Nubank Stock

Hello everyone. Good morning. Thank you for being here. It's an honor to welcome you here into our Nu Stadium, see so many familiar faces. The room is packed, and we have over 10,000 people watching online. So really, really amazing special moment for us to share an incredible and incredible announcement. That video covered 13 years in just a few minutes. I wish building Nubank had been that smooth. But the reality was considerably messier. It started with an ordinary moment. In 2012, I moved to Sao Paulo, and I needed to open a bank account, very simple task. I walked into one of those very fancy branches from one of those very fancy banks. And then I hit a wall. I run into an outrageous experience.

I was stuck in a bulletproof revolving door and alarms started sounding. Armed guards came to see me as almost a criminal, and I had to walk out back and leave my backpack outside in a locker and then walk back in and then just begin a 1.5-hour wait, begging to get a simple bank account. And that entire process ultimately took over 5 months, 5 months until that final credit card arrived, carrying a 1,200% interest rate. I remember thinking, I am trying to give my money to this bank. Why are they treating me like they're doing me a favor? And I would ask my friends, is there something wrong with this bank specifically or what's the issue?

And what I kept hearing was, don't waste your time trying to find a different bank. They're all the same. There are 5, they all look the same. And so what is the point? Another revolving door, another long wait, another set of fees and just customers were not satisfied, and they had simply stopped believing that anything better, a better experience was possible. And so that was the problem we set ourselves to correct 13 years ago. We set ourselves to build a financial institution that was simple, transparent and truly on the customer's side. We started with a small team. You saw the little house in the beginning, plenty of skeptics, plenty of naysayers.

Most of us came from outside the banking system, and we didn't have licenses or special connections with regulators or an established brand. We were a complete team of outsiders. What we did was we had a very clear conviction on the problem we were trying to solve. Technology had enabled the reinvention of financial services and perhaps that also enabled us to create something most people thought was impossible, products and services that customers loved fanatically. We began with one very simple product, a purple credit card with no annual fee, our Roxinho, as we call it in Brazil. And we put it in customers' hands, listened carefully, improved and iterated very quickly and then obsessed about solving every single little detail.

And then something happened that none of us had put in our original business plan. People became fans. People painted their cars in purple. They did their birthday parties on Nubank. They had their dogs become customers. This became a fanatical brand, something you have never seen in financial services anywhere around the world. People never behave that way towards a bank. And this behavior told us that customers were readier for this type of experience. They were readier to be treated well, to be treated like human beings. Banking has become a source of constant, unnecessary anxiety. And when you remove that anxiety and get people back a little control, they notice.

We used to track, I remember this very well, the name of every new customer coming in through Slack, and we would celebrate every single customer. And then those 12 customers went into 1,000 and 1,000 to 1 million in less than 2 years. It exploded. The channel in Slack like went down immediately. And that 1 million became 5 million and then 10 million and then 100 million. And today, more than 140 million customers in Latin America use Nu and make it their most preferred financial services institution. Take a second to think about that number, 140 million people. But scale can become an abstract very quickly. So let me bring it down to think about specifically about every single one of our customers.

And we met them incredibly well, and some of them are actually here with us. It's Agda, it's Dario. It is the people who started as you saw up there that we were trying to show and they were trying to put front and center. Thank you for trusting us and for pushing us to keep getting better every single day. But as we grew, one question kept coming back. Is this fanaticism just unique to Brazil? Is there something specific about Brazil that is making this explosion in terms of customers? When we thought about first principles, we just didn't think so. Every banking system around the world and every country has its own rules and history and regulation, of course, it's a local business.

But from a customer's point of view, the problems look remarkably familiar. People want to be treated well, and we want to be treated as -- we treat our friends and our families and our partners. And the details are actually very similar around the world, high cost, unnecessary complexity, poor service, product design around the institution, wanting to figure out how to increase revenues versus increase consumer experience. So then a few years ago, we decided to test that idea. Could the Nubank model travel across borders? And we would enter each new market the way we built Nu in Brazil, start very focused, earn the trust of each customer one at a time and then build more of what people need.

So in 2018, we entered Mexico. And today, Nu is the largest digital bank in the country with over 16 million customers in Mexico. The business is profitable, growing very quickly and the model traveled. Mexicans found a new way to manage and treat their money. And then in 2021, we entered Colombia. I'm Colombian, and I was born there. So it was a very, very meaningful moment for me as we launched Nu in Colombia. And then we got surprised once again as Colombian customers responded incredibly quickly. And when you look at the curves in Colombia and Mexico and Brazil, every one grows faster and faster than the rest.

So the same model that worked in Brazil and Mexico was working again. Three countries, different systems, but the same basic customer need. People just want to be treated well. And across those markets, the impact we've had over 13 years is actually incredibly substantial. So since then, we've paid over $10 billion in yield for our customers. And that is money working for our customers that is not sitting idle in some bank accounts. We estimate that we have saved them over $28 billion in banking fees that if we were not around, would still have been removed from our customers' pockets in fees back to those big banks. And then the most incredible statistics. We actually did the calculation, and we think we've returned more than 77,000 years of time that otherwise more valuable than money is time.

And so 77,000 years that otherwise all these 140 million customers would have spent being locked in a banking branch, waiting to be let in and begging to open a single bank account, navigating that bureaucracy or waiting to get actually be served well with bad customer service. So 77,000 years, and that time goes back to their families and to their friends to do things that they actually love to do. So this is not separate from our business model. This is the business model. Technology enabled the opportunity to operate at a significantly lower cost than our competitors. And so we would turn that efficiency back to our customers via better price, better product and just a much faster customer experience.

Customers say, just more of Nu and then they tell their people and they tell their friends and becomes a viral, viral brand. And when customers win, this business gets stronger. And when the business gets stronger, we can create even more value for customers. Brazil, Mexico and Colombia still offer enormous opportunity for growth. It's day 1 for us even in Brazil. But they have also taught us something important that the model can travel because the problems we're solving are not as specific to Brazilians or Mexicans and Colombians. These problems are global in nature and not specific to any single country. This is the most incredible statistics, I think I'll present.

More than 95% of the world's banking still happens today in 2026 through very big, fancy, expensive banking branches owned by incumbents. After a decade of fintech around the world, it's so early in the development of this market. All of that market continues to be in banking branches. And this means high fees, every single customer is paying very high fees for an infrastructure they actually don't need. It's almost as if every single customer was paying for a rent of an apartment that they're actually not even using. So after a while, bank forget the one thing that actually gives them the right to exist, which is the customer. And that's for the people who actually have a bank account.

There are still close to 3 billion people in the world that remain unbanked or underbanked that they don't even have the luxury of getting into a banking branch. They don't even get welcome to be trapped in a bulletproof door. So for us, as we think about the next few decades, the answer became obvious. Continue expanding our model globally beyond our core markets and try to serve those customers incredibly well, wherever they are. We know how to enter markets, start with focus, earn trust, obsess about solving each little problem and expand the relationship over time.

And today, we're ready to take the next step, and I'd like to invite my co-founder, Cris, to tell us about it. Go ahead, Cris. Come up.

Hello, and good morning. Thank you for coming. It's great to see so many familiar faces. Thanks for everyone that showed up today. We had a big turnout today, so I want to acknowledge that. Thank you. So happy to be here. So let's talk about the next step. Like David did in Brazil some 13 years ago, I had to open a bank account when I arrived here in the U.S. last year. I had to get the account, get a credit card. And after a while, I got the account and then eventually months later, they told me, finally, they were ready to approve a credit card for me. Of course, it took months, but I was like, okay, now we're ready.

But then they said, "no, no, no, wait a minute. We approved you a credit card, but we don't have proof of your address." But that was the same bank that had my mortgage. So they had it right there to -- of course, they said, no, but that's the mortgage people, right? Like the credit card people don't see that. Great. Thank you. Same bank, same building probably, and they couldn't talk to each other. And it wasn't just me. I bet everyone in this room has some story that looks like that. Even Pope Leo isn't immune to bureaucracy and bad customer service. I don't know if you guys saw this story. But of course, he became Pope and he moved to Europe.

So he had to call his bank back in Chicago to switch addresses. And he went through all the security questions, he cleared them all. But still, they insisted that he has to come into a branch in Chicago to do so. To which, of course, he said, I really can't because now I'm in the Vatican because I'm the Pope and they hung up on him. So anyway, if the system is this broken for the Pope, you can imagine how it feels for millions of other people across this country who are just drowning in paperwork and stuck in those endless lines. And then you go through all that and what happens? You get your account, but then your money just sits there, right?

How does that make sense in a country like the U.S.? Here, if you work hard at something consistently, it builds into something real. Your skills compound, your career compounds, your relationships get deeper the longer you invest in them. There's a reason people call compound interest the most powerful force in the universe. But your money doesn't compound, not here. Again, it just sits there. Fees eat at it, inflation eats the rest, you know the drill. You can get cash back on this category, but not on that one. You get those sign-up bonuses or you get miles, but then they expire before you can use them. And then you pay hundreds and hundreds of dollars on annual fees.

For a card, it doesn't even work that night. The U.S. still writes more paper checks than any developed country on earth, not because people here deserve less, but because the system has never had a reason to change. Think about the number of financial apps on your phone. Most of us here are based out of the U.S. They just pile up without end. And somewhere in our minds, we've got to run through this whole checklist just to make sense of what you've got to do when and where not to be tricked by some fine print. All that nonsense has a name, it's called complexity, and it's the thing that we've been fighting for over 13 years now.

And that's why we've been getting so much noise from our customers, people that grew up with us with Nu in Brazil, Mexico, Colombia, but then moved here for school, for work, for family. And then they had to open an account at a bank that still makes you wait in line at a branch. These people have seen this before. They have seen us before, and they really miss us. Not just in theory, they miss us every time that they have to write one of those paper checks or when they get slapped with an unexpected fee. I would like Camila tell you herself.

It was actually a big surprise for me. I was told that I needed to send a fax, and I did not know that fax still was a thing here, when in reality, I could just solve everything through my phone. Right now, banking is that thing that you have to do but it's so annoying, and it's time-consuming, and it's never easy. But Nubank changes all of that. If I'm here talking about Nubank is because I believe how incredible it is and how amazing it will be when it enters the North American market.

And It wasn't just them, it wasn't just people like Camila who moves here. Over the years we have lost count of how many messages we got asking us to bring Nu here. People from all over the country. People from California from Silicon Valley, people from New York, people from Texas, people right here from Florida. People who found us through inter Miami or through the Mercedes F1 team or people that just live here, but are very tired of all the bureaucracy. People like Chris.

In my day-to-day life, I value seamless experiences, whether I'm working out, eating out or taking a trip, Nu could really add value to all of those experiences by helping to make sure that the financial aspect of those experiences really is seamless and adding value and allowing me to live life of my pace.

Guess what, that future that he's talking about already exists. It just hasn't arrived here yet. But today, it does. Today, we are launching Nu in the United States. I know we're all very excited. All right. There's a lot to talk about. Let's see what that looks like.

[Presentation]

What does that actually mean for you? As you may have understood from what we've been talking about, we want to be a financial institution that you love and that loves you back. So your money here will actually compound as it should rather than sitting idle. You will earn 3.5% APY on every single dollar. Not a separate savings account.

You don't have to remember the fees or ask permission to move, no subscriptions, no minimums, no loopholes. That's the default. And coming soon, when you pair it with the Nu credit card, your earnings will be boosted to 4.5%. And the Nu credit card won't just unlock more yield for you. It will offer you a truly premium card experience but with 0 annual fees. It will be for the first users that come in a limited edition beautiful card. It is a metal credit card from our partner, Mastercard, that we're very happy to have here with us tonight -- today with a limitless 1.5% cash back on every purchase. But we want to reward your loyalty. We want to earn your business.

So coming soon, that cash back will be boosted to 2% when you bring in your direct deposit to the account. So you're going to get cash back with no categories, no caps and nothing to track. Every benefit that people usually pay hundreds and hundreds of dollars a year for included. It's that simple. And if you ever need to talk to someone, a real person who actually gives a damn will pick up and speak to you in English or Spanish or Portuguese, whatever you need, 24/7, 365 days a year. Now think about it. You get the account, the debit cards, your savings, your credit cards, transfers, including to Brazil, Mexico and to Colombia and soon to many more countries in one app.

So many of those random financial apps that you have in your phone and those logins and credentials, no longer necessary. We're already able to bring all of this to you today with our partner, Lead Bank, who is also here today, where your deposits will be held FDIC-insured. But as you may have heard earlier this year, federal regulators approved our plans to build a national bank in the U.S. And we can't wait to open the doors of the bank next year and be able to offer even more to our customers. We believe you deserve someone who's going to work hard every day to earn your business and not make it feel like they're doing you a favor because the relationship built on transparency and trust works for both sides.

We mean it. We put our name on the stadium. We brought an F1 car to the stadium, and we're building operations and our team here. And I personally packed a husband, 4 kids, including a 6-month-old baby, and moved my family here. We have a lot of conviction that we can reset your expectations about how to handle your money. Trust isn't a ceiling. It's embedded in everything that we do. And you've probably been told that it's pointless to switch banks like David was back in Brazil, but they all work the same way and there's nothing to be done about it. But that nonsense that we've been trained to accept here that it's okay for banks to work that way, that's not normal and surely not necessary. But that's not all that we have to tell you today. David?

All right. Super exciting. Thank you, Cris. All right. It's exciting to be a customer of Nu in the U.S. Let's hear it. All right, there you go. Awesome. So super exciting to be able to make this announcement and bring our products and services to the biggest market in the world. So we're very focused, and it's an important moment for us. Is that it? It's not. We got a couple of more surprises to share with you all. And we're ready finally to even go beyond because as I said earlier, we have concluded that these are some of the problems that are global, and we want to go beyond. For the next decade, we want to continue building and taking the way we do banking to the U.S. and beyond. What about all those billions of customers that could benefit from our approach in financial services that are still going to those banking branches that are still begging to get a simple bank account or that have a credit?

From them -- today we're also introducing for them a great new product called Nu Global. So Nu Global is our first step. So we're serving customers in another 35 countries. So who is this for exactly? Many of you know from your own lives that money no longer stays neatly inside one country. Most of you live lives in multiple countries at the same time. People study abroad. They build careers far from where they were born. They support family across borders. Their financial lives have become global, while most financial products and banks remain stubbornly local. Customers often use one app to hold money, another different to transfer it.

And think about the last time that you had to send money from one country to the next. It was so painful, was so expensive. You probably have to compare rates, search for fees, wait for the transfer. Customers end up once again managing all that complexity that shouldn't really exist there for them to handle. And we think that there is a way to do it much more simpler like this, let's take a look.

[Presentation]

Is it awesome. So let me walk you through what you can actually do with Nu Global if you're in 1 of those 35 different countries that we're announcing initially. First, you can earn the same value proposition. It's a multicurrency account that sits on stablecoins, where customers can hold digital dollars and euros with a 3.5% annual yield on dollars and 2.2% on euros paid daily. Finally, your money compounds also across the world. Your money keeps working for you without you having to think about it.

Second, spend. You can create a virtual card with our partner, Mastercard, added to your wallets with no international transaction fees or hidden markups to spend as you go around the world. And finally, we liberate money. Money can move across to more than 35 countries quickly, no transfer fees, no exchange rate spreads. You don't get that anywhere else. Finally, you can also diversify your funds with a selected range of digital assets, carefully curated. Now put those pieces together.

Today, customers assemble their financial lives across multiple apps. Each one solves a narrow problem and the customer has to make the whole thing work. Nu Global brings it all together in one place. Our ambition is to earn the primary financial relationship with these customers one useful interaction at a time. And the opportunity is much larger. Nu already serves more than 140 million customers across Brazil, Mexico and Colombia. If you add U.S. and 35 countries on Nu Global, you have the opportunity to build a global payment network where people can send and receive money real time for free.

Now let's imagine that world in which all these Nu customers are connected no matter where they are. And sending money should be as easy as sending a text message real time for free. This is what we're building towards over the next decades. And we strongly believe that the future of global retail financial services will belong to consumer-obsessed digitally native firms such as Nu.

Cris, why don't you join me here to close it up?

Yes. So as David was saying, this is the future that we envision, and that's why this moment is just so special for us. This is just the first step, but it is the right step into the next phase of our journey to build that future. We've been working so hard on this for a few years now, and we've waited a long time to say this. So that question that we kept getting from so many people from so many different countries. When is Nu coming? When can I have this? Well, today is when.

So if you're here in this room or if you're watching from home, it's because you want to be a part of that future. So here's the app. Take out your phone now or if you're online, just go into your browser. Right now, we're sitting here and sign up on nu.com because starting today, we will release the Nu experience to customers here in the U.S. and very soon to many more countries.

And the first people that sign up to Nu in the U.S. will get the beautiful limited edition card that we showed along with some other surprises. And that's the invitation today because you don't want to be just customers. We're pretty good to our customers, but you also want to be able to say many years from now that you were among the first to see this come to life here. And then please tell somebody, tell the people that you care about, tell them today so that they can also learn that you don't have to settle for less anymore.

13 years ago, people told us that better financial services in Brazil and Latin America was impossible. Our customers proved our lives. And to everyone who helped Nu, including our many partners sitting down here, our friends, our families, our Nubankers, all our friends, to everyone seeing us here for the first time, welcome. We are just getting started. It's the first minute of the first half of that game, and we're excited to play this game together with you. Thank you, everyone.

Thanks, everyone. Thank you.

Good evening, ladies and gentlemen. Welcome to Nu Holdings conference call to discuss the results for the Second Quarter of 2026. A slide presentation is accompanying today's webcast which is available in Nu's investors simulations website, www.investors.nu in English and www.investidores.nu in Portuguese. This conference is being recorded, and the replay can also be accessed on the company's IR website. This call is also available in Portuguese. [Operator Instructions] [Foreign Language] [Operator Instructions]

I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer at New and Holdings. Mr. Souto, you may proceed.

Thank you, operator, and thank you, everyone, for joining our earnings call today. With me on today's call are David Velez, our Founder, Chief Executive Officer and Chairman; and Rob Livingston, our Chief Financial Officer.

All financial metrics discussed and presented today reflect our mini geo P&L framework, which we introduced in the Q4 2025. These managerial measures are important to how we manage the business but are not financial measures as defined under IFRS and may not be comparable to other companies. A full reconciliation report to the most directly comparable IFRS figures is available in our managerial P&L reconciliation report and in the appendix to this presentation. Unless otherwise noted, all growth rates discussed today are presented on a year-over-year FX neutral basis.

Today's discussion may include forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those expressed or implied. Please refer to the forward-looking statements disclosure included in the earnings presentation for additional information.

With that, I will now turn the call over to David. Please go ahead, David.

Hello, everyone, and thank you for joining us today. 13 years ago, we started with a simple hypothesis. A bank built on technology with no branches and no legacy to defend could serve hundreds of millions of people better and at a fraction of the cost. Today, I'm proud to announce that in the past quarter, for the first time, we generated more than $1 billion in net income. This milestone is a result of our customer obsession translated into an earnings generating formula. It is also a testament to the tremendous work of our team here at Nubank 13 years later, that hypothesis continues to play out exactly as we envisioned. Our customer base reached 139 million customers, including almost $118 million in Brazil more than $5 million in Colombia. And in the end of July, Mexico just reached 16 million customers. Engagement continued to deepen alongside that growth.

Our activity rate expanded sequentially to 83.5%, and while Brazil surpassed 86% for the first time. The combination of more customers and deeper engagement continues to drive monetization with RPAC reaching $17. Together, they generated $5.9 billion in gross revenue, while maintaining a highly efficient operating model with an efficiency ratio of 20%. This operating leverage allows us to continue investing in our 3 core markets. Brazil, Mexico and Colombia, while laying the foundation for our international expansion. That is why we have always been by optimizing for the long term. It is why we can continue building for the next decade while delivering a quarter like this one.

Let me walk you through both starting with Brazil. Brazil remains our largest growth opportunity and most of it lies within our existing customer base. The mass market alone represents roughly $30 billion in industry gross profit. We already serve most of the segments, and we're the primary account for approximately 60% of those customers. Even so, there is significant room in deepen those relationships and capture more of that profitability. That is possible because of the capabilities we have built over the past 13 years. They allow us to expand financial access while delivering a better customer experience, lower costs and increasingly personalized products.

As we built one of the leading financial services brands in Latin America for the mass market, we find ourselves attracting millions of higher income resilience that, unfortunately, we were not able to serve well at the time. In 2021, we launched Ultravioleta, a high-income focused brand and product or nearly 1 million Ultravioleta customers have significantly higher purchase volumes and assets under custody than the rest of our portfolio with both continuing to grow strongly, up 41% and 37% year-over-year, respectively, in Q2 2026. However, we have realized that there is a meaningful segment between mass market and high income that we could also be serving better. We call this segment Supercore. And in July, we launched Chroma, a subscription-based tier for our Supercore customers. A segment with an even larger profit pool than high income and one where we already have significant penetration.

Chroma gives them a dedicated experience, enhanced credit offerings and a broader set of banking and life style benefits, designed to reward customers for concentrating more of their financial lives from Nubank. That includes new cell, a free ChatGPT subscription, accelerated savings products and other benefits across our own ecosystem partners. Our goal is to develop primary banking relationships, and Chroma is a significant step in this direction for this segment.

Of course, the opportunity also extends beyond consumers. We already serve 6.8 million small businesses making Nubank, the largest financial institution in Brazil by number of business customers. Though we still reach only about 1/3 of that market. This is how we see the exceptional growth in Brazil. continuing to expand our customer base while increasingly serving a larger share of our customers' financial lives through better product and segmentation.

Now let me turn to our other core markets. Earlier this month, Mexican regulators approved our banking license in the country, and we're happy to be born as the largest digital bank in Mexico with more than 16 million customers. That completes our transformation from a credit-first Fintech into a full-scale digital bank, and it unlocks capabilities we did not have before. Payroll direct deposit strengthened primary banking relationships and customer engagement. Higher deposit insurance increases confidence in holding balances with us. Those deposits fund a broader credit offering while allowing us to expand into new products and customer segments over time.

