Nubank gathers deposits through a mobile account, then extends that trust into cards and lending. In the second quarter of 2026, it reached 138.9 million customers and passed $1 billion in quarterly net income for the first time. Loans more than 90 days past due rose to 6.9% of the portfolio. The credit cycle will decide how much of this digital bank's scale advantage endures. [Source: Nu Holdings Q2 2026 Form 6-K]
I. Decoding the Business DNA
Nubank began with a credit card in Brazil, then placed accounts, deposits, payments, loans and small-business services in one app while expanding into Mexico and Colombia. Households want low-friction everyday banking; small businesses want collections and working capital. A free or low-barrier account starts the relationship. Deposits and credit usage create more substantial economics later. [Source: Nu Holdings 2025 Form 20-F]
Trust is the core exchange. Customers leave salaries and savings with Nu in return for convenience and clarity. Nu gains funding and frequent transaction data, then decides whom to lend to and at what limit. Its disclosed low-and-grow approach starts riskier customers with smaller credit lines and raises limits selectively as repayment history develops. [Source: Nu Holdings 2025 Form 20-F]
Distribution cost is a structural advantage. Without a conventional branch network, Nu acquires customers, serves them and cross-sells inside the app. In the second quarter of 2026, its monthly activity rate was 83.5%, monthly average revenue per active customer was $17.1 and monthly average cost to serve an active customer was about $1. Those figures do not yield a direct profit calculation, but they reveal considerable room between relationship revenue and service cost. [Source: Nu Holdings Q2 2026 Form 6-K]
II. How the Money Works
Revenue comes from credit, float and fees. Nu reported $5.876 billion of managerial revenue in the second quarter of 2026: $3.605 billion of credit income, $1.454 billion of float income and $816 million of fee income. Revenue under IFRS was $5.513 billion. The two totals reflect different presentations and should not be treated as the same metric. [Source: Nu Holdings Q2 2026 Form 6-K]
Funding and credit losses are the real cost of goods for this bank. Managerial funding cost was $1.372 billion and cost of credit $1.691 billion, leaving $2.441 billion of gross profit; net income was $1.061 billion. Deposits totaled $45.3 billion and the card-and-loan portfolio $39.4 billion. Stable deposits support lending without equal reliance on outside funding. Poor credit pricing can erase the spread quickly. [Source: Nu Holdings Q2 2026 Form 6-K]
Fees are not an afterthought. Card purchases generate interchange and related payments income. Frequent usage also gives Nu revenue and behavior data before a customer takes a loan. Even so, interest income and net gains on financial instruments represented 85.2% of total revenue in 2025, leaving the business highly sensitive to rates, loan growth and the cost of risk. [Source: Nu Holdings 2025 Form 20-F]
III. The Flywheel and the Moat
The flywheel starts with a low-friction account. Card purchases, transfers, receipts and savings produce a record of behavior. More data improves credit selection; appropriate limits encourage use; deposits and repayment history make the account more likely to become a customer's primary bank. Each turn raises potential revenue per customer and spreads acquisition cost over a longer relationship.
Brazilian scale provides a data and brand advantage. In the second quarter of 2026, Nu had nearly 118 million customers in Brazil, 15.8 million in Mexico and more than 5 million in Colombia. Management says its NuFormer model is already used for card decisions in Brazil and Mexico and unsecured lending in Brazil, seeking to turn transaction history into more precise risk pricing. [Source: Nu Holdings Q2 2026 Form 6-K]
A Mexican banking license broadens the products Nu can offer; the company launched its bank there in August 2026. Licenses, deposits and payment habits can raise entry barriers for rivals. They also bring capital, compliance and consumer-protection obligations. [Source: Nu Holdings Q2 2026 Form 6-K]
IV. Risks and Cracks
The central risk is that lending grows faster than risk can be measured. The credit portfolio rose 37% year over year in the second quarter of 2026. The share of loans more than 90 days past due was 6.9%, up from 6.5% in the prior quarter. Nu has deliberately entered higher-risk, higher-return segments. Seasonal changes can distort short-term delinquency comparisons; full-cohort losses are the stronger test. [Source: Nu Holdings Q2 2026 Form 6-K]
Rates and funding competition can change the economics. Deposits must remain attractive to customers, while card and lending rates face regulation, competitors and borrowers' ability to pay. If deposit costs rise without a corresponding increase in risk-adjusted loan returns, customer and loan growth may come with lower profit per unit. [Source: Nu Holdings 2025 Form 20-F]
Cross-border replication has limits. Brazil's payment rails, credit information and customer habits do not transfer automatically to Mexico or Colombia. The Mexican bank license expands opportunity and operating complexity. As Brazil's customer base matures, growth will increasingly require a deeper primary-banking relationship rather than more new accounts. [Source: Nu Holdings Q2 2026 Form 6-K]
V. The Endgame
Nubank wants to be the primary financial account for Latin American households and small businesses. If customers concentrate income, savings, payments and credit with Nu, it can earn from stable deposits, card usage and risk-adjusted lending. Products aimed at more affluent customers test whether the brand can serve a broader set of financial needs. [Source: Nu Holdings Q2 2026 Form 6-K]
The upside is considerable, with clear constraints. Banking requires capital, prudential supervision and reliable underwriting. A larger customer base supplies more data; it cannot guarantee sound returns on every new loan. The eventual quality of the model rests on durable, low-cost deposits and risk-adjusted returns by lending cohort.
VI. The Verdict
Nubank's strongest combination is low service cost, active accounts and deposit funding gathered directly from customers. It has turned the digital channel advantage into substantial net income, a more convincing achievement than customer growth alone. [Source: Nu Holdings Q2 2026 Form 6-K]
Risk-adjusted net interest margin is the gauge for this canvas. It reached 12.4% in the second quarter of 2026 even as the longer-term delinquency ratio rose to 6.9%. If Nu preserves healthy risk-adjusted returns as it expands into new markets and customer groups, low-cost distribution will keep amplifying earnings. If credit costs climb persistently, the vast customer base will amplify mispricing too. [Source: Nu Holdings Q2 2026 Form 6-K]
Primary sources: Nu Holdings Q2 2026 Form 6-K; Nu Holdings 2025 Form 20-F.