The Tax Rate Did What the Business Didn't
Nu's net income grew 39.5% this quarter, landing almost exactly on top of its 39.5% revenue growth - but pretax profit, the number that actually reflects how the business performed, grew only 21.0%. Every cost line between revenue and pretax profit grew faster than revenue: credit losses rose 70.7% year-over-year, nearly double revenue's pace, and operating expenses rose 54.7%, continuing almost the identical gap nu/2026-06 flagged last quarter. None of that shows up in net income, because the gap back up was closed by the tax bill, not the business: income tax expense fell 22.4% in dollar terms even as the pretax profit it was taxed on rose 21.0%, pulling the effective rate down to 19.2% from 29.9% a year earlier.
Credit Losses Grew Almost Twice as Fast as Revenue
Gross margin compressed to 41.9% of revenue from 43.5% a year ago, because the cost of credit grew nearly twice as fast as the revenue it's measured against. Total revenue (IFRS) rose 39.5% year-over-year, from $4,172.7 million to $5,820.4 million. Expected Credit Loss» expense - the provision Nu books against loans and credit-card receivables it expects not to collect in full - rose 70.7%, from $977.5 million to $1,668.5 million. That's the opposite of the pattern nu/2026-06 found last quarter, when gross margin "held essentially flat" because credit costs (+46.4% YoY) were growing slower than revenue (+50.3%). This quarter, the asset-quality numbers back up the margin story rather than contradicting it: the leading-indicator 15-90 day NPL» ratio rose to 4.9% from 4.3% a year earlier, and the lagging 90+ day ratio rose to 7.3% from 6.7%.
Operating Expenses Are Still Outrunning Revenue by About the Same Margin as Last Quarter
Total operating expenses grew 54.7% year-over-year to $1,078.3 million, 15.2 percentage points ahead of revenue's 39.5% growth - almost exactly the 15.3-point gap nu/2026-06 found between Q2 2026's 65.6% expense growth and 50.3% revenue growth. Marketing expenses nearly doubled (+79.3% YoY, to $126.1 million) and general and administrative expenses rose 69.1% (to $590.7 million) - both plausibly tied to the Nu US and Nu Global launch campaigns and Mexico's nationwide "bank now" advertising push described in the earnings presentation. Nu's own headline cost metric, the Efficiency Ratio» (Total Operating Expenses divided by Net Interest Income plus Fee Income, net of Transactional Cost and Revenue-Based Taxes - a narrower, managerial figure, not the full P&L), actually improved this quarter: 19.3%, versus 20.3% a year ago and 19.5% last quarter. That improvement is real on its own definition, but its denominator is a smaller slice of the business than total revenue - so an improving Efficiency Ratio and a widening gap between opex growth and total-revenue growth can both be true in the same quarter, and this quarter they are. Management's own explanation for the sequential improvement was "lower personnel costs and some expenses moving into the fourth quarter."
A Falling Tax Rate, Not the Business, Closed the Gap to Net Income
Nu's effective tax rate fell to 19.2% from 29.9% a year ago, even as the statutory rate it's legally subject to went up. Brazil's Complementary Law 224/2025 - flagged as a headwind when it was first disclosed in nu/2026-03 - raised the combined tax rate Nu uses for its main Brazilian subsidiary to 42.5% for the nine months ended September 30, 2026, from 40.0% a year earlier. Applied to this quarter's $1,350.3 million pretax profit, that statutory rate alone would produce a tax bill of $573.9 million. The actual bill was $258.7 million - a $315.1 million gap closed entirely by what the filing calls "permanent additions/exclusions," almost tripled from the $112.9 million gap a year ago. The single largest line driving that growth is "Effect of different tax rates - subsidiaries and parent company," which rose to $142.3 million from $38.5 million - roughly 3.7 times the year-ago figure, a jump the filing doesn't explain beyond its own label. Whatever its cause, it's the reason the income tax line fell in dollar terms (to $258.7 million from $333.6 million) in a quarter where the profit it was levied on rose by more than a fifth.
The Prescription
Keep pushing Nu US and Nu Global exactly as cautiously as their launches so far suggest they're being run: a 3.5% APY account and a no-fee card, not a full credit product, in the US; a stablecoin-based account rather than a lending push in 37 new countries for Nu Global, which the filing says only went live on October 15 - two weeks after the quarter closed, despite being announced the same day as Nu US. That's the same instinct that made the Mexico expansion work - prove the deposit and payments side of the model before extending credit into a market Nu doesn't yet understand - and management's own framing (a committed cap of "up to 100 bps" of Efficiency Ratio impact in each of 2026 and 2027) suggests they're treating it with the same discipline.
