Nika Gawala

Nika Gawala followed up on the private payroll segment, expressing concern about other lenders' aggression and the market doubling in 2025. She asked about the risk of Nu's customers taking private payroll loans from other banks, increasing leverage, and impacting Nu's unsecured asset quality, and why Nu isn't offering private payroll to riskier customers.

Answer

Guilherme Lago, Chief Financial Officer of Nu Holdings, acknowledged concerns about cannibalization and structural subordination but stated no evidence of these risks materializing within Nu's customer base. He noted that most private payroll applicants are higher credit risk customers who wouldn't qualify for unsecured loans. Lago explained that the market's growth partly reflects a migration from older private consignado products and that current first loss rates in the market are in the low double digits, which is not yet conducive to the collateral quality this product can offer. He emphasized that Nu's conservatism with credit risk, not fear of cannibalization, is why they are not leaning in as aggressively. Lago also suggested that risk-adjusted NIMs and ROE could be appealing for private payroll due to potentially lower capital allocation.