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Form 6-K Nu Holdings Ltd. For: Mar 31

May 14, 2024 4:00 PM

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

FORM 6-K

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

 

For the month of May, 2024

Commission File Number 001-41129

 

 

 

Nu Holdings Ltd.

(Exact name of registrant as specified in its charter)

 

Nu Holdings Ltd.

(Translation of Registrant's name into English)

 

Campbells Corporate Services Limited, Floor 4, Willow House, Cricket Square, KY1-9010 Grand Cayman, Cayman Islands

+1 345 949 2648

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F (X) Form 40-F

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes No (X)

 

 
 

 


 
 

Contents

 

 

Unaudited Interim Condensed Consolidated Statements of Profit or Loss  
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income  
Unaudited Interim Condensed Consolidated Statements of Financial Position  
Unaudited Interim Condensed Consolidated Statements of Changes in Equity  
Unaudited Interim Condensed Consolidated Statements of Cash Flows  

 

 

 
 

 

 

KPMG Auditores Independentes Ltda.

Rua Arquiteto Olavo Redig de Campos, 105, 12º andar - Torre A

04711-904 - São Paulo/SP - Brasil

Caixa Postal 79518 - CEP 04707-970 - São Paulo/SP - Brasil

Telefone +55 (11) 3940-1500

kpmg.com.br

 

 

Independent Auditors’ report on review of Interim Condensed Consolidated Financial Statements

 

 

To Board of Directors and Shareholders of

Nu Holdings Ltd.

Cayman Islands

 

 

Introduction

We have reviewed the accompanying interim condensed consolidated statements of financial position of Nu Holdings Ltd. (“Company”) as of March 31, 2024, the condensed consolidated statements of profit or loss and comprehensive income or loss for quarter ended, changes in equity and cash flows for the three-month period then ended, and notes to the interim condensed consolidated financial statements.

 

Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34, ‘Interim Financial Reporting’ issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

 

Scope of review

We conducted our review in accordance with Brazilian and International Standards on Review (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de responsabilidade limitada e firma-membro da organização global KPMG de firmas-membro independentes licenciadas da KPMG International Limited, uma empresa inglesa privada de responsabilidade limitada. KPMG Auditores Independentes Ltda., a Brazilian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
 
 

 

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements as of March 31, 2024, are not prepared, in all material respects, in accordance with IAS 34, ‘Interim Financial Reporting’.

 

 

São Paulo, May 14, 2024.

 

 

KPMG Auditores Independentes Ltda.

CRC 2SP-027685/O-0 F SP

 

 

 

 

Rodrigo de Mattos Lia

Accountant CRC 1SP252418/O-3

 

KPMG Auditores Independentes Ltda., uma sociedade simples brasileira, de responsabilidade limitada e firma-membro da organização global KPMG de firmas-membro independentes licenciadas da KPMG International Limited, uma empresa inglesa privada de responsabilidade limitada. KPMG Auditores Independentes Ltda., a Brazilian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

 
 

 

Unaudited Interim Condensed Consolidated

Statements of Profit or Loss

 

For the three-month period ended March 31, 2024 and 2023

(In thousands of U.S. Dollars, except earnings per share)

 

    Note   03/31/2024   03/31/2023
             
Interest income and gains (losses) on financial instruments   6   2,280,248   1,255,454
Fee and commission income   6   455,653   363,213
Total revenue       2,735,901   1,618,667
Interest and other financial expenses   6   (660,715)   (440,212)
Transactional expenses   6   (62,948)   (52,778)
Credit loss allowance expenses   7   (830,719)   (474,795)
Total cost of financial and transactional services provided       (1,554,382)   (967,785)
Gross profit       1,181,519   650,882
             
Operating expenses            
Customer support and operations   8   (150,612)   (107,815)
General and administrative expenses   8   (326,052)   (236,881)
Marketing expenses   8   (46,827)   (19,272)
Other income (expenses)   8   (79,491)   (43,285)
Total operating expenses       (602,982)   (407,253)
             
Profit before income taxes       578,537   243,629
             
Income taxes            
Current taxes   29   (415,042)   (205,864)
Deferred taxes   29   215,319   103,986
Total income taxes       (199,723)   (101,878)
             