What Nu should stop doing: let an improving, narrowly-defined Efficiency Ratio stand in as the public measure of cost discipline when the broader number - operating expenses as a share of total revenue - hasn't closed at all since last quarter. A reader who only tracks the Efficiency Ratio would conclude Nu's costs got more disciplined this quarter (20.3% to 19.3%, YoY). A reader who tracks operating expenses against total revenue would conclude the opposite: the gap to revenue growth is unchanged. Both are using the company's own disclosed numbers. That's a communications choice, not a secret, but it's one Nu should stop leaning on to carry the headline when the two measures disagree this sharply.
Key Financial Metrics
Q3 2026 vs. Q3 2025, consolidated IFRS figures ("Accounting P&L"), reported in USD - Nu reports natively in US dollars, so no FX conversion is needed
| Metric | Q3 2026 | Q3 2025 | YoY |
|---|---|---|---|
| Total revenue (IFRS) | $5,820.4M | $4,172.7M | +39.5% |
| Interest income and gains, net of losses | $5,003.3M | $3,577.5M | +39.9% |
| Fee and commission income | $817.0M | $595.2M | +37.3% |
| Gross profit | $2,436.9M | $1,814.5M | +34.3% (margin 41.9% vs. 43.5%) |
| Total operating expenses (net of other income) | $1,078.3M | $697.1M | +54.7%, outpacing revenue |
| Income before income taxes | $1,350.3M | $1,116.3M | +21.0% |
| Income tax expense | $258.7M | $333.6M | -22.4% (effective rate fell to 19.2% from 29.9%) |
| Net income for the period | $1,091.6M | $782.7M | +39.5% (management's own FXN framing: +31%) |
| Balance sheet metric | Sep 2026 | Dec 2025 | Change |
|---|---|---|---|
| Total assets | $87,428.6M | $74,893.9M | +16.7% |
| Total liabilities | $73,083.6M | $63,572.3M | +15.0% |
| Total equity | $14,344.9M | $11,321.6M | +26.7% |
| Deposits | $47,486.8M | $41,925.1M | +13.3% |
| Credit card receivables + loans to customers (net) | $34,571.0M | $27,689.4M | +24.9% |
| Cash and cash equivalents (quarter-end) | $13,772.3M | $15,003.6M | -8.2% (deposit and loan growth outpacing cash build - normal for a growing lender) |
Nu's own earnings presentation labels the $6,258.5 million managerial-basis figure "Gross Revenue" - a term the presentation has used prominently for this same line for at least the past several quarters, not a new label this quarter - while this quarter's press release table instead calls that same figure "Total Revenue" under its separate "Managerial P&L" header, a second, larger "Total Revenue" sitting alongside the audited $5,820.4 million IFRS figure of the same name in the same release. On the numbers disclosed this quarter, neither label is a red flag on its own: the narrower "Net Revenues" figure Nu uses as the Efficiency Ratio's denominator ($4,386.1 million this quarter) actually grew faster year-over-year than the $6,258.5 million managerial-basis figure, not slower, so the gross-vs-net framing doesn't understate how the quarter's net economics performed - it's the opex and tax-rate dynamics above that do that.
Nu's nominal IFRS results this quarter also benefited from a currency tailwind the company's own FX-neutral figures strip out: the Brazilian real averaged R$5.1371 to the US dollar in the three months to September 2026, versus R$5.4493 a year earlier - a roughly 5.7% stronger real - which is part of why net income's 39.5% nominal growth runs ahead of management's own 31% FX-neutral figure.
Key Operational Metrics
Arrow = the way the number moved year-over-year; green = good for the bank, red = bad, grey = flat or not callable either way.
- Customers: 142.6 million (Sep 2026) vs. 127.0 million (Sep 2025) - +12% FXN YoY, 3.7 million net adds this quarter. Brazil reached almost 120 million customers (65% of the adult population); Mexico reached 16.6 million (+27% YoY, its first quarter as a licensed bank); Colombia reached 6.1 million (+62% YoY), now the country's largest credit card issuer by number of cardholders (3.0 million).
- Monthly activity rate: 83.6%, up from 83.4% a year ago and 83.5% last quarter.
- ARPAC»: approximately $17.7, up 21% FXN year-over-year from ~$13.8, and also above last quarter's $17.1.
- Monthly cost to serve per active customer: approximately -$1.1, up 10% FXN YoY from -$0.9.
- Total credit portfolio (company's own gross-of-provisions figure): $41.6 billion (credit cards $27.2 billion, unsecured lending $11.0 billion, secured lending $3.4 billion), +33% YoY FXN and +6% QoQ FXN.
