Giro Lino's avatar
$2.6m follower assets
New Post About $NU Earnings
### Highlights

Nubank reported a $45mn net loss vs. the company-provided consensus of a $77mn loss. Similar NPL rises to the incumbent consumer segment, but without payroll and mortgage to smooth the hit.

We see the quarter with solid credit balance growth. Specifically, total loans rose 122% YoY. In addition, consumer loans, an investor focus, rose to $2bn and now represent 23% of total loans vs. 21% in 4Q21.

Card TPV rose to $15.9bn, up ~112% YoY and ahead of GIROe's $14.8bn. Interchange revenues increased 127%, with flattish yields at 1.19%.

Significantly, asset quality did not erode as most buy-side analysts expected, with 90-day NPLs up 70bps QoQ vs. Bradesco’s consumer segment’s 60bps and Itau’s 30bps, although this comparison tells only half true (keep reading).

While fast loan growth helps NPLs, we see Nubank’s figures as substantially better than other neobanks. Provisions rose 287% YoY, driven by loan growth. Overall, Nu presented a strong beat vs. our expectations.

Nu presented a substantial beat to our estimates due to credit portfolio growth. According to the management:

> “We continued to see significant opportunities to grow and gain share in the unsecured credit market in Brazil, the largest available market in financial services in Latin America. Our credit portfolio, with credit cards and personal loans, grew significantly above market, at 126% YoY, to a total of U$$8.8 billion, while maintaining healthy credit levels and strong unit economics”. (David Vélez)

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Giro Lino's avatar
$2.6m follower assets
$NU looks cheap
Nubank is trading an implicit internal rate of return of ~30% for the following 5yr. Many analysts are worried after BNPL reporting disastrous earnings. IMO, they don't understand the business and its PnL.

$NU's business and PnL. BNPL is a terrible business.
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Giro Lino's avatar
$2.6m follower assets
New Post About Payments $STNE $NU $MELI $PAGS
According to our proprietary research and expert channel checks, instant payments can affect many use cases involving merchants and consumers.

In the past month, we heard over a dozen CFOs and Senior Product Managers trying to map where instant payment schemes could offer a threat to profit.

Our perception is that C-level management doesn’t see Pix as a core, and Product Executives are solely focused on implementation.

Even though we agree they should focus on their respective roles, we missed more granularity about the economic impact of Pix.

So, illustrated below, we set our war table for estimating where and by how much Pix and probably most instant payment schemes should affect profit pools.

Source: Giro Lino.

We built this table based on the available evidence, gathering and processing all data since Pix was launched in the 3Q20 and in our new top-down model for payment companies.

The first evidence we highlight is the transaction market share. By the 4Q21, Pix had gained an 8.9% market share. Also, it’s worth mentioning that credit cards gained market share during the period.

As the following illustration shows, bank slips, wire transfers, and withdrawals (cash) were the main losers.

Source: Giro Lino, BCB.

However, based on historical growth, we observed that Debit and Prepaid Card growth decelerated since Pix was launched, raising the question of whether Pix isn’t stealing the incremental volume directed to Debit.

If that is the case, and the argument sounds reasonable, Debit card penetration should slow in the following years.

On the other hand, we see evidence of accelerating credit card adoption since Pix was launched. After deep research, we concluded there is a different external factor for such acceleration.

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April 2022 Bloodbath - Names Down >30% Since April 1
April 2022 was one of the worst market months of all time. In fact, it was the worst since October 2008. Here are 100 stocks down >30% since April 1:

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Giro Lino's avatar
$2.6m follower assets
$NU is down 50% since its IPO
$NU is down almost 50% since its IPO. IMO, investors are worried about asset quality for 1H22. Companies are reporting substantial deterioration in the 1Q22. However, interestingly, $NU anticipated its lock-up period to May 17th, after its release. Curious...
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