Profit for the period       378,814   141,751
             
Earnings per share – Basic   9   0.0794   0.0301
Earnings per share – Diluted   9   0.0775   0.0294
Weighted average number of outstanding shares – Basic (in thousands of shares)   9   4,773,284   4,709,505
Weighted average number of outstanding shares – Diluted (in thousands of shares)   9   4,886,361   4,818,200

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 
 

 

Unaudited Interim Condensed Consolidated Statements of Comprehensive Income

 

For the three-month period ended March 31, 2024 and 2023

(In thousands of U.S. Dollars)

 

    Note   03/31/2024   03/31/2023
             
Profit for the period       378,814   141,751
             
Other comprehensive income or loss:            
Effective portion of changes in fair value       45,508   1,995
Changes in fair value reclassified to profit or loss       (15,498)   (2,874)
Deferred income taxes       (3,308)   3,026
Cash flow hedge   19   26,702   2,147
             
Changes in fair value       2,220   10,324
Deferred income taxes       (1,539)   185
Financial assets at fair value through other comprehensive income       681   10,509
             
Currency translation on foreign entities       (71,969)   110,505
             
Total other comprehensive income (loss)  that may be reclassified to profit or loss subsequently       (44,586)   123,161
             
Changes in fair value - own credit adjustment   20   (18)   45
Total other comprehensive income or loss that will not be reclassified to profit or loss subsequently       (18)   45
Total other comprehensive income (loss), net of tax       (44,604)   123,206
Total comprehensive income for the period, net of tax       334,210   264,957

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 
 

 

Unaudited Interim Condensed Consolidated

Statements of Financial Position

 

As of March 31, 2024 and December 31, 2023

(In thousands of U.S. Dollars)

 

 

    Note   03/31/2024   12/31/2023
             
Assets            
Cash and cash equivalents   11   6,033,658   5,923,440
Financial assets at fair value through profit or loss       646,131   389,875
Securities   12   624,731   368,574
Derivative financial instruments   19   21,076   20,981
Collateral for credit card operations   22   324   320
Financial assets at fair value through other comprehensive income       8,801,925   8,805,745
Securities   12   8,801,925   8,805,745
Financial assets at amortized cost       25,309,564   24,988,919
Credit card receivables   13   12,796,677   12,414,133
Loans to customers   14   3,863,812   3,202,334
Compulsory and other deposits at central banks   15   7,005,946   7,447,483
Other receivables   16   1,405,969   1,689,030
Other financial assets       167,666   131,519
Securities   12   69,494   104,420
Other assets   17   567,552   936,209
Deferred tax assets       1,710,214   1,537,835
Right-of-use assets       28,954   30,459
Property, plant and equipment       36,530   39,294
Intangible assets   18   307,399   295,881
Goodwill   18   397,570   397,538
Total assets       43,839,497   43,345,195

 

 
 

 

Unaudited Interim Condensed Consolidated

Statements of Financial Position

 

As of March 31, 2024 and December 31, 2023

(In thousands of U.S. Dollars)

 

 

    Note   03/31/2024   12/31/2023
             
Liabilities            
Financial liabilities at fair value through profit or loss       660,425   242,615
Derivative financial instruments   19   27,488   28,173
Instruments eligible as capital   20   3,990   3,988
Repurchase agreements       628,947   210,454
Financial liabilities at amortized cost       35,230,755   34,582,759
Deposits   21   24,254,885   23,691,130
Payables to network   22   9,572,521   9,755,285
Borrowings and financing   23   1,403,349   1,136,344
Salaries, allowances and social security contributions       191,544   166,876
Tax liabilities       320,379   1,300,845
Lease liabilities       35,676   36,942
Provision for lawsuits and administrative proceedings   24   13,579   8,082
Deferred income   25   67,505   68,360
Other liabilities   26   516,943   532,331
Total liabilities       37,036,806   36,938,810
             
Equity            
Share capital   30   84   84
Share premium reserve   30   4,974,704   4,972,922
Accumulated gains   30   1,716,077   1,276,949
Other comprehensive income   30   111,826   156,430
Total equity       6,802,691   6,406,385
Total liabilities and equity       43,839,497   43,345,195

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 
 

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

 

For the three-month period ended March 31, 2024

(In thousands of U.S. Dollars)

 

    Attributable to shareholders of the parent company
                Other comprehensive income    
  Note Share capital   Share premium reserve   Accumulated gains   Translation reserve   Cash flow hedge reserve  