- Deposits: $47.5 billion, +19% YoY FXN ($38.6 billion Brazil, $5.3 billion Mexico, $3.5 billion Colombia); the cost of deposits fell to 87% of the interbank rate from 89% a year ago.
- Efficiency Ratio»: 19.3%, better than 20.3% a year ago and 19.5% last quarter - see the opex subsection above for why this doesn't mean the broader cost-to-revenue gap closed.
- Risk-Adjusted NIM»: 12.1% as reported, up from 10.8% a year ago but down from 12.4% last quarter; excluding non-recurring items, management states it actually rose sequentially, to 12.7% from 11.9% last quarter - implying Q2 2026's reported figure carried a one-off boost that this quarter's headline decline is partly just unwinding.
- Asset quality: the leading-indicator 15-90 day NPL» ratio rose to 4.9% from 4.3% a year ago; the lagging 90+ day ratio rose to 7.3% from 6.7%. Coverage of 90+ NPLs was 234%, which the company describes as consistent with historical trends.
- ROE: 32% (annualized), up from 31% a year ago though down from 33% last quarter.
Beyond the Usual
A counterparty's liquidation forced a $132.8 million impairment the press release doesn't mention
Nu's quarterly report discloses that it recognized a $132,822 thousand ($132.8 million) allowance for expected credit losses on "other receivables" as of September 30, 2026 - up from just $1,946 thousand ($1.9 million) at the start of the year. These receivables are "credit card receivables previously acquired from merchant acquirers," and the filing states the loss is "related to credit card receivables acquired from certain payment institutions that were placed under extrajudicial liquidation by the Central Bank of Brazil." As a direct result, 30.9% of this receivables portfolio's exposure moved from the strongest risk classification ("Stage 1 Strong," probability of default under 5%) to "Stage 3" - the stage reserved for credit that is already impaired. The filing also states Nu "ceased acquiring these receivables in August 2026" - a quiet discontinuation of a business line, disclosed only in a footnote, with no mention in the press release, the earnings presentation, or the opening-remarks slides that otherwise cover the quarter's business highlights in detail.
The CEO received a new $200 million restricted-share award days after the quarter closed
On October 15, 2026 - a subsequent event, not reflected in this quarter's financials - Nu's board granted founder and CEO David Vélez 13,577,733 Restricted Class A Shares under the company's 2020 Omnibus Incentive Plan, with an estimated grant-date fair value of approximately $200 million. The award vests over ten calendar years, with final vesting on January 1, 2036, and the filing states it was granted "in lieu of regular annual equity awards from 2027 through 2031" - meaning it's intended to substitute for, not add to, five future years of ordinary CEO equity grants, though the dilution and the expense recognition both land now rather than being spread across those years as they're earned. Separately, 2,719,316 of Vélez's previously outstanding RSUs were replaced by an equal number of Restricted Shares on the same vesting schedule, with no incremental fair value recorded. This sits alongside a broader rise in share-based compensation expense across the company, up 45.6% year-over-year this quarter ($114.0 million vs. $78.3 million) - worth tracking next quarter once the new award itself starts showing up in the numbers.
The geographic revenue note is back - and it uses a narrower definition of "revenue" than the headline number
Nu's filing broke out revenue by geography this quarter, after nu/2026-06 found no such table in the interim disclosures. Brazil revenue rose to $4,035.6 million from $2,883.9 million (+39.9% YoY); Mexico rose to $348.7 million from $220.0 million (+58.5% YoY); and "Other countries" (Colombia, plus whatever Nu US generated in its first three weeks - Nu Global was only announced on September 10 and didn't go live until October 15, after the quarter closed, so it contributed nothing to this total) rose to $143.0 million from $58.0 million (+146.3% YoY) - the fastest-growing slice, though starting from the smallest base. The total of these three, $4,527.3 million, does not match the $5,820.4 million "Total revenue" figure in the headline income statement: the filing's own footnote defines this geographic breakout's revenue as covering only "interest income (credit card, loan and other receivables), credit and prepaid card income, late fees, insurance commission and other fees and commission income" - a narrower measure that excludes some of what the consolidated income statement counts as revenue. A reader trying to compute Mexico's share of total revenue from this table alone would be dividing by the wrong denominator if they used the headline $5,820.4 million figure instead of this narrower one.
