Can you quantify the impact of credit limit increases on credit card growth and the headwind from FGTS regulations on the overall loan book?

Guilherme Lago explained that unused credit limits increased by $11 billion, a 60% rise, driven by new AI-powered underwriting tools. This contributed to a 50 basis point increase in Brazil's credit card purchase volume market share in Q4 FY25, the largest gain in over 10 quarters. He also noted that new FGTS regulations, effective November 1, 2025, caused a 50-60% drop in FGTS loan originations. Excluding the FGTS impact, the sequential portfolio growth would have been 13-14% instead of the reported 11%. “unused credit limits went from about $18 billion to $29 billion, so an increase of about $11 billion, which accounts for about 60% increase in unused credit limits.”

Please elaborate on the expected pressures on the efficiency ratio in 2026 and the key drivers for future revenue growth.

Guilherme Lago outlined three categories causing potential upward pressure on the efficiency ratio in the short term (next 4-6 quarters): 1) The return-to-office policy, expected to increase the efficiency ratio by 80-100 basis points due to office preparation. 2) Investments in AI and new technologies, requiring talent, R&D, and GPU investments. 3) Globalization efforts, involving laying foundational operational groundwork for international expansion. These are deliberate long-term investments, and the company expects efficiency to improve over the medium term. “we may see kind of upward pressure on efficiency ratio in the coming quarters, i.e., in the short term, like the next 4 to 6 quarters.”

What drove the lower accounting tax rate in Q4 FY25, and what should be expected for the tax rate going forward?

Guilherme Lago explained that the lower effective tax rate in Q4 FY25 was due to two factors: a nonrecurring $58 million positive impact from the remeasurement of deferred tax assets (DTAs) following a CSLL rate increase in Brazil, and recurring benefits from technology investment tax breaks. He clarified that the quarter had three one-off items: the $58 million DTA positive, a $25 million Prosofipo negative expense, and a $22 million return-to-office provision negative expense. “The recurring ones is that kind of as we increase the amount of investments that we have been making in technology across the firm in Brazil but also in the other countries, we end up also benefiting from kind of a technology investment tax breaks that some of the governments provide.”

Nu Holdings (NU) Q4 FY25 earnings call: guidance and Q&A

Q: Is Nu at risk from AI or positioned to win, given recent market concerns about AI's impact on financial services?

David Velez stated that AI presents both challenges and significant opportunities. He believes businesses that merely act as brokers in financial services are most at risk. Nu is well-positioned due to the sustainable nature of credit revenue, which is capital-intensive and regulatory. AI enhances revenue through cross-sell and new products, aiming to increase ARPAC from $15 towards $40, and reduces costs across functions like customer service and compliance. Nu's lower cost structure compared to incumbent banks positions it as a winner in this technology shift. “Net-net, we think it's more opportunity than challenge for us.”

Earnings call· Dec 2025 (Q4 FY25)· Financials· Feb 25, 2026

Source: earnings call transcript

Executive summary

Nu Holdings Q4 FY25 — Record Profitability and Strategic Investments for Global Expansion

Nu Holdings delivered a strong Q4 FY25, marked by record profitability and significant customer growth, driven by deeper monetization and effective credit underwriting. The company is strategically investing in AI, global expansion, and its core markets, particularly Brazil and Mexico, positioning for a transition to a global digital banking platform in 2026. While these investments are expected to create near-term pressure on the efficiency ratio, management anticipates continued improvement over the medium term.

Highlights

Closed the year with 131 million customers, adding 17 million net new customers and maintaining an 83% activity rate.
ARPAC reached $15 per active customer, up approximately 9% quarter-over-quarter and 27% year-over-year.
Revenues in Q4 FY25 reached $4.9 billion, up 45% year-over-year, with gross profit nearly $2 billion, up 38% year-over-year.
Achieved a record 33% return on equity, with net income reaching $895 million, up 50% year-over-year.
Efficiency ratio declined to 19.9% under the new methodology, falling below 20% for the first time in company history.

