Jorge Kuri

Jorge Kuri inquired about the impact of credit limit (Clip) increases on Nu's credit card growth and the extent to which this acceleration is expected to continue into 2026. He also asked for quantification of the headwind on the loan book from FGTS regulations.

Answer

Guilherme Lago, Chief Financial Officer, explained that unused credit limits increased by about $11 billion (60%) due to new AI-powered credit underwriting tools. He noted that the benefits are unfolding in stages, with Q4 2025 showing a 50 basis point increase in Brazil's credit card purchase volume market share, the largest gain in over 10 quarters. Lago anticipates continued unfolding of these benefits through 2027 and the expansion of AI technology to other products and geographies. Regarding FGTS, he stated that new regulations effective November 1, 2025, caused originations to drop by 50%-60%, but this was largely offset by growth in public consignado. He quantified the FGTS headwind, indicating that without it, sequential portfolio growth would have been 13%-14% instead of 11%.

Jorge Kuri inquired about the impact of credit limit increase programs (CLIP) on credit card growth, asking for quantification of year-on-year growth and the expected rollover into 2026. He also asked to quantify the headwind on the loan book from FGTS regulation changes.

Answer

Guilherme Lago, Chief Financial Officer of Nu Holdings, explained that unused credit limits increased by $11 billion (60%), driven by predictive AI credit underwriting tools. He noted that the benefits unfold in three steps (offer, purchase volume, NII), with Q4 2025 showing a 50 basis point increase in Brazil's credit card purchase volume market share, the largest gain in over 10 quarters, with more to come in 2026 and 2027. Lago added that AI technology will be exported to Mexico and Colombia. Regarding FGTS, new regulations from November 1, 2025, caused originations to drop by 50-60%, though this was offset by growth in public payroll loans. He quantified that, excluding FGTS, the sequential portfolio growth would have been 13-14% instead of 11%.

Jorge Kuri of Morgan Stanley questioned the flat quarter-over-quarter loan origination growth, contrasting it with strong year-over-year figures and recent initiatives like record credit line increases and PIX financing.

Answer

Guilherme Lago, CFO, broke down the performance by asset class. He noted that unsecured lending had an exceptionally strong Q1, while secured lending was impacted by a temporary industry-wide disruption in the INSS payroll system. He clarified that credit card receivables market share grew significantly due to improved underwriting models, and the overall portfolio still grew 8% quarter-over-quarter.

Jorge Kuri from Morgan Stanley inquired about the resilience of Nu's Net Interest Margin (NIM) in Brazil, which remained stable despite higher SELIC rates and a pullback from high-yield Pix financing, and asked if the NIM has bottomed. He also requested clarification on the impact of a 10-day pause in FGTS loan originations.

Answer

Chief Financial Officer Guilherme Marques do Lago explained that the headwinds from higher interest rates and portfolio mix shifts were offset by an increasing loan-to-deposit ratio (LDR). He anticipates that continued balance sheet re-leveraging will be the primary driver for NIM expansion in the medium term. Regarding the FGTS pause, Lago estimated it caused a roughly 10% impact on FGTS originations for the quarter.

Jorge Kuri asked for clarification on the short-term growth strategy for Pix financing and requested a detailed breakdown of the factors driving the recent compression in Nu's risk-adjusted net interest margin (NIM).

Answer

CFO Guilherme Marques do Lago clarified that Pix financing growth will align with the overall credit card portfolio's expansion in the short term, rather than growing as a percentage of the portfolio. This pause is to refine the user experience and address secondary impacts on NPS and churn, despite the product's strong profitability. CEO David Velez-Osomo added this reflects a cultural choice to prioritize long-term customer satisfaction over short-term earnings. Regarding the NIM, Lago attributed the 70bps contraction to FX translation effects (~45%), a mix shift towards lower-yield secured lending, and higher funding costs in Mexico and Colombia.

Jorge Kuri inquired about the business and revenue model for Nu's new telecom service, NuCel, asking about its unit economics, potential profitability, and its expected long-term impact on the company's financials.

Answer

CEO David Velez-Osomo explained that NuCel operates on a revenue-share model with partner Claro, designed to leverage Nu's large customer base and low acquisition costs. He positioned it as a strategic entry into a new vertical with significant synergies, aiming to build a digital ecosystem beyond financial services. Velez noted it's early to detail financial impact but highlighted the potential for substantial, diversified revenue streams that are less cyclical than credit.

Jorge Kuri from Morgan Stanley questioned Itaú Unibanco's relatively conservative 2026 credit growth guidance (5.5%-9.5%) despite a more constructive macroeconomic outlook, significant platform improvements in consumer and SME, and strong potential for payroll loan growth. He probed whether this conservatism stems from intensifying competition, market share defense challenges, or caution regarding Brazil's political cycle.

Answer

Milton Maluhy Filho, CEO of Itaú Unibanco, explained that the 2026 credit growth guidance is a 'realist guidance' reflecting uncertainties from Brazil's election year, including potential volatility in investor reactions, economic plans, indebtedness, FX rates, and inflation's impact on interest rate cuts. He emphasized Itaú's agility to adjust guidance if opportunities arise or if conditions worsen, highlighting the bank's strong capital, liquidity, NPL, and profitability positions, which allow for flexible portfolio management rather than aggressive upfront growth commitments.

Jorge Kuri of Morgan Stanley asked for a long-term view on profitability, seeking to quantify how much of the current record ROE is due to high interest rates and how ROE might behave as rates normalize lower.

Answer

CEO Milton Maluhy Filho and CFO Gabriel de Moura explained that the bank is less sensitive to interest rates than it appears due to hedging strategies and a diversified portfolio. They argued that lower rates are preferable for the long term, as they stimulate credit demand, fee-generating activities, and overall economic growth, creating a positive portfolio effect that compensates for lower returns on capital and deposits.

