Q2 2025 Nu Holdings Ltd Earnings Call

Speaker #1: Good evening, ladies and gentlemen. Welcome to New Holdings' conference call to discuss the results for the second quarter of 2025. A slide presentation accompanies today's webcast.

Speaker #1: Which is available on the news and investor relations website, www.investors.new in English, and www.investidores.new in Portuguese. This conference is being recorded, and the replay can also be accessed on the company's IR website.

Speaker #1: This call is also available in Portuguese. To access it, press the globe icon on the lower right side of your Zoom screen, then select the Portuguese room.

Operator: After that, select Mute Original Audio. Para acessar nossa conferência em português, clique no ícone do globo ao lado inferior direito da sua tela Zoom e selecione a opção Portuguese Room. Ao acessar a nova sala, certifique-se de mutar o áudio original. Please be advised that all participants will be in a listen-only mode. You may submit online questions at any time today using the Q&A box on the webcast. I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer at Nu Holdings Ltd. Mr. Souto, you may proceed.

Speaker #1: After that, select "Mute Original Audio." Para acessar nossa conferência em português, clique no ícone do globo ao lado inferior direito da sua tela Zoom.

Speaker #1: E selecione a opção 'Portuguese Room'. Ao acessar a nova sala, certifique-se de mutar o áudio original. Please be advised that all participants will be in listen-only mode.

Speaker #1: You may submit online questions at any time today using the Q&A box on the webcast. I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer at Nu Holdings.

Speaker #1: Mr. Souto, you may proceed.

Guilherme Souto: Thank you, operator, and thank you, everyone, for joining the earnings call today. If you have not seen the earnings release already, a copy is posted in the Investor Relations website. With me on today's call are David Vélez, our Founder, Chief Executive Officer and Chairman, and Guilherme Lago, our Chief Financial Officer. Throughout this conference call, we will be presenting non-IFRS financial information, including adjusted net income. These are important financial measures for Nu Holdings Ltd., but are not financial measures as defined by IFRS and may not be comparable to similar measures from other companies. Reconciliations of the non-IFRS to the IFRS financial information are available in the earnings press release. Unless noted otherwise, all growth rates are on a year-over-year FX neutral basis.

Speaker #2: Thank you, operator. And thank you, everyone, for joining the earnings call today. If you have not seen the earnings release already, a copy is posted on the investor relations website.

Speaker #2: With me on today's call are David Velez, our founder, chief executive officer, and chairman, and Guilherme Lago, our chief financial officer. Throughout this conference call, we'll be presenting non-IFRS financial information, including adjusted net income.

Speaker #2: These are important financial measures for Nu Holdings, but are not financial measures as defined by IFRS and may not be comparable to similar measures from other companies.

Speaker #2: Reconciliations of the non-IFRS to the IFRS financial information are available in the earnings press release. Unless noted otherwise, all growth rates are on a year-over-year FX neutral basis.

Guilherme Souto: I would also like to remind everyone that today's discussion might include forward-looking statements, which are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties and could cause actual results to differ materially from our expectations. Please refer to the forward-looking statements disclosure in the earnings release. I will now turn the call over to David. Please go ahead, David. Hello, everyone, and thank you for joining us today. In Q2 2025, we delivered another quarter of strong growth as we continue to strengthen our position as the leading digital bank in Latin America and one of the leading financial technology platforms in the world.

Speaker #2: I would also like to remind everyone that today's discussion might include forward-looking statements, which are not guarantees of future performance; therefore, you should not put undue reliance on them.

Speaker #2: These statements are subject to numerous risks and uncertainties and could cause actual results to differ materially from our expectations. Please refer to the forward-looking statements disclosure in the earnings release.

Speaker #2: I will now turn the call over to David. Please go ahead, David.

Speaker #3: Hello everyone, and thank you for joining us today. In Q2 2025, we delivered another quarter of strong growth as we continue to strengthen our position as the leading digital bank in Latin America and one of the leading financial technology platforms in the world.

Guilherme Souto: Our customer base is expanding to nearly 123 million customers with over 4.1 million net additions, all while maintaining an activity rate above 83%, underscoring the depth of engagement across our platform. In Mexico, we surpassed 12 million customers, now serving approximately 13% of the adult population. In Colombia, nearly 10% of the population is already choosing Nu as their financial partner. The combination of sustained customer growth and a 34% ARPAC CAGR since 2021 has created a powerful compounding effect, driving revenues to $3.7 billion in Q2, representing an 85% annualized growth rate since 2021. Gross profit has risen 78% annually, reaching $1.5 billion, as we capture the benefits of scale, cutting our efficiency ratio by more than half to 28.3% in Q2 2025. Quarterly net income has almost tripled in the past two years to $637 million.

Speaker #3: Our customer base expanded to nearly 123 million customers, with over 4.1 million net additions, all while maintaining an activity rate above 83%. This underscores the depth of engagement across our platform.

Speaker #3: In Mexico, we surpassed 12 million customers, now serving approximately 13% of the adult population. In Colombia, nearly 10% of the population is already choosing Nu as their financial partner.

Speaker #3: The combination of sustained customer growth and a 34% ARPAC CAGR since 2021 has created a powerful compounding effect, driving revenues to $3.7 billion in Q2, representing an 85% annualized growth rate since 2021.

Speaker #3: Gross profit has risen 78% annually, reaching $1.5 billion, as we captured the benefits of scale, cutting our efficiency ratio by more than half to 28.3% in Q2 2025.

Speaker #3: Quadrilingual net income has almost tripled in the past two years to $637 million. These results come despite our ongoing investments in growth and, most importantly, in keeping our customers loving us fanatically.

Guilherme Souto: These results come despite our ongoing investments in growth and, most importantly, in keeping our customers loving us fanatically. We will continue to invest with focus and intention. This performance reinforces a key message: growth is not coming at the expense of sustainable results. Quite the opposite, we are proving that it is possible to scale efficiently with discipline and still generate strong earnings. Taken together, these elements have broadened our platform into a powerful multi-product, multi-segment, and multi-geo growth engine. Today, 104.7 million mass-market customers, 3 million high-income clients, and 5.2 million small businesses engage with Nubank through a diverse suite of products ranging from credit and insurance to investments and crypto. This breadth is no accident; it is the result of a deliberate cross-sell strategy that expands a single product relationship into a broad ecosystem.

Speaker #3: And we will continue to invest with focus and intention. This performance reinforces a key message: growth isn't coming at the expense of sustainable results. Quite the opposite; we're proving that it's possible to scale efficiently with discipline and still generate strong earnings.

Speaker #3: Taken together, these elements have broadened our platform into a powerful multi-product, multi-segment, and multi-geo growth engine. Today, 104.7 million mass-market customers, 3 million high-income clients, and 5.2 million small businesses engage with Nubank through a diverse suite of products ranging from credit and insurance to investments and crypto.

Speaker #3: This breadth is no accident; it is the result of a deliberate cross-sell strategy that expands a single product relationship into a broad ecosystem. By meeting customers' needs at every stage of their financial journey, we not only deepen loyalty but also multiply the ways we can create value.

Guilherme Souto: By meeting customers' needs at every stage of their financial journey, we not only deepen loyalty but also multiply the ways we can create value. This broad-based momentum is reflected in Q2. The active unsecured loans customer base expanded 56% year over year, while the secured customer base more than doubled, and crypto customers increased 41% year over year. All segments continue to post solid growth, and in our less mature countries, our core credit card franchise is scaling quickly. Card customers rose 52% in Mexico and 34% in Colombia. We are not only scaling; we are unlocking new markets, pioneering adoption in underpenetrated segments, and building the foundation for the long term. As we continue to grow and deepen customer relationships, we are doing so with a business model that delivers results, not just in growth but also in profitability.

Speaker #3: This broad-based momentum is reflected in Q2. The active unsecured loans customer base expanded 56% year over year, while the secured customer base more than doubled, and crypto customers increased 41% year over year.

Speaker #3: All segments continue to post solid growth, and in our less mature countries, our core credit card franchise is scaling quickly. Card customers rose 52% in Mexico and 34% in Colombia.

Speaker #3: We're not only scaling; we're locking new markets, pioneering adoption in under-penetrated segments, and building the foundation for the long term. As we continue to grow and deepen customer relationships, we're doing so with a business model that delivers results—not just in growth but also in profitability.

Guilherme Souto: As we look ahead to this next chapter, having the right leadership in place is more important than ever. We have recently made significant additions to our management team that elevate our ability to execute on our long-term strategy and deepen our leadership bench. Over the past few months, we welcomed three truly exceptional leaders to Nubank. Roberto Campos Neto joins us as Vice Chairman and Head of Public Policy. As the former governor of the Central Bank of Brazil, Roberto brings not only unmatched regulatory insight but also a strategic vision for how technology and policy can shape more inclusive financial systems. Eric Young, our new Chief Technology Officer, brings deep expertise in scaling complex tech platforms and leading high-performing engineering teams at a global scale, having run and led products that reach over 900 million customers around the world.

Speaker #3: As we look ahead to these next chapters, having the right leadership in place is more important than ever. We've recently made significant additions to our management team that elevate our ability to execute on our long-term strategy and deepen our leadership bench.

Speaker #3: Over the past few months, we welcomed three truly exceptional leaders to Nubank. Roberto Campos Neto joins us as Vice-Chairman and Head of Public Policy.

Speaker #3: As the former Governor of the Central Bank of Brazil, Roberto brings not only unmatched regulatory insight but also a strategic vision for how technology and policy can shape more inclusive financial systems.

Speaker #3: Eric Young, our new Chief Technology Officer, brings deep expertise in scaling complex tech platforms and leading high-performing engineering teams at a global scale, having run and led products that reach over 900 million customers around the world.

Guilherme Souto: Ethan Eismann, our new Chief Design Officer, is a world-class design leader with a track record of building intuitive, human-centered digital experiences that delight hundreds of millions of users around the globe. All three are joining Nubank's management team and will report directly to me. They are world-class experts in their craft and, just as importantly, seasoned business leaders with the experience and judgment to help guide Nubank through our next chapter of growth. If there is one thing that has defined Nubank since day one, it is our people. We have always had the right team for each stage of our journey, leaders who are not only exceptional in their domains but who elevate the company around them. That remains true today.

