Nubank (NUBR33) reported a loss of $29.9 million in the second quarter of 2022, but earnings in terms of adjusted

Nubank (NUBR33) reported a loss of $29.9 million in the second quarter of 2022, but earnings in terms of adjusted

Nubank (NYSE: NU; B3: NUBR33) reported a net loss of $29.9 million in the second quarter of the year, up 96.7% from a negative balance recorded a year earlier (from $15.2 million).

However, the adjusted net result resulted in a profit of US$17 million. This figure represents an increase of 3.03% compared to the R$ 16.5 million obtained in the same period last year. The figure is adjusted for compensation expense based on the stock and tax implications.

On the earnings call, Nubank founder David Velez said the bank “maintained the ability to reinvest earnings into expanding and improving operations, including those in Mexico and Colombia.”

The company’s revenue was $1.157 billion in the period, an increase of 244% compared to the second quarter of 2021. Expenses with provisions for credit losses remained stable at 3%.

Digital Bank ended the second quarter with 65.3 million customers, an increase of 56.6% over the previous year. Active customer portfolio reached 52.3 million compared to 29.9 million in the previous year. Activity rate reached 80% from 72% in Q2 2021. Average monthly revenue per active customer doubled to $7.8.

Nubank’s total credit portfolio was $9.2 billion in the period. Of the total, $7.1 billion is for credit cards and $2.1 billion is for personal credit.

“We have a lot of liquidity on our balance sheet. The only limitation we have is our appetite for credit underwriting, which is 100% under our control. We chose to be a little bit more selective in the quarter,” Nubank CFO Guilherme Lago said on a conference call on the company’s results. second, but we also chose to reprice our products more aggressively.”

Deposits totaled $13.3 billion, an increase of 77% over the two periods. The company explained that the financing was done at a lower cost than the CDI, which is a risk-free rate in Brazil, resulting in a “significant liquidity surplus”.

The CFO says Nubank should continue to grow at above-market levels, but remain “selective and conservative”. Of the total customer base, about 4 million have a personal loan and more than 11 million are eligible to purchase financing.

Loan defaults from 15 to 90 days were flat compared to the first quarter at 3.7%, “indicating that the cycle of normalization after the Covid pandemic may be over,” the text accompanying the result says. The 90-day delinquency rate rose from 3.5% to 4.1%, in line with the bank’s expectations.

“Our baseline forecast for the rest of 2022 is that the early delinquency ratio of 15 to 90 days will remain stable if there are no material changes in our underwriting strategy or business environment,” Lago said.

In the second quarter, Nobank implemented a new methodology that projected personal loans delinquent from 360 days to 120 days, while card arrears remained at 360 days. “Such changes have no effect on the result, as these write-offs have already been fully provided for,” says the text accompanying the bank’s results. Executives say this practice is more common among banks around the world.

The provisioning balance in the second quarter ended at $968 million, up more than 15% from the previous quarter. “The growth of the loan portfolio was responsible for about 85% of the increase in provisions,” Nubank said.

Card purchases reached $20 billion, an increase of 94%. “This increase is due to the growth of the customer base, the maturation of existing customer crops and the increased use of the Nu product suite, which consists of credit cards, prepaid cards, Ultravioleta cards, and secured cards,” the company explained, in the text accompanying the results.

Lago explains that the overdue rate of more than 90 days is a measure of overdue inventory, not flow, so it should take longer to settle, and should continue to rise in the coming quarters.

Financial services and transaction costs jumped from $177.2 million in the second quarter of 2021 to $794 million.

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