Concerns

New FGTS regulations reduced new loan originations by more than 50% since November 1, 2025.
Recorded a one-off extraordinary contribution of approximately $25 million to Prosofipo in Mexico, reflected in interest expenses.
Recognized approximately $22 million of transition expenses provisions related to the return-to-office decision.
2026 is an "investment year" with anticipated "upward pressure on the efficiency ratio" in the near term (next 4-6 quarters) due to investments in RTO, AI, and globalization.
The CSLL rate increase in Brazil will be a medium-term headwind for the effective tax rate, despite a one-time positive DTA remeasurement impact in Q4 FY25.

Guidance & targets

Category	Target	Timeline	Confidence
Company Transition	Transitioning from a Latin American leader to a global digital banking platform medium materiality	2026 · FY26	Medium
Core Market Focus	Brazil and Mexico will continue to absorb the majority of our capital and management attention medium materiality	Ongoing	High
Mexico Banking License	Finalizing our banking license process is critical as it unlocks the next phase of credit growth and customer depth medium materiality	Ongoing	High
U.S. International Expansion	Lay the operational groundwork for our U.S. opportunity medium materiality	2026 · FY26	Medium
AI Expansion (nuFormer)	Expand nuFormer to lending in Brazil and credit cards in Mexico medium materiality	Ongoing	High
Efficiency Ratio	Efficiency to continue improving over the medium term medium materiality	Medium term	Medium
Public Payroll Loans Growth	Even faster growth in 2026 medium materiality	2026 · FY26	High
Private Payroll Loans	Matter of when, not a matter of if low materiality	Future	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Brazil Scale and engagement continue to reinforce each other, making Nu the largest private financial institution by number of customers. Customers: 113 millionActivity rate: 86%Largest private financial institution by customer count	—	—	—	—
Mexico Advanced banking license process, reinforcing Nu's role in expanding access to credit for a significant portion of its customer base. Customers: 14 millionFirst credit card through Nu: ~50% of customers	—	—	—	—
Colombia The subscription-based credit card significantly increased approval rates while maintaining healthy unit economics. Customers: >4 million	—	—	—	—
Digital Ecosystem Includes initiatives such as NuCel, NuPay, and NuTravel, showing compelling growth and satisfaction indicators despite early adoption relative to the base. Unique active customers: >12 million	—	—	—	—