Speaker #3: Ethan Iseman, our new Chief Design Officer, is a world-class design leader with a track record of building intuitive, human-centered digital experiences that delight hundreds of millions of users around the globe.

Speaker #3: All three are joining Nubank's management team and will report directly to me. They are world-class experts in their craft and, just as importantly, seasoned business leaders with the experience and judgment to help guide Nubank through our next chapter of growth.

Speaker #3: If there's one thing that has defined Nubank since day one, it's our people. We've always had the right team for each stage of our journey—leaders who are not only exceptional in their domains but who elevate the company around them.

Speaker #3: That remains true today. This addition reflects our ongoing commitment to having the best possible team in place for the next cycle— a cycle that will require even greater scale, complexity, and ambition.

Guilherme Souto: These additions reflect our ongoing commitment to having the best possible team in place for the next cycle, a cycle that will require even greater scale, complexity, and ambition. Together, Roberto, Ethan, and Eric represent the kind of talent advantage we believe is one of Nubank's greatest strengths, a dream team for where we are heading next. We are thrilled to have them on board, and I want to offer a very warm welcome to all three. With that, I would like to pass the floor to our CFO, Guilherme Lago, who will walk us through the details of our financial results. Over to you, Lago.

Speaker #3: Together, Roberto, Ethan, and Eric represent the kind of talent advantage we believe is one of Nubank's greatest strengths—a dream team for where we're heading next.

Speaker #3: We're thrilled to have them on board, and I want to offer a very warm welcome to all three. With that, I'd like to pass the floor to our CFO, Guilherme Lago, who will walk us through the details of our financial results.

Speaker #3: Over to you, Lago.

Guilherme Lago: Thank you, David, and good evening, everyone. Let me start by reinforcing how our business model creates value. We acquire customers at scale, increase engagement over time, monetize as cohorts mature, and we do all of this on a low-cost, highly efficient platform. On the left side of this slide, you see monthly ARPAC consistently increasing across all cohorts, reaching $27.3 for customers who have been with us for longer. And even among these more mature customer cohorts, monetization keeps expanding. In the second quarter of 2025, our monthly ARPAC crossed the 12 mark for the first time, reaching $12.2, up 18% year over year. Meanwhile, as you can see on the right side of this slide, cost to serve remains stable at $0.80 per active customer, reflecting the efficiency of our platform. This operating leverage is one of the most important and competitive advantages of Nubank.

Speaker #4: Thank you, David, and good evening, everyone. Let me start by reinforcing how our business model creates value. We acquire customers at scale, increase engagement over time, monetize as cohorts mature, and we do all of this on a low-cost, highly efficient platform.

Speaker #4: On the left side of this slide, you see monthly ARPAC consistently increasing across all cohorts, reaching $27.3 for customers who have been with us for longer.

Speaker #4: And even among these more mature customer cohorts, monetization keeps expanding. In the second quarter of 2025, our monthly ARPAC crossed the $12 mark for the first time, reaching $12.2, up 18% year over year.

Speaker #4: Meanwhile, as you can see on the right side of this slide, cost to serve remains stable at $0.80 per active customer, reflecting the efficiency of our platform.

Speaker #4: This operating leverage is one of the most important competitive advantages of Nubank. It is what allows us to offer better pricing to customers while consistently increasing our earnings power.

Guilherme Lago: It is what allows us to offer better pricing to customers while consistently increasing our earnings power. Moving to our credit portfolio, total balances reached $27.3 billion in the second quarter, up 40% year over year on an FX neutral basis. All segments contributed to this growth. Secured lending grew 200% on an FX neutral basis, unsecured loans 70%, and credit cards 24%. The continued diversification has been a mark of our credit portfolio, quarter after quarter. Secured and unsecured loans now represent more than one-third of our total portfolio, up from 25% just a year ago. This shift in mix is intentional, and it speaks to our ability to expand our credit portfolio spectrum over time and better serve customers in every single market where we operate. Moving to loan originations, we are operating a retail credit business at scale across Brazil, Mexico, and Colombia.

Speaker #4: Moving to our credit portfolio, total balances reached $27.3 billion in the second quarter, up 40% year over year on an FX-neutral basis.

Speaker #4: All segments contributed to this growth. Secured lending grew 200% on an FX-neutral basis, unsecured loans 70%, and credit cards 24%. The continued diversification has been a mark of our credit portfolio, quarter after quarter.

Speaker #4: Secured and unsecured loans now represent more than one-third of our total portfolio, up from 25% just a year ago. This shift in mix is intentional, and it speaks to our ability to expand our credit portfolio spectrum over time and better serve customers in every single market where we operate.

Speaker #4: Moving to loan originations, we are operating a retail credit business at scale across Brazil, Mexico, and Colombia. In the second quarter, we maintained a strong pace from the previous quarter, originating $3.6 billion in loans.

Guilherme Lago: In the second quarter, we maintained a strong pace from the previous quarter, originating $3.6 billion in loans. That marks a 43% year-over-year increase on an FX neutral basis, and it is the highest origination volume we have ever reached. This consistent origination growth reflects both the sheer size of our consumer platform and the maturity of our credit underwriting engine in Latin America. Turning to our credit card portfolio in Brazil, installment balances remain the primary component of our interest earning portfolio. This reflects our strategy of promoting more structured and predictable forms of credit, helping our customers finance purchases and transfers in a responsible way. Our mix is fundamentally different from that of the industry. While many players rely heavily on revolving balances, we have been building a more sustainable model centered on lower risk, lower cost interest earnings installments.

Speaker #4: That marks a 43% year-over-year increase on an FX-neutral basis, and it is the highest origination volume we have ever reached. This consistent origination growth reflects both the sheer size of our consumer platform and the maturity of our credit underwriting engine in Latin America.

Speaker #4: Turning to our credit card portfolio in Brazil, installment balances remain the primary component of our interest-earning portfolio. This reflects our strategy of promoting more structured and predictable forms of credit, helping our customers finance purchases and transfers in a responsible way.

Speaker #4: Our mix is fundamentally different from that of the industry. While many players rely heavily on revolving balances, we have been building a more sustainable model centered on lower risk, lower cost, interest-earning installments.

Speaker #4: And this translates into better products for our customers and healthier unit economics for Nu. Now, turning to the other side of the balance sheet: funding.

Guilherme Lago: And this translates into better products for our customers and healthier unit economics for Nu. Now, turning to the other side of the balance sheet, funding, we continue to execute our strategy to build a scalable and sustainable deposit franchise across Latin America. Total deposits reached $36.6 billion in the second quarter, up 41% year over year on an FX neutral basis. Brazil remains the anchor of our deposit base, but we are also seeing strong progress in Mexico and Colombia, where we have expanded both volumes and attach rates. This deposit growth is a core pillar of our long-term strategy. It is what enables us to become the leading and most competitive retail financial institution in the region. We have been lowering deposit yields in Mexico and Colombia in the recent months, with some significant changes implemented only now in early July 2025.

Speaker #4: We continue to execute our strategy to build a scalable and sustainable deposit franchise across Latin America. Total deposits reached $36.6 billion in the second quarter, up 41% year over year on an FX-neutral basis.

Speaker #4: Brazil remains the anchor of our deposit base, but we are also seeing strong progress in Mexico and Colombia, where we have expanded both volumes and attached rates.

Speaker #4: These deposit growths are a core pillar of our long-term strategy. It is what enables us to become the leading and most competitive retail financial institution in the region.

Speaker #4: We have been lowering deposit yields in Mexico and Colombia in recent months, with some significant changes implemented only now in early July 2025.

Speaker #4: As a result, our second quarter cost of funding did not yet fully reflect these adjustments. We expect the full impact to materialize only gradually over the coming quarters.

Guilherme Lago: As a result, our second quarter cost of funding did not yet fully reflect these adjustments. We expect the full impact to materialize only gradually and over the coming quarters. Now, turning to net interest income, we delivered strong growth again this quarter, up 33% year over year on an FX neutral basis, reaching a record high of $2.1 billion in the quarter. NIM improved 80 basis points quarter over quarter on an FX neutral basis, even with a slight reduction in our loan-to-deposit ratio, which went from 44% to 43%. In our most scale market, Brazil, NIM continued to expand, supported by healthy spreads and growing volumes. In Mexico and Colombia, we continue investing to become the leading and most loved retail financial institution in these countries. While these investments, however, naturally weigh on the short-term margins, we believe they are critical to unlocking long-term value.

Speaker #4: Now, turning to net interest income. We delivered strong growth again this quarter, up 33% year over year on an FX-neutral basis, reaching a record high of $2.1 billion in the quarter.

Speaker #4: NIM improved 80 basis points quarter over quarter on an FX-neutral basis, even with a slight reduction in our loan-to-deposit ratio, which went from 44% to 43%.

Speaker #4: In our most scaled market, Brazil, NIM continued to expand, supported by healthy spreads and growing volumes. In Mexico and Colombia, we continue investing to become the leading and most loved retail financial institution in these countries.

Speaker #4: While these investments, however, naturally wait on the short-term margins, we believe they are critical to unlocking long-term value. Looking ahead, we see further room for margin expansions as we optimize the balance sheet, gradually relocating liquidity from cash into credit and lower our cost of funding in Mexico and Colombia.

Guilherme Lago: Looking ahead, we see further room for margin expansions as we optimize the balance sheet, gradually reallocating liquidity from cash into credit, and lower our costs of funding in Mexico and Colombia. Now, onto credit loss allowances and risk-adjusted NIM. CLA expenses remained relatively stable in the quarter. In early Q2, we began rolling out major upgrades to our credit models. This will significantly increase credit card limits in Brazil throughout the remainder of 2025. As a result, we recognized provisions this quarter, front-loading expected credit losses, which have not yet been fully offset by the corresponding growth in the interest earning portfolio and related revenues, naturally creating a temporary time in this match. Now, excluding this effect, credit loss allowance would have declined quarter over quarter on an FX neutral basis, reflecting the normalization of seasonal dynamics that had impacted Q1.

Speaker #4: Now, onto credit loss allowances and risk-adjusted NIM. CLA expenses remain relatively stable in the quarter. In early Q2, we began rolling out a major upgrade to our credit models.

Speaker #4: This will significantly increase credit card limits in Brazil throughout the remainder of 2025. As a result, we recognized provisions this quarter, front-loading expected credit losses, which have not yet been fully offset.

