Brett Schafer, The Motley Fool

Sun, Jun 29, 2025, 2:32 AM5 min read

• Nu Holdings is a rapidly growing online bank in Brazil and Mexico.

• It is not only growing quickly, but is highly profitable for a bank.

• The stock trades at a reasonable valuation and could be a good long-term hold.

• 10 stocks we like better than Nu Holdings ›

Financial technology and digital banking took the United States by storm in the last few decades. Now, the same trend is happening in Latin America, and it is being dominated by one company: Nu Holdings (NYSE: NU). The online and mobile-focused bank is capturing tens of millions of new customers to join its service in Brazil, Mexico, and Colombia, disrupting stodgy legacy financial institutions with a better customer experience.

Nu Holdings, otherwise called Nu Bank, has grown at an incredible pace in these emerging markets. Yet the stock is barely higher than it was at its IPO in late 2021. Here's why the stock is a buy before its next earnings report on Aug. 14.

Nu Bank began its journey in Brazil in 2013 by launching an online-only bank with an easy-to-use smartphone application. Compared to the existing banks in the country, with their terrible customer experiences and high-interest-rate loans, Nu Bank was a sight for sore eyes, leading to rapid adoption in the nation. From 2013 to today, Nu Bank has gone from a standing start to over 100 million accounts in Brazil, or over half of the population.

In Brazil, Nu Bank's annual revenue will likely pass $10 billon this year. But the company is just getting started in the nation. It has a major plan to keep upselling its banking, lending, payment card, and investing products to active customers. The company's average revenue per active customer is $11.20 a month. Its earlier customers are now at much higher levels, and compared to incumbent institutions with an average monthly revenue per customer of over $40, Nu Bank has just barely cracked the surface of its revenue-generating potential in its home market.

At $10 billion in revenue today, Nu Holdings has a chance to double or even triple its total annual sales in Brazil, even if it doesn't grow its customer count again. That is a nice place to be in as a business, innovating while the legacy banks keep their inferior business models.

Brazil is starting to mature as a market for Nu Bank. That's not so much the case in Mexico, where the company has 11 million customers in a total population of approximately 130 million. With a similar situation to Brazil, where incumbent players have stodgy systems that frustrate customers, Nu Bank has the green light to steal market share in Mexico. It just received its official banking license to operate in Mexico, which will give it full lending and banking capabilities to offer its clients.