Nu Holdings posts 29% ROE, outpacing JPMorgan as Latin American fintech expands

Nu Holdings delivered a 29% return on equity in the first quarter, 10 percentage points above JPMorgan Chase, as the digital bank's low-cost model drives profit growth across Latin America.

Nu Holdings' 29% return on equity in the first quarter surpassed JPMorgan Chase's 19%, proving a digital-first model can outperform traditional banking at scale across Latin America. The São Paulo-based fintech reported first-quarter revenue of $5.3 billion, up 42% from a year earlier, while net income rose 41% to produce a margin of 16.4%.

The company's efficiency ratio hit a record low of 17.6% last quarter, reflecting the cost advantage of operating without physical bank branches. By avoiding the overhead that traditional lenders carry, Nu has built a lean model that generated $3.2 billion in net income over the trailing 12 months on $16 billion in revenue. JPMorgan Chase, the largest US bank by assets, reported an ROE of 19% in its most recent quarter.

Nu's customer base reached 135 million as of March 31, up 14% year over year, with the vast majority in Brazil. The company has expanded to 15 million customers in Mexico, where it ranks as the third-largest financial institution, and nearly 5 million in Colombia. It plans to enter the US market next year, pending regulatory approvals, and may target additional Latin American countries including Chile, Argentina, or Peru.

Profitability at Scale Drives the Bull Case

The four-year-old profitability inflection is accelerating. Nu posted a net loss of $45 million in the first quarter of 2022; by the first quarter of 2026, net income had grown more than 4,000% to $3.2 billion on a trailing basis. Revenue per customer is rising in Brazil, its home market, while Mexico already generates nearly $1 billion in annual revenue — a fraction of Brazil's $10 billion-plus, suggesting a long runway for expansion in an economy of similar size.

Credit costs remain a watchpoint. Expected credit losses rose 76% year over year in the first quarter, a figure that may have contributed to the stock's 28% decline in 2026. The company also faces a leadership transition: Chief Financial Officer Guilherme Lago, a seven-year veteran, will step down on July 13.

Valuation and Shareholder Returns

Despite the selloff, Nu's fundamentals have strengthened. The company announced a $1 billion share repurchase program, signaling management's confidence that the stock is undervalued. At a forward price-to-earnings ratio of 16.1, Nu trades at a discount to many US fintech peers while delivering higher growth and profitability.

If Nu can maintain its efficiency ratio near current levels and double revenue over the next five years, net income could more than triple to $10 billion, according to analyst projections cited in recent reports. That would give the company a price-to-earnings ratio in the single digits at today's market capitalization of $59 billion — a valuation that appears to price in significant macroeconomic risk from Latin America's historically volatile economies.

For investors, the question is whether Nu can replicate its Brazilian success across Mexico, Colombia, and eventually the US. The company's 29% ROE and 17.6% efficiency ratio suggest the digital banking model works. The next five years will test whether it scales across borders as effectively as it scaled within them.

This article is for informational purposes only and does not constitute investment advice.