Speaker #4: By the corresponding growth in the interest-earning portfolio and related revenues, naturally creating a temporary timing mismatch. Now, excluding these effects, credit loss allowances would have declined quarter over quarter on an FX-neutral basis.

Speaker #4: Reflecting the normalization of seasonal dynamics that had impacted Q1. Now, despite these dynamics, strong NII more than offset this small increase in CLA expenses.

Guilherme Lago: Now, despite these dynamics, a strong NII more than offset this small increase in CLA expenses, driving our risk-adjusted NIM up to 9.2% in the second quarter of 2025. Next, delinquency metrics for our consumer credit portfolio in Brazil. The 15 to 90-day NPR ratio declined to 4.4% in the second quarter, a 30 basis points improvement versus the previous quarter. This was in line with our expectations and slightly better than the typical second-quarter seasonality, which usually shows a 20 basis points drop. Now, the 90-plus-day NPR ratio increased by 10 basis points to 6.6%, reflecting the rise in early delinquency observed in Q1 and following the usual seasonal pattern. Finally, coverage ratios remained solid and stable. We continue to carry a fairly robust provision buffer, both across the total portfolio and specifically across the 90-plus NPR balances.

Speaker #4: Driving our risk-adjusted NIM up to 9.2% in the second quarter of 2025. Next, the liquidity metrics for our consumer credit portfolio in Brazil. The 15 to 90-day NPL ratio declined to 4.4% in the second quarter, a 30 basis point improvement versus the previous quarter.

Speaker #4: This was in line with our expectations and slightly better than the typical second quarter seasonality, which usually shows a 20 basis point drop. Now, the 90-plus-day NPL ratio increased by 10 basis points to 6.6%.

Speaker #4: Reflecting the rise in early delinquency observed in Q1 and following the usual seasonal pattern, coverage ratios remained solid and stable. We continue to carry a fairly robust provision buffer, both across the total portfolio and specifically across the 90-plus NPL balances.

Speaker #4: Shifting to gross profit. In Q2, gross profit reached a record high of $1.5 billion, up 24% year over year on an FX neutral basis.

Guilherme Lago: Shifting to gross profit, in Q2, gross profit reached a record high of $1.5 billion, up 24% year over year on an FX neutral basis, a clear reflection of the strong momentum of our business. This performance was driven by strong NII expansion and stable credit loss allowances. Gross profit margin also improved sequentially, climbing now to 42.2%, up from 40.6% in the past quarter. Looking at the composition of our gross profit, we continue to see the benefits of our business model, not only in terms of growth and profitability, as we have seen in the prior slides, but also in terms of diversification and resilience. By leading with credit, we drive stronger engagement and deepen customer relationships over time, which unlocks cross-sell and increases shares of wallet.

Speaker #4: A clear reflection of the strong momentum of our business. This performance was driven by strong NII expansion and stable credit loss allowances. Gross profit margin also improved sequentially, climbing now to 42.2%, up from 40.6% in the past quarter.

Speaker #4: Looking at the composition of our gross profit, we continue to see the benefits of our business model. Not only in terms of growth and profitability, as we have seen in the prior slides, but also in terms of diversification and resilience.

Speaker #4: By leading with credit, we drive stronger engagement and deepen customer relationships over time, which unlocks cross-sell and increases shares of wallet. But fees and float have also become meaningful contributors to our gross profit and have added resilience and consistency to our revenues across cycles.

Guilherme Lago: But fees and float have also become meaningful contributors to our gross profit and have added resilience and consistency to our revenues across cycles. Ultimately, being a credit-first fintech has helped us ignite what we call the principality flywheel. And with that, we have earned the right to cross-sell and diversify our gross profit base. Now, turning to efficiency, in the second quarter, our efficiency ratio rose slightly to 28.3%, driven by two main factors. Number one, RSU expenses from the initial vesting of our 2025 NR grant, which typically happens around March of every year. And number two, higher market investments during the quarter. Now, as David mentioned earlier today, we are investing with intention to become the largest and the most loved financial institution in Latin America.

Speaker #4: Ultimately, being a credit-first fintech has helped us ignite what we call the Principality flywheel. With that, we have earned the rights to cross-sell and diversify our gross profit base.

Speaker #4: Now, turning to efficiency. In the second quarter, our efficiency ratio rose slightly to 28.3%, driven by two main factors. Number one, RSU expenses from the initial vesting of our 2025 NR grant, which typically happens around March of every year.

Speaker #4: And number two, higher market investments during the quarter. Now, as David mentioned earlier today, we are investing with intention to become the largest and the most loved financial institution in Latin America.

Speaker #4: While these investments may temporarily increase our efficiency ratio in the coming quarters, they are fully aligned with our long-term value creation strategy. The long-term trajectory remains intact.

Guilherme Lago: While these investments may temporarily increase our efficiency ratio in the coming quarters, they are fully aligned with our long-term value creation strategy. The long-term trajectory remains intact. Our model continues to benefit from operating leverage, with significant room to unlock additional efficiencies as we scale. Supported by strong revenue growth and disciplined cost management, we expect the efficiency ratio to further decline over the coming years, driving number one, continued margin expansion, number two, sustainable profitability, and number three, deeper competitive modes. Before we wrap up, it's important to highlight how our business model consistently delivers bottom-line performance, and does so at scale. Net income reached $637 million in the second quarter, up 42% year over year on an FX neutral basis. Return on equity reached 28%, continuing to track well above industry peers.

Speaker #4: Our model continues to benefit from operating leverage, with significant room to unlock additional efficiencies as we scale. Supported by strong revenue growth and disciplined cost management, we expect the efficiency ratio to further decline over the coming years.

Speaker #4: Driving number one: continued margin expansion. Number two: sustainable profitability. And number three: deeper competitive moats. Before we wrap up, it's important to highlight how our business model consistently delivers bottom-line performance and does so at scale.

Speaker #4: Net income reached $637 million in the second quarter, up 42% year over year on an FX-neutral basis. Return on equity reached 28%, continuing to track well above industry peers.

Speaker #4: Now, what makes this performance especially notable is how we got here: by charging lower prices and offering better experiences to our customers, while still delivering strong bottom-line results.

Guilherme Lago: Now, what makes this performance especially notable is how we got here, by charging lower prices and offering better experiences to our customers, while still delivering strong bottom-line results. And we are just getting started. Which brings us to Mexico, where we are seeing encouraging momentum and a clear path to scale. Customer growth is accelerating, and our core product, credit cards, is scaling. We reached 6.6 million credit card customers this quarter, up from 4.3 million a year ago. Over the last 12 months, we accounted for more than a quarter of all new credit cards issued in Mexico. This is a clear sign of our early success in expanding access to credit in the country.

Speaker #4: And we are just getting started. This brings us to Mexico, where we are seeing encouraging momentum and a clear path to scale. Customer growth is accelerating, and our core product, credit cards, is scaling.

Speaker #4: We reached 6.6 million credit card customers this quarter, up from 4.3 million a year ago. Over the last 12 months, we accounted for more than a quarter of all new credit cards issued in Mexico.

Speaker #4: This is a clear sign of our early success and expanding access to credit in the country. At this stage in Mexico, our most important KPIs are: number one, growing a solid and engaged customer base.

Guilherme Lago: At this stage in Mexico, our most important KPIs are: number one, growing a solid and engaged customer base; number two, building a large and resilient local currency liability franchise; and number three, continue to improve our credit underwriting models to approve more customers and drive sustainable portfolio growth. On the funding side, our liability franchise continues to show signs of strength. Even after adjusting down our DEPO rates, deposits continue to exceed $6 billion, underscoring the value of our brand and the appeal of our product. Our interest earning portfolio has gained strong traction recently, growing over 70% year over year on an FX neutral basis. We will continue to scale credit, but at the right pace, accelerating when the signals are clear and consistent with our long-term strategy in Mexico. We will never hesitate to pull back if and when the situation requires.

Speaker #4: Number two: building a large and resilient local currency liability franchise. And number three: continue to improve our credit underwriting models to approve more customers and drive sustainable portfolio growth.

Speaker #4: On the funding side, our liability franchise continues to show signs of strength. Even after adjusting down our deeper rates, deposits continue to exceed $6 billion, underscoring the value of our brand and the appeal of our product.

Speaker #4: Our interest-earning portfolio has gained strong traction recently, drawing over 70% year-over-year on an FX-neutral basis. We will continue to scale credit, but at the right pace, accelerating when the signals are clear and consistent with our long-term strategy in Mexico.

Speaker #4: And we will never hesitate to pull back if and when the situation requires. We are very confident in our opportunity to win in Mexico, and our focus remains on disciplined execution and long-term value creation.

Guilherme Lago: We are very confident in our opportunity to win in Mexico, and our focus remains on disciplined execution and long-term value creation. With that, we will now open the call for questions. Thank you.

Speaker #4: With that, we will now open the call for questions. Thank you.

Speaker #1: We will now start the Q&A session for investors and analysts. If you wish to ask a question, please click on "raise your hand." If your question is answered, you can exit the queue by clicking on "put your hand down."

Operator: We will now start the Q&A session for investors and analysts. If you wish to ask a question, please click on "Raise your hand." If your question is answered, you can exit the queue by clicking on "Put your hand down." Please limit yourself to one question and a follow-up. If you have further questions, please re-enter the queue. You may submit online questions at any time today using the Q&A box on the webcast. I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer.

Speaker #1: Please limit yourself to one question and a follow-up. If you have further questions, please re-enter the queue. You may submit online questions at any time today using the Q&A box on the webcast.

Speaker #1: I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer.

Guilherme Souto: Thank you, operator. Could you please open the line for Eduardo Hosmann from BTG?

Speaker #5: Thank you, operator. Could you please open the line for Eduardo Rossmann from BTG?

Eduardo Hosmann: Hi, hi everyone. Congrats on the numbers. I have a question for David. In recent months, we have seen important changes, right, in the management team, including the announcement of a new CTO this week. So, could you please help us understand, you know, the significance of these changes for Nubank in this next phase? And please, if you could also connect this topic to the company's kind of international expansion, right? That would be great as well. Specifically, do these new additions suggest also a possible acceleration of the growth outside Brazil, including entering new markets, you know, beyond Mexico and Colombia? Thanks a lot.

