A Billion-Dollar Quarter, Bought With a Worse Efficiency Ratio
Over these 12 quarters: share price $7.25 to $13.36 (+84%); profit before tax 412 to 1,236 US$ million; profit before tax margin 19.3% to 22.4%. One graph in actual numbers: bars are the quarter's profit before tax, over them the share price at quarter-end (left axis) and the profit before tax margin (right axis); each line is fitted to its own range, so read the timing, not the heights. Prices are adjusted for splits.
Nu Holdings' second quarter of 2026 (period ended June 30, 2026) is the quarter the company's own founder has been building toward since the 2013 pitch: net income for the period reached $1,061.1 million, the first time Nu has crossed the billion-dollar mark in a single quarter, up 66.6% from $637.0 million a year earlier on an IFRS basis (management's own FX-neutral framing puts it at +49%). Customers reached 138.9 million globally, ROE closed at 33%, and - as covered in nu/2026-03 - Mexico's break-even milestone from the prior quarter has now compounded into an actual banking license: Nubank Mexico received its final Operations Authorization from Mexico's banking regulator (CNBV) on July 9, 2026 and began operating as a full multiple bank on August 6, 2026, becoming, in the company's own words, "the largest digital bank in the country."
That's the headline. The tension a reader following the numbers rather than the press release should notice is what happened underneath the profit record: total operating expenses grew 65.6% year-over-year, outrunning the 50.3% growth in total revenue that funded them. The company's own Efficiency Ratio» - the ratio it uses to tell investors how disciplined its cost base is - worsened to 19.5% this quarter from 17.6% the quarter before, and management's own explanation is candid about why: "real estate and marketing expenses shifted from the first quarter into the second," on top of "continued investments in international expansion." A billion-dollar profit quarter built partly on real estate and marketing timing, not a step-change in operating leverage, is a different quarter than the headline number alone suggests.
The Prescription
Nu should keep pushing the Mexico playbook exactly the way it's now proven it works: ARPAC» there is already running ahead of Brazil's equivalent early-cohort pace ($12.3 vs. $5.6 "at the same stage," per the company's own disclosure), and a full banking license removes the last structural constraint on deposit-funded growth in that market. The Banco Porto Real acquisition announced July 20, 2026 (see Beyond the Usual) - adding a formal banking license to the Brazilian conglomerate - is the same instinct applied at home: close regulatory gaps before a rule change forces the issue, rather than after.
What Nu should stop doing: treating this quarter's Efficiency Ratio deterioration as a footnote to a profit-record headline. A bank that leads its investor materials with "more than a billion dollars in quarterly net income" while its own cost discipline metric moves the wrong way for the second time in three quarters (19.9% in Q4'25, 17.6% in Q1'26, now back up to 19.5%) is letting a genuinely strong absolute number paper over a cost trend worth explaining on its own terms, not folding into the celebration.
Key Financial Metrics
US$ billion; margin is profit before tax as a percent of net revenue, per quarter. Values are standalone quarters; 3 derived from annual, half-year or nine-month figures (Q4 2023, Q4 2024, Q4 2025).
Q2 2026 vs. Q2 2025, consolidated IFRS figures ("Accounting P&L"), reported in USD - Nu reports natively in US dollars, so no FX conversion is needed
| Metric | Q2 2026 | Q2 2025 | YoY |
|---|---|---|---|
| Total revenue (IFRS) | $5,513.2M | $3,668.5M | +50.3% |
| Interest income and gains, net of losses | $4,760.6M | $3,128.7M | +52.2% |
| Gross profit | $2,346.5M | $1,548.0M | +51.6% (margin 42.6% vs. 42.2%) |
| Total operating expenses (net of other income) | $1,105.6M | $667.6M | +65.6%, outpacing revenue |
| Income before income taxes | $1,236.3M | $879.4M | +40.6% |
| Income tax expense | $175.2M | $242.4M | Effective rate fell to 14.2% from 27.6% |
| Net income for the period | $1,061.1M | $637.0M | +66.6% (management's own FXN framing: +49%) |
| Balance sheet metric | Jun 2026 | Dec 2025 | Change |
|---|---|---|---|
| Total assets | $82,753.4M | $74,893.9M | +10.5% |
| Total liabilities | $69,501.7M | $63,572.3M | +9.3% |
| Total equity | $13,251.7M | $11,321.6M | +17.0% |
| Deposits | $45,328.4M | $41,925.1M | +8.1% |
| Credit card receivables + loans to customers (net) | $32,811.8M | $27,689.4M | +18.5% |
| Cash and cash equivalents (quarter-end) | $13,551.6M | $15,003.6M | -9.7% (deposit and loan growth outpacing cash build - normal for a growing lender) |
Gross margin held essentially flat (42.6% vs. 42.2% a year earlier), which is itself notable given Expected Credit Loss» expense grew 46.4% YoY (to $1,482.2 million) against 50.3% revenue growth - credit costs are no longer outrunning revenue the way they did in nu/2026-03's comparable quarter. The effective tax rate fell to 14.2% from 27.6% a year ago, a smaller and more mechanical swing than the one flagged in the prior post - this quarter's filing doesn't disclose a single dominant driver on the scale of last quarter's $319.8 million deferred-tax benefit, so the lower rate reads as a continuation of the credit-provisioning-driven deferred-tax pattern already established rather than a new one-off.