Financial inclusion has been a defining part of the journey. For 35% of our customers, we were their first bank account, for 52% their first credit card, Today, our customers live in 98% of Mexico municipalities with nearly 80% outside the country's major cities, demonstrating how technology lets us reach customers everywhere. But what excites us most is what comes next. Mexico remains at an earlier stage of digital financial adoption. Bank account penetration has increased from 44% to 63% over the past decade. Just 85% of Mexicans still preferred to pay in cash. Yet the pace of change is accelerating, digital payments in Mexico continue to compound year after year. In the first half of this year, transfer below $5 grew more than 60%. And today, nearly half of all transfers in the country are less than $25. These are everyday transactions and a clear sign that cash is steadily giving way to these payments.

In June, the Central Bank introduced new rules that every financial institution must implement by the end of the year. The objective is to simplify the experience across different payment rails. Going forward, consumers will see a standard interface and follow the same steps regardless of who they are paying or how they choose to pay. Since these rules are mandatory for the entire financial system, they strengthen network effects and should further accelerate digital payment adoption.

We have seen this movie before. In Brazil, the regulatory agenda foster competition and digital innovation, expanding financial inclusion, driving everyday usage and ultimately accelerating credit adoption. Pix is the clearest example. We have put a simple and seamless experience from the very beginning, became the market leader in transaction volume and turned that into primary banking relationships. That environment toward exactly the digital model we have built. We believe Mexico is following a similar path. We can already see it in our numbers. Today, we reached 16.5% of Mexico's out of population, essentially the same penetration we had in Brazil in 2020. But the cohorts are monetizing earlier. At the same stage, ARPAC in Mexico is $12.3 against $5.6 in Brazil, higher income per capita better unit economics in the credit card product and higher interest-earning balances, all at a lower cost to serve.

Mexico is Brazil's playbook running faster and with the benefit of the scale we have today. That's how we broke even in 6 years in Mexico compared with 8 years in Brazil. To recap, customer behavior, technology and regulation are now all moving in the same direction. Taken together, they create one of the most compelling opportunities we have ever seen in Mexico. As more financial activity moves onto our platform, we build deeper customer relationships, gain better underwriting insights and expand our ability to serve a larger share of our customers' financial lives. For the first time, we now have the full set of capabilities to capture that opportunity in Mexico. And Brazil and Mexico run on the same technology stack and increasingly on the same brand.

Let me show you what that means. About a year ago, we introduced or flotation model for financial behavior. Since then, we are focused on one objective, building a single AI platform that powers business and customer decisions across the Nubank. That work spans every layer of the stack. We increased and upgraded our own GPU fleet, giving us full control of the compute layer. We expanded our architecture research efforts, and we continue building on one of our greatest advantages more than a decade of transaction history across more than 100 million customers in 3 countries. That research is unlocking compounding against inefficiency and model quality. We recently advanced the former to a hybrid linear attention the same architectural approach behind front models like KemiK3 and Quon3.5, and we trained with Moen, the same class of optimizer powering today's most efficient, large language models.

By decoupling the former core backbone for specific downstream decisions, any improvement to the central model can instantly upgrade performance across all our business lines with a cost of retraining. The latest generation quadrupled context length, trainining speed and inference speed while reducing the cost of running models in production. As we've scaled pretraining the base models, understanding of how our customers behave has become deep enough to change or we build every model on top of it. To give you 1 example, today, we can achieve the same predictive performance with 20 million fine-tuning data rows that previously required over 400 million, cutting development cycles from weeks to days. The platform now reaches nearly every decision we make.

We first deployed nuFormer in our flagship credit portfolio in Brazil. Through 2025, we replicated the model in Mexico, demonstrating that the platform generalizes across markets. During the first half of this year, we extended it to unsecured lending in Brazil and to the next generation of our core credit models. We're now testing it in credit cards for SMEs and for our Colombian customers. But underwriting is only one application. Today, AI agents handled more than 60% of customer support conversation in Brazil with customer ratings at or above human parity. Beyond underwriting and customer support, we're using artificial intelligence to optimize decisions across credit, deposits and growth, moving from predictive outcomes to determining the actions that maximize value on the real world constraints and have the same understanding of transactions that predict credit risk also predicts what a customer wants next. It allows us to recommend the products that maximize long-term customer value, personalize the app experience and move toward our vision of an private banker.

nuFormer is also improving how we grow. As the model learns our representation of how every customer behaves, we use it to put each campaign in front of the customers most likely to find it useful and more than 100 campaigns have already run this way. One platform powers underwriting, customer support, optimization and growth. every improvement we make benefits every application built on top of it. We're incredibly excited about the progress Nubank has had to date, levering AI as its informative technology and have strong confidence our approach will be a meaningful differentiation going forward.

Before we turn to our financial results, I want to say a few words about our CFO transition. As we announced in early June, Rob Livingston has succeeded Guilherme Lago as our Chief Financial Officer. Lago spent 7 years with us, 5 of them as CFO, and he handed over the role at the strongest moment in our history with our first $1 billion quarter. He has been an incredible partner, and I am glad we will keep working together in his new role as special adviser. Rob has spent the past few weeks working alongside Lago and our teams, and we're very excited to be able to counter with his significant experience. Rob, welcome. Over to you.

Thank you, David. It is a privilege to step into this role at such an important moment for the company. Since joining Nubank, I have spent time with our teams across the organization. What has impressed me most is the customer obsession, the consistency of the business model and the discipline with which it has been executed. I'm excited to help lead the next phase of Nubank's journey. And today, I'm pleased to walk you through our Q2 2026 financial results.

Let's start with our consolidated credit portfolio. Portfolio reached $39.4 billion, up 37% year-over-year and 5% sequentially. Growth remained broad-based. Credit cards increased 35% year-over-year to $26 billion. Unsecured lending grew 45% to $10.3 billion and secured lending increased 30% to $3.1 billion. Sequential growth remained solid while normalizing after a period of exceptionally strong expansion, origination does not expand in the straight line, and we see that as a healthy dynamic. Throughout the quarter, our underwriting framework remained unchanged and growth remained strong relative to the broader market. As we'll discuss in the next few slides, we're comfortable with the quality of the portfolio and the performance of the vintages we're originating.

Now turning to deposits. We ended the quarter with $45.3 billion in deposits, up 18% year-over-year and 6% sequentially, recovering the seasonal outflows we discussed last quarter. Brazil closed to $36.4 billion, Mexico was $5.7 billion and Colombia at $3.3 billion. In Mexico, deposits declined modestly again this quarter, reflecting our ongoing deposit optimization strategy. This continues to improve our cost of funding while maintaining ample liquidity with our loan-to-deposit ratio still at just 35%. Our cost of deposits was 88% of the interbank rate essentially unchanged from last quarter and 3 percentage points lower than a year ago. Overall, we're pleased with both the growth and pricing of our deposit franchise across all 3 markets. As always, our objective is not simply to maximize deposits but to build a resilient funding base that deepens customer relationships supports profitable growth and strengthens the long-term economics of the business.

Net interest income reached $3.7 billion, up 9% and net interest margin expanded 180 basis points to 22.9%. That is the result of what we laid out last quarter. The growth we put on the books, a mix weighted further towards unsecured lending and the deliberate risk expansions we made. Cost of credit reduced quarter-over-quarter to $1.7 billion. Desenrola, the government debt renegotiation program impacted this number by just about 5%. And even more important than the accounting impact the program allowed us to help nearly 1.8 million customers renegotiate past due balances and get their finances back on track. With margin up and cost of credit down, risk-adjusted net interest margin expanded to a record 12.4%, up from 9.5%.

I'm going to walk you through the drivers of this expansion in risk-adjusted net interest margin in more detail. That brings us to the risk-adjusted net interest margin bridge, and I want to focus on the expansion between Q1 and Q2. Credit income was a primary driver of risk-adjusted NIM expansion, contributing 178 basis points to the quarter-over-quarter increase compared to 152 basis points in Q1. This acceleration was driven by our strong loan growth in cards and unsecured lending in Q1, reflected in our improving loan-to-deposit ratio. Lower cost of credit contributed a further 115 basis points. The majority of the improvement in cost of credit came from the expected seasonal patterns we observed and disciplined underlying business performance rather than onetime items. Float income and funding costs both remained broadly neutral. Together, these dynamics explain the strong expansion in risk-adjusted NIM this quarter and continue to demonstrate the resilience of our underlying unit economics, supporting the sustainability of current levels going forward.

Now let me turn to asset quality. As expected, our NPL metrics continue to follow their normal seasonal pattern. 15- to 90-day delinquencies improved 16 basis points to 4.8%. That improvement reflects several underlying dynamics, which I'll unpack on the next slide. 90-plus delinquencies increased 35 basis points to 6.9%, broadly reflecting the seasonal migration of first quarter early delinquencies into the 90-plus bucket. Taken together, these metrics are consistent with the seasonal dynamics we expected and continue to support our view that the underlying quality of the portfolio remains robust.

Looking at the drivers of early delinquency, this bridge explains why the 15- to 90-day ratio improved sequentially. Seasonality reduced the ratio by 37 basis points. Against that, our intentional risk expansions in the first half of the year added back 24 basis points. Those were deliberate decisions to serve cohorts with higher expected losses, but which also generate higher risk-adjusted returns as you've seen in our risk-adjusted margin performance. Product mix and the remaining drivers are broadly neutral. We don't see any evidence in our portfolio of a broad-based weakening in consumer credit, yet we remain vigilant as always. Altogether, the 15- to 90-day ratio improved 16 basis points during the quarter.

The allowance bridge tells a similar story from the balance sheet perspective. The allowance increased from $6.1 billion to $6.6 billion. The largest driver by far was portfolio growth, contributing $342 million. Under IFRS 9, we recognize expected credit losses at origination. So growth increases the allowance before the associated interest income is earned. The intentional risk expansions we just discussed contributed another $170 million, while all other movements were immaterial, including Desenrola, which primarily affects recoveries rather than the ECL allowance due to the accounting treatment of renegotiated loans.

Together, these 2 bridges reinforce the same message. The quarter's credit dynamics were driven by growth, seasonality and disciplined risk expansion not by any deterioration in the underlying quality of the portfolio. Our approach to provisioning and coverage remains disciplined and consistent. Starting with the chart on the left, we built allowances equal to 113% of new 15-plus delinquency formation during the quarter, broadly in line with our historical averages. The chart on the right reinforces the same point. Total coverage over NPL90+ stood at 244%, meaning we continue to carry allowances equal to almost 2.5x or 90-plus balances. This provides a strong balance sheet cushion and remains consistent with the levels we've maintained over the past several years even as the portfolio has continued to grow. Together, these 2 metrics reinforce an important point, while the portfolio continues to grow across products and customer segments, our provisioning philosophy remains disciplined and consistent through the cycle.

Now one final point on credit risk, and this is an important one. As David mentioned, Nubank leads the Brazilian market in primary banking relationships. That leadership reflects the trust customers place in us. Combined with the analytical rigor of our underwriting models and the quality of the data generated through those relationships, it creates a structural edge in credit. You can see that clearly on this slide showing the percent of credit card outstandings that are 90-plus days past due in Brazil. Across every income band, our credit risk performance has been steady. This strong and stable performance is driven by customers who have Nubank as their primary banking relationship. The delinquency measures of these customers is roughly half the portfolio average.

What's the implication? That customer primacy is not only a growth and revenue advantage, it is also a credit advantage. A deeper relationship gives us richer behavioral data, strengthens our underwriting and place this Nubank at the top of our customers' payment hierarchy. Together, these factors produce consistently better credit outcomes. That is why we continue to view customer primacy as a key pillar of our credit superpower.

Now turning to our income statement. Gross revenues reached nearly $5.9 billion, up 39% year-over-year. Gross profit reached $2.4 billion during the quarter, up 43% year-over-year and 25% sequentially. As credit normalized in line with its expected seasonal pattern, its contribution to gross profit increased 41% this quarter, all fees represented 25% and flow 34%. These shares naturally fluctuate from quarter-to-quarter. What matters is that all 3 components continue to grow in absolute dollars, reflecting the diversification of our business model. Looking ahead, we remain confident that credit,, fees and float will continue to complement 1 another as drivers of long-term growth profit growth.

Turning to operating leverage. Net revenues surpassed $4 billion for the first time, reaching $4.1 billion, up 8% sequentially. Operating expenses totaled $806 million, up 20% quarter-over-quarter as real estate and marketing expenses shifted from the first quarter into the second, will alongside our continued investments in international expansion. As a result, our efficiency ratio ended the quarter at 19.5%. As we discussed last quarter, the 17.6% reported in Q1 was not a run rate. Roughly 2/3 of that improvement reflected temporary timing effects, which reversed as expected this quarter.

Looking ahead, we continue to expect the efficiency ratio for the full year to average about 20%. More importantly, our long-term view remains unchanged. And we will continue to invest while maintaining operating leverage as we scale.

To conclude, Net income reached $1.1 billion for the first time in Nubank's history, up 17% from the first quarter and 49% year-over-year. More importantly, we delivered that result while sustaining a record 33% return on equity and continuing to invest across our 3 markets and in our long-term opportunities. I believe this quarter reflects the strength of the business model, David described earlier. The investments we've made in technology, AI, underwriting and customer experience continue to translate into profitable growth at scale. I'm excited to be part of this next chapter, and I look forward to continuing to build on this momentum. And with that, we'll open the call for your questions.

[Operator Instructions] I would like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer. .

Thank you, operator. Could you please open the line for Mr. Tito from Goldman Sachs. .

I understand a little bit the different role impacts Rob, you mentioned a few different numbers. I think you said maybe 5% of provisions, but not sure if that necessarily impacted the bottom line? And just thinking because our prior calls, you had mentioned risk-adjusted margin getting back 10.8%, well above that this quarter, very good performance here for sure. But just to understand, was there an impact from this enroll out on that risk-adjusted margin given the different parts? And then I have a follow-up after that.

All right. Thanks so much, Tito. Let me take that and good to hear from you again. Yes, I did mention that this enroller had an impact of about 5% on our cost of credit. That's the main metric that we're looking at there. And so as a result, it did also have an impact on our risk-adjusted net interest margin. If you think about the progress that we made from last quarter to this quarter of almost 3% expansion in the metric, the majority of that did come from lending growth, A.nd this was really due to the strong growth that we saw in Q4 last year, Q1 last year and the matriculation of that into revenues in Q1. Now the cost of credit also contributed 115 basis points. And you're right, that this enroller would be part of that. It's a minority of the impact. The majority did come from seasonality, but also just really solid underlying credit performance.

Okay. No, very helpful, Rob. And I think also, just to think in terms of the context, what everybody is worried about is going into next year. I mean you mentioned overall credit quality trends look good, you feel comfortable. But given the macro that we're seeing in -- how do you think about the growth outlook maybe going into 2027 and this level of risk-adjusted net?.

David here. So as we've said a few times to investors, we don't take a directional view necessarily on the economy. Our base assumption when we underwrite a loan is that the future will be worse than the past. The things will actually be much worse than everything we have seen. So a lot of -- everything, every single underwriting decision already assumes a deterioration by default. It has a pretty significant cushion in terms of what do we need to see for that decision to continue to be NPV positive. Obviously, we're in an environment where there is a lot of caution. We are actively looking at every single sign that we have. So far, we don't really see any significant or structural deterioration in our numbers and we continue to operate with very significant cushion in this environment.

We are also in a position where we -- while we have a large consumer base, we're still a very small percentage of the market. As we've said in last call in this call, we have 7% market share of that profit pool. So we're still a small player in that big market, and we get to cherry-pick our customers. Cherry pick them with loans and products that have very short-term duration, which gives us a huge amount of ability to react quickly, have a lot of conviction on a lot of the underwriting capabilities as we mentioned. And then primarily, we have this huge advantage, as Rob mentioned, of being the largest primary bank accounting in the country today.

Over 60% of our mass market customers use us their primary bank accounts. So that's a huge advantage because, as Rob mentioned, positions as effectively as being senior in the credit stack of a customer. And so when you combine strong analytics, significant cushion being the primary bank account and having that seniority then there is a lot of conditions for us to continue growing at a very good pace. I won't necessarily give you a specific number of growth that we continue to see the conditions to continue growing and taking share as we use a lot of these levers to do that very effectively.

Yes. And to your question on net interest margin or risk adjusted net interest margin for the foreseeable future, we see it as being in the same region as where we are today. We think that it's sustainable.

Operator, could you please open the line for Mr. Jorge Kuri from Morgan Stanley.

Hi, everyone. Thanks for the opportunity to ask questions and congrats on the great numbers. I wonder -- I guess to go back to the risk-adjusted NIM at 12.4%. And maybe tie this to the usage of AI and the sophistication on your credit line increases and overall, your ability to take on more risk with lower losses. And now that you've seen maybe a full year vintage of people that you improve their offer with AI models and that you've been tracking them. Would you mind sharing some of the KPIs that you've seen? And to what extent they are tied to this 12% risk-adjusted margins because you evidently seem very confident about this being the new level. Not only you said it Rob right now, but also in an interview with Bloomberg earlier. And in the past, we have seen volatility in that number based on mix. And so I guess, yes, I just want to get to a little bit more of the KPIs that are driving that? To what extent is the AI models and get more comfort on that being a floor from here.

Yes. So thank you so much for the question, Jorge. I think a few things to say there. The first is that it certainly is the case that our sort of generated models and assisted models are more powerful than traditional logistic regression models that is incontrovertible. And we are tracking them though in the exact same way that we would have tracked our historical models. We're looking at the degree of predictability, the variance at the low end and the high end of the predictive range as well as the outcomes across both back testing as well as forward testing of that model in production.

So the macro point is that our risk approach and our credit monitoring hasn't actually shifted in this dynamic. And in fact, we are very happy to continue to have that same level of discipline going forward. I would correct 1 thing you said, though, where you said that 12% is a floor. I didn't say that it was a floor. I said we'd be in that ballpark. And so I don't want to overcommit there. But what we are seeing is that our strategy that has been partially enabled by stronger models to make intentional risk expansions that produce more risk-adjusted margin is paying off, and that's what we're seeing for the foreseeable future.

I think, Jorge, the additional factor always need to take into account is the increasing LDR and what LDR brings to the business model. This is something we mentioned a few times that if you look at our balance sheet, it continues to be very unlevered. You've seen this in Slide 16, how that LDR has evolved over the past few quarters. Q1 had a significant growth, but then a large cost of credit, mainly because of seasonality. As we go into Q2, we start seeing the benefits of a lot of the growth and the sort of optimization of the balance sheet. And there's a significant opportunity going forward.

We will continue to optimize the balance sheet, obviously, as we continue to grow our credit portfolio. And that just will simply be reallocating a lot of deposits that they are earning CDI or refi rate towards a much higher-yielding assets. And that obviously evolves directly into margin and into ROE. So that's a very strong dynamic that is also happening within the business model.

Operator, could you open the line for Mr. Eduardo Rosman from BTG Pactual.

Congrats on the numbers. I have a question for Dave regarding I think we read recently that you became a part of the Board of OpenAI. So it would be great if you could share with us how do you believe you can help open AI, but more importantly, how this experience might help you here at Nubank?

Sure. Thanks, Ed. So obviously, this is not OpenAI's earnings call. So I won't get in too much of a lot. But -- but I think effectively, we discussed very openly that internally and externally that we think artificial intelligence is the most important technology transformation in our history. And it will be one of the most technological impactful shift in any business in any industry around the world. So this is a global trend and a very powerful trend.

Businesses are going to see significant transformation. And it's early days, but we're seeing it very clearly inside Nubank. We've discussed here today a lot of the different applications from credit and underwriting, but even customer-facing and and we're in the middle of a significant transformation across our organization around how we're using, putting AI in front and center as a technological trend and what will deliver as effectively an advantage.

So from that perspective, for me, getting closer to a company like OpenAI obviously provides a very interesting insight. I personally also, I think it's a great opportunity to make sure that some of these great AI companies build something great for humanity, and I have a huge amount of respect for the OpenAI team and the way they are executing this mission. So I think it's a win-win. And clearly, I mean, it's early days, but I hope I can be able to contribute significantly to the way the organization is executing.

Operator, could you please open the line for Mr. Pedro Leduc from Itau BBA.

Thanks, everybody. Two questions. The first, a little more homework technical. The portfolio that you now have with clients under the government renegotiation program that appeared in Stage 3, maybe in your personal loan book. And I'm assuming with a little bit less expected default loss given the fall given the coverage -- just that's the homework question as I'm trying to interpret here the movements. And then the -- and the second, a little bit back to business. In the prepared remarks when going over the unsecured lending, you mentioned the pace. You've made some comments around that. If you can give us a little more color and also 1 on your latest update on how you are on the payroll, including private payroll.

Okay. Well, let me start with the technical question there. There was a small impact on expected credit losses, as I mentioned in my prepared remarks, but it wasn't material, less than $10 million. And it does appear in Stage 3 of lending is where it shows up. I do think that we are going to see a little bit more impact from Desenrola in Q3, but we've already seen more than 4/5 of that hitting us or benefiting us in Q2. And I hope that answers your question.

The portfolio that you now have under the program, it is a Stage 3 portfolio or starts in Stage 1.

Right. So that -- no, it's in a stage 3 portfolio.

Yes, sure. And on private payroll, we are accelerating month-over-month. We are slowly getting more comfortable with the product. There has been a significant progress in how the product is set up in the Brazilian market, the way companies are able to get the collateral, the way the systems are working. So as we've said many times, we found as metric. And as you made bet to go too fast too quickly on a product that has so many question marks. We think we're getting close to a system that makes a lot of sense, and we are accelerating. And ultimately, the lowest cost provider and whoever treats the customer best will win this market. And so we think we're extremely well positioned to be one of the leading players in this market over the next 18, 24 months. So we have -- and we think it's a good thing for the market.

The other part that is also starting to change slightly is counter to most people's intuitions, the first people that started taking these loans were very high risk. These were not the use cases that you would expect of people refinancing -- low-risk people refinancing high-cost debt. It was actually very high-risk customers. And so from that perspective, just didn't make a lot of sense for us to be opening the door for that as we understand the true level of risk. And there is a bit of a change in behavior. Customers actually -- good customer actually seeing the opportunity to refinance then this becomes a much more attractive product for consumers.