Speaker #2: Hi, hi everyone. Congrats on the numbers. I have a question for David. In recent months, we have seen important changes in the management team, including the announcement of a new CTO this week.

Speaker #2: So, could you please help us understand the significance of these changes for Nubank in this next phase? And please, if you could also connect this topic to the company's kind of international expansion, right?

Speaker #2: That would be great as well. Specifically, do these new additions suggest a possible acceleration of the growth outside Brazil, including entering new markets beyond Mexico and Colombia?

Speaker #2: Thanks a lot.

David Velez: Rosman, thank you. Thanks a lot for the question. We, as we've said in the past, we have made this number of changes over the past couple of months, really thinking about the next five to ten years. We think we are, we have ahead one of the most interesting opportunities in technology in the world. Financial services is still the largest market in the world that hasn't really been disrupted by technology. Over 95% of the market cap of financial services globally, over $8 trillion, is still very much dominated by old traditional banks. And that is very different from what has happened in all our different segments. So, as we think about the next five, ten years, we are preparing to play in the world, in the top leagues, in the world class.

Speaker #6: Rossmann, thank you. Thanks a lot for the question. As we said in the past, we have made this number of changes over the past couple of months, really thinking about the next five to ten years.

Speaker #6: We think we have ahead one of the most interesting opportunities in technology in the world. Financial services is still the largest market in the world that hasn't really been disrupted by technology.

Speaker #6: Over 95% of the market cap of financial services globally, over $8 trillion, is still very much dominated by all traditional banks. And that is very different from what has happened in all our different segments.

Speaker #6: So, as we think about the next five to ten years, we are preparing to play in the world’s top leagues and at a world-class level. As we prepare to compete in these global leagues, we are bringing in a world-class team.

David Velez: And as we prepare to play in the world leagues, we are bringing a world-class team. And this likely is going to mean adding talent, sometimes that comes from Latin America globally, but also some talent that comes from some of the top world-class technology companies. And so that is a bit what we are preparing here. I think the addition of Roberto is very strategic in helping us strengthen our positioning in Latin America. We have, we have regulated entities in the three markets that we operate. We will have many more regulated entities later on as we internationalize. So, regulators are a key counterparty of us. We've always been ahead in terms of regulatory compliance, and we treat that very, very seriously. Public policy is a key aspect of also what we do as a regulated financial institution.

Speaker #6: And this likely is going to mean adding talent, sometimes that comes from Latin America globally, but also some talent that comes from some of the top world-class technology companies.

Speaker #6: And so that is a bit what we are preparing here. I think the addition of Roberto is very strategic in helping us strengthen our positioning in Latin America. We have regulated entities in the three markets that we operate.

Speaker #6: We will have many more regulated entities later on as we internationalize. So, regulators are a key counterparty for us. We've always been ahead in terms of regulatory compliance, and we treat that very, very seriously.

Speaker #6: Public policy is a key aspect of what we do as a regulated financial institution. And in Roberto, we also were able to find all of that knowledge, but also a lot of technology and strategy knowledge.

David Velez: And in Roberto, we also were able to find all of that knowledge, but also a lot of technology and strategy knowledge. So, it was a very key strategic addition to the team, and it has been truly phenomenal to be able to work with him here in the team over the past month already. And with the addition of Eric and Ethan, I think we are saying we are on the way to build one of the world-class products in financial services. We already have one of the most sophisticated technology stacks of any company in Latin America. We're in the middle of an AI transformation that we're taking extremely seriously. And we want to take advantage of all these opportunities that open ahead.

Speaker #6: So, it was a very key strategic addition to the team, and it has been truly phenomenal to be able to work with him here in the team over the past month already.

Speaker #6: And with the addition of Eric and Ethan, I think we are saying we are on the way to build one of the world-class products in financial services.

Speaker #6: We already have one of the most sophisticated technology stacks of any company in Latin America. We're in the middle of an AI transformation that we're taking extremely seriously.

Speaker #6: And we want to take advantage of all these opportunities that open ahead. So, I think as we bring somebody like Ethan, with his knowledge of having run products for hundreds of millions of customers, and the same as Eric, we are just getting prepared for the next stage.

David Velez: And so, I think as we bring somebody like Ethan with his knowledge of having run products for hundreds of millions of customers, and the same ones as Eric, we are just getting prepared for the next stage. So, to summarize, I do think these additions help us both strengthen the market-leading position we have in Brazil and Latin America by upping up our game and also prepare us to really go play in the big leagues as we think about internationalization over the next few years.

Speaker #6: So, to summarize, I do think these additions help us both strengthen the market-leading position we have in Brazil and Latin America. By upping our game, we are also prepared to really go play in the big leagues.

Speaker #6: As we think about internationalization over the next few years.

Eduardo Hosmann: Perfect. Thanks a lot, David.

Speaker #2: Perfect. Thanks a lot, David.

David Velez: Thank you, Rosman.

Speaker #6: Thank you, Rossmann.

Guilherme Souto: Operator, could you open the line for Jorge Cury, for Morgan Stanley?

Speaker #5: Operator, could you open the line for Jorge Curie for Morgan Stanley?

Jorge Cury: Hi, everyone. Congrats on the numbers. Great quarter. I wanted to maybe double-click on your slide 11, your loan origination. You have 1% FX neutral, 1% FX neutral growth, I'm sorry, which is a very different number from what we've seen over the last year, where the quarter-on-quarter growth was in the double digit. And I appreciate that. The year-on-year number is really strong, 43% FX neutral, and that's certainly a better way to look at it.

Speaker #7: Hi, everyone. Congrats on the numbers. Great quarter. I wanted to maybe double-click on your slide 11 regarding your loan origination. You have 1% FX neutral.

Speaker #7: 1% FX-neutral growth, I'm sorry, which is a very different number from what we've seen over the last year. Where the quarter-on-quarter growth, we're in the double digits.

Speaker #7: And I appreciate that. The year-on-year number is really strong, 43% FX neutral, and that's certainly a better way to look at it. But just given some of the things that happened in the quarter, you know, specifically on your credit line increases, your clips on credit cards that you started to implement and reach record levels for the company, given that you are extracting more value out of your hyper-paying acquisition.

Jorge Cury: But just given some of the things that happened in the quarter, you know, specifically on your credit line increases, your clips on credit cards that you started to implement and reach record levels for the company, given that you are extracting more value out of your hyper-playing acquisition, given that we saw a big acceleration of pick at the end of the first quarter that, you know, we assumed it was going to continue or has continued during the quarter. So, if you can help us understand, you know, if some of these things are just not reflected in the numbers, they're going to get reflected going forward. And any other dynamic for us to understand these different paths of originations in the second quarter versus what we've seen over the last year. Thank you very much.

Speaker #7: Given that we saw a big acceleration of picks at the end of the first quarter, we assumed it was going to continue or have us continue during the quarter.

Speaker #7: So, if you can help us understand, you know, if some of these things are just not reflected in the numbers, going to get reflected going forward.

Speaker #7: And any other dynamic for us to understand this different path of originations in the second quarter versus what we've seen over the last year.

Speaker #7: Thank you very much. Hi, Jorge. This is Lago. Thanks for the question. So, let me try to unpack this by asset classes.

Guilherme Lago: Hi, Jorge. This is Lago. Thanks for the question. So, let me try to unpack this in by asset classes. So, let me talk about kind of the slide 11 to which you allude, brings kind of the evolution of originations only for loans. I'm going to now try to address unsecured, then secure, and then credit cards, which are not here. So, starting with unsecured, we have had a fairly robust set of kind of growth figures over the past quarters. We had an exceptionally strong first quarter of 2025, especially because it was a quarter in which we launched a few new kind of models and policies that allow us to embrace customers that were not eligible for unsecured credit lines at that point in time.

Speaker #7: So let me talk about, kind of, slide 11, to which you allude, bringing kind of, the evolution of originations only for loans. I'm going to, you know, try to address unsecured, then secured, and then credit cards, which are not here.

Speaker #7: so starting with unsecured, we have had, you know, a fairly robust set of kind of a growth figures over the past quarters. We had an exceptionally strong first quarter of 2025.

Speaker #7: Especially because it was a quarter in which we launched a few new models and policies that allow us to embrace customers who were not eligible for unsecured credit lines at that point in time.

Guilherme Lago: And usually, when you do so, you have kind of the first-time effect of early kind of adopters of the new policy, which kind of increases the origination volumes. And also, the first quarter for unsecured credit is typically a seasonally strong quarter. We do expect, Jorge, that we will continue to grow unsecured lending originations fairly strongly throughout the remainder of 2025 and 2026, as long as we continue to see the asset quality numbers that we are seeing in our book, not only until the end of the second quarter, but until now, today, August 14th, everything seems to be super on track. We believe that we now account for over 20% of the origination market share of new unsecured loans in Brazil. And this should not only continue to gain speed, but it should be complemented by lending products in Mexico that have recently been launched.

Speaker #7: And usually when you do so, you have kind of the first-time effect of early adopters of the new policy, which kind of increases the origination volumes.

Speaker #7: And also, the first quarter for unsecured credit is typically a seasonally strong quarter. We do expect, Jorge, that we will continue to grow unsecured lending originations.

Speaker #7: Fairly strongly throughout the remainder of 2025 and 2026, as long as we continue to see the asset quality numbers that we are seeing in our book, not only until the end of the second quarter, but until you will know today, August 14th, everything seems to be super on track.

Speaker #7: We believe that we now account for over 20% of the origination market share of new unsecured loans in Brazil. This should not only continue to gain speed, but it should also be complemented by lending products in Mexico that have recently been launched.

Guilherme Lago: So, feeling fairly good about the evolution of unsecured loans. Now, going to the secure loan story, Jorge, I think here I would have to split the story here in two sub-asset classes. So, you have the INSS and the public payroll loans, excluding INSS. So, for those who are not aware, INSS is the public payroll loans directed to pensioners and retirees. In the second quarter, there was kind of a major disruption in the INSS system. So, the overall volume of the origination of the industry dropped by more than 50 to 55%, and our origination dropped by about 50% as well. We even gained market share there, but in a declining kind of origination quarter. We do expect that this will be fixed and resolved very promptly.

Speaker #7: So, feeling fairly good about the evolution of unsecured loans. Now, going to the secured loan story, Jorge, I think here I would have to split the story into two sub-asset classes.

