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Nu Holdings Expands Lending: Can Credit Quality Hold Up?
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Key Takeaways
NU's credit portfolio grew 37% year over year to $39.4 billion, led by broad-based lending growth.
Net interest income rose 9% sequentially as NIM expanded 180 bps to 22.9%, boosting returns.
90-plus-day delinquencies rose to 6.9%, though primary-bank customers show roughly half the portfolio average.
Nu Holdings’ (NU - Free Report) lending engine expanded in the second quarter of 2026, with its total credit portfolio reaching $39.4 billion, up 37% year over year and 5% sequentially. Growth was broad-based: credit card balances rose 35% to $26 billion, unsecured lending jumped 45% to $10.3 billion and secured lending increased 30% to $3.1 billion.
The faster loan growth supported earnings. Net interest income rose 9% sequentially to $3.7 billion, while net interest margin expanded 180 basis points (bps) to 22.9%. A greater mix of unsecured lending and deliberate expansion into higher-risk, higher-return customer groups helped lift returns, while cost of credit fell 9% sequentially to $1.7 billion.
Credit quality, however, remains an important area to watch. Early-stage delinquencies, measured by the 15-90 day NPL ratio, improved 16 bps to 4.8%. Meanwhile, 90-plus-day delinquencies increased 35 bps to 6.9%, largely reflecting the seasonal migration of loans that became delinquent during the first quarter.
Management said the rise in risk-taking was intentional rather than a response to weaker underwriting. Nu added 24 bps to early delinquencies through planned risk expansion, while seasonality reduced the ratio by 37 bps. The company also maintained coverage equal to 244% of 90-plus-day nonperforming loans.
Nu’s customer relationships may provide another buffer. Management said customers who use Nubank as their primary bank have delinquency levels at roughly half the portfolio average. With more customer data feeding its underwriting models, Nu believes deeper relationships can support credit growth while helping it monitor risk across income groups.
How Are Itau Unibanco & MercadoLibre Compete?
Itau Unibanco (ITUB - Free Report) , a major competitor to Nu Holdings in Brazil, continues to expand lending while maintaining strong credit quality. Its consolidated loan portfolio supports balanced growth, backed by stronger origination and increased exposure to lower-risk products. In the second quarter of 2026, the consolidated credit portfolio increased 9.6% year over year, while 90-day NPLs remained at 1.9%.
MercadoLibre (MELI - Free Report) , via its Mercado Pago platform, competes with Nu Holdings in key Latin America markets. The company continues expanding lending while preserving credit quality. Growth is supported by improving underwriting, deeper ecosystem engagement and a shift toward lower-risk borrowers. In the second quarter of 2026, its credit portfolio grew 75% year over year, while 15–90-day NPLs stood at 7%.
NU’s Price Performance, Valuation and Estimates
Shares of NU have gained 9.3% in the past three months, outperforming the broader industry and the S&P 500 Index.
Image Source: Zacks Investment Research
From a valuation standpoint, NU trades at a forward price-to-earnings ratio of 12.55X, well above the industry’s 11.04X. It carries a Value Score D.
Image Source: Zacks Investment Research
NU’s estimates have increased a cent over the past month. The Zacks Consensus Estimate for full-year 2026 EPS is pegged at 86 cents.
View the Zacks #1 Rank List
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Nu Holdings Expands Lending: Can Credit Quality Hold Up?
Key Takeaways
Nu Holdings’ (NU - Free Report) lending engine expanded in the second quarter of 2026, with its total credit portfolio reaching $39.4 billion, up 37% year over year and 5% sequentially. Growth was broad-based: credit card balances rose 35% to $26 billion, unsecured lending jumped 45% to $10.3 billion and secured lending increased 30% to $3.1 billion.
The faster loan growth supported earnings. Net interest income rose 9% sequentially to $3.7 billion, while net interest margin expanded 180 basis points (bps) to 22.9%. A greater mix of unsecured lending and deliberate expansion into higher-risk, higher-return customer groups helped lift returns, while cost of credit fell 9% sequentially to $1.7 billion.
Credit quality, however, remains an important area to watch. Early-stage delinquencies, measured by the 15-90 day NPL ratio, improved 16 bps to 4.8%. Meanwhile, 90-plus-day delinquencies increased 35 bps to 6.9%, largely reflecting the seasonal migration of loans that became delinquent during the first quarter.
Management said the rise in risk-taking was intentional rather than a response to weaker underwriting. Nu added 24 bps to early delinquencies through planned risk expansion, while seasonality reduced the ratio by 37 bps. The company also maintained coverage equal to 244% of 90-plus-day nonperforming loans.
Nu’s customer relationships may provide another buffer. Management said customers who use Nubank as their primary bank have delinquency levels at roughly half the portfolio average. With more customer data feeding its underwriting models, Nu believes deeper relationships can support credit growth while helping it monitor risk across income groups.
How Are Itau Unibanco & MercadoLibre Compete?
Itau Unibanco (ITUB - Free Report) , a major competitor to Nu Holdings in Brazil, continues to expand lending while maintaining strong credit quality. Its consolidated loan portfolio supports balanced growth, backed by stronger origination and increased exposure to lower-risk products. In the second quarter of 2026, the consolidated credit portfolio increased 9.6% year over year, while 90-day NPLs remained at 1.9%.
MercadoLibre (MELI - Free Report) , via its Mercado Pago platform, competes with Nu Holdings in key Latin America markets. The company continues expanding lending while preserving credit quality. Growth is supported by improving underwriting, deeper ecosystem engagement and a shift toward lower-risk borrowers. In the second quarter of 2026, its credit portfolio grew 75% year over year, while 15–90-day NPLs stood at 7%.
NU’s Price Performance, Valuation and Estimates
Shares of NU have gained 9.3% in the past three months, outperforming the broader industry and the S&P 500 Index.
Image Source: Zacks Investment Research
From a valuation standpoint, NU trades at a forward price-to-earnings ratio of 12.55X, well above the industry’s 11.04X. It carries a Value Score D.
Image Source: Zacks Investment Research
NU’s estimates have increased a cent over the past month. The Zacks Consensus Estimate for full-year 2026 EPS is pegged at 86 cents.
Image Source: Zacks Investment Research
NU stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.