Nu's growth engine revs, but credit risk shifts into focus

What happened

Nu Holdings added millions of new customers again last quarter, and profits are surging, but the lending mix is concentrated in higher-risk credit cards and unsecured loans. The latest master report already shows rising early-stage delinquencies (NPL 15-90 at 5.0%), a jump in cost of credit to $1.79B, and Brazil CET1 falling to 11.3%. This news does not change the fundamental picture; it reinforces the tension between impressive customer growth and deteriorating credit-quality signals. The market question remains whether the stock's current valuation adequately prices the potential for rising defaults, especially as Mexico's bank launch adds new unsecured exposure. The wait stance remains appropriate until capital and credit metrics stabilize.

Implication

Investors should maintain a wait stance and avoid adding until there is clear evidence that Brazil CET1 stabilizes at or above 11.3% and risk-adjusted NIM recovers from 9.5%. The news confirms that growth is still robust, but the quality of that growth is under pressure, with rising early-stage delinquencies and higher cost of credit. The next two quarterly reports after Mexico's bank launch are crucial to see if unsecured lending seasons without further deterioration. If NPL 15-90 stays above 5.0% and capital continues to compress, the thesis breaks down and the stock could fall toward $11. Conversely, if those metrics improve, the stock may offer upside toward $17, but that is not yet priced with confidence.

Thesis delta

No shift in thesis; the news reinforces existing concerns about credit risk but does not alter the fundamental wait argument. The master report already flagged rising delinquencies and capital consumption, and the article simply echoes that high growth is coming from higher-risk products. Therefore, the thesis remains: wait for confirmation that NPL 15-90 eases below 5.0% and CET1 stabilizes above 11.3% before considering new positions.