Where Q2 2026's Revenue Went
Net revenue, and how much of it was left as operating profit and net income, in one view. Figures are the same standalone-quarter figures as the metrics table.
US$ billion, Q2 2026. Operating costs are net revenue less profit before tax; tax & other items are profit before tax less net income.
Key Operational Metrics
- Customers: 138.9 million (Jun 2026) vs. 122.7 million (Jun 2025) - +13% YoY FXN, ~4 million net adds this quarter. Brazil reached almost 118 million customers with monthly activity surpassing 86% for the first time; Mexico reached 15.8 million (16 million as of July 2026, per management); Colombia surpassed 5 million.
- Monthly activity rate: 83.5%, essentially flat sequentially (83.4% in Q1'26) and up from 83.2% a year ago.
- ARPAC»: approximately $17.1, up 22% FXN YoY from ~$12.5 and up again sequentially from $15.9 in Q1'26 - the same multi-year monetization trend tracked since nu/2022-03, now roughly 2.6x that quarter's $6.7 figure.
- Efficiency Ratio»: 19.5%, worse than 17.6% in Q1'26 though still better than 21.3% a year ago - management attributes the sequential deterioration to real estate and marketing spend shifting from Q1 into Q2, plus continued international-expansion investment.
- Total credit portfolio: $39.4 billion (credit cards $26 billion, unsecured lending $10.3 billion, secured lending $3.1 billion), +37% YoY FXN and +5% QoQ.
- Risk-Adjusted NIM»: 12.4%, up 290 basis points sequentially from 9.5% in Q1'26 and up from 9.9% a year ago, as Cost of Credit declined 9% QoQ on the normal second-quarter improvement in early delinquencies.
- Asset quality: the leading-indicator 15-90 NPL» ratio improved 16 bps to 4.8%, mostly on seasonality; the lagging 90+ NPL ratio rose 35 bps to 6.9%, which management attributes to the seasonal migration of first-quarter early delinquencies into later-stage buckets rather than a new deterioration.
- Geographic segment note: still a single reportable operating segment (the CEO, as Chief Operating Decision Maker, reviews the Group on a combined basis) - unchanged since nu/2022-03. This filing's interim disclosures don't break out a geographic revenue table for this specific period the way the FY2025 and Q1'26 filings did, so a Brazil-vs.-Mexico-vs.-Colombia revenue split isn't independently verifiable from the source documents for this quarter.
Beyond the Usual
The gap between "Managerial" and audited revenue widened again, in dollar terms
The non-IFRS "Managerial P&L" framework introduced in Q4 2025 and first flagged here in nu/2026-03 is still running: for Q2 2026, Nu's press release headlines Managerial Total Revenue of $5,875.7 million and Managerial Gross Profit of $2,441.1 million, versus the audited IFRS ("Accounting P&L") figures of $5,513.2 million revenue and $2,346.5 million gross profit filed the same day - a $362.5 million gap, up in dollar terms from Q1 2026's $347.5 million gap (though roughly stable as a share of revenue, at 6.6% vs. 7.0%). As before, net income is identical either way ($1,061.1 million under both frameworks) - this remains a presentation choice about where revenue-based taxes and reclassified float/fee income sit above the line, not a change to the bottom line - but a second straight quarter of a larger absolute-dollar gap means this needs to keep being tracked against the audited figures independently rather than assumed to be converging.
Legal-provision additions in Brazil nearly doubled year-over-year
The balance of provisions for civil, tax, and labor lawsuits grew to $44.3 million at quarter-end from $30.9 million at the start of the year, but the more telling number is the flow: new additions to the provision totaled $27.4 million in the first half of 2026, versus $14.5 million in the first half of 2025 - close to double. Civil lawsuits are described as "mainly related to NuAccount operations," and the company still classifies a further $4.8 million of civil claims and $4.9 million of labor claims as only "possible" (disclosed but not provisioned, per note 25c). None of this is large relative to a $13.3 billion equity base, but a near-doubling of the pace of new legal-provision additions in a single year, on a business still adding tens of millions of new accounts, is worth watching rather than dismissing as noise.
