Why NU Holdings Is Attracting Investor Attention in Latin America's Digital Banking Boom

The Numbers Tell a Compelling Story

NU Holdings (NYSE: NU) has captured market attention with a 50% stock appreciation over the past year, driven by its impressive operational metrics. The company’s trajectory reveals why it’s becoming a focal point for those tracking fintech growth in emerging markets. Since the end of 2021 through Q3 2025, customer accounts surged from 53.9 million to 127.0 million—more than doubling in scope—while maintaining a healthy 83% activity rate among its user base.

The real narrative emerges when examining revenue per engaged customer, which nearly tripled from $4.50 to $13.40. What’s particularly noteworthy is that the cost to serve each active customer remained stable at $0.90, suggesting management is orchestrating cross-selling opportunities without eroding profitability. Between 2021 and 2024, revenue expanded at an 89% compound annual growth rate, with profitability achieved in 2023 and earnings per share doubling in 2024.

Growth Deceleration Is Natural—Not Concerning

Year-over-year customer expansion moderated from 23% (Q3 2024) to 16% (Q3 2025), but this pattern reflects strategic market evolution rather than fundamental deterioration. The company shifted focus toward Mexico and Colombia, intentionally reducing Brazil dependence despite that market’s maturity. This geographic diversification required absorbing higher funding costs and increased credit provisions in higher-growth but less-developed markets.

As a result, gross margins compressed from 46% to 43.5% between Q3 2024 and Q3 2025, while net interest margins settled at 17.3%. Net income growth decelerated to 41% year-over-year by Q3 2025, from 63% in the prior-year quarter. Investors should recognize this margin pressure as intentional investment in future market share rather than operational distress.

What’s Driving Next-Phase Growth

Analysts project 36% revenue growth and 46% earnings growth for the full year, with forward estimates suggesting 30% and 37% compound annual growth rates respectively through 2027. Three catalysts deserve attention:

Regulatory Momentum: NU’s recently secured banking license in Mexico and pending full banking license application in Brazil should unlock compliance advantages and new service possibilities. These credentials enhance credibility with regulators and customers alike, particularly in markets with stricter financial oversight requirements.

Market Penetration: The recently filed U.S. bank charter application signals management’s ambition to export its digital-only model northward, complementing existing operations across Latin America.

Strategic Partnerships: Amazon’s integration of NuPay on its Brazilian e-commerce platform strengthens NU’s competitive positioning against MercadoLibre’s Mercado Pago, creating ecosystem lock-in effects.

Valuation Context Before February’s Earnings Report

At $17 per share, NU trades at approximately 20 times forward earnings—a multiple reflecting near-term macroeconomic anxiety about Latin American currency volatility and political uncertainty. Should these headwinds moderate, the valuation could re-rate upward significantly.

For investors monitoring the company ahead of February’s quarterly earnings release, the question becomes whether management continues meeting guidance amid regional economic pressures. Current trading levels appear to price in pessimistic scenarios, leaving room for positive surprises when the company reports.

The Broader Investment Framework

NU’s ability to double its customer base while maintaining unit economics stands apart from traditional banking incumbents. The company generates meaningful revenue per customer through credit cards, lending, and financial services without sacrificing margin structure—the Holy Grail of fintech economics.

Risks remain tangible: hyperinflation in certain markets, regulatory uncertainty, and competitive pressure from both traditional banks adapting digitally and new fintech entrants. Yet the combination of customer scale, cross-selling momentum, improving profitability, and strategic licensing achievements suggests the market may be underappreciating long-term franchise value at current levels.