Speaker #7: So you have the INSS and the public payroll loans, excluding INSS. For those who are not aware, INSS is the public payroll loans directed to pensioners and retirees.

Speaker #7: In the second quarter, there was a major disruption in the INSS system. As a result, the overall volume of origination in the industry dropped by more than 50% to 55%.

Speaker #7: And our origination dropped by about 50% as well. We even gained market share there, but in a declining kind of origination quarter. We do expect that this will be fixed and resolved very promptly.

Guilherme Lago: We are assuming that by the end of August, early September, origination of INSS, not only for us, but for the entire industry, will resume their historical growth. Most likely, in fact, we may see actually a spike in originations in the next kind of months to offset the lower originations. Now, if you exclude INSS or all of the other public payroll loans, Jorge, especially CIAPI, our originations grew by more than 50% in the quarter. So, we are making very good strides in our view in the ramp-up of the public payroll loans there, not only by kind of adding more customers to existing contracts, but also by adding more contracts kind of to our portfolio of collateral agreements, a few of which will come into force in the second half of this year.

Speaker #7: We are assuming that by the end of August, early September, the origination of INSS, not only for us but for the entire industry, will resume their historical growth.

Speaker #7: Most likely, in fact, we may see a spike in originations in the next kind of months to offset the lower originations. Now, if you exclude INSS for all of the other public payroll loans, Jorge, especially SIAPE, our originations grew by more than 50% in the quarter.

Speaker #7: So we are making very good strides in our view. In the ramp-up of the public payroll loans there, not only by kind of adding more customers to existing contracts, but also by adding more contracts to our portfolio of collateral agreements, a few of which will come into force in the second half of this year.

Speaker #7: And then, if you look at the overall evolution of our portfolio, then I would draw your attention to slide 27, Jorge. You will see that even with kind of this one-off headwind from INSS, we continue to see all of the asset classes expanding at what we believe to be a fairly healthy pace.

Guilherme Lago: And then, if you look at the overall evolution of our portfolio, then I will draw your attention to slide 27, Jorge. You will see that even with kind of this one-off headwind from INSS, we continue to see all of the asset classes expanding at what we believe to be a fairly healthy pace. So, over in the quarter, portfolio grew by 8% of FX neutral, and that growth was followed by loans, credit cards IEP, and credit cards non-IEP. And now, my last attempt to address your question, you also mentioned credit cards. So, look, credit cards, yes, we have been seeing kind of fairly material improvements in our ability to do credit underwriting and to continue to expand the credit card portfolio.

Speaker #7: So, in the quarter, the portfolio grew by 8% FX neutral. And that growth was followed by loans, credit cards, IEP, and credit cards non-IEP. In my last attempt to address your question, you also mentioned credit cards.

Speaker #7: So, look, credit cards—yes, we have been seeing kind of a fairly material improvement in our ability to do credit underwriting and to continue to expand the credit card portfolio.

Speaker #7: It has to do with the adoption of, you know, new models and technologies to how we do credit underwriting. Going all the way to better kinds of traditional machine learning models, but also neural networks and predictive AI technologies.

Guilherme Lago: It has to do with the adoption of new models and technologies to how we do credit underwriting, going all the way to better kind of traditional machine learning models, but also neural networks and predictive AI technologies. But more and more, Jorge, by the adoption of new data that we acquire, right? So, the more customers stay with us, the more data we accumulate. We are now the leaders in open finance consent. The combination of better modeling techniques with more data has allowed us to consistently increase kind of credit underwriting credit limits and utilizations. Based on our latest reading, our market share in Brazil in credit card receivables may have grown by more than 100 basis points in this quarter specifically. So, we are fairly encouraged by what is ahead of us, not only in the existing segments, but also as we expand into new segments.

Speaker #7: But more and more, Jorge, by the adoption of new data that we acquire, right? So, the more customers stay with us, the more data we accumulate. We are now the leaders in open finance consent.

Speaker #7: The combination of better modeling techniques with more data has allowed us to consistently increase our credit underwriting, credit limits, and utilizations. Based on our latest reading, our market share in Brazil in credit card receivables may have grown by more than 100 basis points in this quarter specifically.

Speaker #7: So, we are fairly encouraged by what is ahead of us. Not only in the existing segments, but also as we expand into new segments.

Speaker #6: Thank you, Lago. That was super clear. Thanks for all the additional details. And congrats again on the quarter and all of the great new hires.

Eduardo Hosmann: Thank you, Lago. That was super clear. Thanks for all of the additional details. And congrats again on the quarter and all of the great new hires.

Speaker #7: Thanks, Jorge.

David Velez: Thanks, Jorge.

Speaker #5: Operator, could you please open the line for Yuri Fernandez from JP Morgan?

Guilherme Souto: Operator, could you please open the line for Yuri Fernandez from JP Morgan?

Speaker #8: Thank you, and good afternoon. Also, congrats on the margins and the risk-adjusted margin expansion and the good quarter. I have a follow-up also to Lago.

Yuri Fernandez: Thank you, and good afternoon. Also, congrats on the margin, the risk-adjusted margin expansion in the quarter. I have a follow-up also to Lago, just on asset quality. Most metrics, they look good, right? Stable coverage, 18 to 90 days improving, slightly better than seasonality. The only thing that caught my attention, Lago, was a higher stage three formation up quarter over quarter. I would like to get your view on this because when I go to 2024 and 2023, I also saw some seasonality in the second queue. So, just checking if this is basically seasonal. From your answer to Cury, I get an impression that you feel comfortable with asset quality, but given we have many investors concerned with the macro situation in Brazil, it would be good to get your feeling on the formation and also how you see asset quality. Thank you.

Speaker #8: Just on asset quality, most metrics look good, right? Stable coverage, 15 to 90 days improving, slightly better than seasonality. The only thing that caught my attention, Lago, was a higher stage three formation, up a quarter over quarter.

Speaker #8: I would like to get your view on this because when I go to 2024 and 2023, I also saw some seasonality in the second queue.

Speaker #8: So, just checking if this is basically seasonal. From your answer to Curie, I get the impression that you feel comfortable with asset quality, but we have many investors concerned with the market situation in Brazil.

Speaker #8: It would be good to get your feeling on the formation and also how you see asset quality. Thank you.

Speaker #7: No, thanks, Yuri, for the question. So the short answer is yes. I think the increase in NPL formation, as well as in stage three formation, that you can see on slide 26 of our presentation.

Guilherme Lago: No, thanks, Yuri, for the question. So, the short answer is yes. I think the increase in NPL formation as well as in stage three formation that you can see on slide 26 of our presentation is almost entirely explained by the seasonality of basically the spike in seasonal delinquency in the first quarter, kind of flowing through the second quarter. Now, broadly on asset quality, we are fairly mindful of the macroeconomic kind of situations in the markets where we operate, Brazil, Mexico, and Colombia, also how it may impact credit cycles. And this is a concern that has lingered not only with us, but also with many investors and other stakeholders since late last year and early this year. So far, and I say so far until, you know, August 14th, we haven't seen kind of a bad deterioration playing out materially in our asset quality figures.

Speaker #7: is almost entirely explained by the seasonality of basically the spike in seasonal delinquency in the first quarter, kind of flowing through the second quarter.

Speaker #7: Now, broadly on asset quality, we are fairly mindful of the macroeconomic situations in the markets where we operate: Brazil, Mexico, and Colombia, and how it may impact credit cycles.

Speaker #7: And this is a concern that has lingered not only with us, but also with many investors and other stakeholders since, you know, late last year and early this year.

Speaker #7: So far—and I say so far until, you know, August 14th—we haven't seen that deterioration playing out materially in our asset quality figures.

Speaker #7: All of our asset quality figures are performing largely as expected. That doesn't, of course, mean that we have to assume that this will stay as it is going forward.

Guilherme Lago: All of our asset quality figures are performing largely as expected. That doesn't, of course, mean that we have to assume that this will stay as it is going forward. We continue to underwrite with kind of largely two kind of pillars in our mind. Pillar number one, we always assume that the future will be worse than the past. So, irrespective of where any of us here at the company may think we are in the credit cycle when it comes to credit underwriting decisions, we always assume that there's going to be a deterioration in the credit cycle over the next 12, 24, and 36 months.

Speaker #7: We continue to underwrite with kind of a largely two kinds of pillars in our mind. Pillar number one: we always assume that the future will be worse than the past.

Speaker #7: So, irrespective of where any of us here at the company may think we are in the credit cycle when it comes to credit underwriting decisions, we always assume that there’s going to be a deterioration in the credit cycle.

Speaker #7: Over the next 12, 24, and 36 months. And then above and beyond that, which is pillar number two, every cohort of unsecured credit that we underwrite, has to abide by the following kind of stress test, which is losses have to go can go up by up to two times and that cohort still has to be NPV positive.

Guilherme Lago: And then above and beyond that, which is pillar number two, every cohort of unsecured credit that we underwrite has to abide by the following kind of stress test, which is losses have to go up, can go up by up to two times, and that cohort still has to be NPV positive. So, with that, we build enough credit buffer resilience that will allow us to continue to grow conservatively and with conviction that we can withstand kind of unfavorable economic cycles over time.

Speaker #7: So, with that, we build enough credit buffer resilience that will allow us to continue to grow conservatively and, you know, with conviction that we can withstand kind of unfavorable economic cycles over time.

Speaker #8: Super clear. Thank you, Lago. And congrats again.

David Velez: Very clear. Thank you, Lago, and congrats again.

Speaker #7: Thanks, Yuri.

Speaker #8: Thank you.

Speaker #5: Operator, could you please open the line to Geoffrey Elliott from Autonomous?

Guilherme Lago: Thanks, Yuri.

Guilherme Souto: Operator, could you please open the line to Geoffrey Elliott from Autonomous?

Speaker #9: Hello, thanks very much for taking the question. Could we talk about the mix of credit card balances? The last five quarters, interest-earning installments have been between 27% and 29%.

Eduardo Hosmann: Hello. Thanks very much for taking the question. Could we talk about the mix of credit card balances? The last five quarters, interest earning installments have been between 27% and 29% of total balances. Are we now in a range which is normalized and where you expect to stay, or is there scope for that to move higher with increased originations of PIX credit? Thank you.

Speaker #9: Of total balances, are we now in a range that is normalized and where you expect to stay? Or is there scope for that to move higher with increased originations of PIX credit?

