At a time when all banks are facing pressure from high interest rates, there is a greater demand for asset quality. And Nubank has come under close scrutiny from analysts precisely as it embarks on a process of global expansion.
The bank founded by David Vélez came under market scrutiny after reporting a 75.7% increase in provisions in the first quarter compared to the same period last year, reaching US$1.7 billion. During that period, non-performing loans (NPLs) aged 15 to 90 days increased by 0.9 percentage points, reaching 5%.
These advances occurred during a period in which credit accelerated: the portfolio, which includes the volume of loans and credit cards, grew 40% in the quarter, to US$37.2 billion.
According to Citi, the results show that Nubank is prioritizing growth and expansion of net interest income (NII) at the expense of minimizing the cost of risk, which could harm margins. The bank cut its target price from US$22 to US$18, reiterating its buy recommendation.
"In 2026, Nubank demonstrates its commitment to accelerating the growth of its loan portfolio, even in a more challenging macroeconomic scenario. 2026 is expected to be a demanding year for asset quality, with the cost of risk trending upward compared to 2025," says an excerpt from the report.
Bank of America (BofA) went further and decided to downgrade its recommendation for the shares from neutral to sell, in addition to cutting the target price from US$16 to US$10. For BTG Pactual, which maintained its buy recommendation and target price at US$21, concerns about credit quality will not disappear anytime soon.
The assessment is that Nubank may need two or three quarters of good asset quality and risk-adjusted net interest intermediation margins (NIMs) on an improving trajectory to "convince" investors.
"On the other hand, if asset quality disappoints and/or growth slows—credit is not linear and adjustments are necessary during the process—concerns will increase and there will be a risk that many investors will simply 'throw in the towel'," wrote the BTG analysts.
It was in this already pressured scenario that, on the evening of Monday, June 1st, the market received the news of the CFO change – and it did not go down well. Shares fell by more than 11% on the New York Stock Exchange (NYSE) on Tuesday, June 2nd, closing the day down 8.16%, at US$11.93. Year-to-date, the assets have accumulated almost 30%, bringing the market value to US$58 billion.
Guilherme Lago will leave the bank and be replaced by Rob Livingston, who comes from Visa, where he held the position of CFO for North America. He will assume the role on July 13th. Livingston's arrival is part of the institution's efforts to gain global scale, a strategy that also resulted in the hiring of Eric Young as CTO and Kim Farrell as CMO.
But the market reacted with skepticism to the move. According to BofA, although Livingston has a robust resume, "the timing of the transition increases uncertainty, especially since Nubank is going through a more challenging phase for granting credit in Brazil and is seeking expansion into Mexico , Colombia, and the United States ."
Safra analysts echoed this sentiment. "The new global CFO, while possessing a solid international resume, is not an expert on the Brazilian market. With the successor to the Brazilian CFO yet to be named, we view the announcement as a negative factor for now, as it comes at a time when Brazil remains central to investment, especially as investors continue to monitor a potential deterioration in asset quality trends," states an excerpt from the report. Safra has a buy recommendation and a target price of US$22.
To alleviate some of the concerns, Nubank announced the creation of a CFO position for its Brazilian operation, and Lago will remain as a special advisor to the executive board of Nu Holdings and its audit and risk committee.
Still, the bank needs to demonstrate improvement in Brazil, where it has become the largest private financial institution in terms of number of clients, with 112 million. For now, doubts remain greater than certainties.
