Date: February 19, 2026
Introduction
In the global landscape of fintech, few stories are as compelling—or as profitable—as that of Nu Holdings Ltd. (NYSE: NU). Once a disruptive startup challenging the "Big Five" banking oligarchy in Brazil, Nu (commonly known as Nubank) has evolved into a financial superpower. As of early 2026, the company serves over 130 million customers across Latin America and has recently secured a conditional U.S. national bank charter, signaling its ambitions beyond its home continent.
With a market capitalization that consistently rivals the most storied traditional banks in the world, Nu is no longer just a "digital bank." It is an AI-first platform ecosystem spanning banking, telecommunications, travel, and crypto. This feature examines how Nu achieved a record-breaking 31% Return on Equity (ROE) and why it remains the benchmark for the next generation of global financial services.
Historical Background
Founded in 2013 by David Vélez, Cristina Junqueira, and Edward Wible, Nubank was born out of a simple, visceral frustration: the bureaucratic nightmare of Brazilian banking. In the early 2010s, five banks controlled 80% of Brazil’s assets, charging exorbitant fees for basic services while forcing customers to navigate armored doors and long queues.
Nubank’s first product was a simple, no-fee, purple Mastercard credit card, managed entirely via a mobile app. By focusing on a superior user experience and lower costs, the company achieved viral growth. It became a "unicorn" in 2018 and went public on the New York Stock Exchange in December 2021. While the post-IPO period was marked by the 2022 tech sell-off, the company spent 2023 and 2024 proving its unit economics, eventually reaching total profitability in late 2023 and scaling that success into Mexico and Colombia.
Business Model
Nu’s business model is built on an extreme structural cost advantage. By operating without physical branches, its cost-to-serve is roughly $0.90 per month per customer—approximately 85% lower than that of traditional Brazilian incumbents like Itaú Unibanco.
The company categorizes its evolution into "Three Acts":
- Act I (Credit Cards & Core Banking): Building the initial customer base through high-frequency products.
- Act II (Multi-Product Ecosystem): Expanding into insurance, personal loans, investments, and crypto to increase the Average Revenue Per Active Customer (ARPAC).
- Act III (Platformization & Global Expansion): Using AI to offer automated financial planning and expanding into non-financial verticals like NuCel (telecom) and NuTravel.
Revenue is diversified between interest income (from credit card balances and personal loans) and fee income (from interchange fees, insurance brokerage, and investment platform commissions).
Stock Performance Overview
Over its four-plus years as a public company, NU has transitioned from a speculative growth play to a foundational fintech holding.
- 1-Year Performance: The stock has seen robust gains in 2025, driven by the successful launch of its banking license in Mexico and the announcement of its U.S. charter.
- 5-Year Performance: Since its December 2021 IPO at $9.00, the stock experienced a "V-shaped" recovery. After bottoming near $3.50 in mid-2022, it surged as the company reached net income inflection points, trading significantly above its IPO price by early 2026.
- Notable Moves: Significant volatility occurred in early 2024 following the acquisition of AI firm Hyperplane, which investors initially questioned but later embraced as the catalyst for the "AI Private Banker" rollout.
Financial Performance
Nu’s 2025 fiscal year was a landmark period of growth and efficiency:
- Revenue: Reached approximately $15.5 billion in 2025, up from $11.5 billion in 2024.
- Net Income: Nu generated nearly $3 billion in net income for 2025, a massive leap from its first full year of profitability.
- Efficiency Ratio: The company reported an efficiency ratio of 27.7% in Q3 2025, making it one of the most efficient financial institutions globally.
- Return on Equity (ROE): At 31%, Nu’s ROE significantly exceeds the 18–22% typical of top-tier traditional banks, showcasing the power of its low-capex digital model.
- ARPAC: Monthly Average Revenue Per Active Customer climbed to $13.40 by late 2025, with mature Brazilian cohorts exceeding $27.00.
Leadership and Management
The leadership team is widely regarded as one of the strongest in the fintech sector. David Vélez (CEO) remains the visionary architect, maintaining majority voting control and focusing on "The Infinite Game"—a strategy of long-term value creation over short-term quarterly beats. Cristina Junqueira (Chief Growth Officer) is the public face of the brand in Brazil and a key driver of the company’s "customer-obsessed" culture.
The board includes heavyweights from the worlds of tech and finance, including former executives from Amazon and various global venture capital firms. Management’s reputation for disciplined capital allocation was further cemented by their cautious but successful entry into the Mexican credit market, where they avoided the asset-quality pitfalls that hampered many rivals.
Products, Services, and Innovations
Nu has transitioned from a bank to a "super-app" ecosystem:
- AI Private Banker: Using the 2024 acquisition of Hyperplane, Nu launched a personal AI assistant that provides customized financial advice, helping users optimize their spending and debt.
