Nu Holdings: The most profitable bank in the world

"Position yourself in the scarcity, not in the oversupply."

– David Vélez, Founder & CEO of Nu Holdings

neon.

You've heard of it in Switzerland.

A mobile-first, app-based digital banking platform. No branches. No paperwork. No hidden fees. Just a smartphone and a better experience than what the big banks offer.

It's a model that resonates — especially with younger customers who wonder why they should pay CHF 5 per month for a debit card or walk into a branch to change their address.

Now imagine the same idea — but in a country where five banks control 80% of the market (chart 1). Where opening an account requires hours of paperwork and a physical branch visit. Where half the population is unbanked. Where annual credit card fees exceed $100 — for a card that charges 400% interest.

That's Brazil. 215 million people.

And the five biggest banks in all of Latin America? All Brazilian. All entrenched. All charging obscene fees for terrible service.

That's where a 31-year-old Colombian walked into a São Paulo bank in 2013, spent hours trying to open a basic account, walked out furious — and decided to build the bank himself.

This is the story of the Latin American pendant to neon.

Nu Holdings.

Chart 1: LatAm's Five Biggest Banks Are All in Brazil — Top 15 by Total Assets

The Cow, the Cartel, and the Founder's DNA

At arvy, we obsess over founder- (or family-) led companies. Not because founders are always better managers — but because they bring something no hired CEO can replicate: the irrational conviction to keep building when everyone tells them to stop. MercadoLibre. Medpace. Heico. Rollins. The most compelling "Good Stories" in our universe share this DNA.

Nu Holdings has it in spades.

David Vélez was born in Medellín, Colombia in 1981. His father owned a button factory. All eleven of his father's siblings ran their own businesses. Entrepreneurship was in the blood. But so was danger. When David was nine, his uncle was kidnapped. Medellín was Pablo Escobar's territory.

The family?

Fled to Costa Rica.

At age twelve, David convinced his father to let him buy a cow. Over six years, one cow became six. "That was kind of the entryway to understanding compound interest," he later told Stanford. He sold the herd, studied engineering at Stanford, got an MBA, then worked at Goldman Sachs, Morgan Stanley, and Sequoia Capital — where he became a partner scouting investments in Brazil.

He saw what everyone knew.

Five banks controlled 80% of the market and provided miserable service at outrageous prices. In May 2013, with seed money from Sequoia, Vélez co-founded Nubank with Cristina Junqueira and Edward Wible. The product: a no-fee credit card, managed entirely via a mobile app.

Friends warned him: "They're going to kill you. They're going to kidnap your kids." Five incumbent banks with political connections, regulatory capture, and zero interest in disruption.

He built it anyway.

That founder DNA — the kid who fled cartels, raised cattle for compound interest, talked himself into Stanford, and then deliberately picked a fight with the five most powerful financial institutions on a continent — is exactly the resilience that carries a company through crises. Currency collapses, political turmoil, pandemic lockdowns — Nu has weathered all of it. Because the person at the top has weathered worse.

131 million customers later, the numbers are extraordinary (chart 2).

And that's by no means all.

Chart 2: Nu Holdings — Sustained Growth of One of the World's Largest Digital Banking Platforms

20% Efficiency Ratio — The Number That Changes Everything

131 million customers. 62% of Brazil's adult population. Expanding into Mexico (15% penetration) and Colombia (11%).

Just look at those numbers:

• ARPAC (Average Revenue per Active Customer): $15 per month
• $16.3 billion in 2025 revenue — up 45%
• Net income: $2.9 billion
• Return on equity: 33%
• Activity rate: 83%.

But the number that truly sets Nu apart?

The efficiency ratio.

The most important number in the banking world.

An efficiency ratio measures how effectively a company utilizes its assets, liabilities, and resources to generate income, with lower percentages usually indicating better operational efficiency and cost management. A lower ratio is generally better (e.g., 50% means 50 cents spent per dollar earned).