We would love to do the trade. There's been a lot of conversations that we are fearful of cannibalizing ourselves so that we don't want it to be successful. We will be super happy being able to refinance all of the customers that want to lower interest rates for a product that has that collateral, it would be very beneficial for us to have a more diversification in our portfolio. It would add more resilience. It would be less cyclical. So strategically, it's a product that we are very we think in the long run will be very good, and we are very well positioned to do it. We just are going at right pace, and we're getting more comfortable by the month.

Operator, could you please open the line for Mr. Uri Fernandez from JPMorgan. I have a question regarding the over $1 billion net income, and congrats on that, David. .

I was checking here in Banco, 1 of the leading banks in Brazil. And when I look to the retail operation, it was around $1.1 billion, right? So you are very close to that. And my question is how to continue increasing this net income, David? I know your ROE are higher, you have better cost to income you have this efficiency tailwind. But you are getting very big, right? So if you can help us understand if this is just an RPA normalization you have like your mature cohorts coming or it's about new products? Or is this about Mexico. So trying to congratulate you on the $1 billion, but I also ask how to keep growing this sizable profitability?

Sure. A couple of points. You are right that at some point, we're not there yet. At some point, we're going to run out of Brazilian customers. We have been saying that for about 4 years. We continue to get close to 1 million customers in Brazil every quarter. And so we're very -- sorry, every month, and so we're in very good shape in terms of user count. But there'll be a time where the number of Brazilian customers will decrease T.hen the opportunity is ARPAC. And as you'll see in Slide 6, the ARPAC expansion is pretty significantly. We've gone from 13 to 17. A lot of the incumbent banks, if you look at the ARPAC there are $40 million to $45 million we don't think necessarily will get to 40 or 45 because there's a lot of fees that we don't charge. There might be a lot of products that we don't offer.

But we'll certainly -- there is significant upside from the '17 and above. And when you look at all the cohorts customers that have been with us for 7, 8 years, they're already in the mid-20s ARPAC in the higher ARPAC. So from that perspective, there's going to be -- a lot of the opportunity in Brazil is to continue increasing ARPAC. Then we have the opportunity in Mexico and Colombia. As we've said, we think Mexico -- our base case for Mexico is a business that could be 60%, 70% of Brazil, if the utilization in Mexico happens in a real-time payment system works could be as big of Brazil. It's a lower population but has 30% higher income per capita and the ARPAC that we're seeing in Mexico are equal or above Brazil. So significant opportunity in Mexico.

There is also a significant opportunity in Colombia. We are -- our business there is significantly overperforming and we're very happy with the opportunity there. So there is a huge amount of avenues of growth going back a little bit to Brazil. What we do see is that we need to have a better segmented portfolio, and that's why we announced Croma. Now we have 3 core segments and value propositions to serve better other segments like super core and high income, where we already have a lot of customers, but we're not serving them well.

We have a low share of wallet. We gave them -- they came for a credit card. We gave them a very low credit limit. And because of the sophistication and improvement in our models, we're finally able to improve or create an underwriting capability for these segments and the value proposition for a lot of the products. And then finally, SME, we highlighted here on Slide 7. This is a blue ocean. This is a big opportunity. We are already the largest SME player in Brazil, over 6.5 million SMEs. We're just beginning to monetize that entire base and the cost structure advantage that we have, especially for the small businesses is pretty significant. So net-net, yes, over $1 billion in net income, but we're looking at a gross profit pool of $100 billion from that perspective and a lot of opportunities still to grow even in our core market like Brazil.

Super clear a if I may, just a follow-up on Croma. Do you have -- can you share any market share you have today and any goal you have for this segment?

I can tell you that we already have 3 out of 5 Brazilians in this bracket as customers of new. So it's not our opportunity necessarily we have to go out in the market and acquire these customers and spend a lot of money on marketing. They're already inside our base. We are -- we just haven't treated them as good as they deserve. We just haven't given them the product set and the bundle that they should need. And so that is the opportunity. There's a huge opportunity to increase the share of wallet within those 3 to 5 Brazilians that represent -- that exist in that base.

Operator, could you please open the line for Mr. the line for Mr. Joe Elafrom Autonomous.

Thanks, I noticed that the number of employees is down, it's down from 10,500 to 10,400 which doesn't sound like a big change, but it had been growing pretty quickly up until now. what are your hiring plans? And how is AI allowing you to use the workforce more effectively?

Sure. I mean I think -- we -- as you might remember, we announced getting back to the office end of last year. And that announcement caused a number of -- a meaningful amount of people to decide not to work in Nubank anymore. So there was some attrition because of that. We have rehired effectively a lot of that attrition. And so you end up being something about flat. Looking forward, we are seeing a huge amount of productivity increase with AI, and we're very excited about the potential that, that creates. But the list of things that we also want to do, the list of things that we want to build is also infinite. And so it just opens up a larger opportunity of things that we can try.

So net-net, I don't see us significantly increasing that number. I also don't necessarily see us decreasing the number feels more or less right, but it's certainly 10,400 employees that will be 2, 3, 4, 5x more productive over the next few years as we really integrate more AI with that. And then obviously, the output of that head count will be much larger than we were able to provide today. And so we're very excited about that.

And then staying on headcount, thinking about the expansion employees in the U.S. are pretty expensive. You're moving into the U.S.? How far do you see the head count shifting towards the U.S.?

I don't think it's going to be a significant change in the way we are distributed today with our majority of employees are in Brazil and Latin America. We are hiring more in the U.S. and specifically in certain areas where we are able to find a certain level of talent and experience that we just cannot find in Latin America, especially around AI. So we will increase the number of head count we have in the U.S., but it will not move the needle.

I mean it might go up from 1% to 2% total, and that's sort of the level of changes. But it was obviously, it's talent that we would be adding that would be very impactful. And then as we launch U.S. as a market, and we start growing that market, then there'll be more hiring in the U.S. and hopefully, we can be very productive and efficient as we launch our market and relying a lot on a lot of the AI capabilities that we're using.

Operator, could you please open the line for Mr. Mario Pierry from Bank of America. Let's move on for the next one. Could you please open the line for Mr. Daniel Vaz from Safra, please.

David, on your Slide 11, you show deposit and credit financing, price optimization is still in testing with -- so I was wondering on the credit card financing, where is the biggest price for you there? I mean, is to reprice the existing revolvers, maybe you're using personalized rates to convert more transactors who never did credit card finance before. So you want to offer them a cheap interest rate there. So trying to understand where is the biggest prize there for you in credit card finance? And second, on deposits, right? So your loan-to-deposit is very low, as you mentioned. So how should we read that primarily as a funding cost level? So do you want to bring your funding costs down, so you stimulate people to put deposits there on your platform or doesn't have to do anything with that. So you want to bring more deposits, maybe pay more with for people who doesn't have deposits today. So kind of understand that where is the biggest price for an AI applicable in these 2 businesses?

Sure. So -- just as a reminder, one of the most important metrics for us is Net Promoter Score, NPS or a number of different other metrics around product quality. And we seek to -- we think that the way our model works is that if we build the very best product in the market, then customers will come and financial results will follow. So a lot of this optimization is not necessarily about minimizing cost, but it could also be about optimizing quality. And so the sense or the opportunity is that whenever we have a price, be it a price for a loan or a credit product or be it yields that we offer in a deposit or truly any other product that has a price then every single customer will going to have a price which will maximize that equation of quality and cost, being able to offer higher quality at a lower cost. And so that is the analytical exercise that we're increasingly investing in.

Specifically on the deposit, we just get to an equation whether we -- it would be our decision to decide if we want to optimize cost. Then we would be able to optimize the funding cost, but we would know specifically what would be what we're giving up in terms of quality and competitiveness in that opportunity. So I wouldn't necessarily think in the short term that this will drive an improvement in funding costs because we might decide to reinvest all of those gains back into the customer, especially in countries like Mexico, where we're so early and Colombia and Brazil in some of these segments.

We want -- we are still very much on day 1, we're still very much on the challenging mode. We're not in the mode of optimizing for net income, we're increasing earnings. We're investing a lot in growth. We're investing a lot in improving our products and our customer experience. And a lot of what we can do with this new model is being able to make a better decision as we trade off quality with cost for that quality. .

Operator, could you please open the line for Mr. Mario Pierry from Bank of America, please. .

Congratulations on the quarter, it definitely was better than what we were expecting -- but 2 questions here from my part. So on the previous call, right, in the first quarter results, you guys talked about net interest -- risk-adjusted margin going back to the low levels of the second half of last year by the end of this year. So we were talking about 10.8% to 10.5%, and you jumped to 12.4%. So I'm trying to understand where is the surprise coming from what you guys were expecting? Is it that your credit models are better than you're able to grow faster than you expected? Or like because it is a big beat versus what you guys were expecting.

And then my second question is a little bit more technical, and I appreciate you guys showing the slide on Page 20 that shows the NPLs by income. But I was trying to reconcile that slide on Page 20, Page 17. Because on Page 17, you show that NPLs have some seasonality. And then when I look at this slide on Page 20, a it doesn't appear like there's much seasonality on that data. In fact, right, if we look at your NPLs, I think you showed July 25. So now has improved for every income segment that you showed. But then when we look at the overall NPL, we actually deteriorated 40 basis points. So -- does it mean that the entire deterioration that we're seeing and all the seasonality that we're seeing is coming primarily from your unsecured personal loans because again, credit cards are 65% of your loan book and that is not showing any deterioration at all.

Yes. Thank you so much for those questions. I'll start with the second 1 first. So on Page 20, as you're looking at the credit performance that we have relative to other banks in Brazil. Keep in mind that this is credit card only, of course, and the other graph is for the whole company, and it's smooth. So that's in the nice type at the bottom of the page here is that we're taking a rolling average, and that's why you're not seeing the seasonality that does actually exist in these numbers.

Going back to your first question, though, around the overperformance of risk-adjusted NIM. If you recall at the time of the Q1 earnings, Desenrola was not clearly laid out at that time. And so about 1/3 of that benefit relative to what we were expecting is coming from Desenrola, but 2/3 are coming from 2 things. One is just really solid credit performance across the board and in some cases, better than expected. And the other is the increase in our balances that we're earning yield in Q2 at the very beginning. That was driven by the growth in continuing to ramp up. And so that did slightly come in better than we expected, and we're happy to have it now. .

Okay. But just let me follow up then even -- okay, I see the footnote here that says you smoothed out the trends. But the starting point is higher than the current point for your NPLs? And when I look at your overall NPL, it's higher. So again, is it a deterioration primarily coming in the unsecured personal loans?

So it's -- I wouldn't quite characterize it as that as much as I would characterize it as a mix shift that we are seeing. And so what you see on Page 20 is essentially a disaggregated view of the portfolio by income bracket. And when you look at it that way, you do see this steady, if not decreasing performance across all 3 segments in Brazil. But when you look at our overall portfolio, there are shifts in terms of where we are lending money and it's primarily those shifts rather than deterioration within unsecured lending that's driving that increase over time. Does that make sense?

A little bit. But yes, we can follow up later. That's fine.

So think of -- yes, it's more of a mix shift rather than a dynamic where it's all coming from 1 product segment. And we can talk about it later .

Yes. And I think that the problem that I have is the -- it's not like seasonal, right? It's more like a changing mix, the volatility in NPL is more because of a change in mix rather than seasonal. .

Well, the seasonal is still there. It's more of this idea that if you look at Slide and you look at 90 plus over the past 2 years, the general trend is upwards, and that's being driven by the mix. That was my point.

Operator, please could you open the line for Mr. Craig Maurer Murer from FT Partners.

Question specifically for Rob. Having -- with your background, and new moving into the U.S. You spent a lot of time today discussing your data advantages in terms of lending, credit is a super power and so on and so forth. How do you think your models will hold up in the U.S. considering the change in demographics and how much legwork do you have to do to rebuild those models before you can have the same degree of confidence?

It's a really good question. And I think it dovetails nicely with our commitment that we've made that we are not planning to spend more than 100 basis points in our efficiency ratio on the U.S. entry. And the reason is it will take us some time to build up the same confidence in our credit risk models in the U.S. as we have in Brazil and Mexico and Colombia, where we've been operating for years.

The way to think about it is that the platform, the new performer platform for credit models and the credit risk expertise that we have in the company will translate very, very quickly across the border, but the actual data richness in building the experience of foundational testing and having the models in place that are specifically tooled for the U.S. market will take somewhere between 12 and 30 months, depending on the degree of maturation of those curves.

So our priority at the beginning of our entry into the U.S. market when that happens, will be to test learn, build out our data set and then be ready to expand once we have that same level of confidence there that we do in our core markets.

Okay. With that, we -- sorry, we now surpassed 60 minutes of this session. So we are now concluding today's call. On behalf of Nu Holdings and our Investor Relations team, I want to thank you very much for your time and participation in our earnings call today. Over the coming days, we will be following up with the questions received by our platform that attempted, we were not able to ask to make questions tonight. So please do not hesitate to reach out to our team if you have any further questions. Thank you, and have a good night.

The Nu Holdings conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Hello, and welcome to the Annual Meeting of Shareholders of Nu Holdings Ltd. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to David Vélez Osorno, Chairman of the company; and Beatriz Arruda Outeiro, Legal Senior Director of the company. The floor is yours.

Good morning, ladies and gentlemen. My name is David Vélez Osorno. I am both a Director and the Chairman of the Board of Directors of Nu Holdings Limited. On behalf of the company, it is my pleasure to welcome you to this Annual General Meeting or AGM of shareholders. It is 8:00 a.m. here in Sao Paulo between 7:00 a.m. Eastern Time in the United States. And in accordance with the notice of the AGM, I call to order this AGM of Shareholders of Nu Holdings Limited.

I will act as Chairman of this meeting, and Beatriz Arruda Outeiro, our Legal Senior Director, will act as the Secretary of this meeting.

Good morning. My name is Beatriz Arruda Outeiro. I'm Legal Senior Director of the company. Please note the agenda displayed on the screen regarding the items to be discussed at this meeting. Further, as we commence this AGM, I'd like to extend a special welcome and thanks to our shareholders. This AGM is held pursuant to a notice served on July 6, 2026 to the shareholders entitled to vote as of the close of business on June 27, 2026, being the record date for the AGM in accordance with the memorandum and Articles of Association of the Company. All documents concerning the notice of AGM will be filed with the records of the company.

The company has appointed Brian Heffernan, Computershare Inc. to act as inspector of elections at this AGM and Computershare will remotely tabulate the votes. I have received and submit to this meeting, a preliminary report of the inspector of elections from which it appears that there are no less than approximately 23 billion shares represented at this meeting in person or by proxy, which represents 94.30% of all shares in issue and entitled to vote at this AGM.

One or more shareholders voting no less than a majority in aggregate of all shares in issue and entitled to vote present in person or by proxy or if a corporation by its duly authorized representative constitutes the quorum of the shareholders, and therefore, a quorum of shareholders is present. Each Class A ordinary share issued and outstanding as of the close of business on the record date is entitled to one vote at the AGM. Each class B ordinary share issued and outstanding as of the close of business on the record date is entitled to 20 votes at the AGM.

I direct that the report of the inspector of elections be filed with the records of the company. I hereby declare a quorum of shareholders present at the meeting and that this meeting is now regularly convened and duly qualified to transact business.

With respect to voting at this meeting, the memorandum and Articles of Association of the company provide that voting will be conducted by poll vote. On a poll vote, every shareholder who is present in person or by proxy is entitled to one vote in respect of each Class A ordinary share held by him and 20 votes in the keys of each class B ordinary share held by him.

The matters to be acted upon by the shareholders are the following resolutions recommended by our Board of Directors. One, to resolve as an ordinary resolution that the company's audited financial statements and the company's annual report on Form 20-F for the fiscal year ended December 31, 2025, be approved and ratified; and to resolve as an ordinary resolution that the reelection of individuals listed from a to i as directors of the company. The nominees each to serve for a term ending on the date of the next Annual General Meeting of the members or until such person resigns or is removed in accordance with the terms of the memorandum and Articles of Association of the company be approved; David Vélez Osorno, Anita Mary Sands, David Alexandre Marcus, Diego Piacentini Douglas Mauro Leone, Jacqueline Dawn Reses, Luis Alberto Moreno Mejía, Rogério Paulo Calderón Peres, and Thuan Quang Pham.

Now we will proceed with the results of the balloting. Will the inspector of elections, please report the results of the balloting?

Mr. Chairman, the 2 ordinary resolutions have been approved as a result of the affirmative vote in person or by proxy of the holders representing a simple majority of the total voting rights of shareholders entitled to vote therein present in person or by proxy on such resolutions at the AGM, excluding abstentions.

I hereby declare that both the resolutions have been approved by ordinary resolution of the shareholders.

The final results will be announced in a current report on Form 6-K as soon as possible after this AGM. I pass the word to David Vélez Osorno as Chairman to close the deal.

All items of business for this AGM have now been completed. The meeting is now concluded.

This concludes the meeting. You may now disconnect.

Good evening, ladies and gentlemen. Welcome to Nu Holdings' conference call to discuss the results for the first quarter of 2026. A slide presentation is accompanying today's webcast, which is available in Nu's Investor Relations website, www.investors.nu in English and www.investidores.nu in Portuguese. This conference is being recorded, and the replay can also be accessed on the company's IR website. This call is also available in Portuguese. [Operator Instructions] [Foreign Language] [Operator Instructions]

I will now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer at Nu Holdings. Mr. Souto, you may proceed.

Thank you, operator, and thank you, everyone, for joining our earnings call today. With me on today's call are: David Velez, our Founder, Chief Executive Officer and Chairman; and Guilherme Lago, our Chief Financial Officer. All financial metrics discussed and presented today reflect our managerial P&L framework, which we introduced in our fourth quarter 2025 results. These managerial measures are important to how we manage the business, but are not financial measures as defined under IFRS and may not be comparable to other companies. The full reconciliation to the most directly comparable IFRS figures is available in our managerial P&L reconciliation report and in the appendix to this presentation.

We are aware that consensus estimates across the sell side reflect the mix of IFRS and managerial frameworks, and we encourage everyone to use the reconciliation report as a reference point for aligning models going forward. Unless otherwise noted, all growth rates discussed today are presented on a year-over-year FX-neutral basis. Today's discussion may include forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those expressed or implied. Please refer to the forward-looking statements disclosure included in this earnings presentation for additional information.

With that, I will now turn the call over to David. Please go ahead, David.

Hello, everyone, and thank you for joining us today. For several years now, our results have followed the same earnings-generating formula: a growing, more engaged customer base, monetized at higher ARPAC with a scalable, low-cost platform translating into outsized earnings. The first quarter of 2026 was another clean expression of that model.

Our customer base now stands above 135 million customers. In Brazil, we surpassed 115 million customers and solidified our position as the largest private financial institution in the country. In Mexico, we crossed 15 million customers, becoming the third largest financial institution in the market. And in Colombia, we delivered another solid quarter of net additions and are getting close to 5 million customers.

Despite typical first quarter seasonality, consolidated monthly activity rate held at 83% and expanded sequentially. In Brazil, we're approaching 100 million monthly active customers. Customer growth, combined with ARPAC expansion, which has expanded sequentially every quarter since we began reporting and now sits at around $16 per active customer, compounded into record revenue, reaching $5 billion for the first time in our history. The higher revenue translated into strong operating leverage in the quarter, leading to a record low efficiency ratio below 18%, a result that reflects both structural progress and some timing benefits that Lago will unpack shortly. This is happening despite our laying the foundations for our international expansion and accelerating an AI transformation that I will come back to in a few minutes.

On the credit side, 3 things: seasonality, growth, and mix drove higher provisions. This reflects our ability to continue gaining market share with compelling and resilient unit economics and do not suggest any signs of asset quality degradation in our portfolio. Understanding this difference is key for those following high-growth, credit-led fintechs.

We delivered a quarter 1 historical high net income of $871 million, compounding at more than 80% a year on an FX-neutral basis from 2022. With that as a backdrop, let me start with our biggest market, where we still have a long road ahead of us. Brazil is, by any measure, one of the most attractive banking markets in the world. Across just the products and segments we serve today, the addressable profit pool already exceeds $100 billion in annual gross profit and is expected to keep showing healthy growth for years to come. As we expand our product shelf and deepen customer engagement, the profit pool becomes even larger.

Even after a year of meaningful share gains, it's still day 1 for Nubank in Brazil. Our share of that pool stands at roughly 7% even though we're already the largest private financial institution in Brazil by customer base with the strongest brand and the highest customer satisfaction scores.

And in our second largest market, the runway is even bigger. The opportunity in Mexico is in many ways where Brazil was a decade ago. The profit pool of the products we want to serve consumers with already exceeds $40 billion in annual gross profit and is growing faster than most major banking markets in the world.

The banking system in Mexico remains structurally underpenetrated. Cash still dominates everyday transactions. Less than half of adults hold a formal credit product, and a meaningful portion of the population still lacks access to banking. Our share of that profit pool is still below 1% today, a fraction of where we are in Brazil and a fraction of where we believe we can go.

What makes this opportunity particularly compelling is the dual dynamic at play. We're not only taking share of the existing pie, we're also helping grow it, bringing simple, digital, transparent financial products to broader segments of the population that have historically been left out of the formal banking system. That combination is what gives us such a long horizon ahead, and the proof of that thesis is already starting to show up in the numbers.

The same earnings-generating formula I described at the start of our remarks is now unfolding in Mexico, only earlier in its curve. In 4 years, our customer base there has grown from just over 2 million to 15 million today, roughly 7x larger. ARPAC has nearly doubled even as we have onboarded millions of newer, less mature customers. Our efficiency ratio has come down by 78 percentage points.

And on the bottom line, we have moved from a $30 million quarterly loss to our first quarter of IFRS profitability, a milestone that arrived ahead of our own internal plan. Underpinning our operations in Latin America, including Brazil, Mexico and Colombia, and where we believe will further accelerate our impact in the region for years to come is the AI technology shift I referenced at the start of our remarks. Our ongoing AI transformation is a core priority of Nu. Some companies see AI as a productivity enhancement tool. That is useful, but it is not the real opportunity in our view. AI transformation is something different. It means we're designing from the ground up how financial products and services are manufactured and possibly distributed.