Financial Assets

at FVTOCI

  Own credit revaluation reserve   Total equity
Balances as of December 31, 2023   84   4,972,922   1,276,949   135,497   12,417   7,998   518   6,406,385
Profit for the period   -   -   378,814   -   -   -   -   378,814
Share-based compensation, net of shares withheld for employee taxes 10 -   -   60,314   -   -   -   -   60,314
Stock options exercised 30 -   1,782   -   -   -   -   -   1,782
Other comprehensive income, net of tax 28                              
Cash flow hedge   -   -   -   -   26,702   -   -   26,702
Fair value changes - financial assets at FVTOCI   -   -   -   -   -   681   -   681
Currency translation on foreign entities   -   -   -   (71,969)   -   -   -   (71,969)
Own credit adjustment   -   -   -   -   -   -   (18)   (18)
Balances as of March 31, 2024   84   4,974,704   1,716,077   63,528   39,119   8,679   500   6,802,691

 

 
 

 

Unaudited Interim Condensed Consolidated Statements of Changes in Equity

 

For the three-month period ended March 31, 2023

(In thousands of U.S. Dollars)

 

    Attributable to shareholders of the parent company
                Other comprehensive income    
  Note

Share

capital

 

Share

premium

reserve

  Accumulated gains (losses)   Translation reserve   Cash flow hedge reserve  

Financial Assets

at FVTOCI

  Own credit revaluation reserve   Total equity
Balances as of December 31, 2022   83   4,963,774   64,577   (108,356)   (7,486)   (22,298)   489   4,890,783
Profit for the period   -   -   141,751   -   -   -   -   141,751
Share-based compensation, net of shares withheld for employee taxes 10 -   -   50,762   -   -   -   -   50,762
Stock options exercised 30 -   2,019   -   -   -   -   -   2,019
Other comprehensive income or loss, net of tax 30                              
Cash flow hedge   -   -   -   -   2,147   -   -   2,147
Fair value changes - financial assets at FVTOCI   -   -   -   -   -   10,509   -   10,509
Currency translation on foreign entities   -   -   -   110,505   -   -   -   110,505
Own credit adjustment   -   -   -   -   -   -   45   45
Balances as of March 31, 2023   83   4,965,793   257,090   2,149   (5,339)   (11,789)   534   5,208,521

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 
 

 

Unaudited Interim Condensed Consolidated

Statements of Cash Flows

 

For the three-month period ended March 31, 2024 and 2023

(In thousands of U.S. Dollars)

 

 

    Note   03/31/2024   03/31/2023
             
Cash flows from operating activities            
Reconciliation of profit to net cash flows from operating activities:
Profit for the period       378,814   141,751
Adjustments:            
Depreciation and amortization   8   18,465   13,179
Credit loss allowance expenses   7   883,498   491,937
Deferred income taxes   29   (215,319)   (103,986)
Provision for lawsuits and administrative proceedings       5,823   1,239
Unrealized losses on other investments       -   18,298
Unrealized losses on financial instruments       (1,074)   4,437
Interest accrued       41,326   16,463
Share-based compensation       78,649   57,857
Others       2,088   -
        1,192,270   641,175
             
Changes in operating assets and liabilities:            
Securities       (218,559)   1,968,358
Compulsory deposits and others at central banks       447,155   103,703
Credit card receivables       (1,740,047)   (1,577,046)
Loans to customers       (1,564,023)   (702,670)
Other receivables       286,980   (541,190)
Other assets       334,622   406,972
Deposits       570,928   (49,611)
Payables to network       (156,255)   (178,401)
Deferred income       (866)   5,299
Other liabilities       (2,543)   (134,691)
             
Interest paid       (36,260)   (18,832)
Income tax paid       (987,010)   (404,193)
Interest received       1,302,989   575,419
Cash flows (used in) generated from operating activities       (570,619)   94,292
             
Cash flows from investing activities            
Acquisition of property, plant and equipment       (210)   (4,596)
Acquisition and development of intangible assets       (26,573)   (41,919)
Cash flow (used in) generated from investing activities       (26,783)   (46,515)
 
10 
 

 

 

    Note   03/31/2024   03/31/2023
             
Cash flows from financing activities            
Proceeds from borrowings and financing   23   269,726   19,713
Payments of borrowings and financing   23   (11,465)   -
Lease payments       (1,823)   (1,858)
Exercise of stock options   30   1,782   2,019
Cash flows (used in) generated from financing activities       258,220   19,874
Change in cash and cash equivalents       (339,182)   67,651
             
