FinTech Nubank Expects Growth Amid Brazil’s Economic Struggles

Nubank founder and CEO David Vélez sees the economic struggles of Brazil as a potential opportunity for even faster growth for his digital banking platform across Latin America and around the world, he said in a Reuters report Wednesday (Feb. 2).

Nubank’s value has tumbled from the $52 billion valuation at which the company started its New York Stock Exchange journey less than two months ago, but its 48 million clients make Nubank one of the world’s largest digital banks. It also recently expanded into Mexico.

Vélez told Reuters the ratio of nonperforming loans (NPL) is likely to rise this year as Brazilian consumers struggle with increasing inflation, rising interest rates and a struggling economy. However, he expects Nubank’s NPL level to stay lower because of its advance use of data in underwriting loans.

Nubank is funded with retail deposits and has a large cash position since its $2.6 billion initial public offering (IPO) in December, Vélez told Reuters in a video interview Tuesday (Feb. 1).

“We might have, actually have, an opportunity to accelerate and take even more [market] share and leave interest rates even lower to make our products much more competitive,” he said. Nubank requires customers to repay their credit card loans in six weeks and personal credit loans in four to six months.

Related: Nubank Goes Public at $41.5B Valuation with LatAm Growth on Horizon

Nubank was founded in 2013 and is backed by Warren Buffett and Tencent. In addition to Mexico, the company is looking to expand into Colombia and other parts of Latin America. The company offers savings accounts, business loans, insurance and investment products.

In December, Nubank announced that its revenue doubled to $1.1 billion through September compared to the same time one year earlier, but its net losses jumped from $64.4 million to $99.1 million.

Through the first eight months of 2021, 48 Brazil-based companies set a record with 65 billion reals (about $11.5 billion) raised. IPOs around the world have raised more than $600 billion last year.