(Bloomberg) — Nu Holdings Ltd., one of the world’s largest digital banks, posted fourth-quarter earnings that fell short of analyst estimates amid a currency depreciation in its biggest market.
The shares dropped 9% in post-market trading Thursday after earnings were released before trimming some of the losses.
Nubank, as the company is known, reported $2.99 billion in revenue in the quarter through December 31, compared with a median estimate of $3.21 billion in a Bloomberg survey. Return on equity came in at 29%, in-line with estimates.
Net income, meanwhile, totaled $552.6 million, short of the $566.4 million average estimate. The company, which operates in Brazil, Mexico and Colombia, added 4.5 million customers in the quarter, boosting its total at the end of December to almost 114.2 million.
Last year, the Brazilian real fell 21% against the dollar as concerns over the government’s growing budget deficit sparked a market rout across assets. The bank, in turn, is taking a more conservative approach given a scenario of higher interest rates in Latin America’s largest economy.
“We’re more vigilant about the macro, taking into consideration the recent volatility,” said Jorg Friedemann, Nubank’s investor relations officer, in an interview.
Shares of Nu, which has a market capitalization of $64.1 billion, had gained nearly 29% year-to-date. The Sao Paulo-based company, which now ranks as Latin America’s most valuable publicly-traded bank, has attracted attention for using low-limit credit cards and user-friendly mobile apps to lure clients.
Loans that were 15 to 90 days overdue fell 30 basis points to 4.1% while those delinquent more than 90 days dropped 20 basis points to 7.0%. The improvement reflects a shift toward “lower-risk customer and product profiles in credit cards, combined with a higher share of secured lending,” the bank said in a statement.
The stock has 12 buy recommendations, nine holds and three sells, according to data compiled by Bloomberg.
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