$38.2 billion of undrawn credit is sitting almost entirely off the headline numbers
Nu's own risk-management disclosures show $38,163,940 thousand ($38.2 billion) of "unused limits" on credit cards and lines as of June 30, 2026 - up from $28,841,327 thousand ($28.8 billion) at the start of the year, a 32.3% increase in six months. That figure isn't recorded on the balance sheet at all; it only appears in the financial-risk-management footnote because it factors into the Expected Credit Loss calculation. For scale: $38.2 billion in undrawn commitments is now nearly as large as the entire $39.4 billion on-balance-sheet credit portfolio the company headlines every quarter - a genuinely large pool of contingent future credit exposure that grows in near-lockstep with the visible book but gets none of the same attention.
Lease liabilities more than doubled as Nu builds a physical footprint for the first time
Lease liabilities rose to $66.4 million from $29.2 million since year-end (+127%), with the corresponding right-of-use assets more than doubling too ($54.7 million from $22.2 million). For a company that built its brand on having no branches, a lease footprint growing this fast in the same half-year that Nubank Mexico secured its full banking-operations authorization is a plausible, if unstated, connection - a licensed bank in Mexico needs more physical infrastructure (registered offices, back-office space, potentially limited-service locations) than a purely digital credit-card issuer did.
A $500 million buyback ran through half its authorization in six months
Nu repurchased 40,659,600 Class A ordinary shares during the first half of 2026 for a total of $500.4 million, leaving $499.6 million remaining under the program's authorization. This is a genuine capital-allocation signal worth sitting next to the record profit: a company that just posted its first $1 billion profit quarter and closed a Mexican banking license is also actively buying back stock rather than deploying that full pace of capital solely into new-market expansion.
Target Valuation Range
Cheaper than its own Q1, too early to call against peers. At $13.36 Nu trades at about 2.9x trailing-twelve-month EV/Revenue (from ~3.0x), 17.9x P/E (from ~20x) and 4.9x book (from ~5.6x), on a 33% quarterly ROE (from 29%). This section has no peer table, and the Efficiency Ratio deterioration flagged above is the swing factor to watch.
Nu closed Q2 2026 at $13.36 (June 30, 2026) - down 24.7% from the $17.75 high hit just five months earlier (January 2026), and roughly flat versus a year ago ($13.72 at Q2 2025's close, -2.6%), a round trip already covered in more detail in nu/2026-03. With 4,830,688,659 total shares issued and outstanding (Class A and B combined, no stock split since the pre-IPO split already reflected in nu/2022-03's share count):
| Market cap → enterprise value | Q2 2026 |
|---|---|
| Share price (period-end) | $13.36 |
| Shares outstanding | 4,830,688,659 |
| Market capitalization | ~$64.5B |
| Total liabilities (interest-bearing borrowings, financing, leases) | ~$4.7B |
| Less: cash and equivalents | ~$13.6B |
| Enterprise value | ~$55.7B |
| Peer-multiple sanity check | Q1 2026 (annualized proxy) | Q2 2026 (TTM, first real figure) | Change |
|---|---|---|---|
| Enterprise value | ~$60.5B | ~$55.7B | down |
| TTM Revenue | n/a (proxy: $19.9B) | ~$19.3B (Q3'25-Q2'26 actual) | - |
| EV/Revenue | ~3.0x | ~2.9x | roughly flat/down |
| TTM Net Income | n/a (proxy: $3.5B) | ~$3.6B (Q3'25-Q2'26 actual) | - |
| P/E | ~20x | ~17.9x | down |
| P/B | ~5.6x | ~4.9x | down |
| ROE (quarter, disclosed) | 29% | 33% | up |
Q2 2026 is the first quarter with a genuine trailing-twelve-month figure to compute against (Q3 2025 through Q2 2026, all four quarters verified from filed statements), replacing the annualized single-quarter proxy used in nu/2026-03 - and the real number is a touch better than the proxy suggested, not worse. TTM revenue of ~$19.3 billion and TTM net income of ~$3.6 billion put EV/Revenue at ~2.9x and P/E at ~17.9x, both cheaper than three months ago despite the business growing faster over that same window. P/B fell to ~4.9x from ~5.6x on the same equity-growth dynamic (equity up 17.0% since year-end while the share price barely moved).
Nu Holdings Ltd.'s unaudited interim condensed consolidated financial statements as of and for the three and six-month periods ended June 30, 2026 (furnished to the SEC as an exhibit to a Form 6-K, including the independent auditors' review report and explanatory notes, dated August 13, 2026) and its Second Quarter 2026 Results press release (dated August 13, 2026). No company-published earnings presentation or earnings-call transcript for this quarter is publicly available as of this writing.