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Nu Holdings (NYSE:NU) just delivered a blockbuster Q4 and full-year 2024, posting $11.5 billion in revenuea 58% jump year-over-yearwhile net income nearly doubled to $2 billion. The fintech powerhouse added 20.4 million customers in 2024, pushing its total to 114.2 million, solidifying its dominance in Latin America's digital banking scene. But despite the big wins, investors zeroed in on a critical concern: net interest margins (NIM) slipped another 70 basis points to 17.7%, squeezed by foreign exchange swings and a shift toward lower-risk loans. The stock reacted accordingly, tumbling 15% at 10.30am, as markets weighed whether Nu can sustain its high-growth narrative while keeping profitability in check.
The company's footprint keeps expanding, with Mexico surpassing 10 million customers and Colombia climbing to 2.5 million. Meanwhile, Nu has become Brazil's third-largest financial institution by customer count. Its secured lending portfolio skyrocketed 615% year-over-year, and new services like NuTravel and NuCel are strengthening its ecosystem. Yet, analysts flagged a slowdown in revenue growthjust 24% year-over-year in Q4, the slowest pace in yearsattributing it to ongoing NIM pressure. Monthly activity rates dipped slightly to 83.1%, as rapid expansion in newer markets initially weighed on engagement. Investors are now watching whether Nu's efficiency gains can offset these pressures or if growth starts to cool.
Despite the margin squeeze, Nu still boasts a 29% annualized return on equity and strong customer engagement, keeping it among the most profitable fintechs globally. Analysts remain cautious, noting that currency fluctuations and shifts in loan mix could keep the pressure on short-term profitability. But with asset quality improving and a disciplined cost structure, there's a path forwardif Nu can fine-tune its lending strategy and sustain momentum. Investors will be watching closely to see if the company can maintain its breakneck expansion while navigating a more complex fintech landscape.
This article first appeared on GuruFocus.