Speaker #9: Thank you.

Speaker #7: Oh, thanks, Geoff. Look, I think I would say they should stay more or less where it is. Maybe a kind of small variation up or down, maybe a little bit of upside risk here depending on how pronounced PIX financing and other transaction financing products may unfold.

Guilherme Lago: Oh, thanks, Geoff. Look, I think I would say they should stay more or less where it is, maybe kind of small variations up or down, maybe a little bit upside risk here depending on how pronounced PIX financing and other transaction financing products may unfold. But I wouldn't suggest that there is a lot of room for us to go materially beyond the 29% that you alluded.

Speaker #7: But I wouldn't suggest that there is a lot of room for us to go materially beyond the 29% that you alluded.

Speaker #9: Perfect. Thank you.

Eduardo Hosmann: Perfect. Thank you.

Guilherme Souto: Operator, could you please open the line for Niha Gawala from HSBC?

Speaker #5: Operator, could you please open the line for Niha Gawala from HSBC?

Niha Gawala: Hi. Thank you for taking my question and congratulations on the numbers. Quickly, on the deposit side of the franchise, two notable trends. First, on the Brazil, there was a big pickup sequentially on the deposits. What was the driver for that? Are you trying, are you being more active consciously in trying to gather more deposits in Brazil? So, any explanation on that? And on the Mexico side, you brought down the rates quite significantly, lowered the gap versus the TA. What have been the early reactions from the customers? Are you seeing a flow of deposits in July, early August, or has that been fairly stable?

Speaker #1: Hi. Thank you for taking my question, and congratulations on the numbers. Quickly, on the deposit side of the franchise, there was a notable trend in Brazil, where there was a big pickup sequentially in the deposits.

Speaker #1: What was the driver for that? Are you being more active consciously and trying to gather more deposits in Brazil? So, any explanation on that?

Speaker #1: And on the Mexico side, you brought down the rates, quite significantly lowering the gap versus the TA. What have been the early reactions from the customers?

Speaker #1: Are you seeing a flow of deposits in July and early August? Or has that been fairly stable?

Guilherme Lago: No, Niha, thanks for the question. So, let me try to break it down. In Brazil, we did see, or we continue to see, an increase in deposits there. I think that has to do primarily with the increase in engagement and share of wallet that we have had with our customers. I would not ascribe a lot of value to that, to any kind of initiatives to pay up for deposits in Brazil, even though we have launched a few new features that kind of reward customer engagement and loyalty over time. If you were to compare, for example, the cost of funding of Brazil in isolation, it would have been practically unchanged over the past two quarters at kind of low 80s.

Speaker #7: No, Niha, thanks for the question. So let me try to break it down. In Brazil, we did see, or we continue to see an increase in deposits there.

Speaker #7: I think that has to do primarily with the increase in engagement and share of wallet that we have had with our customers. I would not ascribe a lot of value to that to any kind of initiatives to pay up for deposits in Brazil, even though we have launched a few new features that kind of reward customer engagement and loyalty over time.

Speaker #7: If you were to compare, for example, the cost of funding of Brazil in isolation, it would have been practically unchanged over the past two quarters.

Guilherme Lago: So, I wouldn't justify the increase in deposits based on increase in cost of funding, but largely on increase in customer engagement and sequential gains in shares of wallets. Also, kind of progressively, as we make some strides into more affluent segments, it's natural that we should also see increases in deposits over time. So, that's the story about Brazil. The story about Mexico, just to maybe put everyone in perspective, Niha, if you allow me. So, we did announce some material shifts to the design and the pricing of our deposits in Mexico in early July, and that is expected to lead to kind of the lowering of our cost of funding in Mexico. None of that, however, is reflected in the numbers that we see here in the second quarter. So, those are things that we will see throughout the remainder of 2025.

Speaker #7: At a kind of low 80s. So I wouldn't justify the increase in deposits based on the increase in the cost of funding, but largely on the increase in customer engagement and sequential gains in shares of wallets.

Speaker #7: Also, kind of a progressively as we make some strides into more affluent segments, it's natural that we should also see increases in deposits over time.

Speaker #7: So that's a story about Brazil. The story about Mexico, just to maybe put everyone in perspective, Niha, if you allow me. So we did announce some material shifts to the design and the pricing of our deposits in Mexico.

Speaker #7: In early July, we expect this to lead to a lowering of our cost of funding in Mexico. None of that, however, is reflected in the numbers that we see here in the second quarter.

Speaker #7: So those are things that we will see throughout the remainder of 2025. Now, back to your question, Niha. Look, we have been watching this super carefully since we've made the movement.

Guilherme Lago: Now, back to your question, Niha. Look, we have been watching this super carefully since we've made the movements. Everything has been kind of evolving as expected. As we continue to offer what we call the money box capped now at 25,000 pesos, it basically allows us to even better serve and offer an even stronger value proposition for the vast majority of our customers, nearly 90% of the customers. And so, we believe that we will be able to maintain customer engagement and NPS at the segments that we care the most. We did run kind of some risk of having what people call the yield seekers eventually moving their money out. That outflow has not been material so far, even though we watch this carefully. So, so far, so good, Niha.

Speaker #7: Everything has been kind of evolving as expected. As we continue to offer what we call the money box, capped now at $25,000 pesos, it basically allows us to even better serve and offer an even stronger value proposition for the vast majority of our customers—nearly 90% of the customers.

Speaker #7: And so we believe that we will be able to maintain customer engagement and NPS at the segments that we care about the most. We did run the risk of having what people call the yield seekers eventually move their money out.

Speaker #7: That outflow has not been material so far, even though we watched this carefully. So, so far, so good, Niha. If things continue to play out as we have seen, we do expect to be able to continue to have a fairly robust local currency, low-cost retail deposits in Mexico.

Guilherme Lago: If things continue to play out as we have seen, we do expect to be able to continue to have a fairly robust local currency, low-cost retail deposits in Mexico that has already materially de-risked our funding strategy in the country, but progressively at lower funding costs.

Speaker #7: That has already materially de-risked our funding strategy in the country, but progressively at lower funding costs. Niha, I would just add one more point here to Lago, which is the following.

David Velez: Niha, I would just add one more point here to Lago, which is the following. When we launched Mexico, our savings account product was fairly basic. It was an online saving account without a lot of the functionalities. We didn't even have the ability to allow customers to deposit offline or to withdraw, which is very key in a market like Mexico. So, in a way, it was a product, it was truly an MVP as we launched. That meant that we had to pay higher yield. As we launched additional products and the product gets much more robust, we've added OXXO as a distribution channel. Customers are now able to withdraw cash. We've added a number of what we call self-driving bank functionalities inside our app. Then the value proposition increases. That means we have to compensate less on the yield.

Speaker #7: When we launched the Mexico savings account product, it was fairly basic. It was an online savings account without a lot of the functionalities. We didn't even have the ability to allow customers to deposit offline or to withdraw, which is very key in a market like Mexico.

Speaker #7: So, in a way, it was a product; it was truly an MVP as we launched. That meant that we had to pay a higher yield as we launched additional products, and the product gets much more robust.

Speaker #7: We've added, also as a distribution channel, customers are now able to withdraw cash. We've added a number of what we call self-driving bank functionalities inside our app.

Speaker #7: Then the value proposition increases. That means we have to compensate less on the yield, and that's why we've been able to decrease yield without seeing significant changes in the flows of deposits we're seeing into Mexico.

David Velez: And that's why we've been able to decrease yield without seeing significant changes in the flows of deposits we're seeing into Mexico. And the same strategy has really been applied to Brazil and Colombia.

Speaker #7: And the same strategy has really been applied to Brazil and Colombia.

Niha Gawala: Super clear, Lago, David. Thank you for that. If I can have my follow-up on a separate topic, but brief one. The hyperplane expansion and the credit limits that you talked about, is there any particular segment of customer base where it is more targeted towards higher income or mass market or your super growth segments? Because that'll eventually have an impact on probably stronger loan growth in the second half of it or in 2026 for your loan book. Thank you so much.

Speaker #1: Super, super clear, Lago, David. Thank you for that. If I can have my follow-up on a separate topic, but a brief one. The hyperplane expansion in the credit limits that you talked about, is there any particular segment of the customer base where it is more targeted—towards higher income, or mass market, or your super core segments?

Speaker #1: Because that'll eventually have an impact on probably stronger loan growth in the second half of 2025 or in 2026 for your loan book. Thank you so much.

David Velez: So far has been mostly focused on mass market, but we expect that a lot of these new AI-enabled architectures will be now applied to a number of different models. The amazing opportunity of Hyperplane is that it's not only a modeling; the team did not only bring a number of modeling capabilities, but also a true new platform that allows us to put into production and develop a number of different models at the same time. And so, this model was the first one. We expect a number of new models coming in for a number of different segments for the different countries and for different applications such as collections, fraud, cross-sell. So, we're very excited about this, and it's early days of applying this new technology to a lot of the decisioning that we have across Nubank. But we expect to see meaningful changes across the board.

Speaker #7: So far, we have mostly focused on the mass market. However, we expect that a lot of these new AI-enabled architectures will now be applied to a number of different models.

Speaker #7: The amazing opportunity of Hyperplane is that it's not only a modeling tool; the team didn't just bring a number of modeling capabilities, but also a true new platform that allows us to put into production and develop a number of different models.

Speaker #7: At the same time, this model was the first one. We expect a number of new models coming in for a number of different segments.

Speaker #7: For the different countries and for different applications such as collections, fraud, and cross-sell, we're very excited about this. It’s early days of applying these new technologies to a lot of the decisioning that we have across Nubank.

Speaker #7: But we expect to see meaningful changes across the board.

Guilherme Souto: Operator, could you please open the line for Pedro Eduqui from Itaú?

Speaker #5: Operator, could you please open the line for Pedro Duque from Itaú?

Guilherme Lago: Hi, good evening, everybody. Thank you so much for the question. Both on cards, please. First, the number that you give us, and this has to do with PIX financing, that the number of clients using it transactionally fell a bit from 17.3 to 17.1 this quarter. In the last call, you had mentioned that you had slightly become more comfortable to gradually resume the product to those certain customers you had withdrawn from after tests had worked well. So, can you give us an update on the PIX financing process, when how you've seen it roll out, when you can see it get more traction? And then the second question, I'll just, it's sort of related, has to do with the number of active credit cards then that has also fallen a bit. And we can see that you're rolling out more limits and all.