There is a parallel here to the bet we made when we started Nubank a little over a decade ago. We did not digitize a branch. We built a bank without branches. We're applying the same logic to AI. We're not just adding AI to banking, we are rebuilding banking around AI. This transformation is already underway and unfolding in 3 phases at different stages of progress. The first phase, AI assistance, is largely complete. We're reaching close to 100% utilization of AI tools among our employees across all functions of the organization. This enablement is driving productivity gains across the company, with engineering throughput up over 50% year-over-year, weekly token consumption nearly 10x higher than at the start of the year and testing cycles 90% faster.

The second phase, workflow reinvention, is in motion. The principle is simple. AI executes, humans hold judgment. Customer journeys are being rebuilt end-to-end, and new AI-native customer experiences will reach our customers this year, deepening engagement and expanding monetization. A number of teams at Nubank are already working on products and features that we had originally planned to launch only in mid-2027.

The third phase, the AI-native bank, is still early but the foundations are visible. AI Private Banker functionalities such as financial insights, payments, credit advice and debt resolution across the app are already serving more than 15 million monthly active users. nuFormer, our set of proprietary foundation models, are in production today for credit card decisioning in Brazil and Mexico and for unsecured lending in Brazil. We're now able to use real-time AI valuation for every personal loan request, priced and approved individually based on its predictive net present value in under 1 second. These capabilities have been a meaningful driver of the significant expansion in our credit portfolio over the last 12 months, enabling us to grow limits with resilience, not just speed.

And we believe Nu is uniquely positioned to win in AI-accelerated world, anchored by 3 structural advantages. First, our scale, first-party data, 135 million customers transacting on our platform every day, generating one of the largest, cleanest and most differentiated financial data sets in the world. Second, our proprietary technology stack, cloud native with core banking systems built internally, data unified across the company and the ability to move from experiment to production in days rather than quarters.

Third, our talent and culture, our world-class bench of employees for more than 50 nationalities with offices across 6 countries, all working under a single AI mandate, and one we keep reinforcing with the recent appointment of Carl Rivera as our new Chief Product Officer. AI is not an experiment at Nubank. It is reshaping how we build, how we decide and how we serve, and we're still very early in what this transformation will eventually deliver.

Taken together, this is the model we're running in 2026, deepening Brazil from a position of leadership, scaling Mexico and Colombia through their inflection points and making AI compound through every layer of the company, including investing further in our internationalization plans.

With that, I hand it over to Lago, our CFO, to walk you through the financial highlights of the quarter. Over to you, Lago.

Thank you, David, and good evening, everyone. Beginning with our consolidated credit portfolio. We ended the quarter with $37.2 billion, up 40% year-over-year on an FX-neutral basis and up 7% quarter-over-quarter. Growth was strong across all products, especially when the first quarter seasonality is considered. Credit cards, for example, grew 36% year-over-year on an FX-neutral basis. Unsecured lending grew 53%, reaching $10 billion in total portfolio. And secured lending grew 38%, keeping pace with the rest of the book and holding its 8% mix even with the setback from FGTS loans last year.

Now turning to deposits. Total deposits reached $42.4 billion in the quarter, up 22% year-over-year on an FX-neutral basis. Deposits in Brazil declined modestly due to seasonality, while Colombia kept growing. In Mexico, the deposit outflow reflects 2 specific dynamics. Number one, a sharper-than-expected reversal of seasonal year-end inflows. And number two, our deliberate decision to optimize cost of funds and very low loan-to-deposit ratios.

Now our consolidated cost of deposits closed at 88% of the interbank rate, slightly higher sequentially. Even though we saw improvements in the cost of funds in both Mexico and Colombia, this was offset by Brazil, reflecting the reversion of the fourth quarter seasonal effect. Year-end inflows tend to lend in short-tenure balances that carry low cost of funds. And in the first quarter of the year, these balances naturally migrate into longer tenure yield-bearing products. Now we remain very comfortable with our current balance levels and with our cost of deposits. We will continue to manage this franchise to build resilience, deepen customer engagement and preserve its attractive economics.

Moving on to our P&L. Net interest income reached a record $3.25 billion in the quarter, up 12% quarter-over-quarter on an FX-neutral basis. This expansion was driven by strong revenue growth across the franchise, combined with our credit portfolio expanding faster than our liabilities. This mix shift continues to optimize our balance sheet, lifting our net interest margin, or NIM, to 21.1%. Credit loss allowance, or CLA, closed at $1.79 billion in the quarter, up 33% quarter-over-quarter on an FX-neutral basis, mostly driven by 3 very specific dynamics already mentioned by David.

Number one, seasonality. Number two, portfolio growth. Number three, portfolio mix, which I will unpack in the next slides. As a result, our risk-adjusted NIM came in at 9.5%, down 100 basis points sequentially from 10.5%. We expect risk-adjusted NIM to move back towards the level we operated at during the second half of 2025 as the dynamics of first quarter normalize over the coming quarters.

With that, let me now turn to the 3 dynamics I mentioned that drove CLA this quarter and walk you through each of them. Starting with the first reason, seasonality. As you can see on the chart, our 15- to 90-day ratio is highly seasonal. It tends to peak in the first quarter and then resume its trend through the rest of the year. The first quarter 2026 print of 5%, up 89 basis points from year-end, is consistent with that seasonal pattern and broadly in line with what we saw in both 2024 and 2025.

On the right, 90-plus NPLs, our late-stage delinquencies continue to ease, closing at 6.5% in the first quarter of 2026, 10 basis points lower than the fourth quarter of 2025 and well below the 7% peak we reached in the third quarter of 2024. Both metrics came broadly in line with our own internal expectations for the quarter.

And I want to pause on that phrase because it's not incidental. The goal of our credit operations, it's not to minimize NPLs at a point in time. Instead, it is to optimize for resilient NPVs. NPLs only capture the cost side of the equation. They say nothing about the revenues we generated from the customers who perform. Pricing risk accurately is what really reconciles both sides. It is the mechanism by which attractive returns and predictable losses coexist. When the first quarter unfolds as our models anticipated, that is not a coincidence. It is an evidence that the pricing discipline is working well.

Now before we move on, I want to address directly a concern. We know it's top of mind for many investors. Brazil's household debt service ratio. We track this ratio closely, but the data tells a more nuanced story. The debt service ratio in isolation has limited predictive power over delinquency outcomes. What actually drives credit performance is a much broader set of income and employment dynamics.

Employment in Brazil remains strong, and the income tax exemption for earnings up to BRL 5,000 per month is a meaningful structural tailwind for a large portion of our customer base, directly improving disposable income and debt service capacity at the segment levels where we operate the most. And critically, as you will see in the next slides, our portfolio has a particularly short duration, which means that if we ever did see unexpected asset quality movements, we can react fast and we can react consequentially, and we can do so at a very granular level. Looking ahead, the Desenrola program is an additional tailwind expected to take form in the second and third quarters of this year.

Now to the second reason, growth. And what matters here is not only our credit portfolio, but our total exposure, a broader measure that includes the on-balance sheet credit balances and the off-balance sheet credit card limits we extend to our customers. Both things expand our IFRS 9 provisioning base. On the left side of this slide, you will see that total exposure reached $70.7 billion in the quarter, up 44% year-over-year on an FX-neutral basis. Every single dollar of incremental exposure carries upfront provisioning regardless of whether the customer ever draws on it.

And that brings me to the third reason, which is mix. On the right side of this slide, you will see that the incremental exposure we added this quarter tilted further towards credit cards and unsecured lending, which together accounted for 98% of the new exposure, up from 88% in the same quarter a year ago. Secure lending's contribution now stepped down, mostly reflecting the changes in FGTS loans at the end of 2025. And then both credit cards and unsecured lending, they carry higher expected losses than secured lending, which mechanically just lift the marginal provisioning we book.

Growth means a larger exposure, and mix means that the base is tilted towards higher yielding, higher losses products. Both things pushed the upfront expected credit losses build higher even before any change in underlying credit quality. Bringing it all together, the 3 drivers we just walked through: number one, seasonality; number two, growth; and number three, mix, are exactly what shape the moves in NPL 15-90 and in ECL allowance this quarter. There was no sign of credit portfolio degradation.

Let me walk you through each of those bridges. On the left side of this slide, the NPL 15-90 moved from 4.11% at year-end to 5% in the first quarter, an 89 basis points increase; 65 basis points came from seasonality, 17 from intentional risk expansions, 4 from product mix shifts and the small remainder from other effects. Now none of these drivers reflect the systemic deterioration in underlying credit quality.

Now on the right side of the slides, you will see that ECL allowance moved from $5.3 billion at year-end to $6.1 billion in the first quarter, an $800 million increase. The numbers here are worth pausing on. Why? Because portfolio growth alone contributed $423 million, more than half of the total build, which simply reflects the upfront lifetime loss provisioning we book under IFRS 9 as we expand the credit book. Seasonality alone contributed another $267 million, consistent with prior years. Together, growth and seasonality account for 86% of the entire allowance increase. Intentional risk expansion contributed $69 million; product mix, $16 million; and other minor effects, the small remainder.

Now not one of those components reflects deterioration in underlying credit quality. These moves reflect the deliberate scaling of our credit portfolio. As we said before, we manage this business not to minimize NPLs or cost of risk in any given quarter, but to maximize the long-term resilient risk-adjusted returns. We see that discipline at work in the cohort unit economics of our 3 most relevant unsecured credit products. Across all of them, revenues consistently outweighed funding costs and expected losses, leading to return levels that are best-in-class for retail banking.

With a significant buffer, these portfolios remain NPV positive even at substantially higher levels of expected losses. And the short duration of these portfolios is worth pausing on. Why? Because it means that if we ever did observe an expected asset quality movement, we can react fast and we can react decisively. And we can do so at very granular levels well before they become a systemic issue.

We are not a loan book lender waiting quarters and quarters to see the impact of a credit policy change. We see it in days, and we act on it immediately. That is what grounds our strategy. Beyond the unit economics, we also hold considerable buffers in the balance sheet. Our total coverage stands at 16.2% of the portfolio, roughly 2.5x our entire 90-plus delinquency balance. And we are adding to that buffer each quarter. Our gross CLA against the new 90-plus NPL formation closed at 153.8%, which means the provisions we book are running ahead of the new NPL forming. That is balance sheet engineered for resilience, and one that lets us grow the franchise from a position of strength.

That balance sheet resilience that I've just mentioned flows through the gross profit line, which closed at $1.88 billion in the quarter, up 27% year-over-year on an FX-neutral basis. This quarter's mix reflects the elevated CLA we just walked through, which directly reduced credit's contribution and brought float to roughly 40% of the total.

Beneath that quarterly seasonal effect, a multi-quarter trend of genuine diversification continues. Our credit business, our float business and our fee business have been scaling and balancing each other. And our model allows us to build a more diversified gross profit base and ultimately, a higher quality earnings profile overall.

Now turning to efficiency. With net revenues outpacing operating expenses, we continue to deliver operating leverage in the quarter. Our efficiency ratio improved this quarter to 17.6% on a reported basis and 16.6% at the core, which excludes our return to office investments, our international expansion and our investments in AI infrastructure.

The first quarter came in better than expected for 2 reasons working together. Number one, revenues accelerated faster than we anticipated, driven by both ARPAC outperformance and continued portfolio growth. Second, OpEx came in below plan. And here, it's worth pausing to discuss why. Roughly 1/3 reflects structural efficiency gains that are durable and compounding, mainly AI-driven improvements in operations and collections, software platform consolidation and hiring discipline. Now the remaining 2/3 reflect timing items that will normalize in the next quarters, including real estate and marketing phasing. So the 17.6% efficiency ratio should not be extrapolated as our run rate.

But even accounting for those normalizations, we expect our consolidated efficiency ratio for the full year of 2026 to land at approximately 20%, broadly in line with where we ended 2025. And while our core efficiency ratio continues its natural downward trend, we remain confident in the attractiveness of our investments in return to office, U.S. expansion and AI infrastructure.

The positive effects of operating leverage and financial leverage continue to flow through the bottom line. Net income reached $871 million in the quarter, the highest ever for our first quarter and up 41% year-over-year on an FX-neutral basis.

Now I want to be direct about our effective tax rate, or ETR, because we know it may be a focus. The 8.7% IFRS rate this quarter reflects structural changes we have been making to our global operating and corporate structure. It is not a one-off, and it's not an accounting adjustment. It is a recurring structural feature of how we operate. The first quarter rate is naturally lower than our full year rate because it reflects some of the seasonal patterns we discussed earlier in this call.

For modeling purposes, we expect our IFRS ETR for the remainder of 2026 to converge towards the 15% to 20% range. Our managerial ETR, which we believe is the more economically meaningful comparison, should converge towards the 30% to 35% range, which is broadly in line with peers in the region.

Now the broader point is this. We are absorbing intentional investment headwinds in the OpEx line, and those are being more than offset by structural improvements in our ETR. The net result is a net income trajectory that remains durable and compounding, which is the right lens through which to assess the earnings power of our business.

Now to wrap it all up, this was another quarter that demonstrated the durability of our business model. Number one, a growing and engaged customer base. Number two, an expanding credit portfolio, growing profitably and resilient. Number three, a more diversified gross profit base. And number four, one of the strongest balance sheets in financial services.

With that, I will pass it over to David for his closing remarks.

Thanks, Lago. Nubank is incredibly well positioned to continue strengthening its place as Latin America's leading digital bank. While our consumer base is large, our total market share is still small. And that gap represents a long and visible growth runway in our core markets. This remains our #1 priority.

But we continue to have conviction that the digital banking thesis we started to execute in 2013 is a global thesis, not a local or regional one. First principles reasoning shows our advantages [ travel well ]. Our cost structure is 20x to 30x more efficient than the incumbents that still own 90% of the world's banking market.

Our technology gives us the agility to move fast in any environment. Our differentiated approach to credit gives us the tools to compete and grow within a segment that represents over 70% of the world's consumer banking profit pool. And our consumer obsession allows us to build relationships with fans, not just customers, creating one of the strongest and most authentic consumer brands wherever we operate. That is why we are excited to be expanding our model to the U.S. deliberately and at a measured pace, treating it the way we treat every new market, as a call option.

We invest a relatively small amount of capital and resources while we protect our core. Once we see product market fit, we're ready to scale. To be precise, the maximum OpEx headwind we expect from U.S. investment in each of 2026 and 2027 is less than 100 basis points on our consolidated efficiency ratio. And this is inside the 20% efficiency ratio level Lago mentioned before. For a company at our scale, that is quite affordable.

Beyond that, any additional investment is explicitly contingent on clear evidence of product market fit and a credible path to profitable scalability. Even in a scenario where we do not find product market fit, the cost to you as a shareholder is less than 100 basis points on our efficiency ratio, temporary and fully absorbable without touching the trajectory of our core businesses. The upside, if we do find product market fit, is a second Nu. We have seen this movie before in both Mexico and Colombia. The asymmetry between a bounded downside and an uncapped upside is at the center of our investment thesis in the U.S. and potentially, the world. And it does not change our long-term trajectory on efficiency.

With that, let's open it up for questions.

[Operator Instructions] I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer.

Thank you, operator. Could you please open the line for Mr. Jorge Kuri from Morgan Stanley?

Congrats on the results. And really much appreciated the incredible detail around delinquency and credit losses and provisions and expenses and sizing the U.S., I think that's going to go a long way in helping people understand the story better. So thank you.

My question is on an announcement, and I really don't have any questions on the quarter, sorry about that, but I did see an interesting announcement in the press that you're launching an SME-specific product in Brazil. And so I wonder if you can maybe talk about it, what type of products, how they're different from what your competitors offer? What is the edge, the moat that you guys are using in SMEs? And dream the dream, what size can this business be to you overall?

Thanks, Jorge, for that question. I actually think this is probably one of the most underappreciated opportunities we have at Nu. We should be speaking more about it, but we're not. So thank you for asking the question. The reality is we've kind of silently have built the largest SME base in Brazil with our 5 million SME customers effectively built with 0 customer acquisition cost. Since Brazil has a very large number of SME, a significant percentage of employment in Brazil, something like upwards of 70% is -- operates in small businesses. A very large percentage of our 110 million customers have their own businesses. And so we were able to cross-sell our SME product to them, and that took us at a 0 CAC to build this base of upwards of 5 million customers.

We've invested increasingly in building better the product savings account. Initially, we now crossed over 2 million credit cards for the small business. We recently announced what you probably saw is now a number of new lines of credit, both secured and unsecured. Some of them are using some of the government-available programs where entrepreneurs are able to use certain government guarantees to get loans.

And we see a blue ocean in that space, really, the kind of comparative advantages that we have on the [ FS side ] on the individual side applies to the SME. This is a very underserved segment. And I think we're also -- while we began at the base of the pyramid with a very small micro entrepreneurs, we've been slowly going up the base and starting to serve companies that are -- have more than 10 to 15 employees.

So I'll leave at that for now, but we have an ambitious plan on that space. We -- it's -- there's a lot of scarcity in the entire environment. It builds a lot of loyalty with our consumers since they get to back both their businesses and their individual in the same place. And it brings pretty significant advantages on our flywheels.

Operator, could you please open the line for Mr. Yuri Fernandes from JPMorgan?

Everybody, congrats also here on the presentation, very clear. I have one regarding asset quality. And maybe 1 week ago, there was a podcast with Lago, [ Jeremy and Tyler ] to discuss asset quality. And I think one of the highlights in the podcast was how to read a good or a bad quarter for asset quality, right, especially regarding coverage formation and all those metrics.

And here in this quarter, it looks like, kind of an introduction for the quarter, in my view. Because we had a quarter that the company did a lot of provisions, right? The coverage went up. The new NPL formation when you look at the amount of coverage was over 150%. So my question here is, is Nubank being a little bit more conservative and building more reserves, maybe just to show the market that you have a very strong balance sheet? Or no? Or are you seeing a worsening outlook? Are you seeing something that we are not seeing? I guess, Lago already mentioned that he is not seeing a worsening, and the presentation was clear on that, but just reinforcing this message and trying to link with the past week's podcast.

Thanks so much for the question. Look, we feel that our balance sheet is fairly robust, and we try to be extremely conservative in how we build our provisions over time. But I have also to say that the provision that we have been doing over the past quarters, they do not reflect any directional outlook that we have on the credit cycle of each of the markets in which we operate.

The way that we have tried to do credit underwriting and consequently, to do credit provisioning is one where we always assume that the future will be worse than the past, irrespective of where any of us think we may be in the credit cycle. And then for each and every single cohort, we have the stress test whereby that cohort has to withstand a fairly material credit deterioration and still be kind of an NPV positive.

And then the additional disclosure that we are providing that may be helpful to address your question, Yuri, if you go to Slide 18, you can see the unit economics of our 3 core unsecured credit products, namely credit cards in Brazil, unsecured lending in Brazil and credit cards in Mexico, right? They account for the majority of our unsecured exposure. And I would underscore 2 things. First, if you go through the unit economics, it's kind of a healthy unit economics in our view. But more importantly, if you take a look at the ratio between losses and the net margin, you can see that they can withstand a lot of risk worsening and still being NPV positive.

The second thing I would underscore is the duration, right? If you take a look at the duration of each of those portfolios, we operate intentionally with much lower duration than the average of the market. This is a feature, this is not a bug. Why? Because it allows us to navigate with lots of agility at a very granular level.

All this to say that we are provisioning conservatively as we have provisioned in the past. Nothing has changed. We are not provisioning more or less because we have a directional view on the macro or on the micro, but we continue to provision and underwrite with what we believe to be a fairly healthy resilient buffer across every single segment that we do.

There are two things that I believe, Yuri, you have written extensively in your reports that we have not yet taken into account in credit underwriting and provisioning. The first one is the income tax exemption or reduction that has been announced in Brazil at the beginning of this year. That basically benefits consumers with up to BRL 7,400 per month of income. It may very well be a tailwind for us. It's hard to calibrate the magnitude, but that has not been taken into account in the provisions and credit results for.

The second one is the Desenrola 2.0 that we briefly mentioned and you also wrote about it. That, I think can be a fairly important kind of a renegotiation tool sponsored by the federal government for our customers, which we believe can be, for Nubank, either neutral or positive.

No. So basically, I guess, if I can summarize, first quarter is usually seasonal, higher provisions. Following the pattern, I guess, you mentioned this on your remarks, maybe cost of risk moves a little bit lower. Margins are higher. So risk adjusted, maybe the trajectory should be more positive going forward. Do you agree with the summary here?

I do. And I think we even mentioned a bit in the opening remarks, if you go through kind of Slide 14, Yuri, you can see that the risk-adjusted margin contracted from 10.5 to about 9.5 mostly because of the additional CLA in the first quarter, which does not indicate any sign of credit deterioration. And therefore, once seasonality goes out, you should see risk-adjusted NIMs converging back to the levels where it was towards the end of 2025.

Operator, could you please open the line for Mr. Eduardo Rosman from BTG?

Hi, everyone. Look, I do see local Brazilian investors today being much more constructive than the foreigners regarding the investment story, right? They are less concerned about asset quality, more positive on the expansion into the U.S. So I just wanted to hear your thoughts based on your conversations that you have, right? Do you think that this is because maybe local investors were the ones skeptical at the time of the IPO? Or -- and naturally, you delivered a lot, right? Or maybe -- I don't know, maybe foreign investors, they are more concerned about AI, disruption risk and maybe because they never saw a digital bank really succeeding at scale in the U.S. So trying to understand here, based on the conversations that you've been having with investors, if you can share your thoughts with us?

I wouldn't go as far as segregating kind of local versus foreign investors or Brazilian versus non-Brazilian there. But there are, I think, a few topics that are top of mind for many of them. The ones that I would highlight first is kind of asset quality.

So I think when Nubank was founded 13 years ago, the bank had a fairly strong thesis and hypothesis on its ability to do credit underwriting at scale throughout multiple credit cycles in Latin America, which is one of the most volatile regions of the world. It was a hypothesis we couldn't prove at that point in time. You fast forward the move 13, 14 years, and I think we can both in Brazil, in Mexico and in Colombia, already now clearly highlight that we have developed the ability in terms of process, systems and talent to be able to do credit underwriting in a resilient manner at scale.