Cash and cash equivalents            
Cash and cash equivalents - beginning of the period   11   5,923,440   4,172,316
Foreign exchange rate changes on cash and cash equivalents       449,400   70,529
Cash and cash equivalents - end of the period   11   6,033,658   4,310,496
Increase (decrease) in cash and cash equivalents       (339,182)   67,651

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 
11 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Nu Holdings Ltd.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In thousands of U.S. Dollars, unless otherwise stated)

 

1. OPERATIONS

Nu Holdings Ltd. ("Company" or "Nu Holdings") was incorporated as an exempted Company under the Companies Law of the Cayman Islands on February 26, 2016. The address of the Company's registered office is Willow House, 4th floor, Cricket Square, Grand Cayman - Cayman Islands. Nu Holdings has no operating activities with clients.

The Company’s shares are publicly traded on the New York Stock Exchange ("NYSE") under the symbol “NU”. The Company holds investments in several operating entities and, as of March 31, 2024, its significant operating subsidiaries were:

Nu Pagamentos S.A. - Instituição de Pagamento (“Nu Pagamentos”) is an indirect subsidiary domiciled in Brazil. Nu Pagamentos is engaged in the issuance and administration of credit cards and payment transfers through a prepaid account, and participation in other companies as partner or shareholder. Nu Pagamentos has as its primary products: (i) a Mastercard international credit card (issued in Brazil which allows payments for purchases to be made in monthly installments), fully managed through a smartphone app, and (ii) "Conta do Nubank", a 100% digital smartphone app, maintenance-free prepaid account, which also includes features of a traditional bank account, such as electronic and peer-to-peer transfers ("PIX"), bill payments, withdrawals through the 24 Hours ATM network, instant payments, prepaid credit for mobile top ups and prepaid cards similar in functionality to debit cards.
Nu Financeira S.A. – SCFI (“Nu Financeira”) is an indirect subsidiary also domiciled in Brazil, with personal loans and retail deposits as its main products. Nu Financeira offers customers in Brazil the possibility to obtain loans that can be customized in relation to amounts, terms and conditions, number of installments with transparent disclosure of any charges involved in the transaction, fully managed through the above-mentioned smartphone app. Loan issuance, repayment, and prepayments are available 24/7 through "Conta do Nubank", directly in the app. In addition, Nu Financeira issues the Bank Deposit Receipt (RDB), with daily liquidity and with a defined future maturity date and offered to the Company's customers through the "Conta do Nubank". Nu Financeira also grants credit to Nu Pagamentos credit card holders, due to overdue invoices, bill installments and revolving credit.
Nu Invest Corretora de Valores S.A. ("Nu Invest") is an indirect subsidiary acquired in June 2021, domiciled in Brazil, and is a digital investment broker dealer.
Nu Distribuidora de Titulos e Valores Mobiliarios Ltda. ("Nu DTVM") is an indirect subsidiary that executes securities brokerage activities in Brazil.
Nu México Financiera, S.A. de C.V., S.F.P. ("Nu Financiera") is an indirect subsidiary domiciled in Mexico. Nu Financiera is engaged in the issuance and administration of credit cards, payment transfers through a prepaid account and offers customers in México the possibility to obtain loans, in addition to offering "Cuenta Nu", a 100% digital account in the smartphone app, maintenance-free prepaid account, which also includes features of a traditional bank account. It commenced operations in the Mexican market in December 2022 and currently offers credit cards and deposits as its main products.
 
12 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
Nu Colombia S.A. (“Nu Colombia”) is an indirect subsidiary domiciled in Colombia, with operations related to credit cards, which was launched in September 2020. On January 2024, the Financial Superintendence of Colombia ("SFC") approved the Group's request to incorporate a financing institution in Colombia, Nu Colombia Compañía de Financiamiento S.A ("Nu Colombia Financiamiento") ("Incorporation License"). "Cuenta Nu" was launched in the country in March 2024.

The Company and its consolidated subsidiaries are referred to in these unaudited interim condensed consolidated financial statements as the “Group” or "Nu”.

The Company’s Board authorized the issuance of these unaudited interim condensed consolidated financial statements on May 14, 2024.