It measures how much a bank spends to generate one dollar of revenue. Lower is better. Wells Fargo: 63%. JPMorgan: 55%. UBS: around 70%. Julius Bär: 68%, Vontobel: 74%: Pictet: 74%. Migros Bank: 52%. ZKB: 56%.

Nu Holdings?

19.9%.

Yes, you read that right. Let that sink in.

To earn $1 Nu must spend just 19.9 cents.

In Q4 2021, it was 78%. In four years, Nu compressed it from 78% to 20% — the most dramatic operational transformation in digital banking history. The reason: no branches. No legacy. Economies of scale.

No branches means no rent, no tellers, no security guards, no cash handling. No legacy systems means no complex, high-maintenance platforms, tools, or projects. Economies of scale mean that it doesn’t matter whether 100 or 10,000 people use the platform—it’s fully automated anyway.

The cost to serve one customer is below $1 per month. A traditional Brazilian bank spends $15–25. That's a 15–25x structural cost advantage — permanently baked into the model.

Every new customer Nu adds costs almost nothing to serve while generating $15 per month in revenue. That's operating leverage traditional banks can only dream of.

And despite these metrics, Nu trades at roughly 17x forward earnings (chart 3). For a company growing at 45% with a 33% ROE — that's not expensive. Traditional banks trade at 8–12x. US high-growth fintechs at 30–50x. Of course, there is a reason, just remember the founder’s youth.

But Nu sits in the sweet spot: emerging market discount, developed market quality.

I think we can agree this is a compelling "Good Story."

Now it's time for the "Good Chart."

Chart 3: Nu Holdings — Valuation at ~20x Forward P/E Despite 45% Revenue Growth and 33% ROE

The "Good Chart" — Volatile, But Forming

Nu went public in December 2021 at $9. Then the IPO Class of 2021 happened. By mid-2022, the stock was below $4. Minus 60%.

That wasn't a Nu problem. Growth stocks were slaughtered. Emerging markets doubly so. Brazil — with political volatility, currency risk, and rising rates — triply so.

We call it the Valley of Tears, which so often follows IPOs.

Since then?

From below $4 to above $14 — roughly a 4x from the lows (chart 4). Revenue quadrupled. Net income went from negative to $2.9 billion. The "Good Story" delivered. The "Good Chart" followed.

But the chart carries an asterisk.

Volatility is structurally higher than a Stryker or a Visa. Nu is a growth stock in an emerging market, priced in dollars, with currency exposure to the Brazilian real, the Mexican peso, and the Colombian peso. When global risk appetite falls — as during the Hormuz crisis — emerging market equities get hit first.

At arvy, we never buy into IPOs from the beginning. Recall our IPO Class of 2026 arvy’s weekly a few weeks ago.

We wait.

We let the initial hype fade, the lock-up expirations pass, and the price find its true level. We need enough data for a "Good Chart" to form — and that takes time. Minimum a few weeky if not months but typically 12 to 18 months of price history before the chart tells us anything meaningful about trend strength, support levels, and volatility patterns.

Nu now has over three years of public market data. The 200-day moving average is upward sloping. The long-term trend is intact. The "Good Chart" is forming — not elite yet, but improving with every quarter of delivered results.

This is a company where the "Good Story" is significantly ahead of the "Good Chart." The fundamentals are extraordinary. The chart is catching up. And the valuation — at 17x forward earnings for 45% growth — offers a margin of safety that most growth stocks don't.

It took a nine-year-old's courage to leave Medellín.

A twelve-year-old's patience to turn one cow into six.

And a 31-year-old's conviction to challenge a continent's banking monopoly.

Investing in Nu requires a similar kind of patience — the willingness to endure emerging market volatility for a "Good Story" that's still writing its best chapters.

Never ever forget, everything in life compounds.

Even when it starts with livestock.

Chart 4: Nu Holdings Since IPO — From $4 to $14, the "Good Story" Delivered