Nu Holdings' U.S. Bank Charter Approval Fuels Expansion Narrative Amid Elevated Risks

What happened

Nu Holdings has garnered attention with its conditional OCC approval for a U.S. bank charter, as reported in a Motley Fool article highlighting expansion prospects through 2030. This milestone, detailed in the DeepValue report, sets a time-bound path for U.S. entry, with targets to capitalize within 12 months and open within 18 months, adding a new growth vector. However, the report emphasizes that Nu's valuation at $16.82 and P/E of 32.2x prices in robust growth, leaving little safety margin given high provisioning intensity and credit risks. Key concerns include the drift in 90+ day NPL to 6.8% and potential deposit pricing pressures in Mexico and Colombia, which could undermine profitability. Investors should view the U.S. charter as a catalyst that requires strict monitoring of execution milestones and credit metrics over the next 6-12 months.

Implication

The U.S. bank charter approval shifts Nu's narrative towards global scalability, potentially driving stock re-ratings if regulatory milestones are achieved on schedule. Yet, the core investment case remains tethered to credit discipline, as any acceleration in 15-90 day delinquencies could trigger higher provisions and erode ROE from current levels. In international markets, deposit growth must sustain without reverting to high-yield promotions to avoid compressing net interest margins and unit economics. Near-term, investors should track updates on FDIC approval and operational efficiency metrics to assess management's execution capabilities. Given the high valuation, a balanced approach is advised, with position sizing based on confidence in credit containment and U.S. progress.

Thesis delta

The Motley Fool article reinforces the bullish sentiment around Nu's U.S. expansion, but the DeepValue report indicates no material shift in the underlying thesis; it remains contingent on credit quality and deposit scaling, with the U.S. charter serving as an incremental optionality factor rather than a game-changer.