Moody’s recently published the full rating report on the Nubank (PURPLE34), made at the end of October.
At the time, the Moody’s assigned a AAA rating to the fintech, following Nubank’s good results and higher-than-expected ROE.
In the report, the risk assessment agency highlights that in recent years credit cards account for around 80% of the total, of which 75% are interest-free transactions.
“Nubank’s gross portfolio reached R$71 billion (+48% year-on-year) in June 2023. Credit cards accounted for R$58 billion, the third largest credit card portfolio in the national financial system .”
In terms of credit classification, credits classified as Stage 3 by IFRS 9 represented 7.2% of the total credit portfolio in June this year.
They also showed a reserve coverage rate of 190% for these operations, nearly double the reserves required by Resolution 2,682 for operations in Brazil.
Another data point highlighted as relevant was the increase in market share – or market share – considering recent milestones regarding customer volume, as Nubank recently surpassed the 90 million account holder mark.
“In the first half of 2023, compared to the same period in 2022, the financial intermediation margin increased by 135%, reaching R$ 9.4 billion. Services revenues grew by 30%, reaching R$ 3.7 billion R$, with a large share of revenue from card interchange, where Nubank is positioned as the 3rd largest institution in terms of transaction volume with a market share of 14%”
Furthermore, the data presented as “strengths” were:
- An experienced and qualified management team, with a conservative risk management culture, resulting in comfortable levels of regulatory capital, below-market credit card default rates and ample provision for bad debts (PDD);
- Consolidated position among the largest financial institutions in the country, ensuring economies of scale and strong revenue recurrence;
- The digital business model translates into lower operating costs compared to traditional banks and greater agility in promoting innovation;
- Stability and granularity of the funding structure, mainly composed of deposits from your customer base.
Learn more about Nubank ratings
At the time of publication of the rating, in October, the agency highlighted that the score attributed to the digital bank reflects the robust Nubank capitalization and access to a granular, low-cost base of core deposits from approximately 80 million customers in Brazil.
“Furthermore, the ratings incorporate asset quality metrics for credit cards that have consistently remained below industry problem lending ratios in Brazil for this specific segment,” the house says.
According to David Vélez, CEO and founder of the fintech, “the diversification of the portfolio has brought excellent results” and the company “still has a lot to grow on this front”.
On a global scale, Nubank Brasil has received a Ba2 rating from Moody’s, which places the company at the same level as Brazil’s sovereign rating and that of the major existing banks.
Nu Holdings – the data controller Nubank – received a Ba3 rating from the risk agency, also on a global scale.
Source: Terra
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