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It finally happened: Buffett-backed Nubank turns a profit in Brazil

The digital bank posted a net income of BRL 76 million from January to June, as it lured more clients to its credit card

Nubank US IPO
Photo: Nubank/Courtesy
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Latin American fintech Nubank managed to turn a profit in the first half of 2021 in its Brazilian operations, as it lured more clients to its credit card, according to a statement on its website. It is the first time that the fintech company with Warren Buffett’s Berkshire Hathaway as investor has turned a profit for a full semester.

Nu Pagamentos, as Nubank is formally known, posted a net income of BRL 76 million ($13.7 million) in the period between January and June. In the same period a year earlier, Nubank had a loss of BRL 95 million reais. The results do not include Nubank’s operations in Colombia and Mexico, although Brazil is the fintech’s largest market by far.

READ ALSO: Nubank reaches e-commerce with the acquisition of Spin Pay, an instant payment fintech

Nubank‘s first profit for a full semester comes at a time pointed out as critical for digital banks: after some booming years, the customer base growth begins to slow and investors start to demand profitability.

According to Bank of America, for the first time since January 2015, the industry recorded a drop in the number of monthly active users. Nubank, however, was one of three digital banks that managed to grow its monthly active user base (35.4 million), well ahead of second-placed Inter (8.4 million) and C6 (7.9 million).

For Nubank, the timing is all the more tricky as Latin America‘s most prominent fintech is eyeing an initial public offering in the United States by the beginning of 2022, with a valuation of over $55 billion, which would put it above Itaú Unibanco’s $55.4 billion.

READ ALSO: Brazilian unicorns Nubank and Creditas partner to offer credit products

By way of comparison, Nubank closed 2020 with a loss of BRL 230 million and a loan portfolio of about BRL 18 billion, while Itaú had a profit of BRL 18.5 billion and its loan portfolio totaled BRL 870 billion.

If Nubank is successfully listed at greater than Itau’s $55.4 billion market cap, it would be vaulted into the ranks of the world’s largest fintechs, ahead of recently listed Robinhood Markets, for example.

READ ALSO: Buffett-backed Nubank to seek IPO valuation of over $55.4 billion, say sources

On the announcement of the first half-year profit, Chief Financial Officer Guilherme Lago said in the statement that Nubank‘s total payment volume doubled from a year earlier to BRL 92 billion, adding the fintech’s clients have used their credit cards more often.

Its loan book, according to Brazil‘s central bank data, ended June at BRL 23 billion, also roughly doubling from a year earlier. Nubank added more than 8 million new clients since December, Lago said.

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