Speaker #9: Hi, good evening, everybody. Thank you so much for the question. Both on cards, please. First, the number that you gave us, and this has to do with PIX financing, is that the number of clients using it transactionally fell a bit, from 17.3 to 17.1.

Speaker #9: This quarter, during the last call, you mentioned that you had slightly become more comfortable to gradually resume the product to those certain clusters you had withdrawn from.

Speaker #9: After tests had worked well, can you give us an update on the PIX financing process? When do you see it rolling out, and when can you see it getting more traction?

Speaker #9: And then the second question, I'll just, it's sort of related. It has to do with the number of active credit cards that has also fallen a bit.

Speaker #9: And we can see that you're rolling out more limits and all sorts of expect the opposite: no more active cards. So if you can help us square this out a little bit.

Guilherme Lago: I'd sort of expect the opposite, no more active cards. So, if you can help us square this out a little bit. Thank you. Sure. So, Leduc, thanks for the question. Let me try to touch on each of them separately. So, PIX financing, PIX financing, or better said, the whole transactional financing kind of a family of products, of which today PIX financing is by far the biggest one, but that continues to grow. We did show in the last quarter that we had resumed growth there, that we were at the end of the first quarter already now with a bigger kind of a PIX financing and transactional financing portfolio than we had in the second quarter of 2024 when we decided to pull back. That only continued to increase. So, today we are even ahead of where we were in the first quarter of 2025.

Speaker #9: Thank you.

Speaker #5: Perfect. Donald Duque, thanks for the question. Let me try to touch on each of them separately. So PIX financing, or better said, the whole transactional financing kind of a family of products, of which today PIX financing is by far the biggest one.

Speaker #5: But that continues to grow. We did show in the last quarter that we had resumed growth there. We were at the end of the first quarter already with a bigger kind of PIX financing and transactional financing portfolio than we had in the second quarter of 2024 when we decided to pull back.

Speaker #5: That only continued to increase. So today we are even ahead of where we were in the first quarter of 2025. The performance of the portfolio continues to be fairly robust.

Guilherme Lago: The performance of the portfolio continues to be fairly robust, and it has been widely adopted by our customer base. So, you may see, Leduqui, a few kind of noise in seasonality when you go from one quarter to another. But by all measures, it has been kind of a remarkable success for the customers. It has been adopted by, so I think as of the end of the second quarter, over 40% of our credit card customers were also active with some type of transactional financing, primarily PIX financing functionality. So, the attach rate there is very high, very healthy, not only in the first order, but also in the second order impact. So, we do expect this to continue to grow. It certainly has a high correlation with the overall usage of PIX in the economy.

Speaker #5: And it has been widely adopted by our customer base. So you may see the duque a few kinds of noise in seasonality when you go from one quarter to another.

Speaker #5: But by all measures, it has been kind of a remarkable success for the customers. It has been adopted by, I think as of the end of the second quarter, over 40% of our credit card customers were also active with some type of transactional financing, primarily PIX financing functionality.

Speaker #5: So the attach rate there is very high, very healthy. Not only in the first order, but also in the second order impact. So we do expect this to continue to grow.

Speaker #5: It certainly has a high correlation with the overall usage of PIX in the economy. But we don't have any concerns, as we discussed when we presented the results of the third quarter of 2024.

Guilherme Lago: But we don't have any concerns as we discussed when we presented the results of the third quarter of 2024. So far, so good. Second question that I also wanted to address, which is credit cards. So, we have the number of active credit card customers in Brazil, depending if you measure this in terms of purchase volume or in terms of revenues, has remained largely flat, right? So, it's like in one measure it goes by plus 100,000. The other measure goes less than 100,000, but overall it has remained flat. What we do expect to see going forward is that the main lever of earnings growth for our credit card business in Brazil will mostly come from the increase of utilization in ARPAC per product, rather than the increase of the number of credit cards. It doesn't mean that the number of credit cards will not grow.

Speaker #5: So far, so good. The second question that I also wanted to address is regarding credit cards. As the number of active credit card customers in Brazil—depending on whether you measure this in terms of purchase volume or in terms of revenues—has remained largely flat, right?

Speaker #5: So it's like in one measure it goes by plus 100,000, the other measure goes less than 100,000, but overall it has remained flat. What we do expect to see going forward is that the main lever of earnings growth for our credit card business in Brazil will mostly come from the increase of utilization and RPAC per product rather than the increase of the number of credit cards.

Speaker #5: It doesn't mean that the number of credit cards will not grow. Yes, it will continue to grow. But I think the biggest leverage will be in RPAC and utilization.

Guilherme Lago: Yes, it will continue to grow, but I think the biggest leverage will be in ARPAC and utilization. And then you mentioned, look, if you are increasing eventually credit limits, shouldn't you see necessarily an increase in the number of active customers? Not yet, especially because the credit limit policies that we have implemented have been directed primarily at existing customers, not at initial lines. It is only natural that as we collect more data, as we continue to improve the models, what you suggested will likely happen as well. That's great, Lago. Thank you.

Speaker #5: And then you mentioned, look, if you are increasing eventual credit limits, shouldn't you see necessarily an increase in the number of active customers? Not yet.

Speaker #5: Especially because the credit limit policies that we have implemented have been directed primarily at existing customers, not at initial lines. It is only natural that as we collect more data, and as we continue to improve the models, what you suggested will likely happen as well.

Speaker #7: That's great, Lago. Thank you.

Guilherme Souto: Operator, could you please open the line for Mario Pierre from Bank of America?

Speaker #5: Operator, could you please open the line for Mario Pieri from Bank of America?

Mario Pierre: Hey guys, good evening. Congrats on the quarter. Thanks for taking my question. Lago, I wanted to discuss a little bit the private payroll product. It doesn't seem like Nubank is too excited about the product, or at least I haven't heard you guys talk too much about the opportunity. When we talk to other industry players, right, they think this is one of the best products to come to Brazil in the last, I don't know, 20 years. So, and again, they talk about the potential size of this market being significant. Can you discuss a little bit about your strategy in the private payroll product, like looking at origination data, right? We haven't seen Nubank being very active yet. When do you think you're going to be more active? Why are you holding back?

Speaker #10: Hey, guys. Good evening. Congrats on the quarter, and thanks for taking my question. Lago, I wanted to discuss a little bit the private payroll product.

Speaker #10: You, it doesn't seem like Nubank is too excited about the product, or at least I haven't heard you guys talk too much about the opportunity.

Speaker #10: When we talk to other industry players, right? They think this is one of the best products to come to Brazil in the last, I don't know, 20 years.

Speaker #10: So, again, they talk about the potential size of this market being significant. Can you discuss a little bit about your strategy in the private payroll product?

Speaker #10: Like looking at origination data, right? We haven't seen Nubank being very active yet. When do you think you're going to be more active? Why are you holding back?

Mario Pierre: Are you seeing this product as an opportunity, or do you think this is a threat to your business? Thank you.

Speaker #10: Are you seeing this product as an opportunity, or do you think this is a threat to your business? Thank you.

Guilherme Lago: Oh, Mario, thanks for the question. Look, we are very excited about the private payroll product. We think that has been a fairly important and thoughtful product innovation that has been added to Brazil. And I think Nubank has much more to gain than to lose with this product by a wide margin. Let me share a few thoughts on this, right? So, we definitely from kind of the more established kind of incoming banks, we don't have kind of a B2B2C distribution channel to kind of compete for corporate payroll on business in Brazil, which is a fairly important one. And basically, the private payroll loan product allows us to basically break into the segment in a very profitable manner, right?

Speaker #7: Oh, Mario, thanks for the question. Look, we are very excited about the private payroll product. We think that has been a fairly important and thoughtful product innovation that has been added to Brazil.

Speaker #7: And I think Nubank has much more to gain than to lose with this product by a wide margin. Let me share a few thoughts on this, right?

Speaker #7: So we definitely from kind of the more established kind of incumbent banks, we don't have kind of a B2B2C distribution channel to kind of compete for corporate payroll on business in Brazil.

Speaker #7: Which is a fairly important one. And basically, the private payroll loan product allows us to break into the segment in a very profitable manner, right?

Speaker #7: I don't necessarily need to have a B2B contract with Company X to be able to access all of the employees of this company and also enjoy the benefits of the payroll flow that goes through the bank account.

Guilherme Lago: I don't need necessarily now to have a B2B contract with company X to be able to access all of the employees of this company and also enjoy the benefits of the payroll flow that goes through the bank account. I can have access to tons of data that so far we have been kind of precluded from having access to. So, we expect that this product will improve kind of collaterals across the board, will lower data symmetry, and therefore will help the overall economy lower spreads and materially increase the size of the pie. So far, so good. Why have we not been kind of as aggressive at the inception of this product? So, the product was announced in late March. We launched the product right after this in early April.

Speaker #7: I can have access to tons of data that so far we have been kind of precluded from having access to. So we expect that this product will improve collaterals across the board.

Speaker #7: We'll lower data symmetry, and therefore, this will help the overall economy lower spreads and materially increase the size of the pie. So far, so good.

Speaker #7: Why have we not been as aggressive at the inception of this product? The product was announced in late March, and we launched the product right after this in early April.

Speaker #7: But we have not yet been kind of fully kind of we haven't been able to raise our comfort levels to adequate levels with respect to the quality of the collateral, right?

Guilherme Lago: But we have not yet been kind of fully kind of, we haven't been able to raise our comfort levels to adequate levels with respect to the quality of the collateral, right? So, I think some of the collateral that are structural to this product have not yet been fully tested and implemented. And the first data points that we have actually seen in the industry have suggested to us that the risk has not yet been fully addressed. So, first payment defaults are set to be in the 10 to 18%, which I think it is higher than what at least we would expect so far. So, we are not yet fully comfortable with the quality of the collateral, number one. Number two, we don't see necessarily material first mover advantages there.

Speaker #7: So I think some of the collateral that are structural to this product have not yet been fully tested and implemented. The first data points that we have actually seen in the industry have suggested to us that the risk has not yet been fully addressed.

Speaker #7: So, first payment defaults are set to be in the 10% to 18% range, which I think is higher than what at least we would expect so far.

