Options Market Statistics: Nu Holdings Revenue, Adjusted Net Income Gain in Q3 as Purchase Volume Rises; Shares Rise and Options Pop
Bank stocks have rarely been so despised. But the group's worst days appear to be in the rearview mirror. The Federal Reserve's rate-hiking campaign has been the primary driver of that weakness. Central bank officials have lifted short-term interest rates so much that profit margins in lending businesses, which rely on borrowing short-term money to make longer-term loans, have plummeted. Making matters worse, depositors have yanked trillions of dollars this year from banks and put that money into higher-yielding money-market funds. Lastly, deal activity is down this year, an issue for investment banks.
Any turnaround needs fuel. That would come from the Fed, which appears to be close to being done hiking rates. And if rates cuts occur, the 2-year Treasury note's yield -- which remains a touch below its multiyear high -- could keep dropping.
Lower short-term rates would help improve profit margins for loans. Bank stocks started to underperform in early 2021 when short-term rates started rising faster than long-term rates. Sinking short-term rates should have the opposite effect and bring about better performance in bank shares.
To be sure, the Fed would have to cut rates because of a weakening economy. But bank stocks have already priced in potential economic turbulence. Once financial markets anticipate more substantial rate cuts, bank stocks are likely to start gaining thanks to an improvement in the outlook for loan demand.
Nu Holdings Ltd., ("Nu" or the "Company"), one of the world's largest digital financial services platforms, released today its Third Quarter 2023 financial results.
Nu is on a remarkable upward trajectory, demonstrating solid operating performance, continued growth, and increasingly robust profitability. We reached 90 million customers in October, and closed Q3'23 with ever-increasing principality and engagement rates, cost to serve remaining below the dollar level, and efficiency ratio further improving 40bp QoQ to 35.0%. ARPAC broke double digits for the first time, at US$10.0, annualized ROE achieved 21% and annualized adjusted ROE reached 25%, showcasing our operational leverage. All of that led to a record revenue for the period, surpassing the US$2 billion mark, resulting in a net income of US$303 million and an adjusted net income of US$356 million. It's important to note that we are achieving these strong levels of profitability while keeping asset quality in line with expectations and continuing to invest in product portfolio and geo expansion," said David Vélez, founder and CEO of Nubank.
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Source: Benzinga, Dow Jones, CNBC
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