And I think the velocity to which Nubank has been able to gain market share has now encouraged or impressed some of them. So I think the credit underwriting capabilities of the bank and concerns with asset quality will always remain and they should remain because for any kind of digital bank that has been able to attack credit, we will always have credit risk first in our priority list. But I think at this point in time, let's say, across most of the investor spectrum with when we speak, that has been more of a common theme.

The second question that I would say that is more polarizing is on our international expansion, specifically to the U.S. On one hand, Rosman, you do have investors that are extremely bullish on our ability to basically break into what is simply the largest retail financial services market globally, right? And there are key and relevant pockets of pain points on consumers there that a digital bank franchise can attract.

On the other hand, you have investors, they are more skeptical about this. At this point in time, we have deliberately chosen not to fully disclose the go-to-market strategy that we want to have in the U.S., mostly for competitive reasons. But I think what we can know -- and David tried to address this in his closing remarks, provide the comfort to investors is that we will be very deliberate and we will stage the deployment of capital and the deployment of talent and never putting at risk, our ability to execute in Latin America. So it's more of an attempt to balance the downside that hopefully will allow investors to more clearly identify the asymmetry of this bet.

And finally, the third one that I would say that it kind of has an even more heterogeneous assessment is the role that AI has been playing and will continue to play in digital banking or in banking in general, right? So a lot of companies have been talking about their efforts to kind of use AI. We have the first time, in the opening remarks of David, prove that we have been able to use AI to deliver impacts and results, not efforts. So a material growth of our customer base and credit underwriting hinges on our success to kind of embed AI across how we manage the company. A material improvement in our efficiency ratio hinges on our ability to fully embrace AI. And there's a ton of additional things for us to do, and we are very confident that we have the capabilities to continue on that front. So 3 points, Rosman: asset quality, internationalization and AI.

Thanks a lot, Lago.

Only thing I'll just add to everything that Lago said on the internationalization is that it's interesting that every time we've launched a new country, the locals have been skeptical. When we launched in Brazil, the locals were very skeptical. When we launched in Mexico, the locals were very skeptical. And the capital came from the foreigners.

And so sort of the same thing kind of repeats, sometimes being a local is a little bit of a blessing. Sometimes, it's a little bit of a curse because if you're a local by definition, it's very hard for you to reimagine how things can happen differently. You are too consumed by the status quo. So I definitely do not want to minimize the challenge that a country like the U.S. is going to be -- is extremely -- will be clearly challenging. There's a lot of very competent competitors. But we think we have an insight, and we'll see how that goes. The good news is that if we're wrong, it's a little loss. If we're right, it's going to be a huge opportunity for us.

Operator, could you please open the line for Mr. Daniel Vaz from Safra?

Congrats on the results, and thanks for the insightful presentation. David, in the present [indiscernible] agenda for the next years with AI transformation, Mexico and U.S. expansion, and so on and so forth. But let me ask you about Brazil. How specifically the team is looking at Brazil, right? So your incremental exposure is again on unsecured products. And all your competitors are trying to focus in on exactly the opposite, like they're trying to grow in secured loans, private payroll.

So I guess my question is, how should we read that, right? So is it -- we realize that we can extract much more value and returns from these unsecured products compared to our peers, and we'll try to focus the most on it and dominate the market, especially the mass market. And as a follow-up, how should we think about the secured products like the private payroll loans? So if you can answer that, it's very helpful.

Of course. And it's a great question. And that's why I think we wanted to -- if you go back to Slide 7, we wanted to -- this is a slide I would like to use maybe at least once a year to kind of anchor people on the opportunity. And to remind everybody how early it is, this story, even for us in Brazil, even though we're already -- in terms of number of customers, we have over 110 million Brazilians, and we're the largest private financial institution in the country.

But in terms of profit pool, we only have 7%. And I think the answer to your question is really the growth opportunities everywhere. In unsecured loans, there is a lot of growth ahead. We only have about 8% market share, but we have something like 25%, 30% market share of new originations every month. So we have a disproportionate amount of market share gains every month.

In secured loans, we are tiny. We started later, as you know, we've been kind of around for about 1.5 years, 2 years. Operationally, it's much more complex, especially on the public, what is called public payroll, [ consignado ]. There's been a fair amount of contracts that we needed to sign with the municipalities, and there is a fair amount of integrations that need to happen.

But if you look at the growth rate we're seeing in secured loans, it's growing pretty significantly as well. And we think that the growth in secured will be -- will continue to be even in something like FGTS, which we launched about 2 years ago, we became the largest FGTS provider, which is fully secured in about 18 months. Obviously, the product was restructured by the government.

But anyway, long way to say that the opportunity, the growth opportunity is in both, and we continue to see both. On private payrolls specifically, we've discussed that we've been slower at growing that, and that has been by design. Here, I think we have just a little bit of a different point of view than a lot of other players in the market. We think that this product began with more risk than people anticipated because there was -- there were a number of different points in the chain. And especially with integration with DataPrev and some of the providers that were untested. There were a lot of flows like what happens when employee goes from company to company that was completely untested.

And so we just took a more careful approach. And I think yes, we'll see how that goes, but we're seeing 10% to 15% for payment default. That's a very high FPD. That's a very high risk for supposedly, a secure product. We also decided not to put interest rate too high. We don't want to be charging too high of an interest rate for these products because they are supposed to be secured. And we thought that there was a lot of regulatory risk. And in fact, there is now a conversation about capping pricing, which is going to hurt more, the players that were too fast, pricing very high.

So we think in the long run, this is a winning product. We think in the long run, this is going to be great for customers to be able to have that security. And in the long run, we will also -- will stand ready to win this market with the same advantages that we have of data, of consumer trust, of cost to serve also apply for secured loans. But here, we decided to just be a little bit more careful and go a little bit slower as we measure them.

So long answer to say, there is no preference necessarily here. This is a wide open market. We're very well positioned to gain -- continue gaining share across the board, even in credit cards, which has been our first product. And so that's why we just say that this is sort of still the first minute of the first half in Brazil.

Operator, could you please open the line for Mr. Marcelo Mizrahi from Bradesco BBI.

I have two questions. First one is regarding the efficiency ratio. So you guys were saying that to target at range to achieve 20% efficiency ratio. So now we are below this level, just to understand, just how we can predict that. So how to forecast that looking forward? First one.

And the second one is about the private payroll. If you guys have any update in terms of the view of Nubank looking to this product and the possibility to this product to bring more clients or even some impact that could bring on the NIMs on the margins?

Thanks so much for the question. I'll take the first one, and we can maybe refine David's last response on the private payroll loan. But the first one was about efficiency ratio. So I will draw your attention to Slide 21. And you can see that we have had kind of a positive trajectory on efficiency ratio overall.

Now last quarter, or last call, we did mention that we were making deliberate investments in 3 fields: return to office, internationalization, and AI infrastructure. And those investments would be kind of a headwind to our overall efficiency ratio. And therefore, we wouldn't be able to get the same level of efficiency ratio gains over time that we saw over the past 2 years.

We still believe this is going to be the case, but I wanted to kind of unpack the performance in the first quarter a little bit more. So in the first quarter, you can see that we got kind of a 17.6% efficiency ratio. It was slightly better than even us expected there, but I would underscore a few things. First, about 2/3 of this kind of overperformance in efficiency ratio in the first quarter was mostly due to timing. What do I mean? It would mean kind of operating expenses that would be incurred in the first quarter, but will likely be incurred in the subsequent quarters of the years. Examples, some marketing investments, some real estate, then it will be tied to the return to office.

Now about 1/3 of the overperformance is truly structural. They are mainly coming from some of the operation gains driven by some of the AI investments that we are making across the board, from BPOs to software consolidation to enterprise functions. And those will continue.

The second thing that I would highlight, as we mentioned in the last quarter that we would start breaking down the efficiency ratio in two. One is the consolidated efficiency ratio, which we can see is 17.6%. But also is the efficiency ratio that we would have had, had we not decided to make the investments in RTO, internationalization and AI infrastructure, which in this quarter will be 16.6%.

Now going forward, I think one should expect that our 2026 efficiency ratio will converge towards approximately 20%, which is largely in line with where we landed last year. And this 20% envelope includes those kind of strategic investments that I alluded, both the RTO and U.S. expansions that David touched as well.

Your second point was on private payroll. I think I will -- David has covered kind of a little bit of the strategic reason on our choice to speed it up more or less. The one point that I would just underscore, if I got your question correctly is we continue to believe that as the lowest cost manufacturer of this industry. We will be able to provide kind of this product at very competitive levels. And we are very bullish about this product specifically because it will allow us to have access to customers and data that we have been unable to do as we don't have a corporate business.

So if you are today an employee of a large corporate in Brazil, most likely, that corporate has a payroll agreement with 1 of the top 5 incumbent banks of the country. And we historically have had some limitations on the amount of data that we could get from those customers by virtue of not being able to offer that payroll services.

Now with private payroll, we can have access exactly to the data, by which I mean how much money you make, for how long you've been working at the company, what's your expected severance cost. So we basically closed entirely, the gap that we could have had on that specific segment against incumbent banks. So we will likely drive more customer acquisition, better credit underwriting, better cross-sell.

Operator, could you please open the line for Mr. Tito Labarta from Goldman Sachs?

Great job addressing a lot of the key concerns with the credit quality and expenses. I guess my question, a follow-up a little bit, I guess, on credit quality. I think part of the concern also is your relative exposure to the lower income segment. So the question is more, how is the high income segment going? I think that's still a big opportunity for you as well. Anything you can comment on that?

And also one follow-up on the secured lending side because I know you're not growing the private payroll now. And you still had the headwind from FGTS in the quarter, the full quarter impact. So I was a little surprised with the strong growth in the secured lending quarter-over-quarter. I imagine that's public payroll, but just to talk a little bit about that opportunity on the secured lending side? Not just private payroll, but I think public payrolls and other segment where you have a lot of opportunity to grow.

Let me try to address some of your questions in order. So I'll start with what you call the high income, which I would mention kind of in the 3 segments that we have in the bank, so mass market, super core and the high income. Look, we have been kind of quite encouraged by the progress that we have made across the more affluent segments. Both the super core and the high income, which I think all our banks would probably core more of a mass affluent than the high income, which, just to be clear, those are customers who earn anywhere between BRL 5,000 to BRL 12,000 super core and more than BRL 12,000, the high income.

If you take a look at not only the number of products that we have been launching with the new UV credit cards, the [indiscernible], the 3 kind of international seen, the cashback, [indiscernible], so there's a lot of new products and features that we have been launching. And all of those things have been translating in not only more customers, but also more engagement, right?

So out of the high income, we now have about 2 out of every 5 high-income Brazilians are customers of Nubank. The customer base has grown by about 24% year-over-year based at the end of the first quarter of 2026, with now monthly credit card kind of volumes up 42% year-over-year, assets under custody by like 36%. So we are seeing lots of traction there. In super core, 3 out of every 5 Brazilians are already customers of the bank, again, kind of TPV and AUC all growing between 35% and 40%. So happy with the traction that we have had over the past now 2.5 years.

Now back to your question on credit exposure, you're absolutely right that still the bulk of our credit exposure is in what we call mass market. That's a bigger exposure than what we have in kind of the more affluent customers. And then when you look at Slide 12, you will see the evolution of unsecured and secured. And in spite of the headwinds from the new regulations of FGTS, you can see that we continue to grow secured, as you pointed out.

But I would underscore one thing, Tito. As the duration of the FGTS portfolio is relatively long, so more than 36 months, it means that even if we decrease the origination, it takes some time for that to play out entirely in the balance, and that's the fact that you may be seeing. Now to counter the slowdown in originations of FGTS, we are seeing an increase in the originations of public payroll loans, and we do expect that we will also see a pickup in the originations of private payroll loans. So I would not expect that the volume of secured cards will suffer too much throughout the year, irrespective of the FGTS regulations.

To your question, Tito, on high income specifically. We don't disclose the numbers particularly, but the growth of -- the PV growth for high income for us is one of the fastest segments that we have, growing upwards of 40%. So way faster, way higher than what we're seeing in mass market. And a lot of the benefits of these new models that allow us to give higher exposure. If you see the big growth in higher exposure is coming also disproportionately for being able to give better limits to high income population, which historically has been something that we hadn't really gotten, right, since our models were very much focused on mass market.

So from this exposure growth, there is a disproportionate amount of high income. And obviously, that's good news because this is a segment where we have a very large -- 2 out of 5 Brazilians with high income are already customers of Nubank, and we have a significant opportunity to continue growing that share and diversify the customer base that we have.

So thank you, everyone. We now have approached 60 minutes of the call. So we are now concluding today's call. On behalf of Nu Holdings, our Investor Relations team, I want to thank you very much for your time and participation on Nu earnings call today.

Over the coming days, we will be following up with questions received tonight, but we were not able to answer. And please do not hesitate to reach out to our team if you have any further questions. Thank you, and have a good night.

The Nu Holdings conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good evening, ladies and gentlemen. Welcome to Nu Holdings conference call to discuss the results for the fourth quarter of 2025. A slide presentation is accompanying today's webcast, which is available in Nu's Investor Relations website, www.investors.nu in English and www.investidores.nu in Portuguese. This call is also available in Portuguese. [Operator Instructions] [Foreign Language] [Operator Instructions]

I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer at New Holdings. Mr. Souto, you may proceed.

Thank you, operator, and thank you, everyone, for joining our earnings call today. With me on today's call are David Velez, our Founder, Chief Executive Officer and Chairman; and Guilherme Lago, our Chief Financial Officer. Starting with this quarter's results, we're introducing a new managerial reporting framework, including managerial indicators and our manager P&L.

All financial metrics discussed and presented today reflect this framework. Lago will provide additional details during his presentation. These managerial measures are important to how we manage the business but are not financial measures as defined under IFRS and may not be comparable to other companies.

A full reconciliation to the most directly comparable IFRS figures is available in our managerial P&L reconciliation report and in the appendix to this presentation. Unless otherwise noted, all growth rates discussed today are presented on a year-over-year FX neutral basis. Today's discussion may include forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those expressed or implied. Please refer to the forward-looking statements disclosure included in this earnings presentation for additional information.

With that, I will now turn the call over to David. Please go ahead, David.

Hello, everyone, and thank you for joining us today. 2025 was a fantastic year for Nubank, and Q4 '25 truly showed the strength of our business model. During the year, effectively, most of our key indicators from customer law to scale, engagement and profitability moved in the right direction, while we continue to invest significantly on long-term growth.

We closed the year with 131 million customers adding 17 million net new customers and maintaining an activity rate of 83%. Scale and engagement remained the foundation of our model. ARPAC reached $15 per active customer, up approximately 9% quarter-over-quarter and 27% year-over-year, driven by deeper monetization across our platform. As a result of strong customer growth in higher ARPAC, revenues in Q4 '25 reached $4.9 billion, up 45% year-over-year.

Gross profit in the same period reached nearly $2 billion, up 38% year-over-year. At the same time, we maintained discipline with an efficiency ratio of 20% under the new methodology even as we continued investing in our core markets and new technologies. Net income reached $895 million, translating into a record 33% return on equity, while maintaining strong capital buffers and scaling our credit portfolio responsibly. These results reflect the priorities we set and the discipline of execution throughout the year.

One way to see this execution is to look at what we put in customers' heads. Across our markets, we launched more than 100 new products and features. More important than the number was the intent. Each launch aimed to deepen engagement to expand access and strengthen unit economics. Individually, these initiatives are incremental. At scale, they compound. In payments, we have both PIX with AI-enabled features, launched instant payments in Colombia and expanded Mexico's cash in and cash out network to more than 30,000 physical points.

In credit, we expanded responsibly launching new payroll loan modalities in Brazil, the subscription-based credit card in Colombia, and rolling out programs like fresh start to help engage customers regain access to credit. We also introduced the under 18 credit card beginning to build financial relationships earlier in customers' lives.

On the affluent segment, Ultravioleta continued to strengthen our value proposition. For SMEs, we scale credit products and launch tools like charging assistant to help small businesses manage cash flow. Behind this execution was a clear set of priorities, cutting our allocation of capital and talent throughout the year. As you may recall, our top priority is to build the largest and most loved retail banking franchise in Latin America.

In 2025, we made measurable progress across all three markets. In Brazil, we became the largest private financial institution by a number of customers, reaching $113 million with an activity rate of 86%. Scale and engagement continue to reinforce each other. In Mexico, we reached 14 million customers, advanced our banking license process and roughly half of our customers received their first credit card through Nu, reinforcing our role in expanding access to credit.

In Colombia, we surpassed 4 million customers and the subscription-based credit card significantly increased approval rates while maintaining healthy unit economics. In our digital ecosystem, we reached over 12 million unique active customers across initiatives such as Nu Cell, Nu Pay and Nu Travel.

Adoption remains early relative to our base, but growth and satisfaction indicators are compelling. On AI and global expansion, our foundation model, Nu Former is now in production for credit decisioning in Brazil and in testing across additional use cases. AI is already improving underwriting, conversion and service quality with PIX with AI surpassing 10 million monthly active users. In January, we also received conditional approval from the OCC for a U.S. national bank charter. Overall, we delivered on our 2025 priorities while strengthening the foundation for what comes next.

Let now turn to how we're thinking about 2026. As we enter 2026, we see this as an inflection year. The year we begin transitioning from a Latin American leader to a global digital banking platform. Our priorities are organized around three pillars. First, winning in our core markets. Brazil and Mexico will continue to absorb the majority of our capital and management attention. In Brazil, we will deepen leadership in the mass market, expansion of wallets and ARPAC, strengthening small businesses and grow or high income presence through Ultravioleta.

In Mexico, finalizing our banking license process is critical as it unlocks the next phase of credit growth and customer debit. In Colombia, we will continue scaling credit and bringing a number of Nu products. Across all three markets, our focus remains on experience, principality and monetization. Second, strengthen foundations for international expansion. During 2026, we will lay the operational groundwork for our U.S. opportunity, building on the conditional bank charter approval. Latin America remains our primary growth engine.

Third, AI as a superpower. We will expand Nu Former to lending in Brazil and credit cards in Mexico and continue putting AI directly into customers' hands, moving closer to our long-term vision of an AI-powered personal banker in every customer's pockets.

With that context, I'll hand it over to Lago to walk through the quarter's financial results.

Thank you, David, and good evening, everyone. Now before moving into this quarter's financials, I will briefly explain an evolution in our disclosures. As Nubank has become a multiproduct, multisegment and multi-country platform. We are introducing a managerial P&L to provide a clear view of value creation and internal performance. This evolution does not change economic reality. It only clarifies it.

The managerial P&L is derived entirely from our IFRS results and represent our structural reorganization of IFRS line items designed to enhance comparability and better reflect economic contribution. The framework preserves net income, cash flow, equity and regulatory capital and is fully reconciled to IFRS.

The key benefit is clear visibility into how margins, operating leverage and value creation evolve as the Nubank platform scales across multiple products, segments and geographies. And to support this new disclosure, we are publishing a detailed managerial P&L reconciliation report on our Investor Relations website, including the full bridge to IFRS and the complete methodology used. We have also updated historical data back to the first quarter of 2021 under this new framework.

With that context, I will now walk you through the quarter's performance already used in the managerial P&L. We ended the quarter with a total portfolio of $32.7 billion, up 40% year-over-year, driven primarily by credit cards and unsecured lending. Credit cards increased 12.2% quarter-over-quarter. This was the strongest quarterly growth since the end of 2023. This reflects continued limit expansion in Brazil supported by our foundational credit models, along with typical fourth quarter seasonality.

Now unsecured lending balance surpassed $8 billion with record high originations of $4 billion in the fourth quarter. Secured lending grew 3.8% quarter-over-quarter. Recent changes to FGTS regulations have reduced Nu originations by more than half. Though the impact on outstanding portfolio remains limited given the longer duration nature of the secure launch. We remain very comfortable with the portfolio's growth trajectory and risk profile underpinned by very disciplined credit underwriting and the evolving nature of our credit models.

I will now turn to deposits where we continue to build a scalable and resilient funding base. We ended the quarter with total deposits of $41.9 billion, up 29% year-over-year, with growth across all three countries. In Brazil, growth reflected typical fourth quarter seasonality, including the 13th salary. In Mexico, following pricing and product adjustments in the third quarter, deposits resumed growth in the fourth quarter. On funding costs, we saw improvements across all geos.

The cost of deposits declined to 87% of the interbank rate on a consolidated basis by the end of the fourth quarter reflecting mixed dynamics, disciplined pricing and seasonality. Now deposits remain a very strategic lever for us. Strengthening balance sheet resilience, supporting earnings and reinforcing customer engagement while we continue to manage pricing with discipline to preserve attractive economics.

Turning to NII, CLA, and risk-adjusted margins. Net interest income increased 13% quarter-over-quarter, driven by portfolio growth and improved funding costs, especially in Mexico. Credit loss allowance increased primarily as a function of growth as we expanded credit card limits and balances, provisions rose mechanically due to front-loaded origination accounting while underlying credit quality remains stable. We also recorded a one-off item related to Mexico.

As background, Prosofipo is a sector-wide deposit insurance fund to which also peoples are required to contribute to. As the largest SOFIPO in the country, new was required to make an extraordinary contribution of approximately $25 million, which is reflected in interest expenses this quarter. This is a onetime nonrecurring regulatory levy not a reflection of the credit quality or the financial health of our operations in Mexico. Risk-adjusted NIM closed at 10.5%, and would have been broadly stable quarter-over-quarter, excluding the Prosofipo contribution.

Moving to asset quality. As our portfolio has diversified across products, segments and geos, we are now presenting consolidated NPL metrics. We believe this provides a more holistic view of credit quality across the Nubank platform. Now given Brazil's relative size, trends remained largely driven by the Brazilian portfolio, where credit performance continues to track our expectations, supported by disciplined underwriting.

As you see in the slide, early-stage delinquencies measured by 15 to 90 NPLs improved for the fourth consecutive quarter, declining 20 basis points to 4.1%, partially reflecting the seasonality of the quarter in Brazil. As a result of prior improvements in early delinquencies, 90-plus NPLs declined 10 basis points, pointing to 6.6% in the quarter. Coverage ratios remained strong, both on total balances basis and on 90-plus NPLs, providing continued comfort across loss absorption.