Speaker #7: So we are not yet fully comfortable with the quality of the collateral, number one. Number two, we don't necessarily see material first-mover advantages there.

Speaker #7: I think if we are the lowest-cost manufacturer of this product, we will be able to secure a fairly meaningful market share position when the collateral system is more tested and solidified.

Guilherme Lago: I think if we are the lowest cost manufacturer of this product, we will be able to secure a fairly meaningful market share position when the collateral system is more tested and solidified. But Mario, you've been doing this for a long time, like many of us. And you may recall that at the beginning of the public payroll systems, the Consignado Público, the collateral was not working super well in the first months or even in the first quarters. It took some time, but the product actually ended up being a remarkable success. We do expect that private payroll loan will follow suit. And we believe that as the lowest cost manufacturer of the industry, with no more than 50% of the target market for this product within our customer base, we will have a fairly relevant ability to win there when the product is more mature.

Speaker #7: But Mario, you've been doing this for a long time, like many of us. And you may recall that at the beginning of the public payroll systems, the consignado público, the collateral was not working super well in the first months or even in the first quarters.

Speaker #7: It took some time, but the product actually ended up being a remarkable success. We do expect that private payroll loans will follow suit, and we believe that as the lowest cost manufacturer in the industry, with no more than 50% of the target market for this product within our customer base, we will have a fairly relevant ability to win there when the product is more mature.

Speaker #10: Yep. Okay, no, that's clear. There are some players that we're seeing right now more active in the segment. They're talking about, yes, we're seeing higher elevated provisions and delinquencies.

Mario Pierre: Yep. Okay. No, that's clear. Some of the players that we're seeing right already more active in this segment, they're talking about, yes, we're seeing higher, you know, elevated provisions and delinquencies. However, they still think that this is a 30% ROE product right now. So, it feels like it could get even better. So, I was just wondering, right? Like, I understand your concerns about the quality of the collateral. It's a new product. However, right, Nubank is always moving ahead of everyone else and trying to innovate. So, that's why I was a little bit surprised that you're not more active right now, but I fully understand your concerns. Thank you.

Speaker #10: However, they still think that this is a 30% ROE product right now. So it feels like it could get even better. So I was just wondering, right?

Speaker #10: Like, yeah, I understand your concerns about the quality of the collateral. It's a new product. However, right, Nubank is always moving ahead of everyone else and trying to innovate.

Speaker #10: So that's why I was a little bit surprised that you're not more active right now. But I fully understand your concerns. Thank you.

Speaker #7: Thank you, Mario.

Guilherme Lago: Thank you, Mario.

Speaker #5: Operator, could you please open the line for Tito Labarta from Goldman Sachs?

Guilherme Souto: Operator, could you please open the line for Tito Labarta from Goldman Sachs?

Speaker #9: Hi, good evening. Thank you for the call and for taking my questions, and congratulations on the strong results. A little bit of a follow-up, but just how do you think about your loan growth along with your deposit growth, right?

Tito Labarta: Hi, good evening. Thank you for the call and taking my questions and congratulations on the strong results. A little bit of a follow-up, but just how do you think about your loan growth along with your deposit growth, right? Because loan growth seems to be accelerating. You're doing well there, but deposit growth remains very strong. On the one hand, it's a headwind to earnings, but on the other hand, it's good for client engagement, client addition. Are you comfortable just continuing to grow that deposit book and get these clients, even if it is a bit of a headwind to earnings, or at some point would you want to try to slow down the deposit growth to match the loan growth? Just how do you think about, I guess, the assets and the liabilities growing in conjunction? Thank you.

Speaker #9: Because loan growth seems to be accelerating, you're doing well there. But deposit growth remains very strong. On the one hand, it's a headwind to earnings; on the other hand, it's good for client engagement and client addition.

Speaker #9: Are you comfortable just continuing to grow that deposit book and get these clients, even if it is a bit of a headwind to earnings?

Speaker #9: Or at some point, would you want to try to slow down the deposit growth to match the loan growth? Just how do you think about, I guess, the assets and the liabilities growing in conjunction?

Speaker #9: Thank you.

Speaker #7: Tito, thanks so much for the question. Look, a few thoughts there on how we are thinking about deposits from both a financial standpoint, but also from a strategic standpoint.

Guilherme Lago: Tito, thanks so much for the question. Look, a few thoughts there and how we are thinking about kind of deposits from both a financial standpoint, but also from a strategic standpoint. I would say that from a financial standpoint, we are very comfortable with the loan-to-deposit ratio that we see in Brazil, Mexico, and Colombia, not only with respect to the quantum, but also with respect to the duration and with the resilience of the retail deposits. If anything, we have buffer to either grow credit more rapidly, but we don't think that growing kind of credit more rapidly just because you have more funding is the most kind of wise approach to this. Or we would have the ability to eventually lower prices and bring deposits down. That's from a purely financial standpoint.

Speaker #7: I would say that from a financial standpoint, we are very comfortable with the loan-to-deposit ratio that we see in Brazil, Mexico, and Colombia. Not only with respect to the quantum, but also with respect to the duration and with the resilience of the retail deposits.

Speaker #7: If anything, we have buffered to either grow credit more rapidly. But we don't think that growing that kind of credit more rapidly just because you have more funding is the most wise approach to this.

Speaker #7: Or we would have the ability to eventually lower prices and bring deposits down. That, from a purely financial standpoint. However, from a strategic standpoint, especially in markets where information asymmetry is lowering very fast, including in Brazil with open finance, we do believe that we need to be the best place for our customers across Latin America to receive payments, make payments, and store value.

Guilherme Lago: However, from a strategic standpoint, especially in markets where kind of information asymmetry is lowering very fast, including in Brazil with open finance, we do believe that we need to be the best place for our customers across Latin America to receive payments, make payments, and store value. And to that extent, having a very competitive and compelling kind of a deposit design, which includes, but is not limited to price, is paramount to our primary banking relationship customers. So, we don't expect that we will play down with deposit rates in Brazil anytime soon. We do expect that in Mexico and Colombia, we will continue to actively kind of reshape the size and the price of the deposits to optimize the value proposition for the customers, loan-to-deposit, and liquidity resilience there. So, that's our thought process there.

Speaker #7: And to that extent, having a very competitive and compelling kind of deposit design, which includes, but is not limited to price, is paramount to our primary banking relationship customers.

Speaker #7: So we don't expect that we will play down with, you know, deposit rates in Brazil anytime soon. We do expect that in Mexico and Colombia, we will continue to actively reshape the size and the price of the deposits.

Speaker #7: To optimize the value proposition for the customers, loan-to-deposit, and liquidity resilience there. So that's our thought process there. I think Mexico and Colombia, you should see increases in NIM as a result of that optimization.

Guilherme Lago: I think Mexico and Colombia, you should see increases in NIM as a result of that optimization. In Brazil, I think you should see kind of a relatively stable NIM with respect to the deposits only.

Speaker #7: In Brazil, I think you should see kind of a relatively stable NIM with respect to the deposits only.

Speaker #5: Okay, no, that's great. Very helpful. Thank you, Lago. And if I can, just a quick follow-up, I guess. When you think of client monetization, I'm looking at slide 18, gross profit breakdown, right?

Tito Labarta: Okay. No, that's great. Very helpful. Thank you, Lago. And if I can, just a quick follow-up, I guess. When you think of client monetization, I'm looking at the slide 18, growth profit breakdown, right? I mean, credit is still a big component. Fees have been around this 30% level for some time, and then the rest is float. Do you think that's an optimal level? Is there an optimal?Level

Speaker #5: I mean, credit is still a big component. Fees have been around this 30% level for some time. And then the rest is float. Do you think that's an optimal level?

Speaker #5: Is there an optimal level that you would like to get to? Just how do you think about that breakdown between, I guess, lending, fees, and other sources of monetization?

Operator: that you would like to get to. Just how do you think about that breakdown between, I guess, lending fees and other sources of monetization?

Speaker #7: So Tito, the one thing that I would point out is I would kind of respond to this by sending you to another slide, which is slide 9.

Guilherme Souto: So, the one thing that I would point out is I would kind of respond to this by sending you to another slide, which is slide nine. Right? If you take a look at this slide, which is a very clear comparison between the revenues per active customers that we have and the cost per active customers that we have, today we have a weighted average ARPAC at about $12.2. The more mature cohorts are already at $27, $28 dollars. The ARPAC of incumbent banks are largely at $45. So we do expect over time that we will take the ARPAC from $12 to $15 to $20 and onwards towards the levels of incumbent banks, while our cost to serve will remain at or below $1. So that is kind of the power of the operating leverage of our digital banking model.

Speaker #7: Right? If you take a look at this slide, which is a very clear comparison between the revenues per active customer that we have and the cost per active customer that we have.

Speaker #7: Today, we have a weighted average RPAC of about $12.2. The more mature cohorts are already at $27 and $28. The RPAC of incumbent banks is largely at $45.

Speaker #7: So we do expect over time that we will take the RPAC from 12 to 15 to 20 and onwards towards the levels of incumbent banks.

Guilherme Souto: Now, what are the main levers first to bring kind of the ARPAC from $12 to $30 to $40? If you take a look at the profit pool of retail banking in Latin America as a proxy, about 65% to 70% of that is credit. So credit is expected to be kind of the bulk of that growth going forward. That does not mean, however, that all credits are created equally. You will have more secure credit, more unsecured credit. So the mix of credit will kind of shift. But I wouldn't be surprised if credit accounts for a substantial part of the ARPAC expansion. And it's one of the reasons why we are so excited with kind of digital banking models that are able to provide competitive solutions and resilient solutions for credit at scale.

Guilherme Souto: Because that is really where kind of the bulk of the profit pool is, not only in Latin America, but across many other markets in the globe.

Operator: Great. No, super helpful. Thank you, Lago. And congrats again.

Guilherme Souto: So thank you, everyone. We now have approached 60 minutes of the call. So we are now concluding today's call. On behalf of Nu Holdings, our investor relations teams, I want to thank you very much for your time and participation on Nu Holdings Ltd Q3 call today. Over the coming days, we'll be following up with questions received tonight, but we are not able to answer. And please do not hesitate to reach out to our team if you have any further questions. Thank you and have a good night.

Guilherme Lago: The Nu Holdings Ltd Q3 conference call has now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.