2. STATEMENT OF COMPLIANCE

These unaudited interim condensed consolidated financial statements do not include all the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards ("IFRS”) as issued by the International Accounting Standard Board (“IASB”). However, selected condensed explanatory notes are included to explain events and transactions that are significant to understanding the changes in the Group's financial position and performance since the issuance of its last annual financial statements.

The Group’s unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting issued by IASB. Accordingly, this report is to be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2023 (the "Annual Financial Statements”).

a) Functional currency and foreign currency translation

i) Nu Holding's functional and presentation currency

The presentation of the functional currency and foreign currency translation is described below and it is valid for these unaudited interim condensed consolidated financial statements.

The functional currency for Nu Holdings and the presentation currency of these unaudited interim condensed consolidated financial statements is the U.S. Dollar (“US$”). The functional currency of the Brazilian operating entities is the Brazilian real, for the Mexican entities, Mexican peso and for the Colombian entities, the Colombian peso.

The financial statements of the foreign subsidiaries held in functional currencies that are not US$ are translated into US$, and the exchange differences arising from the translation to US$ of the financial statements denominated in functional currencies other than the US$ are recognized in the consolidated statements of comprehensive income or loss (OCI) as an item that may be reclassified to profit or loss within “currency translation on foreign entities”.

 
13 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

b) New or revised accounting pronouncements adopted in 2024:

The following new or revised standards have been issued by IASB, were effective for the period covered by these unaudited interim condensed consolidated financial statements and had no significant impact.

Disclosures in Financial Statements (Amendments to IAS 1);
Non-current Liabilities with Covenants (Amendments to IAS 1);
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1);
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16);
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).

c) Other new standards and interpretations issued but not yet effective:

Presentation and Disclosures in Financial Statements (IFRS 18);
Lack of Exchangeability (Amendments to IAS 21).

Management does not expect the adoption of the amendments described above to have a significant impact, other than additional disclosures, on the Group's unaudited interim condensed consolidated financial statements.

3. BASIS OF CONSOLIDATION

These unaudited interim condensed consolidated financial statements include the accounting balances of Nu Holdings and all those subsidiaries over which the Company exercises control, directly or indirectly. Control is achieved where the Company has (i) power over the investee; (ii) is exposed, or has rights, to variable returns from its involvement with the investee; and (iii) can use its power to affect its profits.

The Company re-assesses whether it maintains control of an investee if facts and circumstances indicate that there are changes to one or more of the three above mentioned elements of control.

The consolidation of a subsidiary begins when the Company obtains control over it and ceases when the Company loses control over it. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the reporting period are included in the consolidated statements of profit or loss from the date the Company gains control until the date the Company ceases to control the subsidiary.

The financial information of the subsidiaries was prepared for the same period as the Company and consistent accounting policies were applied. The financial statements of the subsidiaries are fully consolidated with those of the Company. Accordingly, all balances, transactions and any unrealized income and expenses arising between consolidated entities are eliminated in the consolidation, except for foreign-currency gain and losses on translation of intercompany loans. Profit or loss and each component of other comprehensive income are attributed to the shareholders of the parent and to the non-controlling interests, when applicable.

 
14 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

The subsidiaries below are the most relevant entities included in these unaudited interim condensed consolidated financial statements:

Entity   Control   Principal activities   Functional currency   Country   03/31/2024   12/31/2023
Nu Pagamentos S.A. - Instituição de Pagamentos (“Nu Pagamentos”)   Indirect   Credit card and prepaid account operations   BRL   Brazil   100%   100%
Nu Financeira S.A. – SCFI (“Nu Financeira”)   Indirect   Loan operations   BRL   Brazil   100%   100%
Nu Distribuidora de Titulos e Valores Mobiliarios Ltda. ("Nu DTVM")   Indirect   Securities distribution   BRL   Brazil   100%   100%
Nu Invest Corretora de Valores S.A ("Nu Invest")   Indirect   Investment platform   BRL   Brazil   100%   100%
Nu México Financiera, S.A. de C.V., S.F.P. ("Nu Financiera")   Indirect   Multiple purpose financial company   MXN   Mexico   100%   100%
Nu Colombia S.A. (“Nu Colombia”)   Indirect   Credit card operations   COP   Colombia   100%   100%