We typically see a seasonal uptick in the 15- to 90-day NPLs in the first quarter of the year. This pattern is expected for this coming quarter, aligned with historical trends. Overall, we see no signs of deteriorations and remain comfortable with our credit quality indicators.

Turning to gross profit. Gross profit reached a nearly $2 billion in the quarter, up 38% year-over-year. In terms of composition, float contribution increased reflecting strong deposit inflows in Brazil and improved funding economics in Mexico following the pricing adjustments implemented in the prior quarters. Fees also performed well. Driven by very strong purchase volumes supporting the largest quarterly increase in our credit card market shares in Brazil in over 10 quarters. The credit component reflected higher front-loaded credit loss allowances consistent with the strong portfolio growth in the quarter.

Now looking ahead, we will remain credit first. Credit represents the largest profit pool in financial services and is a key driver of engagement and relationship that across our platform. At the same time, fees and float provide diversification and support a more resilient gross profit profile as we continue to scale across products, segments and geos.

Going to the efficiency ratio now. As part of our disclosure evolution, we updated the methodology for calculating this metric to better align with industry practice and enhance comparability. Details of this new methodology are included in the appendix to this presentation and we are also presenting the ratio under the prior methodology for reference. Under the new methodology, the efficiency ratio declined to 19.9% following below 20% for the first time in our history. This reflects operating leverage with net revenues growing faster than operating expenses, even after typical fourth quarter seasonality in marketing and transactional costs.

In the fourth quarter, we also recognized approximately $22 million of transition expenses provisions related to our return to office decision, which becomes effective only in mid-2026. These cost provisions are temporary and not indicative of the ongoing run rate.

Now looking ahead, as David outlined before, 2026 is in fact, an investment year. We are laying the operational foundations for global expansion and accelerating the adoption of AI and other new technologies across the platform. These are deliberate investments in long-term capacity building Nubank and they will likely put upward pressure on the efficiency ratio in the near term.

We are comfortable with this trade-off. The structural drivers of operating leverage, revenue growth, scale and disciplined cost management remain unchanged, and we expect efficiency to continue improving over the medium term as these investments that we are making today begin to generate returns.

To close the P&L review, net income. In the fourth quarter, net income increased 50% year-over-year to $895 million, delivering a record high ROE of 33%, while we continue investing in growth and maintaining quite robust capital buffers. This includes certain nonrecurring items in the quarter, a positive impact of approximately $58 million of net income related to the remeasurement of deferred tax assets following the CSLL rate increase in Brazil and a negative impact of approximately $29 million related to return to office provisions and the Prosofipo levy in Mexico. Now together, these results demonstrates the scalability of our operating model. Growing earnings while sustaining high returns.

Now turning to capital and liquidity. At the holdings level, total capital stands at $8.9 billion. Of that, $3.6 billion covers regulatory requirements across our three geographies. $2.2 billion represents excess capital in our operating entities. And $3 billion see it at the new holdings level as unrestricted cash and equivalents available to fund both continued growth in our core markets, as well as our global ambitions.

Now on the liquidity side, available funding of $38.8 billion represents approximately twice our net credit portfolio of $19 billion, which represents our gross credit portfolio net of credit card accounts payable. Which provides very significant headroom to continue scaling credit responsibly while also seizing the opportunities coming from further balance sheet optimization. Our capital liquidity positions reinforce our ability to invest in growth from a position of strength, and that is exactly what we intend to do.

Taken together, our capital and liquidity positions are not simply a reflection of our past performance. They are, in fact, the foundation of what comes next, and we enter 2026 with the financial strength and to win our core markets, the firepower to accelerate globally and the discipline to do both things responsibly.

Now I'd like to thank you, and we are very happy to take your questions.

[Operator Instructions] I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer.

Thank you, operator. Could you please open the line for Mr. Eduardo Rosman from BTG Pactual.

I have a question for David Velez regarding AI. David, do you see a risk that Nu could be disrupted by AI? Or do you see Nu as a potential winner in this transformation? It would be great if you could elaborate a little bit since I think the stock and then the sector in the U.S. has been suffering lately because of that.

Sure. And the answer is both. It is both a challenge and has potential for disruption as well as significant opportunity. Net-net, we think it's more opportunity than challenge for us. But we have to take it pretty seriously, and we are taking it very seriously.

A couple of ways to think about it. I think there is one specific trend or one common denominator across every technology transformation. And this goes all the way to even the internet era, which is any business model that relies on simply moving bits from point A to point B, where you're effectively a broker tends to be heard the quickest because one of the things that technology does is remove a lot of that friction in those processes.

So I think to -- some of the commentary that has been around in the market about financial services is, I think businesses in financial services that are simply moving money from one point to another point, will have the higher risk of potential disruption. You need to be able to add more value than that. And I think from that angle, we think -- we have always believed that credit, specifically, credit revenue is actually the most sustainable type of revenue in financial services because of the capital intensity, the regulatory nature of it, the balance sheet aspect and the proprietariness of the data where AI plays a role and ultimately allows you to make a better decision on that.

So I think from one angle, there is potential for challenging around the business model, but I think we're very well positioned given the way we are set up in the strength around credit that we have. I think a couple of our opportunities really on the revenue side. And as a reminder, our package $15 a day and our incumbent competitors are something like $40, so we have a significant opportunity to increase ARPAC is around Nu cross-sell and Nu products that we can be delivering to the very significant consumer base that we have.

And I think everything around cross-sell everything about using the data that we already have to offer new products and services, it's a big opportunity and nice [indiscernible] enabler. And here, we've discussed a few times over the past year, the significant lift that we're seeing when we're using our own foundation model on credit, but also cross-sell and a number of other revenue-related opportunities. And then you have the cost side, and I think the cost side is a little bit more clear.

I think every single company really might benefit from that, where every function that you do, especially as a bank from customer service to compliance to regulatory to AML will be significantly enhanced or being significantly enhanced through AI. So net-net, I do think that there are potential resorptive vectors in some of the business models. But I think when you compare -- when you think about the fact that 95% of the world's financial services profits are still concentrated in incumbent banks that still have significantly larger cost structures. Means that we're very well positioned to take advantage of AI as a technology enabler for revenue and cost and ultimately madly be one of the winners in this technology shift.

Operator, could you please open the line for Mr. Jorge Kuri from Morgan Stanley.

I wanted to ask a question about your loan growth for the quarter. And I guess it's a 2-part question. First, can you help us dimension the impact that your clip increases are having on your credit card growth. To what extent -- I know there is evidence seasonality, but if we think of the year-on-year growth at how much do you think came from those clip increases? How much of that acceleration in credit cards, do you think it's still going to roll over into 2026.

And then the second part is on FGTS, is there a way to quantify what was the headwind on your loan book based on FGTS. In other words, excluding FGTS, what would have been the portfolio sequential growth?

Let me try to slice them in those two parts. So your first question was on the clip. Look, this was a year in which we have deployed this new technologies and approach to credit underwriting very successfully so far in allowing our customers to increase kind of their credit limits, especially in Brazil so far.

And the best way for me to kind of illustrate the magnitude of this increase is Jorge, maybe, refer you to explanatory note, #32 of our financial statements in which we are then starting to provide what I call the unused credit limits. And you can see that unused credit limits went from about $18 billion to $29 billion. So an increase of about $11 billion, which accounts for about 60% increase in unused credit limits. It's a big one.

And I think it wouldn't be possible for us to do so if we hadn't be leveraging kind of the entirety of the predictive AI credit underwriting tools that have been kind of developed by us over the past now 18 to 24 months. Have we seen all of those benefits translated into net income? The answer is no, not yet. So usually, I think at least I see kind of credit limits increases playing out in three steps.

First, you have to offer the additional credit limits, then the credit limit translates into purchase volume. And then you have to see whether the purchase volume will then translate into IBB, We are starting to see the first step, Jorge, which is in the fourth quarter of 2025, our market share in purchase volume in Brazil has gone up by about 50 basis points. It was the biggest market share gain that we've seen in Nubank over the past 10 to 11 quarters.

There's two more to come, and then we still have to see kind of all of those purchase volumes reflecting into IBB. Even though 2025 was, I think, a big sign of the magnitude of this ability to increase clip, I don't think it will stop there. You will continue to see this kind of unfolding in new models and new improvements throughout 2027 -- 2026, 2027 and onwards. And I would also say that the advent of the predictive AI technology will not stop at clip Brazil, right? It will be and is being exported to clip Mexico, clip Colombia, and then we're going to go acquisition Brazil, acquisition in Mexico, what you're going to go to fraud. It's going to go to deposits, pricing and designs. So there's a plethora of options that we're going to be leveraging on. So that's my attempt to address your first question, Jorge.

The second question was on FGTS. So the new regulations of FGTS came into effect on November 1, 2025. And we have seen our originations of FGTS loans dropping by about 50% to 60% in the period in which the new regulation has become effective. It was more than offset by the growth in public consignado in public payroll loans, but it has certainly been a headwind to the origination of this very kind of interesting asset class.

And is there a way to quantify that thinking about it on a quarter-to-quarter basis, what would have been the total balance of credit expansion excluding that. So instead of the 11% FX-neutral quarter-on-quarter would have been the number without FGTS?

Yes, it would have been about 13% to 14%.

Operator, could you please open the line for Mr. Pedro Leduc from Itau BBA.

Thank you so much for taking my question. A little more as you look into 2026, and I'm going to use some of the prepared remarks there, especially in terms of efficiency trajectory. You mentioned that there might be some pressures. I'll see if you can maybe go into detail about it.

And of course, it's a ratio also as I'm trying to think about revenues, of course, you're ending at a very high pace of loan book. NII. But as I look forward, can you help us understand a bit on the drivers when we see funding costs go up, I'm sorry if we can see that continuing a little bit on the portfolio. Just help us think a bit about these drivers now that you are already 35% ROE.

Leduc, thanks for the question. Look, I will refer to Slide 16 of our earnings deck, which is -- brings the efficiency ratio evolution. And we have seen kind of over the past quarters and years, the continuation of the operating leverage potential of the organization. We wanted to highlight very clearly that we may see kind of upward pressure on efficiency ratio in the coming quarters, i.e., in the short term, like the next 4 to 6 quarters.

As a result of very deliberate investments, I would bucket them in three categories. Number one is we have recently announced a return to office policy, right, in which starting on July 1, 2026, employees will start going back up to the office 2x per week. That means that we're going to have to kind of prepare the offices, increase the leased area to welcome our employees as they prepare to come back to the office.

We believe that this will bring enormous benefits to the company, including about kind of ingenuity, kind of a innovation, coordination, but it does come with an increase in OpEx in the short term, and we wanted to clarify this. I would say that the return to the office will likely bring kind of our efficiency ratio, all else constant, up by about 80 to 100 basis points.

The second bucket, I would say, Leduc, is the all of the investments that we are making in AI and new technologies. So that brings new talent that we have to hire, eventually new investments in R&D and research in GPUs that will have kind of a short-term cost, which we believe will be way, way, way more offset by the medium-term gains that we're going to have, but we will not shy away to make investments in talent, R&D and GPU to maximize the impact of our efforts in AI.

And I would say that kind of -- we have returned to the office, you have AI. And the third one is the globalization. So there is a lot of investments that we are making in laying down the foundation for us to go beyond Brazil, Mexico and Colombia. And a substantial amount of those expenses are not capitalized and are incurred in 2026 first to collect revenues and margins in the following years. So that's the direction.

I wouldn't be able to provide you Leduc at this point in time, more kind of a precision on the effect of all of the three, but we think that they would put some kind of upward pressure in the coming quarters.

Operator, could you please open the line for Mr. Yuri Fernandes from JPMorgan.

Most metrics, they look very good. But there is one line here that I think investors are a little bit more puzzle this quarter, that is the tax rate, right? And I know there is a managerial adjustments, and we see some incumbents in Brazil also have similar adjustments. So I think it's -- it's easy to understand and explain. But regarding this quarter, and maybe Lago can help me here. I would like to understand what drove the lower accounting tax, if this was the DTA? And you have lower DTAs, but just checking if this was DTA, some kind of tax-exempt bond, IOC. And maybe some kind of color going ahead, what should we expect for the tax rate for Nubank.

Sure. So Yuri, look, I think the lower effective tax rate in the fourth quarter can be explained by, I would say, largely two things. One, completely nonrecurring and on recurring. What's the nonrecurring one. So about beginning of December 2025, the federal government approved an increase in the corporate income tax applicable to fintechs, including those like Nubank that essentially kind of increased progressively the corporate income tax from about 40% to 45% starting in 2026 and then going all the way in the next 2 years.

Even though that in the medium term is a headwind for our effective tax rate in the quarter in which this kind of legislation is passed. We have to remeasure our deferred tax assets. So our DTAs remeasure up. and that increase in the DTA, which was about $58 million unit is recognized in the fourth quarter of 2025, decreasing the effective tax rate in the quarter. So that's the portion that I attribute as a nonrecurring one-off event. The recurring ones is that kind of as we increase the amount of investments that we have been making in technology across the firm in Brazil, but also in the other countries.

We end up also benefiting from kind of a technology investment tax breaks that some of the governments provide. And that may increase a little bit the OpEx, but they are more than offset by lower effective tax rate. Those are the two aspects that have kind of impacted ETR this quarter.

So very clear, Lago. And you also had the nonrecurring on the Prosofipo like the deposit as you mentioned. So not the same magnitude, but also negative versus this tailwind you had in the quarter.

No, you would think that's precisely clear. I think we have basically three one-offs in the quarter, right? What I would say. One is the $58 million DTA reassessment that we just discussed. The other one was the about $25 million one-off expense of the Prosofipo. And the third one was the $22 million provision expense for the return to office program, right? So those are the three moving parts that we have. DTA positive return to the office negative and Prosofipo negative.

Operator, could you please open the line for Mr. Mario Pierry from Bank of America.

Guys. I wanted to focus a little bit more on the provision expenses, right? Because we did see your cost of risk go up this quarter. And last quarter, if I recall, you were talking about your ability to extend credit to existing clients because you're employing AI and then you're seeing a lower cost of risk in this reverse this quarter. So I wanted to understand a little bit better what happened with provisions in the quarter.

Also, if you can talk a little bit -- you showed your NPL relatively stable. But this is a consolidated NPL, correct? And before you were showing us Brazil NPL only like your NPL on a consolidated basis is lower than the previous number. Just trying to understand why the NPLs as you're expanding into Mexico, especially. Are you seeing lower NPLs in Mexico than you had in Brazil?

Let me try to address each of them in order. So the first one is we did have an increase in CLA item this quarter. And I would be very clear, this was entirely attributed to growth not to any type of asset quality deterioration experienced in the quarter. So we didn't see -- we saw asset quality performing very much in line with our expectations, including the seasonality trends. And now we are on like February 25, and we continue to see kind of our asset quality metrics, no trailing our expectations very well in all asset classes in Brazil, in Mexico and in Colombia.

So we watch this kind of quite closely. But as of now, we have not seen any signs of degradation in our asset quality. What we have seen to justify the increase in CLA is not only the increase in the credit book in itself, which you can see kind of in Slide 11 that grew by about 11% quarter-over-quarter.

But also, Mario, in the increase in credit limits unused credit limits which do not show up as credit per folio per se, but our exposures for which we do need to build CLA. So again, CLA growth entirely driven by growth in exposure, not the gradation of assets. The one thing that I would highlight, at least, Mario, that I like to see going on a recurring basis when I look at those numbers is like NPL formation was fairly stable, 3.6 to 3.5x. Stage 3 formation, fairly stable. And one metric that I personally look as a ballpark, Mario, is the CLA divided by average credit portfolio.

So it used to be like 3.9% fourth quarter '24, then 4.3%, then 3.9%. Then in the third quarter of 2025, we went down a little bit from 3.9% to 3.3%, and now it's back to 3.9%. So I think the third quarter, as we updated them all those with higher recovered ratios, it may have come kind of slightly below. Now it's going back to 3.9. I'm sure you're going to ask the questions what's next?

I think what next is something around or below the average between 3.3% and 3.9% on the coming quarters, of course, something that we don't control, but that would be more or less our expectations with the mix that we have today.

So that's your first question. I think your second question was on the NPLs. Would you provide kind of now consolidated NPL trends simply because as we grow the book internationally with Mexico, Colombia and hopefully other countries in the next years, we start to see those metrics kind of better representing the economic reality of the company rather than looking at Brazil only.

However, if we were to post the Brazil only NPL charts, they would equally show kind of a fairly benign trend of asset qualities, moving very much in the direction of seasonality that we expect to see in the fourth quarter.

And then your question about, look, how can you actually aggregate Mexico and Colombia and get to lower NPLs it is justified mostly by the write-off policies that we have in those countries than on the risk of those countries. So for example, in Mexico and Colombia, we can have shorter write-off policies than we have in Brazil, and that kind of affects the overall NPL calculations.

But in general, Mario, no concerns at this point in time with asset quality. It is super point -- super important to highlight, and I know that you've been following this for many years, so I speak more for to the other participants of the call. Fourth quarter of every year, we usually observe a benign movement in NPLs because of seasonality, but equally, we do expect to see kind of an uptick in NPLs in the first quarter of 2026, also following natural seasonality, right?

Operator, could you please open the line for Mr. Gustavo Schroden from Citi.

Hello. Good evening, everybody. My question is regarding credit products and also client mix. We could see a relevant increase in loan book for credit cards and personal loans. But I'd like to explore more of the secured loans. Lago explained about, Lago, you explained about the FGTS change recently, indeed, has impacted the evolution of this portfolio.

But I'd like to understand the appetite for payroll loans, I mean public -- public and private pay loans, how the bank sees these products, we should expect some, let's say, replacement of FGTS by this private pay loans mainly. So any view on that would be great. And also about the client mix, should we -- could you explain us how the bank is evolving in this, let's say, exploring the affluent market, I mean, mid- to high-income customers, especially after this increase in credit limits, that would be great.

Thanks for the question. Let me try to address the first one on the breakdown of originations of our secured loans and then David may address the second one on our performance in both the what we call super core and high income segments.

So I would basically divide our, what we call secure loan portfolio in three, right? So we will have the FGTS. We have the public payroll loans, and we have the private payroll loans. So FGTS is the one that has recently received kind of a negative impact of the new regulations starting on November 1, 2025. It has dropped kind of our originations by about 50%. And we continue to have a very good dialogue with the government to try to influence the agenda for 2026 and 2027.

And we have become market leaders in FGTS. It was a very -- it is and it used to be a very good product, and we believe it will continue to play an important role in the formation of our secured lending book. Even though if regulations don't change, we'll probably play a smaller role than it could have played before. But that's bucket number one.

Bucket number two, public consignado or public payroll, which I put here, including both [indiscernible] and [indiscernible] We are very bullish on this. We think it is still a market that has kind of a lot of opportunity to increase efficiency in the intermediation and in the distributions. We can offer no products at materially lower cost than most of the other market participants and it's now finally entering into time in which we will see interest rates drop in Brazil.

And with that, we hope that kind of portability will pick up. And we like to believe that we're going to be one of the biggest beneficiaries of that of the trend. So I think it is one that we think regulation is there, portability is there, interest rate cycle is there. So we are bullish that this will kind of have an even faster growth in 2026.

The third bucket is private consignado. So this is a product with which we are very, very optimistic and bullish on a structural form by which I mean it is a way for fintech such as Nubank to have access to information and to customers who used to be primarily served by incumbent banks which own the payroll service of large corporates in Brazil. So it's a massive opportunity for us. And it's one that we will lean in as soon as we see the mature improvements in credit risk that this product offers.

We are still not seeing that. I think part of that is kind of a counterparty risk of the corporates. Part of that is the collateral is not yet operating at its full potential. We, however, think it it's a matter of when, not a matter of if. You've also been following this quite closely for some time. You may recall that when public consignado was introduced a few years ago, it took kind of a year, 1.5 years for everything to all of the collaterals to be working well. and we are just waiting for this to happen for us to lean in more heavily.

Now let me pause here, see if you have any follow-ups and then pass the floor to David for him to comment on the affluent part of your question.

All clear, Lago.

Perfect.

I think I'll say on the secured lending side is it is -- continues to be a very significant opportunity for us. I think growing within that existing profit pool has been probably more complicated than we expected given the significant operational complexities that the product has.

There is a fair amount of features that need to be built into the product, specifically around portability. Most of the growth of those products are portability and when customers are doing that portability. You need a lot of different integrations. There's also a fair amount of fees. All of that friction is going away. I think the tailwind, if there's one consistent tailwind in Brazilian financial services is that all those -- all that friction and cost that historically have improved had made it harder to move towards the best product, it's going away.

So we're seeing accelerating market share gain, and we are ready to -- we're building a lot of those features, and we're getting significant share on the secured line. So while I wish the traction to date had been significantly higher, I think every single month, we're seeing an acceleration of market share and the tailwinds are helping.

On the high income side, we continue to see a very good growth. Again, this is a competitive environment. It's a competitive segment, a lot of -- a lot of banks in common banks and others are going upmarket. We define a market for us as customers are making above BRL 12,000 per month. So this is not 1% of Brazilian. This is probably closer to 10% of Brazilians. And within this consumer base, we already have two out of -- two out of five, about 40% of those Brazilians in that bracket are customers of Nubank today.

They're just not really using us as their primary card. We are the third car. We have small share of wallet. A lot of the times was because we gave him a low credit limit initially. And if we had opportunities to improve credit limits on mass market, and we're seeing that with AI models, we have even more opportunities to improve credit limits on high income because a customer type that we didn't really understand.

So we have to fix credit limits, which we're doing. We have to improve the value proposition of the product, specifically on credit card, which we are. Over the past couple of quarters, we launched new improvements, different cash back rates. We announced a lot of integration with our Nu Travel platform. So it's a really good product where we guaranteed the price of any ticket or hotel that you book in our app. We're seeing customers getting significant value out of that. So it's very well integrated with the travel value proposition.

We announced our frequent flyer lounge in Guarulhos in Sao Paulo that is getting a lot of acceptance. So there's a long path of opportunities that we have to improve the product on the credit card side. And we see that translating into increasing market share. This segment for us grew something like 40% year-over-year and is gaining share across our portfolio. So we're seeing good traction. A lot of these investments are paid off.