Jorge Kuri questioned the exceptionally low 4% tax rate this quarter and 11% for the first nine months, asking for an explanation of the drivers, its sustainability, and future expectations for the effective tax rate. He also inquired about the underlying profitability, noting the 13.5% ROE (taxed at peer average) is below Selic and cost of capital, and what macro conditions or internal actions are needed to improve it.

Answer

CEO Mario Leão attributed the low tax rate to a combination of interest on owned capital (JCP) and legitimate tax planning, including tax-exempt bonds. He stated that the bank is not relying on such low tax rates going forward and is focused on generating a sustainable and diversified profit before taxes (PBT) to achieve higher net income and profitability, even with higher taxes. CFO Gustavo Alejo added that increased PBT from improved portfolio, spreads, market NII, costs, and asset quality will naturally lead to a higher tax rate as a consequence of rebuilding profitability.

Jorge Kuri questioned the exceptionally low tax rate of 4% in Q3 2025 and 11% year-to-date, asking about its sustainability and the right expectation for the effective tax rate going forward. He also asked how the bank views its underlying profitability, given that its 13.5% ROE year-to-date is lower than the Selic rate and likely its cost of capital, and what macro conditions are needed for improvement.

Answer

CEO Mario Leão attributed the low tax rate to a combination of interest on owned capital (JCP) and legitimate tax planning. He stated that the bank is not counting on such a low tax rate for future quarters and is focused on producing sustainable, diversified profit before taxes (PBT) to generate a higher taxable base, pay more taxes, and still achieve higher net income and profitability. He reiterated the strategy of growing revenues while maintaining stable costs and provisions to improve PBT. CFO Gustavo Alejo added that higher PBT would naturally lead to a higher tax rate, as part of the process to rebuild profitability.

Jorge Kuri from Morgan Stanley sought clarity on the Markets NII performance, noting the negative result was larger than expected. He asked for an outlook for the next two quarters with a high Selic rate and for 2026 under a potential rate-easing cycle.

Answer

VP & IR Gustavo Alejo Viviani stated the full-year plan for Markets NII remains intact. CEO Mario Roberto Opice Leão added that with the Selic rate remaining high, the negative impact from the ALM portfolio is unlikely to improve materially in the coming quarters. However, for 2026, a lower average Selic rate should provide a positive contribution and earnings momentum for this line item.

Jorge Kuri of Morgan Stanley inquired about the path to normalizing net interest margins (NIM) to the 5% level to boost ROE, and the impact of interest rate sensitivity on this outlook.

Answer

IRO Andre Garvalho stated that the focus is on growing risk-adjusted returns, not just NIM. However, he noted the client NIM is trending up towards 9% due to better pricing and a favorable macro environment. He also mentioned that a decline in interest rates next year would positively impact the ALM and market NII. CEO Marcelo Morojin added that NII growth will come from better liability management and stacking portfolios with higher risk-adjusted returns.

Asked about the path to normalizing the bank's Net Interest Margin (NIM) to historical levels around 5% to drive higher ROE, and the various factors influencing this, such as interest rates and portfolio mix.

Answer

The bank's primary focus is on risk-adjusted return (RAR), not NIM in isolation. However, the client NIM is showing a gradual recovery trend, expected to approach 9%. A future decline in interest rates would benefit the market NII line. The key objective is to grow the absolute NII through better liability management and stacking the portfolio with high-RAR loans, even if they have lower spreads.

Jorge Kuri challenged management's cautious tone on reaching the top end of their guidance, asking for more detail on why market NII is considered a headwind, given that strong operating leverage should still drive significant net income growth.

Answer

An executive confirmed the full-year market NII guidance of BRL 0 to BRL 1 billion remains feasible due to treasury's proactive ALM work. Executive Cassiano Scarpelli then revealed a key factor supporting higher net income: the probable effective income tax rate range is being lowered from 19-23% to 18-21%. This adjustment, driven by increased potential for interest on capital payments, implicitly raises the net income outlook within the existing guidance.

Jorge Kuri requested a deeper analysis of Brazil's revenue and gross profit decline and questioned the rationale for initiating a dividend policy given the vast growth opportunities in emerging markets.

Answer

CEO Pedro Arnt explained Brazil's decline was due to tough year-over-year comps from a merchant repricing, a shift to a lower-take-rate gateway product, and $2.5 million in one-off costs. Regarding capital allocation, he defended the dividend, stating the asset-light model generates excess cash beyond investment needs and that a dividend is preferable to a buyback due to the stock's low float.

Questioned the significant increase in marketing and selling expenses relative to revenue growth, asking for confidence in its ROI given competitors are also investing heavily. Also requested details on the payroll loan business, including its composition, scale, and origination methods.

Answer

The company expressed confidence that investments in sales and marketing are driving their all-time high results across key metrics and that their integrated banking-acquiring ecosystem provides a superior value proposition. On payroll loans, the focus is on retirees and FGTS loans, with origination being done in-house (not buying portfolios) through a mix of digital channels and intermediaries, with a trend towards full digitalization.

Inquired about the composition of the market Net Interest Income (NII), which was a significantly large number in the quarter, and the key drivers behind its growth.

Answer

Market NII is composed of several elements, including Banco Patagonia (which contributed BRL 2 billion), private securities, derivatives, exchange rates, working capital, and institutional funding expenses. The growth in the quarter was driven by strong commercial activities, even with a reduced contribution from Patagonia. The bank advises looking at the consolidated NII for a clearer picture and notes that a 100 bps drop in the Selic rate reduces NII ex-Patagonia by about BRL 100 million.