NU operating KPIs by quarter

NU operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	This call Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Efficiency ratio	29.9% Our efficiency ratio improved significantly, closing the quarter at 29.9%, 150 basis points improvement from the previous quarter and over 610 basis points better than last year. Source: earnings call transcript	28.3% Gross profit has risen 78% annually, reaching $1.5 billion as we capture benefits of scale, cutting our efficiency ratio by more than half to 28.3% in Q2 2025. Source: earnings call transcript	—	—	—	—	-1.6 pt
Net interest margin	17.7% Conversely, our net interest margin contracted 70 basis points to 17.7% this quarter. Source: earnings call transcript	—	17.3% So the combination of lower asset yield because of the mix with a slightly more expensive funding base in Brazil has compressed net interest margins in the quarter, which is what you see on Slide 15 that has gone from 17.7% to 17.3%. Source: earnings call transcript	—	21.1% This mix shift continues to optimize our balance sheet, lifting our net interest margin, or NIM, to 21.1%. Source: earnings call transcript	22.9% Net interest income reached $3.7 billion, up 9% and net interest margin expanded 180 basis points to 22.9%. Source: earnings call transcript	+1.8 pt
Customers	—	—	127M Our customer base grew to 127 million customers, with more than 4 million net additions in the quarter while maintaining an activity rate above 83%, a clear reflection of the depth of engagement we continue to build with our users. Source: earnings call transcript	131M We closed the year with 131 million customers adding 17 million net new customers and maintaining an activity rate of 83%. Source: earnings call transcript	135M+ Our customer base now stands above 135 million customers. Source: earnings call transcript	139M Our customer base reached 139 million customers, including almost $118 million in Brazil more than $5 million in Colombia. Source: earnings call transcript	—
Activity rate	—	—	83%+ Our customer base grew to 127 million customers, with more than 4 million net additions in the quarter while maintaining an activity rate above 83%, a clear reflection of the depth of engagement we continue to build with our users. Source: earnings call transcript	83% We closed the year with 131 million customers adding 17 million net new customers and maintaining an activity rate of 83%. Source: earnings call transcript	83% Despite typical first quarter seasonality, consolidated monthly activity rate held at 83% and expanded sequentially. Source: earnings call transcript	—	0 pt
Customers Mexico	—	—	13M+ In Mexico, we surpassed 13 million customers now reaching around 14% of the adult population. Source: earnings call transcript	14M In Mexico, we reached 14 million customers, advanced our banking license process, and roughly half of our customers received their first credit card through Nu, reinforcing our role in expanding access to credit. Source: earnings call transcript	15M+ In Mexico, we crossed 15 million customers, becoming the third largest financial institution in the market. Source: earnings call transcript	16M+ Earlier this month, Mexican regulators approved our banking license in the country, and we're happy to be born as the largest digital bank in Mexico with more than 16 million customers. Source: earnings call transcript	—
Customers Brazil	—	—	—	113M In Brazil, we became the largest private financial institution by number of customers, reaching 113 million with an activity rate of 86%. Source: earnings call transcript	115M+ In Brazil, we surpassed 115 million customers and solidified our position as the largest private financial institution in the country. Source: earnings call transcript	<118M Our customer base reached 139 million customers, including almost $118 million in Brazil more than $5 million in Colombia. Source: earnings call transcript	—
Customers Colombia	—	—	—	4M+ In Colombia, we surpassed 4 million customers, and the subscription-based credit card significantly increased approval rates while maintaining healthy unit economics. Source: earnings call transcript	—	5M+ Our customer base reached 139 million customers, including almost $118 million in Brazil more than $5 million in Colombia. Source: earnings call transcript	—
15-90-day NPL ratio	—	—	—	4.1% As you see in the slide, early-stage delinquencies measured by 15 to 90 NPLs improved for the fourth consecutive quarter, declining 20 basis points to 4.1%, partially reflecting the seasonality of the quarter in Brazil. Source: earnings call transcript	5% The first quarter 2026 print of 5%, up 89 basis points from year-end, is consistent with that seasonal pattern and broadly in line with what we saw in both 2024 and 2025. Source: earnings call transcript	4.8% 15- to 90-day delinquencies improved 16 basis points to 4.8%. Source: earnings call transcript	-0.2 pt
90+ day NPL ratio	—	—	—	6.6% As a result of prior improvements in early delinquencies, 90+ NPLs declined 10 basis points, pointing to 6.6% in the quarter. Source: earnings call transcript	6.5% On the right, 90-plus NPLs, our late-stage delinquencies continue to ease, closing at 6.5% in the first quarter of 2026, 10 basis points lower than the fourth quarter of 2025 and well below the 7% peak we reached in the third quarter of 2024. Source: earnings call transcript	6.9% 90-plus delinquencies increased 35 basis points to 6.9%, broadly reflecting the seasonal migration of first quarter early delinquencies into the 90-plus bucket. Source: earnings call transcript	+0.4 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Pix with AI-enabled features	update	—
Instant payments	launch	—
Mexico cash in and cash out network	expansion	—
New payroll loan modalities	launch	—
Subscription-based credit card	launch	—
Fresh Start program	launch	—
Under 18 credit card	launch	—
Charging Assistant	launch	—
nuFormer	milestone	—
U.S. national bank charter	milestone	January 2026
Frequent flyer lounge	launch	—
Investment platform	expansion	—

Risks & headwinds

FGTS regulations impact on loan originations Since November 1, 2025

Reduced new originations by more than 50%

Mitigation:Ongoing dialogue with the government to influence the agenda for 2026 and 2027.

Extraordinary regulatory levy (Prosofipo) Q4 FY25 (one-time)

$25 million

Mitigation:Identified as a nonrecurring item, not reflective of credit quality or financial health.

Return-to-office transition expenses Q4 FY25 (one-time provision)

$22 million

Mitigation:Identified as temporary costs, not indicative of the ongoing run rate; expected to bring long-term benefits.

Upward pressure on efficiency ratio Near term (next 4-6 quarters)

80 to 100 basis points (from RTO alone)

Mitigation:Deliberate investments in RTO, AI, and globalization for long-term capacity building; structural drivers of operating leverage remain unchanged, expecting medium-term improvement.

