Citigroup Upgrades Nubank to Neutral; 42% Revenue Growth, 135M Users
NU•Citigroup raised its rating on Nubank to Neutral from Sell, signaling improved risk outlook after a 37% decline from its highs. The digital bank posted 42% year-over-year revenue growth and expanded its customer base to 135 million, but higher loan losses and rising NPL levels in Brazil pose challenges.
1. Analyst Upgrade Details
On June 15, Citigroup raised its rating on Nubank to Neutral from Sell, reflecting reduced perceived risk and an improved investment outlook. The move follows a 37% drop in the stock price from its prior highs.
2. Financial Growth Metrics
Nubank reported 42% year-over-year revenue growth last quarter and expanded its customer base to 135 million across Brazil, Mexico and Colombia. Mexican operations achieved break-even status, underscoring the bank’s regional expansion success.
3. Risk Factors and Challenges
Despite strong top-line growth, Nubank is contending with higher loan losses and elevated non-performing loan levels in Brazil, which could pressure future profitability. Management is prioritizing an increase in Average Revenue Per Active Customer to mitigate credit risks.
4. Operational Highlights
A one-time operational error sent an erroneous liquidation notice to customers, which Nubank promptly corrected, affirming that all operations remain stable. The incident highlights the importance of robust communication protocols within its digital-only platform.
