Brazilian neobank Nubank reported another customer surge, surpassing 90 million customers in Latin America and driving a surge in profits during the third quarter as the company moves well past breakeven.

The Sao Paulo-based fintech, invested by Warren Buffett’s Berkshire Hathaway, reported a substantial surge in net profit during the three months. It booked $303 million in net income, up from $7.8 million in the year-ago quarter, as the company reaps the benefits of its massive customer base. The quarter marks the fifth straight period of profits, which have been growing every quarter ever since.

“Nubank is on an incredible upward trajectory,” Chief Executive David Velez said in a statement. “We’re achieving these strong levels of profitability while also holding portfolio quality in line with expectations and continuing to invest in our product portfolio and geographic expansion.”

The average revenue per customer grew to $10 per month as the company expanded its product suite. This is up from $7.90 a year ago. While still small compared to large traditional banks, it has consistently grown in the past quarters while service costs remained virtually unchanged.

A surge in customers

Nubank reached 89.1 million clients in the period, adding 18.7 million in the last year. The neobank has already surpassed the 90 million threshold since the end of the quarter in September. According to its figures, more than half the Brazilian adult population is already a customer.

Of those, 73.8 million were categorized as active customers, which means they generated some kind of revenue for the company in the last 30 days. It had almost 39 million active card customers, it said, the vast majority of them based in Brazil.

The company said nearly two-thirds of its active customers were using Nubank as the main banking relationship. The concept of principality has been increasingly crucial among Brazilian fintechs and banks, all of them vying to become the customer’s product of choice when it comes to financial services.

Most of Nubank’s clients are in Brazil, where it was founded. In Mexico, Nubank reported 4.3 million customers, and 0.8 million in Colombia, signaling the complexities of replicating overseas its massive success in Brazil.

Nubank is growing its lending portfolio.

Amid a challenging funding environment for Latin American startups, Nubank, which expanded into Mexico and Colombia in recent years, stands out with a delicate balance between profitability and an ambitious growth strategy.

To enhance profitability and compete in the digital banking space, Nubank continues to roll out new products, such as Payroll loans and car insurance in Brazil in 2023, as well as virtual accounts and consumer loans in Mexico. The strategy focuses on building a comprehensive product offering and encouraging customers to use the app as their primary financial platform. This is relevant as it is common practice for Brazilian clients to use multiple financial providers simultaneously.

Nubank’s total loan portfolio reached $15.4 billion in the period, as the company gradually picks up the pace of lending in the face of a somewhat less risky scenario. Credit card loans make up the bulk of the lending. The company, however, has been only gradually building deposits, up to $19.1 billion as of September 2023, compared to $14 billion in the year-ago period.

Lending growth does not come without risk. Nubank’s 90-day non-performing loan ratio increased 20 basis points to 6.1%. The company said this reflected “expected migration behavior” from past-due payments that had been late by 15 to 90 days.

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