SAO PAULO, Aug 13 : Brazilian digital lender Nubank's quarterly net profit surpassed $1 billion for the first time, beating analysts' estimates and causing shares to surge after the bell on Thursday.Nu Holdings posted net profit of $1.06 billion for the April-June quarter, a 49 per cent rise year-on-year on a foreign-exchange-neutral basis and above the $967.2 million Visible Alpha estimate. Shares in the lender, which serves nearly 139 million clients across Brazil, Mexico and Colombia and is preparing to start operating in the U.S., jumped some 9.5 per cent in extended trading to about $15.25 each.The profit increase was driven by higher revenue and an improvement in risk-adjusted net interest margin, Chief Financial Officer Rob Livingston, who assumed the role last month, told Reuters.
Nubank's revenue increased 39 per cent to $5.88 billion, beating the $5.60 billion projected in the Visible Alpha forecast, while the risk-adjusted net interest margin rose to 12.4 per cent from 9.9 per cent a year earlier.Livingston told an analyst call that the current level of risk-adjusted net interest margin (NIM) is seen as sustainable in the foreseeable future."We believe bull investors were working with ~11 per cent risk-adjusted NIM, meaning this is a solid beat even for investors who were positive into the print," JPMorgan analysts wrote.Cost of credit, which weighed on shares last quarter after rising to $1.79 billion, declined to $1.69 billion, though it remained 60 per cent higher than a year earlier.Nubank benefited from Brazil's Desenrola debt-refinancing program, launched this year to help individuals renegotiate debt, according to the CFO.However, he said the improvement would have occurred even without the program, citing seasonal factors and noting that Desenrola accounted for only about 5 per cent of the bank's total cost of credit.The credit portfolio stood at $39.4 billion, a 37 per cent growth year-on-year and a 5 per cent rise quarter-over-quarter.Credit portfolio "did slow a little bit sequentially in terms of the growth rate relative to the first quarter," Livingston told Reuters, but noted the move came from an unusually strong recent expansion.Early delinquency rates came in at 4.8 per cent, up 0.3 per centage point year-on-year, but down from the 5 per cent in the first quarter.