The second part of the value proposition is investments which you might know that obviously, we've discussed it a few times. It's taken a while for us to build a very, very compelling investment value proposition in our app. We're getting very close. We are close to really product parity. We have now all the products that this segment needs in our app. We have fixed income products, equity products, crypto products.

We have all the type of visualizations that this customer is asking. So we're getting very close to have a very good investment platform that it's critical to win this high income segment. So overall, these are -- these two specific opportunities that you mentioned, there are not one, two quarter opportunities where you're significantly gone. These are long journeys of a lot of product improvements, but we feel very good about the progress we've made and the opportunity we have ahead.

And Gustavo, just one additional point. We mentioned about the mass market, which in our definition, our customers will earn up to BRL 5,000 per month. And then you asked about what is called high income, which our customers who earn more than BRL 12,000 per month, which was the answer that the David had provided.

But in the middle, which is what we call super core, i.e., customers who earn from BRL 5,000 to BRL 12,000 per month, it is the segment in which we are growing the fastest, right? So if David mentioned that in the high income, we've been growing at about 40% per year. in what we call super core. We are growing at about 100% in 2025. So I would kind of invite you and others to kind of segment this at least in 3 parts. And I think there's a massive opportunity for us to go into the super core there as well.

Could please open the line for Neha Agarwala for HSBC.

Just wanted to follow up on the private payroll segment. We do understand your concerns regarding operational complexities at this point. But we do see a lot of other lenders being more aggressive in this market. And the market has doubled during 2025.

Do you see the risk of some of your customers who might have personal with you going or have a credit card with you going to other banks and taking private payroll loans. And ultimately, their leverage increases and that could impact the asset quality for those customers for you on the unsecured side?

Very good question. And yes, we are very mindful of those two risks, which I call kind of the cannibalization, i.e., customers borrowing from another bank and kind of us losing the primary banking relationship. That's one. The second one is structural subordination, right? So customers boring and providing the collateral and ourselves becoming stretchy subordinated to someone else. The same can be made when we lean in into this product.

Even though we have been very mindful of this, we have not yet seen any evidence that any of those two risks that you've laid out are materializing within our customer base. In fact, most of the customers who have been applying for private payroll loans have been customers with higher credit risk, at least that has been our experience and most likely customers who would not be entitled to have access to an unsecured personal loans or even sometimes to unsecured credit cards but it -- but we are tracking this very, very closely.

In terms of the growth of the market that you've also pointed out now, I would highlight that there are a few things to adjust in this growth. One is there's just a natural shift from asset classes that were considered private consignado without the collaterals that were instituted by the government and are just now migrating to the new private consignado.

Those are usually loans that have been carried by kind of the more traditional incumbent banks, and they account for a fairly substantial portion of what is seen as the growth of this new asset class, i.e., is just migration from the old to the new.

The second one, we now see kind of players playing in this space with very two kind of different approaches. The incumbent banks who have relationships with the corporates when it comes to payroll loans. They are more focused on the lower risk customers and the digital players are more focused on the higher-risk customers. But when we step back, we are seeing kind of this market operating with first losses of no low double digits, which is not yet conducive to the quality of the collateral that this product can have.

Once we see kind of a credit improving as the product will deliver, we will not shy away to leaning very heavily and the term cannibalization is just not a term that we use. We will be there offering the best product for our customers, irrespective if they will actually use the proceeds to prepay or repay higher yield assets. We are not moving ahead with this as strongly as others, not because of the risk of cannibalization, but more because of conservatism with credit risk.

Understood, Lago. And in terms of cannibalization, yes, NIMs might go down, but risk-adjusted NIMs might not be impacted as much, even if you replace the credit from unsecured to secured with some of your customers, right?

That's correct. The other component of that, Neha, is that you may see at some point in time the amount of capital that you have to allocate to private consignado, possibly being lower than the ones for unsecured. So not only risk-adjusted NIMs may be preserved or even increase in an absolute amount, but the return on equity may be as appealing, if not more appealing because you have to post lower capital to that, yet to be defined.

I just wanted to understand why not offer the private payroll, and I understand that there are complexities and you can price for those complexities and collateral not working smoothly. Why not offer it to some of the customers whom you deem to be riskier and don't want to give them an unsecured loan at this point. Why not start off with the secured private payroll loan with them and price it accordingly.

You I would certainly could. I think what we are saying is that the benefits of the collateral for the higher-risk customers, have not proven to be material enough to justify a substantially different credit underwriting or pricing policy to date. But again, just to be super clear, I think it is a matter of when, not a matter of if this is a good product, it is a good structure. This will benefit kind of consumers, by and large. We just don't think that is yet ready to be kind of the product in which we will lean in that heavily at this point.

Operator, could you open the line for Mr. Tito Labarta from Goldman Sachs, please.

I guess my question is following up a bit more on expenses. First, and you talked about 2026 being an investment year and thinking more about the global expansion. Just help us think a little bit about what investments are needed there? Because I mean you got the initial license pre-approval, I guess, in the U.S. But is there more investments that you need to make in the U.S. already in 2026. Just help us think about what are these investments that you need to lay this global foundation.

And then also just specifically in the quarter, because if I look at the accounting P&L, which I guess is more comparable to the estimates that are out there, there was a big jump in expenses, and I know there was the one-off from the return to office but marketing expenses jumped quite a bit. G&A expenses jumped a bit. If you can just give some more color, what specifically drove those increases in operating expenses in the quarter would also be helpful.

Thanks Tito. Quickly on U.S. We will continue to invest. I mean, kind of we are investing more, mostly on team building and product. It's de minimis. It's not a significant source of investing for launch in the U.S. We did announce a number of bigger marketing partnerships over the past couple of months. And those really are related to both our core markets, as well as U.S. and potentially future markets around the world.

So there is an increased a bit in marketing. Their team increases that we're having for the U.S. launch. But I wouldn't say they're going to -- they expect to be significant in 2026.

And then, Tito, on your questions about the breakdown of our OpEx in the fourth quarter of 2025. I think the marketing one is a traditional seasonal one. It usually spikes a little bit in the fourth quarter of the year. The other one was incorporated in the tax breaks related to technology investments. So many of the increases in [indiscernible] that are recognized as OpEx, but they actually drive quite a bunch of off-tax efficiency. But nothing extraordinary or nonrecurring other than those three moving parts that we mentioned.

Okay. No, super helpful. Thanks, Lago. And maybe just one quick follow-up for David. Any just initial thoughts on what the expansion plan in the U.S. will be like just a high-level footprint on what you're targeting segments go-to-market there? Any color or thoughts that you can provide would be super helpful.

Sure. On a very high level, and we're not really ready yet to disclose specifically what the strategy there is going to be. But at a very, very high level, this is the largest market in the world. And while at a very high level, it seems like a very saturated or competitive market in certain segments. When you dig in into subsegments in certain niches that, by the way, happen to be the size of Brazil.

We actually find opportunity to solve a number of consumer problems that are similar to what we've done in the past. So we're going to have a very targeted strategy. We're going to be very disciplined on investing. There are a lot of focuses on certain potential geographies or subsegments that we are interested about. You're not going to see us kind of shooting in all directions here because it's a bit of a long journey, and we fully acknowledge that this is a very competitive and sophisticated market in certain areas. But we do think that it's -- there are opportunities for us to create a meaningful business in certain sub areas of the United States.

So thank you, everyone. We now have approached 60 minutes of the call. So we are now concluding today's call. On behalf of new holdings, our Investor Relations team, I want to thank you very much for your time and participation on new earnings call today. Over the coming days, we will be following up with questions received tonight, but we are not able to answer. And please do not hesitate to reach out to our team if you have any further questions. Thank you, and have a good night.

The Nu Holdings conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good evening, ladies and gentlemen. Welcome to Nu Holdings conference call to discuss the results for the third quarter of 2025.

A slide presentation is accompanying today's webcast, which is available in Nu's Investor Relations website, www.investor.nu in English and www.investidores.nu in Portuguese. This conference is being recorded, and the replay can also be accessed on the company's IR website. [Operator Instructions] [Foreign Language] [Operator Instructions]

I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer at New Holdings. Mr. Souto, you may proceed.

Thank you, operator, and thank you, everyone, for joining the earnings call today. If you have not seen the earnings release already, a copy is posted in the Investor Relations website.

With me on today's call are David Velez, our Founder, Chief Executive Officer and Chairman; and Guilherme Lago, our Chief Financial Officer.

Throughout this conference call, we'll be presenting non-IFRS financial information, including adjusted net income. These are important financial measures for new holdings, but are not financial measures as defined by IFRS and may not be comparable to similar measures from other companies. Reconciliations of the non-IFRS to the IFRS financial information are available in the earnings press release. Unless noted otherwise, all growth rates are on a year-over-year FX neutral basis.

I would also like to remind everyone that today's discussion might include forward-looking statements which are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties and could cause actual results to differ materially from our expectations. Please refer to the forward-looking statements disclosure in the earnings release.

I will now turn the call over to David. Please go ahead, David.

Hello, everyone, and thank you for joining us today. In Q3 2025, effectively every single one of our metrics continue to grow, reinforcing our position as the leading digital bank in Latin America and one of the leading fintech platforms globally. Our customer base grew to 127 million customers with more than 4 million net additions in the quarter while maintaining an activity rate above [ 82% ], a clear reflection of the depth of engagement we continue to build with our users. In Mexico, we surpassed 13 million customers now reaching around 14% of the adult populaton. And in Colombia, we're approaching 4 million customers. Both markets continue to demonstrate strong traction, highlighting the scalability of our model.

The solid growth, combined with continued ARPU expansion, which surpassed $13 this quarter has led to record revenues of over $4 billion. These results highlight the compounding effect of our customer expansion, deeper engagement and disciplined monetization.

Our gross profit continues to rise sharply, reflecting strong unit economics and operating leverage. And with a cost-to-income ratio of 28%, we continue to progress on our trajectory of improving efficiency. And finally, we delivered net income of $783 million, another quarter of solid profitability even as we keep investing in growth and innovation across all markets.

This consistent performance is a direct result of our business model, one that attracts millions of new customers every quarter, fosters deeper engagement that expands monetization all while operating on a low-cost and highly efficient platform. This formula continues to drive our earnings growth across markets, but with each component playing a distinct role in every geography.

In Brazil, we now serve over 60% of the ad population and estimate that we're already the largest player in the SME segment by a number of accounts. Having reached scale, revenue per customer has become the main growth driver. Our focus going forward is broadening our product portfolio, deepening engagement across all segments and continuing to execute our credit strategy, increasing exposure among customers with the strongest risk-adjusted returns.

In Mexico, our main focus remains on expanding our customer base, deepening product adoption and advancing financial inclusion, all while laying the groundwork for sustainable long-term monetization. Given the scale-up phase, ARPAC levels are already nearing dosing in Brazil, reflecting the strong unit economics of the credit card business in that market, driven by a higher share of interest-bearing balances and a steadily declining cost to serve supported by our ongoing platformization efforts.

Both markets demonstrate the strength and the stability of our model, which is capable of driving rapid growth and scale in earlier stages. -- while expanding profitability as market matures. Diving deeper into Mexico or second score, we see a market now beginning to scale and one that we expect will contribute meaningfully to our results in the years ahead. We're building strong foundations, having reached market leadership position in the Mexican digital banking space, already reaching 13 million customers or around 14% of the adult population compared with about 10% when Brazil entered its inflection point back in 2019.

Even with the product portfolio still largely center on the credit card, ARPAC has already reached $12.5 reflecting strong customer engagement and the favorable unit economics of this product in Mexico. On the cost side, cost of service was already below $1 and recent adjustments to deposit yields are beginning to flow through our cost of funding. Looking ahead, we'll continue stacking U.S. curves with focus and discipline, while Brazil and Mexico remain our core priorities where most of our resources and execution efforts are directed. We also see transformational optionality in the U.S. following our filing for a national bank charter, a step that could unlock new opportunities over time as we remain fully focused on our core markets.

As we continue scaling across markets, we're also building the next generation of our platform, refining how we operate and how customers experience banking. We have heard several investors asking us about our AI strategy, and so we wanted to spend a few minutes on it. Our vision is to become AI first, which means integrating foundation models deeply into our operations to drive an AI-native interface to banking, while creating meaningful benefits for both our customers and our business.

For our customers, AI is enhancing our understanding of each individual and their financial needs, allowing us to deliver personalized recommendations, contextual offers and products and proactive insights at the right amount. It will also transform the way people interact with Nubank, be it through a simpler and seamless app or to a number of additional channels, embedding conversational user interfaces. We think there is a significant opportunity to include Agentic workflows across most products and services, improving customer experiences across the board.

For our business, AI is strengthening how we manage risk and scale efficient. It is helping us to design safer and more precise financial solutions, reducing credit and fraud losses and enabling tailored collection strategies that drive better recoveries. At the same time, it is enhancing productivity across the company from leaner operations to faster development cycles and higher engineering throughput.

When we bring all of this together, becoming AI first means accelerating our flywheel by scaling to offer high-quality products at lower costs. unlocking the full value of open finance, deepening cross-sell and product penetration and opening new revenue streams, all while optimizing pricing and delivering superior value for both customers and shareholders.

But AI is not a buzzword for us. We believe Nubank is uniquely positioned to become AI first and a leader in the use of AI and financial services globally, and we're already starting to see the first breakthroughs. Since our early days, we've known that technology and data will be our strongest competitive advantage, being cloud native and built entirely on modern architecture enables us to simulate, experiment, train and deploy foundation models at scale. Coupled with our proven ability to attract world-class talent, this puts us ahead of incumbent banks and regional finding competitors and places us in a unique position globally.

Over the past 12 to 15 months, we developed new former or proprietary approach for building large generalizable models based on advanced transform architectures and self supervised learning principles similar to those powering world-class and kens. These models provide a deeper understanding of customer behaviors and can be deployed across our critical risk and personalization engines. To reach this level of performance, the first generation of our new former model was built with 330 million parameters and trade on approximately 600 billion tokens, an unprecedented scale of data by financial industry standards. That data represents only a fraction of our full data set, which spends trillions of tokens and reflects the vast scale and diversity of Nubank's platform. Our business model with principality at its core generates a deep repository of high-quality transactional and behavioral data, giving us a distinctive edge by enabling new form to learn from richer context and continuously strengthening its predictive power.

Historically, gains in credit performance have come from our main fronts, incorporating more and better data sources into models, expanding training samples or reducing bias within them, optimizing positive frameworks, including the use of complementary models that evaluate different dimensions of credit risk; and finally, refining modeling techniques from definition of targets to model architecture and feature engineering.

The adoption of Foundation models represents a radical expansion of this last frontier. It brings a research-driven approach that moves the needle through advances in model architecture and training processes, enabling rapid and continuous improvement as AI researchers push the boundaries of what's possible.

When we applied this approach, the models were built to deliver an average improvement about 3x higher than what's typically observed in successful machine learning model upgrades. Translating this into business outcomes, our initial models enable a major upgrade to credit the card limit policies in Brazil, allowing us to meaningfully increase limits for eligible customers while maintaining the same overall risk appetite.

This successful breakthrough within an already robust underwriting model, like credit card Brazil underscores the significant potential of these advanced approaches. We're now focused on scaling this innovation beyond Brazil, already in motion in Mexico and extending them across every part of Nubank from personalization and cross-sell to fraud and collections, further reinforcing both the strength of our model and our ability to execute at scale. That said, we're still just scratching the surface. As always, at Nubank, it's still day 1, but we believe that embedding AI into our business represents a once-in-a-lifetime opportunity to further differentiate Nubank from traditional banks. We're building on years of experience in model governance, privacy and large-scale model deployment to ensure we continue evolving responsibly. This means having robust processes to make sure our tools true from what our customers financial are being with the right guardrails in place to bring these advanced models safely into production within a highly regulated environment. We'll continue to share our progress as this journey evolves.

And with that, I'll hand it over to Lago to walk you through the financial highlights of the quarter. Thanks a lot.

Thank you, David, and good evening, everyone. To begin, I'd like to start with our credit portfolio. Total balances reached $3.4 billion in the third quarter, up 42% year-over-year on an FX-neutral basis, with very solid growth across all products. Credit cards accelerated during the quarter, supported by our ability to continuously enhance the precision of our credit models and increased limits for our customers. all while maintaining very healthy risk metrics as we will see in the following slides.

At the same time, secure lending grew 133% in unsecured loans 63% year-over-year, reflecting the ongoing diversification and maturation of our portfolio. Together, secured and unsecured loans now account for nearly 35% of total balances, up from 27% a year ago. This reinforces our capacity to broaden the credit spectrum and serve a wider range of customers' needs over time.

Moving to loan originations. We reached a record high of $4.2 billion in the quarter, up 40% year-over-year on an FX-neutral basis with growth coming from both unsecured and secured land. In unsecured lending, performance was supported by the strong momentum in our SME portfolio and buy new credit policies introduced for both business and individual customers. These updates are enabling us to safely expand eligibility and increase average loan sizes while keeping new originations more concentrated in lower risk segments.

In secure lending, results were driven by strong originations in public payroll loans or Consignado, which grew nearly 130% year-over-year along with a gradual normalization of INSS loans.

Now turning to deposits. Our balances reached $38.8 billion, up 34% year-over-year on an FX neutral basis, while the cost of funding actually improved from 91% to 89% of interbank rates. This is a clear demonstration of our ability to grow volumes while enhancing efficiency, continue to build a scalable and sustainable funding franchise across Latin America.

In Colombia, deposits continued to grow steadily, even with funding costs below the interbank rate. In Brazil, we saw strong inflows across all segments, reinforcing the depth and the resilience of our deposit franchise. And in Mexico, we had anticipated some outflows following the recent reduction in deposit yields. This was a deliberate move that reduced our consolidated funding cost and this was fully aligned with both our expectations and our long-term strategy for sustainable growth. Recent trends in Mexico reinforce our confidence in our ability to continue expanding and strengthening our deposit franchise.

Moving to net interest income. We reached $2.3 billion in the quarter, up 32% year-over-year on an FX neutral basis, driven again by the continued expansion of our credit portfolio. Net interest margins contracted by about 40 basis points from the prior quarter. This reflects our disciplined approach to optimizing risk-adjusted returns as we continue to expand originations in lower risk segments, including in credit card interest-earning portfolios, unsecured loans are also to lower risk individuals and higher shares of SME and secured loans within our total interest earning portfolio.

While some of these products carry lower nominal yields they strengthened the portfolio's overall quality and resilience over time, as you can see in the next slide. Our credit portfolio continues to outperform our expectations supported by disciplined underwriting and a healthy mix shift towards customers and products with stronger risk-adjusted returns. Combined with better recoveries, these factors drove a 7% decline in credit loss allowance expenses quarter-over-quarter, also on an FX-neutral basis, mainly reflecting lower provisions in our 2 largest products, namely credit cards and unsecured loans.

As a result of this lower cost of credit, our risk-adjusted net interest margins expanded to 9.9% in the quarter, underscoring the resilience and the quality of our portfolio. Next, looking at delinquency metrics for our consumer credit portfolio in Brazil.

The 15- to 90-day NPL ratio remained well within expectations, ending the quarter at 4.2% and slightly below the historical third quarter seasonality. The 90-plus day NPL ratio increased marginally to 6.8% and also very much in line with the expected seasonality and the underlying portfolio dynamics.

Now finally, our coverage ratios remained solid, even though they declined modestly in line with the recent movements in credit loss allowance. We continue to maintain what we believe to be a quite robust provision buffer both over the total portfolio and specifically over the 90-plus day NPL balances.

Moving to gross profit. We delivered another quarter of solid growth, reaching $1.8 billion, up 32% year-over-year, also on an FX-neutral basis. The expansion in gross profit margin now to 43.5% and reflects the consistent top line growth, combined with the continued improvement in the risk-adjusted performance that we saw in the prior slide.

These trends reinforce the sustainability and the scalability of our business model as we continue to balance growth, profitability and risk discipline across the 3 markets in which we operate. In the third quarter, our efficiency ratio decreased slightly to 27.7%, reflecting continued progress in productivity and operating leverage. Yet, we will continue to invest intentionally and strategically to become the largest and the most loved retail financial institution in Latin America. These investments are fully aligned with our long-term value creation strategy, even if they sometimes create short-term pressures on costs. That all said, the structural trend remains clear as we scale revenue growth and disciplined cost management will continue to drive efficiency gains and margin expansion.

Now to wrap up we delivered a record high net income of $783 million and a record ROE of 31%, up 39% year-over-year, also on an FX-neutral basis. We achieved these results while we continue to deliver strong operational growth, always putting our customer at the very center of everything that we do, offering better products, lower fees and an exceptional experience. These results once again highlight the strength and the scalability of our model as well as our ability to combine growth with profitability.

Now with that, we will open the call for questions. Thank you.

[Operator Instructions]. I would now like to turn the call over to Mr. Guilherme Souto, Investor Relations Officer.

Thank you, operator. Could you please open the line for Mr. Yuri Fernandes from JPMorgan.

I think the debate from investors here, I'd love to hear your thoughts, David, are related to your provisions, Lago. Your cost of risk was lower. I think you are doing a risk migration, right, growing more middle income in Brazil. growing more secured lending. When we check your new Stage 3 formation -- new Stage 3 formation improved. But I guess investors, they will try to understand the lower provisions this quarter that helped on EBIT. So if you can like provide some explanation for investors to understand what drove this lower provision. I think this will help with the understanding for the quarter.

Thank you very much, and congrats again.

No, thanks, Yuri, for the question. Yes. I think asset quality has been positive over the past 2 quarters. I think this quarter, we have also seen kind of asset quality performing as per expectation, even it's likely better than expectations. We have also had some effects of the policies that we have intensified over the past now 3 to 4 quarters of reactivating customers in Brazil who had defaulted with us a few years ago and only now after they have cured their debt, we are also kind of offering them additional credit opportunity that has materially improved the recovery levels.

And then finally, we actually have seen through both machine learning, but also the predict AI technology and modeling that David alluded, the ability to actually have greater precision in some of the credit modeling techniques. So what you have seen is kind of a asset performing in line or even better, but it's still, if I would not draw your attention, you do, let me go here, Slide 17, you see that the coverage ratio that we continue to have are at levels that we believe to be fairly robust in both the total balance as well as NPL 90-plus. Now let's see how it goes, but we are also kind of in the mid of the fourth quarter of 2024 now, it's November 13. And we continue to see asset quality performing relatively okay. So that's kind of the main background for the evolution of our CLA this quarter.

