In a report released yesterday, Mario Pierry from Bank of America Securities maintained a Hold rating on Nu Holdings (NU – Research Report), with a price target of $8.50.
Mario Pierry of Bank of America Securities has given a Hold rating to Nu Holdings due to a range of factors.
Firstly, Pierry notes that Mexican operations, which contribute to 6% of Nu’s consolidated revenues, are approaching breakeven, with a reduction in loss from US$10 million in January to US$3 million in July. This improvement is attributed to lower charges for provisions and rising fees, even as Net Interest Income (NII) stays relatively stable. He also mentions that the loan book has shown a 12% growth year-to-date, although it remains flat when viewed in Mexican currency terms.
Secondly, Pierry points out that the NII has remained steady, and total revenues in Mexico have reached US$141 million in the first half of 2023, again contributing to 6% of consolidated revenues. On the downside, however, the Net Interest Margin (NIM) has contracted due to possibly increased funding costs. Despite this, net fees have shown positive growth due to increased card usage. Also, the Non-Performing Loan (NPL) ratio in Mexico, though higher than consolidated operations, has been decreasing. However, despite these positive signs, Pierry maintains a neutral rating due to valuation.
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Nu Holdings (NU) Company Description:
Nu Holdings Ltd is engaged in providing digital banking services. It offers several financial services such as Credit cards, Personal Account, Investments, Personal Loans, Insurance, Mobile payments, Business Account, and Rewards.
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