Mexico FinTech News
Nu (Mexico) reports mixed 1Q24 results
Nu reported Mexico 1Q24 results on its Mexico website, although not on its Investor Relations website, nor through a press release, suggesting its IR team needs to up its game. The results were mixed, but on the key issue of cost of risk, (perhaps the only issue that really matters long-term) showed improvement.
- NU deposits now at US$2.2bn, explosive growth from US$1bn at end of 2023. Cuenta Nu is a huge success, leaving other FinTechs in Mexico despite offering similar yields far behind.
- Credit growth has picked up a little, with loans at US$850mn. But as deposits have exploded, the loan to deposit ratio has collapsed to 38%.
- As a result of much faster growth in expensive deposits than loans, the net interest margin is barely positive, at 2.6% from 16% a year ago. Nu (for a FinTech) has an unusual problem of excess liquidity, paying more on the liquidity (14.75%) than it can get on government securities (11%). And the collapse in NIM has meant heavy losses. Nu Mexico lost US$30mn in 1Q24, versus US$20mn in 1Q23. Ouch.
- But Nu is finally getting its cost of risk (loan loss reserves/loans) under control, now at 20%, versus 33% a year ago. In a country where credit cards rates are at 70%, fund at say 20% (deposit yields plus commissions and costs), if you can get cost of risk below 20% you will be nicely profitable, eventually. And its easy to bring down the rates on deposits to manage excess liquidity.
- How did Nu manage this? By putting the brakes on credit card growth. And improving its data analysis. Here is a clue from the recemtly released 20-F. “Consumer Credit Underwriting (Mexico) – We are already operating the sixth generation of our proprietary machine-learning underwriting models, which meaningfully increase our ability to accept new customers in a country with one of the lowest levels of financial inclusion in the world. Compared to making decisions with generic credit bureau scores, the latest version of our credit engine allows us to lower risk by 70% for a comparable approval rate. On a year over-year basis, our first payment default rate has dropped to 3.1% in the year ended December 31, 2023, from 5.7% in the year ended December 31, 2022, and from 7.4% in the year ended December 31, 2020. The velocity with which we implemented our proprietary underwriting models in Mexico is also ahead of our experience in Brazil at the same point in the journey.”
Información financiera (nu.com.mx)
Mercado Libre’s FinTech active clients reach 49mn, 1Q24 results beat estimates
Mercado Libre, Latin America’s e-commerce leader, reached 49 million active users for its digital bank, Mercado Pago in 1Q24, (+38% yoy), or +3.2mn users qoq, with growth in Brazil users ahead of the average. The firm’s fintech net revenues soared by 74%, primarily fueled by Brazil’s growth and high-yield account offerings. Mercado Credito’s gross portfolio surged by 46% year-on-year and 18% quarter-on-quarter. Credit cards drove the increase. Despite a slight increase in past-dues, net interest margins after losses were 31.5%. Fintech take rates were 4.5%, down 50bps year-on-year but up 10bps quarter-on-quarter.
LatAm’s Mercado Libre plows ahead with 50M fintech clients | Fintech Nexus
Alto Nivel, 05/03/2024, Staff:
Ganancias de Mercado Libre crecen 71% en 1T impulsadas por México y Brasil
Femsa agrees with Conekta to purchase Oxxo Pay assets
Femsa has agreed with Conekta to acquire the assets of Oxxo Pay, a move that aims to strengthen Femsa’s presence in the digital payment sector in Mexico. The acquisition includes Oxxo Pay’s user base and technology platform, allowing Femsa to expand its portfolio of financial services and enhance its digital capabilities. This strategic move reflects Femsa’s commitment to innovation and its goal of meeting the evolving needs of consumers in the digital era.
Expansión, 04/29/2024, Staff: Femsa acuerda con Conekta la compra de activos de Oxxo Pay
Other news
El Economista, 04//2024, Sebastián Estrada: Nu México reforzará seguridad y reducirá riesgo de fraudes
America Retail & Malls, 04/28/2024, Staff: Rappi y Amazon ofrecen promoción única a sus clientes
BBVA’s Sabadell Deal Appetite Offers Sign of European Bank Shakeup – Bloomberg
LatAm FinTech News
Nubank has announced the launch of a payroll loan portability option in Brazil.
Nubank, a leading FinTech company in Brazil, has announced the launch of a payroll loan portability option in the country. This new feature allows customers to transfer their payroll loans from other financial institutions to Nubank, offering them greater flexibility and control over their finances. By expanding its product offerings, Nubank aims to enhance its competitive position in the Brazilian market and provide customers with more accessible and convenient financial services.
Latam FinTech Hub, 04/29/2024, Álvaro Campos: Nubank ha anunciado el lanzamiento de una opción de portabilidad de préstamos de nómina en Brasil
Yuno and Kushki Form Alliance to Enhance Digital Payment Ecosystem in Latin America
Yuno, a Colombian FinTech startup, and Kushki, a payment gateway platform operating across Latin America, have joined forces to bolster the digital payment landscape in the region. This strategic alliance aims to leverage the expertise and capabilities of both companies to enhance the efficiency, accessibility, and security of digital transactions across various industries. By combining Yuno’s innovative solutions for financial management and Kushki’s robust payment infrastructure, the partnership seeks to provide businesses and consumers with seamless payment experiences while driving financial inclusion and accelerating the adoption of digital payments throughout Latin America.
Contxto, 04/30/2024, Staff: Yuno and Kushki Form Alliance to Enhance Digital Payment Ecosystem in Latin America
Other news
Contxto, 04/30/2024, Staff: Máximo and AlFinTech Partner to Enhance Digital Banking in Peru
Contxto, 05/02/2024, Staff: Nayax Acquires VMtecnologia, Expands in Latin America
Global FinTech News
SumUp lands €1.5bn private credit debt deal led by Goldman Sachs
SumUp, a prominent player in the FinTech industry known for its innovative payment solutions, has successfully closed a significant private credit debt deal totaling €1.5 billion. This substantial financing round was led by the prestigious investment bank Goldman Sachs, highlighting SumUp’s growing influence and attractiveness to major financial institutions. The injection of capital is expected to fuel SumUp’s expansion initiatives and further strengthen its position in the global market for payment processing solutions. This financing round highlights the confidence that investors, particularly industry leaders like Goldman Sachs, have in SumUp’s business model and growth prospects.
FinTech Futures, 05/03/2024, Tyler Pathe: SumUp lands €1.5bn private credit debt deal led by Goldman Sachs
Barclays reportedly leading the race to take over GM credit card programme from Goldman Sachs
Barclays is reportedly emerging as the frontrunner to acquire the General Motors (GM) credit card program from Goldman Sachs. The potential deal represents a shift in GM’s banking partnerships, moving away from Goldman Sachs toward Barclays. While details of the transaction remain undisclosed, Barclays’ advanced technology and extensive experience in credit card services could position it favorably in this acquisition bid. If successful, the move could significantly impact the credit card landscape and deepen Barclays’ presence in the financial services industry.
FinTech Futures, 05/01/2024, Tyler Pathe: Barclays reportedly leading the race to take over GM credit card programme from Goldman Sachs
Other news
FinTech Futures, 05/30/2024, Cameron Emanuel-Burns: HSBC CEO Noel Quinn to step down after five years in the role
FinTech Futures, 05/01/2024, Tyler Pathe: Franklin Templeton partners Microsoft to build “advanced financial AI platform”
Digital bank Monzo expands fundraising to £500m in deal with top tech investor | Business News | Sky News
Tide set to launch business accounts in Germany with Adyen | Tide Business