Effective tax rate headwind Starting 2026 and over the next 2 years

Progressive increase in corporate income tax from 40% to 45%

Mitigation:Benefiting from technology investment tax breaks, which partially offset the impact.

Seasonal uptick in NPLs Q1 2026

Expected uptick in 15-90 NPLs

Mitigation:This pattern is expected and aligned with historical trends; no signs of deterioration in credit quality.

Private payroll loan market collateral effectiveness Current

First losses of low double digits

Mitigation:Awaiting mature improvements in credit risk and collateral mechanisms before leaning in more heavily, driven by conservatism with credit risk.

U.S. market competitiveness Ongoing

Very competitive and sophisticated market in certain areas

Mitigation:Pursuing a very targeted and disciplined strategy, focusing on specific niches and subsegments.

Q&A highlights

Is Nu at risk from AI or positioned to win, given recent market concerns about AI's impact on financial services?

David Velez stated that AI presents both challenges and significant opportunities. He believes businesses that merely act as brokers in financial services are most at risk. Nu is well-positioned due to the sustainable nature of credit revenue, which is capital-intensive and regulatory. AI enhances revenue through cross-sell and new products, aiming to increase ARPAC from $15 towards $40, and reduces costs across functions like customer service and compliance. Nu's lower cost structure compared to incumbent banks positions it as a winner in this technology shift.

“Net-net, we think it's more opportunity than challenge for us.”

asked by Eduardo Rosman · answered by David Velez-Osomo

2 min read 6 chapters

Detailed narrative

Managerial P&L Framework Introduction

Nu Holdings introduced a new managerial P&L framework to provide a clearer view of value creation and internal performance, derived entirely from IFRS results. This framework reorganizes IFRS line items to enhance comparability and better reflect economic contribution, preserving net income, cash flow, equity, and regulatory capital.

The company has published a detailed reconciliation report and updated historical data back to Q1 2021 under this new methodology.

Credit Underwriting and AI Leverage

The company successfully deployed new technologies and AI-driven approaches to credit underwriting, particularly in Brazil, leading to a significant increase in unused credit limits. Unused credit limits grew by $11 billion, a 60% increase, enabling a 50 basis point gain in Brazil's credit card purchase volume market share in Q4 FY25, the largest in over 10 quarters.

This predictive AI technology is also being exported to Mexico and Colombia for credit and fraud management.

Secured Lending Portfolio Strategy

Nu's secured loan portfolio is segmented into FGTS, public payroll, and private payroll loans. FGTS originations dropped by 50-60% due to new regulations, though the company is engaging with the government for future agenda. Public payroll loans (SIAPE and INSS) are viewed bullishly, with expectations for faster growth in 2026 driven by increased efficiency, portability, and a favorable interest rate cycle.

Private payroll loans are structurally optimistic, but the company is awaiting improvements in collateral effectiveness before leaning in more heavily.

High-Income and Super Core Segment Growth

The company is actively expanding its presence in the affluent market, targeting customers earning above BRL 12,000 per month, where 40% are already Nubank customers. Efforts include improving credit limits, enhancing the Ultravioleta product value proposition with features like NuTravel integration and a frequent flyer lounge, and building a comprehensive investment platform.

The 'super core' segment (BRL 5,000 to BRL 12,000 monthly income) is experiencing the fastest growth, approximately 100% in 2025.

Global Expansion and AI Investments

Nu Holdings is positioning 2026 as an inflection year for global expansion, laying operational groundwork for its U.S. opportunity following conditional OCC approval for a national bank charter. Investments in the U.S. are currently focused on team building and product development.

The company is also accelerating AI adoption, expanding its nuFormer foundation model to lending in Brazil and credit cards in Mexico, aiming for an AI-powered personal banker for every customer.

Strong Capital and Liquidity Position

The company maintains robust capital buffers and liquidity, with total capital at the holdings level of $8.9 billion, including $3 billion in unrestricted cash and equivalents. Available funding stands at $38.8 billion, approximately twice its net credit portfolio of $19 billion.

This strong financial position provides significant headroom to scale credit responsibly, seize balance sheet optimization opportunities, and fund both core market growth and global ambitions.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.