Nubank achieves its first half-year profit in Brazil

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  • The Brazilian neobank Nubank has announced that it has made its first half-year profit in its domestic market.
  • Nubank’s success follows other major neobanks that have recently taken similar steps.
  • Insider Intelligence publishes hundreds of banking industry research reports, charts, and forecasts. Learn more about how to become a customer.

Nubank has revealed that it made its very first half-year profit in Brazil, its home market and its biggest, according to Reuters.

neobank roadmap towards profitability


Insider Information


The

neobank
reported first half 2021 net profit of BRL 76 million ($ 14.7 million), a year-over-year increase from its loss of BRL 95 million in the first half of 2020 ($ 18.4 million) . (The update does not include performance data for the company’s other markets, Mexico and Colombia.)

The neobank also experienced increase in loans, payments and use of keys:

  • Total payments volume reached BRL 92 billion ($ 17.84 billion), double the previous year, according to a disclosure from Nubank CFO Guilherme Lago. The CFO also noted that, since December 2020, Nubank has attracted more than 8 million customers.
  • The loan portfolio approximately doubled year-on-year to reach BRL 23 billion ($ 4.46 billion), according to data from Brazil’s central bank.

Nubank’s success follows that of other greats

neobanks
which have recently reached similar milestones, although none have yet revealed quarterly profitability measured in bottom line. Each neobank has used highly qualified terms to describe the circumstances in which they have achieved profitability – and the duration of their accomplishments varies too widely for comparison.

Starling, based in the UK, first shot monthly profit in October 2020 and it’s on track to become profitable for its current fiscal year, CNBC reported. UK based Revolut reached breakeven point for November 2020, according to NECN. And US-based Chime revealed in September 2020 that it had earnings as measured by EBITDA, per TechCrunch.

Nubank’s milestone shows that its strategy of initially focusing on user scale before moving to monetization has paid off domestically, and it could replicate that strategy overseas.

The company has expanded its clientele and, as a result, has become the world’s largest neobank as measured by users, with 40 million worldwide, according to TechCrunch.

The success of the giant challenger has also been fueled by an increase in its loan portfolio and volume of payments. This suggests that it has been able to evolve its key operations in a way that is followed with the upsurge in its users. His approach could be a good example of a case with lessons that other neobanks could incorporate into their own profitability efforts.

Nubank also has more leeway when it comes to monetization and overseas operations:

  • In July 2021, the neobank spear Ultravioleta, its very first paid account, with a monthly price of 49 BRL ($ 9.50). The deployment reported another push from Nubank to monetize its users and increase profits.
  • The Mexican and Colombian presences are the two Fairly recent, which implies higher revenues and profits if the company can emulate its success in the domestic market by attracting users and then shifting towards monetization.

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