Operator, could you please open the line for Mr. Jorge Kuri from Morgan Stanley.

Congrats on the numbers. Great results. My question is around your net interest margin. I heard what Lago said about the mix of credit being responsible for the decline in NIM. I have -- I'm looking at just the nominal numbers and your interest income was up 14% quarter-on-quarter versus a loan book in total that was up 11%. So it doesn't seem that you're growing your income less on the assets, which would be sort of like a signal of mix deterioration. It's actually the other way around.

But on the flip side, your interest expense was up 24% quarter-on-quarter versus your deposits of 6%. And so you talked about the cost of deposits coming down, but it's just in this -- in dollar numbers, it's kind of like doesn't at all. And so I'm just wondering if you can walk us through the dynamics and exactly what explains that NIM contraction.

Sure, it, look, 2 things on this. So first on the revenue and then on the cost. I think on the revenue side, we have seen the growth being kind of more heavily weighted into less risky assets, not only asset classes per se. For example, you can see that if you go to Slide 12, you can see that, for example, secured lending has outpaced the rest of the portfolio. Secured assets has no everything else constant, lower kind of yield levels.

But even within lending and within credit card, we are seeing kind of a faster growth on a balanced basis. towards less risky customers that would have all else equal kind of lower yields. So that is one of the things that would justify, but you correctly pointed out that we have also seen an increase in interest expenses, and that has come entirely from Brazil. So our average funding cost in Brazil has gone up and the average funding cost in Mexico and Colombia have been coming down.

When we look at the average funding cost that we published on Slide 14, you will see kind of the -- what we call the cost of deposits as a percentage of the interbank rate going from 91% to 89% and then may call the question why, how do I kind of connect the dots, right? If you are lowering the cost of funding as a percent expressed as a percentage of interbank rates, how can your cost of funding expressed in dollars been going up? It's because the piece that is going up is the piece denominated in Brazilian reais, which is subject to the nominally higher interest rates of link -- so the weighted average cost of fund the expressed as a percentage of the interbank deposit rate, which is what you see here on Slide 14 has come down. But the overall interest expenses, dollar-wise, has gone up a little bit.

So the combination of lower asset yield because of the mix with a slightly more expensive funding base in Brazil has compressed net interest margins in the quarter which is what you see on Slide 15 that has gone from 17.7% to 17.3%.

What I would, however, point out is, when you're taking into account the asset quality or the cost of risk, you actually see an expansion in margin. And that is what is shown on the subsequent slide, which is Slide 16. Our risk-adjusted margin has actually gone up from 9.2% to 9.9%. And which goes to show that even though we have kind of increased the growth towards less risky assets that has come at the expense of slightly lower asset yield. This has been more than offset by much lower cost of risk, which has left with the expansion of risk-adjusted NIMs.

All right. That was very clear. And if you remind my follow-up on the previous question, on provisions. You mentioned recoveries stronger than expected. Would you mind quantifying that and what impact it had on the combined provision number?

We don't -- we are not disclosing this one-off impact, Jorge. It's basically the additional of the recoveries, mostly from the customers that we reactivated over the past now 3 quarters. This is a program that we have done by kind of offering a second chance to customers who defaulted was a few years ago have completely kind of paid down their debt and then we have seen that out of those customers. The recovery has been higher than we had booked for but we are not disclosing the breakdown of the additional recovery coming from this pride.

Operator, could you please open the line for Mr. Pedro Leduc from Itau BBA.

Hello, good evening, everybody. Thank you for the call and taking the question. If I may, on credit cards, please. Last quarter, we saw a big increase in newly granted limits this quarter, we may be seeing some of the effects here. There's more cards active, more cards generating revenues, transaction volumes, the cards seem to be going up. Can you talk a little bit more about how you're seeing this rollout perform on the ground? It looks like you did another small increase now in 2Q. If you can talk about that as well. And I think it may tie up also to the -- what we're seeing in the stages and the probabilities. It seems like this growth is coming from slightly better quality mix if you can also include that. I know it's a longer question, but I think you get the spirit.

Sure. Leduc, thanks for the question. So look, we announced a relatively large credit limit increase program in the second quarter of 2025. and the rollout of that credit limit program was spread grossly 1/3 in the second quarter, 1/3 in the third quarter and 1/3 expected to be finalized in the fourth quarter. So we have not yet seen the full effects of that clip program materialized and the financial performance of the company. It's something that we will only see in full most likely towards the mid and end of 2026 because it takes some times for limits to converge into PV and for PVs to converge into IBB. So there's some leeway there as well.

Second point, Leduc, you're right. I think a substantial portion of the credit limit was granted to less risky customers. And so kind of the average unit of risk that we have added has actually lowered over time. However, as we increase the limits to kind of lower-risk customers, we also decreased the flip side, the utilization, right? So I think if you have BRL 1,000 limits, and we increased this by 20% you would experience much higher utilization than if you have 100,000 limits and we increased this by 10%, but both the utilization as well as the credit performance related to this credit limit increase have now both performed largely per our expectations.

So nothing kind of the deviates or forces us to revisit both from the offensive as well as on the defensive side, the pace and tenacity of those movements. Now even though we did disclose in the second quarter that we saw a big clip, a credit limit increase I don't think we should see this as a one-off, right? This is really a continuous enhancement of the programs that will not be kind of a straight line, but we will see kind of a clip programs did introduce from time to time. This is what we've seen over the past years.

And then if you go Leduc what David mentioned at the beginning of his session about the implications of the predictive AI modeling to our credit underwriting. I would say that, first, we have introduced this to credit limit increases that has not yet been introduced to releases by which I mean we have been able to sharpen how we increase credit limits of existing customers. We have not yet applied this to the determination of the new customers to which we granted the initial line, which we call customer acquisition. We have also not introduced this to lending. And we have not introduced this to Mexico and Colombia. So I think there's still quite a lot of runway for us to see further improvements and enhancements in our credit underwriting performance.

Operator, could you please open the line for Mr. Mario Pierry from Bank of America.

Guys. Congrats on the results. Let me double-click a little bit on Mexico and Mexico ARPAC of $12.50 that you're showing -- and which is a quite impressive number, right, especially given that Mexico is fairly new for you and the ARPAC is almost similar to Brazil. Can you give us like a little bit more details on the breakdown of the ARPAC between interest income and fees because -- and I asked this, right, because we saw the regulator in Mexico now proposing our -- card interchange fees. So I was wondering what is your view on that? And how much that could impact your results in Mexico also staying with Mexico, you only give us data, right, the NPL data and coverage data for Brazil operations only. I was wondering if you could share any asset quality metrics from Mexico, that will be helpful.

Let me try to address each of those questions and feel free to follow up if I miss any of them. So I think on Mexico, you mentioned about the evolution of the customer in ARPAC and cost to serve. And I would draw your and the attention of the orders to Slide 7, where you can see the evolution of our customers in Mexico. It's now about 13 million customers accounts for grossly 14%, 15% of the adult population of Mexico, but accounting for now nearly 25% of the bank population in Mexico.

So we can easily say now that about 1 out of every 4 bank Mexicans are customers of new bank, which makes us quite excited. And then as you said, you see kind of the ARPAC evolution in Mexico. Most of them are kind of interest related, both from credit card lending and floating from our deposit base. the fees, the interchange related to both credit cards and debit cards accounts for a smaller portion of the overall ARPAC.

That said, Mario, I think you alluded to the public consultation that the Mexican government has recently issued ended capping the interchanges of both credit cards and debit cards in Mexico. We have, since this kind of came out being in very active dialogue with other industry participants and with the government itself. And even though that accounts for the smaller portion of our revenues, we are concerned with the idea of caps and price control there because they may actually inhibit, the financial inclusion and credit dymphony than we have seen in Brazil and other countries as they make the unit economics of new to credit customers less compelling. So we are kind of in active discussions with all of the industry participants. We are very confident that kind of we will be able to find together as an industry to a good balance that will not put at risk our ability to promote together with other fintechs and the financial inclusion in Mexico over time. Mario, did I forget any of your questions?

No, no, that's helpful. And then on the NPLs. And just to clarify, like when you say, right, that the fees are a smaller percentage, are we talking about like 15%, 20%. Any idea that you could give to us?

No, we don't provide this breakdown. But I think if you take a look at the financial statements that we posted with the regulators in Mexico, you will largely get a good proxy of kind of the weight of each of those components for us. But I think even if the, Mario, for example, let's assume that interchange accounts for a small portion. If you cap this in the magnitude that has been proposed by the government, the existing kind of business plan that we have a significant portion of the new customers of the ones that we would bring from informal related to the bank may be compromised, right? So we do believe that it's our obligation and duty to be able to share this very openly with the stakeholders in Mexico to continue to foster the competition and financial inclusion that we want to do so.

Okay. And the second part of my question was on the NPLs in Mexico, as Mexico becomes more relevant, right? Like are you going to disclose the NPLs for the total group rather than just Brazil? And if you can make any comments on how that is behaving in Mexico and the coverage they're using?

Yes. No, absolutely. We do expect that as Mexico gains relevance in our overall credit portfolio, we will start providing kind of a much more granular disclosure on its asset quality. Today, it still accounts for less than 10%, 15% of our overall book, but we are certainly able and willing to provide those levels of the -- asset quality and asset performance in Mexico overall has been a fairly good story for us. I think we spent the good part of 2023 and 2024 kind of sharpening the data stacks and the models.

And what you have seen over the past 12 to 18 months, it's a relatively strong acceleration of the growth of our credit book in Mexico, growing at a clip of about 50% to 70% on an annualized basis. But more than the top line growth or the size of the book, the asset quality has performed very much in line in some cases, even though better than expected.

Also, we have recently launched kind of the lending product in Mexico. We have been kind of working primarily with credit card, and lending has been doing really, really well in Mexico. I wouldn't be surprised if differently from Brazil. At some point in time, lending becomes an even bigger business for us in Mexico than credit cards.

So I would say, yes, the left side of the balance sheet has expanded nicely in both kind of quant and quality. And then on the right side of the balance sheet, as you may have seen, Mario, we have been kind of sequentially redesigning and repricing deposits it has led to a fairly substantial drop in cost of funding in Mexico. And still preserving what we see very intensively there, which is primary banking relationship, transactionality, activation, so forth, most of the customers. It has actually been going up. We are an all-time high of transactionality there. So very excited with Mexico with what we're seeing. Still early days. But as David mentioned, it's playing out to be as strong, if not even stronger than Brazil.

Thank you. It's very impressive how quickly and how profitable you're growing in Mexico. Thank you.

Operator, could you please open the line for Mr. Marcelo Mizrahi from Bradesco BB.

Thank you very much for the opportunity to participate. So my question is regarding the cost of risk again. So you understand what drives the cost of risk to go down. But as Lago has said, so about the campaign to recovery to bring back clients, so we are already seeing the number of active cards going up. So the question is, looking forward, this level of cost of risk seems that is the new level in the next quarters? So the growth of the NIM will come with this proportionality, so far more from the cost of risk than from the net interest margin.

So thanks for the question. I think it will -- in terms of NIMs, starting with your -- the latter part of your question, it will be a function of both asset mix as well as LDR, right? So I think as we increase kind of -- we continue to increase the ratio and the weight of secured lending in our book. We could eventually see the continuous kind of lowering of the asset yield.

But as LDRs go up, we should expect to see kind of a NIM even expanding potentially. So it will depend on the velocity with which we increase kind of our credit assets versus the velocity with which we continue to increase deposit in both Brazil, Mexico and Colombia.

In terms of cost of risk, we don't provide guidance on cost of risk in the short or in the long term. What we have been doing, as you have followed us for some time, is we have been kind of measuring and managing the business with a paranoid focus on the short-term data that we collect on the margins. So far, the data has proven to be fairly encouraging and reassuring for us to continue to grow the book.

However, as we have done in the past, if and when we see any deterioration in asset quality across any of the segments, any of the products or any of the geos, we will not hesitate to kind of -- to pull the brakes, reassess, revisit whether we will go. So that's one of the reasons why we are so hesitant to provide kind of a guidance on both top line as well as cost of risk.

Can I just a follow-up here on the LDR. So looking for the -- what is happening now in Mexico. So for me, it makes sense to see this -- part of this profitability coming from the leverage of the portfolio. So on the LDR part. Are you guys seeing that already or not?

Yes. Look, I think LDR in Mexico is about 15%, 1-5, right? So certainly, it's in many respects, one of the most liquid financial institutions that we may have in the region. Having said that, over the past 2 quarters, most of the expansion of NIMs in Mexico has come from the lowering of the cost of funding rather than any material changes in LDR. Going forward, however, I think that LDR will play a much bigger role than any material change in cost of funding.

Operator, could you please open the line for Mr. Thiago Batista from UBS.

I have 1 question, actually, 1 question of adding -- about regulation. The first part of the question is about mortgage with there was recent change regulation on saving deposits and mortgage in Brazil, do you believe it is possible to start to operate in this market in the near future? And second, on the FGTS loans, with the change that we saw probably 1 month ago or less than that, do you believe that FGTS loans will be reduced in a material way?

Thank you for your question. So we've looked at the market space in Brazil, and certainly, there are a number of attractive angles, specifically around principality. But it's not -- it's not a priority for us right now. It's not a product that I see yourselves really doing over the next couple of years.

The main reason for that is we think about our balance sheet fundamentally as a small balance sheet that is well capitalized that has very high velocity and very high return on equity. So from that perspective, we're going to be picking products, especially credit products that have short duration, very data-intensive that gives us the opportunity to react very quickly to changing macroeconomic environments and that maintains -- it gives us a lot of agility. And obviously, mortgages is kind of the opposite of that. It does -- it's very long-term duration, removes a lot of agility. It requires a lot of long-term funding. So it doesn't really match with the type of products that we want to be offering directly from the balance sheet and perhaps down the road, there might be an opportunity to partner with somebody to actually do it, but it's not something that we -- that we'll be prioritizing right now.

On FGTS, regulation, yes, I think the regulation would have a decrease of our FGTS originations. But given the size of the portfolio and the rest of the lending products that we offer, it wouldn't really be material. So yes, effect on FGTS, but not really a material effect overall on the portfolio growth.

Operator, could you please open the line for Mr. Gustavo Schroden from Citi.

Guys, congrats on the results. Thanks for the call. Most of my questions were answered. So let me do a follow-up here. The first one is I'd like to understand better this -- the asset quality. Indeed, the bit was on the lower ECL. So despite this some metrics like 90 days NPLs relatively stable and early NPLs improving. When we analyze the transfers to Stage 3 in both credit cards and loans, it is continuing increasing, right? I mean it's rising. So I'd like to understand how we reconcile this increase in transfers to stage with this, let's say, a lower risk credit portfolio you are adopting and this lower provision expenses in the quarter.

Thanks for the question. Look, we've been -- I think later than what we've already mentioned related to the better-than-expected asset quality performance in some of the segments, especially with credit cards Brazil. I think the order, no positive surprise I wouldn't say surprised in the positive outcome that we have had after kind of many months and years of investment is also on the ability to improve our collections, engines and platforms which has had kind of a material improvement in Brazil. And I think it will start to have material improvements in Mexico, most likely starting in the fourth quarter of 2025.

But other than that, it's just kind of a general performance of the portfolio. There's nothing atypical or nothing abnormal that you would have seen over the past 2 to 3 quarters that we wouldn't expect to continue seeing in the next 2 to 3 quarters unless we see kind of material changes in macro.

Okay. Okay. Understood. And the my follow-up would be regarding Mexico. Assuming this, let's say, improving in cost of funding, we follow data from Mexico and we can see that you are improving the cost of funding there, assuming a potential improvement also in loan-to-deposit ratio. And we also followed the NPL ratio, and we see the NPL ratio next when your control. So do you think that assuming these trends you are posting Mexico, we can expect like some positive ROE, our bottom line in Mexico soon.

So Schroden, I wouldn't guide in any way or form as we haven't done in the past on kind of the P&L or net income either for the company or for any of the legal entities. So I would stay away from trying to provide you any high conviction outlook on when we're going to become net income positive for ROE.

That said, I'm much more comfortable providing you with our impressions of the profitability potential of Mexico. If you take a look at our business in Mexico, it is it posts actually unit economics that are as compelling, if not more compelling than Brazil. It has higher ROA. It has higher ROE and allows us to actually provide kind of with material credit asset, no access to a portion of the population that it hasn't yet had no access to credit.

If you take a look at the more than 13 million almost 14 million customers in Mexico, about 20% of those did not have access to kind of a banking or credit before joining new bank. And we think that in Mexico, we enjoy a very favorable cost structure compared with many of the other players in the region that allows Nubank to play at segments that incumbent banks are enabled and -- will it play to price it lower and still have compelling kind of unit economics. And we are super excited with what lies ahead in Mexico. We are still very, very, very early.

But as we continue to gain scale, we will see kind of economies of scale and operational leverage playing out there. In fact, today, Mexico already has a cost to serve that is about $1, which is much better than what Brazil had when it was at the same point in time of development of Mexico, and it already has kind of very encouraging ROEs and ROAs trends.

The question in Mexico become how fast the economy will truly digitalized and how much kind of a banking penetration will grow. We are now excited not only to witness this but also to be a very active agent in promoting this together with other players in the industry and with the Mexican government.

The other point I would just add here is that if we wanted to be profitable in Mexico, we would be profitable already. It's a decision. We literally touch about on mechanization and we're profitable immediately. We have already had the scale to generate that profitability. But that would actually be a really bad decision. It would be sacrificing the future for a short-term decision. We've always told investors we're optimizing for the long run. We're really optimizing to try to make investments that will pay for long as possible. And this is a very attractive market.

Another data point that I do think Lago mentioned previously is -- on the ARPAC question, Visa country has a 40% higher income per capita than Brazil and where credit cards are majority, about 80% of revolvers versus only in Brazil, about 10% to 15% for our portfolio revolvers.

So anyway, it's a big market, low penetration, a lot of the advantages that we have, like our capabilities on credit underwriting, the efficiency ratio. Good unit economics provide a really compelling investment opportunity. And so we'll continue investing the excess capital that we have in trying to maintain a leadership position in the country.

Okay. Okay. Okay. That's a great answer. And as I said, we have followed your data in Mexico in the -- and we can see these trends improving. This is why I was asking about the potential profitability maybe sooner than we were expecting. But thanks again, and congrats on the results.

Rate, could you please open the line for Mr. Tito Labarta from Goldman Sachs.

First, I have a follow-up question, Lago, your comment on the higher interest expenses just driven by higher funding costs. in Brazil and SILIQ being a little bit higher, I think. But just to understand, because average SILIQ only increased modestly in the quarter. Was there any impact perhaps from just more working days in the quarter. You had also launched the Turbo money boxes. I was wondering if that had any impact. I was a bit surprised by how much the interest expenses jumped.

So no, Tito, you're right, there were a few additional working days in the quarter, but it would have been equally offset by the revenues as well. But what you will see is that as we kind of took a more aggressive stance on the segmented portion of our deposits in Brazil, by which I mean for a selected profile of customers that we think that our primary bank relationship customers or are prone to become primary banking relationship customers. We have been more aggressive with the money boxes with the Turbo Caritas and that has all else constant increase our cost of funding in Brazil. So that is unequivocal observation.

What I was trying to allude only, Tito, is that how would you reconcile what I've just said. We have Slide 14 which is where we show kind of the cost expressed as a percentage of interbank rate coming down. And I was just trying to say that the reason why it comes down is because we do a weighted average of percentage of CDI, a percentage of IBR and percentage of tea in Mexico. And as both Colombia and Mexico went down. Then line here on Slide 14 goes down, notwithstanding the fact that overall cost of funding denominated in dollar has gone up because of our deliberate intention to play more aggressiveness on the segmented roles of Caritas in Brazil.

Okay. No, that's very clear. That helps clarify a lot, yes, I mean we expected funding costs in Mexico and Colombia to come down. It was just a little bit surprised by how much that had gone up specifically in Brazil, and as you mentioned, more than offset by the revenues.

So my second question is somewhat on the revenue. Just thinking on the loan growth, very good loan growth overall. But first on the secured lending, right? And David, you mentioned your FGTS could be a headwind, but it shouldn't have an impact. Do you expect that to be potentially offset by private payroll loans? I don't think you're necessarily growing significantly there. Just think about what could offset that potential headwind would be helpful.

Yes. No, absolutely, Tito. Look, let me put it this way. the secure lending class or segment that we define here is largely composed by FGTS, public payroll loans and private payroll loans. So grossly, those are the 3 components. You do still have a smaller portion that we call IPL, investment backlogs, but that's a much minor portion.

We do expect to see a material headwind in terms of FGTS in the new regulation kind of prevails. But we do believe that this will be more than offset by an increase in public payroll loans at this point in time, more so than on private payroll loans. On public payroll loans, we have seen a fairly material uptick in our ability to originate public payroll loans in Brazil. In the third quarter, we expect to see this in the fourth quarter as well. And as we see in nominal interest rates in Brazil finally coming down, we do expect to see portability going up as we have seen in all of the prior cycles, and that will give us the opening to actually get a disproportionately higher shares of the public payroll loan market in the country.

Now going to your third and final piece, which is private payroll loans. We are very, very bullish on this product in the medium and long term. We are still more cautious than some of the other players in the industry with respect to its cost of risk. Mostly related to what we call employee-related collateral, but we are seeing this kind of improving quarter-after-quarter, and we are reflecting and watching this very carefully on when and how we will lean in more aggressively in the future. It's not something that we are taking as a base case now, but we are certainly paying very close attention to that. For now, public payroll loans is the one that will offset the slowdown in FGTS Q2.

That's very clear. Thanks a lot, a congrats on the results.

So thank you, everyone. We now have approached 60 minutes of the call. So we are now concluding today's call. On behalf of new Holdings, our Investor Relations team, I want to thank you very much for your time and participation on Nu earnings call today.

Over the coming days, we'll be following up with questions received tonight, but we are not able to answer. And please do not hesitate to reach out to our team if you have any further questions. Thank you, and have a good night.

The Nu Holdings conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.