S&P’s rating is a statement of our long-term vision, a reinforcement that our business model is solid and on the right path. Currently one in every two Brazilian adults is a customer, so we see a large avenue of growth within our own base. There is great potential in gaining principality and further strengthening our position, as Nu’s market share in many of the verticals we operate is still minimal compared to incumbents,” says David Vélez, Nu’s founder and CEO.

Consistent growth

Nu currently serves over 85 million customers in Latin America and has been reporting stronger results each quarter, with net income reaching US$225 million and revenues at US$1.9 billion in Q2’23. While revenues grew 5x in just two years, the customer base doubled in the same period, and monetization is ever-improving, with ARPAC (Monthly Average Revenue per Active Customer) surpassing US$9 for the first time.

In the report, S&P stresses Nu’s increasing financial margin, stronger operational efficiency, and better capacity to manage expenses with credit provisions, despite increasing risks in the sector since 2022.

“We expect that the entity will continue improving its financial performance through its sticky and large customer base and through the gradual diversification of revenue sources. We expect results to improve during 2023 and 2024. Moreover, we expect Nubank to remain a leading digital nonbank financial company in Brazil, without compromising the quality of its assets and capital metrics,” state the analysts.