- NuCrypto: A robust digital asset platform allowing users to buy, sell, and custody Bitcoin, Ethereum, and Solana. In 2025, it launched the NBIT11 ETF, further bridging the gap between traditional and decentralized finance.
- NuCel: A mobile virtual network operator (MVNO) launched in 2024 to provide integrated mobile services, increasing customer stickiness.
- Secured Lending: To combat the cyclicality of unsecured credit, Nu expanded heavily into payroll-linked loans (consignado) and home equity loans in 2025.
Competitive Landscape
In Brazil, Nu continues to take market share from the "Big Five" (Itaú, Bradesco, Santander, Banco do Brasil, and Caixa). However, the competitive front has shifted:
- Itaú Unibanco: The strongest incumbent has modernized its digital offerings, but still struggles with a cost structure tied to physical branches.
- Mercado Pago (NASDAQ: MELI): Perhaps Nu’s most dangerous rival. As the fintech arm of e-commerce giant Mercado Libre, Mercado Pago leverages its shopping ecosystem to drive transactional volume. The "war for Mexico" between Nu and Mercado Pago is currently the most watched battle in LatAm fintech.
- Revolut & Global Neobanks: While global players like Revolut have entered Brazil, Nu’s localized brand equity and massive data moat have made it difficult for newcomers to gain significant traction.
Industry and Market Trends
The "Financialization of Latin America" remains the primary tailwind. Central Bank initiatives like Pix in Brazil have digitized the economy at breakneck speed, moving millions of people from the informal cash economy into the digital financial system.
Furthermore, the "AI-First Banking" trend is the new frontier. Nu is leveraging its vast data set—covering 130 million users’ transactional behaviors—to build proprietary credit scoring models that outperform traditional FICO-style metrics, especially for the underbanked.
Risks and Challenges
- Credit Risk: As Nu expands its lending book, particularly in Mexico and Colombia, it remains sensitive to macroeconomic shifts and unemployment rates in these regions.
- Regulatory Scrutiny: As Nu becomes "systemically important," it faces increasing capital requirements and regulatory oversight from the Central Bank of Brazil (BCB).
- Currency Volatility: As a NYSE-listed company earning revenue in BRL, MXN, and COP, Nu is constantly exposed to the volatility of Latin American currencies against the USD.
- Expansion Execution: Moving into the U.S. market (expected late 2026) is a high-risk, high-reward move. The U.S. banking landscape is far more saturated and competitive than LatAm.
Opportunities and Catalysts
- The Mexican "Inflection": Having received its full banking license in April 2025, Nu is poised to launch payroll portability and high-yield savings in Mexico in 2026, which could replicate its rapid Brazilian ascent.
- U.S. Market Entry: The January 2026 conditional U.S. Bank Charter approval is a massive catalyst. A digital-first offering for the U.S. market could tap into the massive diaspora and expatriate financial flows.
- Monetization of Mature Cohorts: As millions of customers who joined in 2020-2022 move into "mature" status, their contribution to ARPAC is expected to rise sharply as they take out mortgages and investment products.
Investor Sentiment and Analyst Coverage
Investor sentiment remains overwhelmingly positive. Berkshire Hathaway remains a notable long-term shareholder, providing a "seal of approval" that has attracted other institutional giants.
Wall Street analysts are particularly bullish on Nu's efficiency ratio. Most major firms maintain "Buy" or "Overweight" ratings, with price targets reflecting expectations of sustained 30%+ ROE. Among retail investors, Nu is often cited as the "gold standard" of fintech, frequently compared to the early high-growth days of PayPal or Square but with better profitability.
Regulatory, Policy, and Geopolitical Factors
The regulatory environment in Brazil has been a tailwind, with the Central Bank fostering competition through Open Banking and Pix. However, geopolitical shifts in Mexico and Colombia—specifically tax reforms and interest rate caps—remain factors that management must navigate carefully.
The U.S. Federal Reserve’s oversight will become a new reality for Nu in 2026 as it begins operations under its U.S. charter, requiring the company to meet stringent compliance and anti-money laundering (AML) standards that exceed those of Latin American jurisdictions.
Conclusion
Nu Holdings enters 2026 as the preeminent example of how a digital challenger can not only disrupt an industry but dominate it profitably. With 130 million customers and a efficiency ratio that is the envy of the banking world, Nu has successfully transitioned from a Brazilian credit card company to a regional financial ecosystem.
For investors, the story is now about geographic execution and AI integration. Can Nu replicate its Brazilian success in Mexico? Will its AI "private banker" drive ARPAC to new heights? And most provocatively, can it succeed in the crowded U.S. market? While risks regarding credit quality and currency volatility remain, the company’s track record suggest that David Vélez and his team are more than capable of playing "the infinite game."
This content is intended for informational purposes only and is not financial advice.