Half the buyback authorization was spent in under a month, then none of it for the rest of the quarter
Nu's board approved a $1.0 billion share repurchase program on June 3, 2026, effective the next day. By September 30, 2026 - the nine-month mark - the company had repurchased 40,659,600 Class A shares for $500.4 million, almost exactly half the authorization. Nu's own Q2 2026 post already showed the full $500.4 million had been spent by June 30, 2026, so this quarter's filing confirms the buyback ran hard for its first four weeks and then stopped completely: no further shares were repurchased in the third quarter, even though $499.6 million of authorization remains available through June 3, 2027. Shares outstanding still rose slightly anyway, from 4,830,688,659 at the end of Q2 2026 to 4,838,534,315 at the end of Q3 2026, as employee RSU vesting (net of shares withheld for taxes) outpaced the now-paused buyback.
Undrawn credit commitments keep growing in lockstep with the visible loan book
Nu's "unused limits" on credit cards and lines - a contingent credit exposure that doesn't appear on the balance sheet but factors into the Expected Credit Loss calculation because of the risk it represents - reached $39,511,616 thousand ($39.5 billion) at September 30, 2026, up 37.0% from $28,841,327 thousand ($28.8 billion) at the start of the year and up modestly from the $38.2 billion level nu/2026-06 flagged three months earlier. That's still within a few percentage points of the entire $41.6 billion on-balance-sheet credit portfolio the company headlines every quarter - a large pool of future credit exposure that continues to track the visible book almost one-for-one.
Target Valuation Range
Cheaper than last quarter on every multiple, despite a growing business. At $12.66 (September 30, 2026 close), Nu trades at about 2.5x trailing-twelve-month EV/Revenue (from ~2.9x three months ago), 15.6x P/E (from ~17.9x) and 4.3x book (from ~4.9x), on a 32% quarterly ROE (from 33%). The stock fell faster than the fundamentals did.
Nu closed Q3 2026 at $12.66 (September 30, 2026) - down 5.2% from the $13.36 close three months earlier and down 28.7% from the $17.75 high hit in January 2026, a round trip already covered in more detail in nu/2026-03 and nu/2026-06. With 4,838,534,315 total shares authorized and fully issued (Class A and B combined, net of the 40,659,600 Class A shares held in treasury under the buyback program; no stock split since the pre-IPO split already reflected in nu/2022-03's share count):
| Market cap → enterprise value | Q3 2026 |
|---|---|
| Share price (period-end) | $12.66 |
| Shares outstanding | 4,838,534,315 |
| Market capitalization | ~$61.3B |
| Total liabilities (interest-bearing borrowings, financing, leases) | ~$5.0B |
| Less: cash and equivalents | ~$13.8B |
| Enterprise value | ~$52.5B |
| Peer-multiple sanity check | Q2 2026 (TTM) | Q3 2026 (TTM) | Change |
|---|---|---|---|
| Enterprise value | ~$55.7B | ~$52.5B | down |
| TTM Revenue | ~$19.3B | ~$21.0B | up |
| EV/Revenue | ~2.9x | ~2.5x | down |
| TTM Net Income | ~$3.6B | ~$3.9B | up |
| P/E | ~17.9x | ~15.6x | down |
| P/B | ~4.9x | ~4.3x | down |
| ROE (quarter, disclosed) | 33% | 32% | down |
Trailing-twelve-month figures (Q4 2025 through Q3 2026, all four quarters from filed statements) put TTM revenue at roughly $20.99 billion (Q4 2025's $4.69 billion, derived by subtracting the nine-month 2025 total from the FY2025 20-F's full-year total, plus Q1 2026's $4,968.0 million, Q2 2026's $5,513.2 million and this quarter's $5,820.4 million) and TTM net income at roughly $3.92 billion (Q4 2025's $894.8 million, Q1 2026's $871.4 million, Q2 2026's $1,061.1 million and this quarter's $1,091.6 million - all four figures as disclosed in this quarter's own ROE-reconciliation table, not independently re-derived). Every multiple in the table above is cheaper this quarter than last, even though both TTM revenue and TTM net income grew over the same window - because the share price fell faster (-5.2%) than the business grew. This section carries no peer table, as in nu/2026-06, since no directly comparable neobank currently has a published Q3 2026 quarter on a basis clean enough for a same-quarter multiple comparison.
Nu Holdings Ltd.'s unaudited interim condensed consolidated financial statements as of and for the three and nine-month periods ended September 30, 2026 (furnished to the SEC as an exhibit to a Form 6-K, including the independent auditors' review report and explanatory notes, dated November 12, 2026), its Third Quarter 2026 Results press release (dated November 12, 2026) and its Q3'26 Earnings presentation (dated November 12, 2026). No company-published earnings-call transcript for this quarter is publicly available as of this writing.