In addition, the Company consolidated the following investment fund as of March 31,2024 and December 31, 2023, in which the Group’s companies hold a substantial interest or the entirety of the interests and are therefore exposed, or have rights, to variable returns and have the ability to affect those returns through power over the entity:

Name of the entity   Country
Fundo de Investimento Ostrum Soberano Renda Fixa Referenciado DI (“Fundo Ostrum”)   Brazil

Nu Pagamentos, Nu Financeira, Nu DTVM, Nu Invest and Nu Pay, Brazilian subsidiaries, are regulated by Central Bank of Brazil (“BACEN”); Nu Financiera, a Mexican subsidiary, is regulated by both the Mexican Central Bank ("BANXICO") and Mexican National Banking and Stock Commission (“CNBV”); Nu Colombia Financiamiento, Colombian subsidiary, is regulated by Industry and Commerce Superintendency and by Financial Superintendence of Colombia ("SFC"); and as such, there are some regulatory requirements that restrict the ability of the Group to access and transfer assets freely to or from these entities within the Group and to settle liabilities of the other entities of the Group.

4. MATERIAL ACCOUNTING POLICIES

The significant accounting policies adopted by the Group in the preparation of these unaudited interim condensed consolidated financial statements are consistent with those adopted and disclosed in the Annual Financial Statements and therefore should be read in conjunction.

5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

Use of estimates and judgments

The preparation of financial statements requires judgments, estimates, and assumptions from management that affect the application of accounting policies, and reported amounts of assets, liabilities, revenues, and expenses. Actual results may differ from these estimates, and estimates and assumptions are reviewed on a periodic basis. Revisions to the estimates are recognized prospectively.

The significant assumptions and estimates used in the preparation of these unaudited interim condensed consolidated financial statements were the same as those adopted in the Annual Financial Statements.

 
15 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Credit losses on financial instruments for credit card receivables and loans to customers

The Group recognizes a loss allowance for expected credit losses on credit cards receivables and loans to customers that represents management’s best estimate of allowance as of each reporting date.

Management performs an analysis of the credit card and loan amounts to determine if credit losses have occurred and to assess the adequacy of the allowance based on historical and current trends as well as other factors affecting credit losses.

Key areas of judgment

The critical judgments made by management in applying the expected credit losses ("ECL") allowance methodology are:

a)Definition of default;
b)Forward-looking information used for the projection of macroeconomic scenarios;
c)Probability weights of future scenarios;
d)Definition of significant increase in credit risk and lifetime; and
e)Look-back period, used for parameters estimation (probability of default - PD, exposure at default - EAD and loss given default - LGD).

Sensitivity analysis

On March 31, 2024, the probability weighted ECL allowance for credit card receivables and loans to customers totaled US$2,934,387 of which US$2,319,493 related to credit card receivables and US$614,894 to loans to customers. The ECL allowance is sensitive to the methodology, assumptions and estimations underlying its calculation. One key assumption is the probability weighting of the macroeconomic scenarios between upside, base and downside as the carrying amount of the credit loss allowance is determined based on the weighted average of these scenarios. Such weightings are a reflection of the management's perception around the current and future expectations of the macroeconomic environment based on, but not limited to, GDP, Inflation, Unemployment and Interest Rates in each of the geographies the Group operates in. The table below illustrates the ECL that would have arisen if management had applied the weighted average of these three macroeconomic scenarios and a 100% weighting to each macroeconomic scenario.

 

    Weighted average   Upside   Base case   Downside
                 
Credit card and lending ECL   2,934,387   2,751,817   2,914,055   3,208,082

 

 
16 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

 

6. INCOME AND RELATED EXPENSES

a) Interest income and gains (losses) on financial instruments

    Three-month period ended
    03/31/2024   03/31/2023
         
Interest income – credit card   983,573   447,696
Interest income – lending   655,961   286,943
Interest income – other assets at amortized cost   260,222   154,163
Interest income – other receivables   103,816   86,971
Interest income and gains (losses) on financial instruments at fair value   276,676   279,681
Financial assets at fair value   289,557   271,194
Other   (12,881)   8,487
Total interest income and gains (losses) on financial instruments   2,280,248   1,255,454

The interest income presented above from credit card, lending, other assets at amortized cost and other receivables represents interest revenue calculated using the effective interest method. Financial assets at fair value comprise interest and the fair value changes on financial assets at fair value.

b) Fee and commission income

    Three-month period ended
    03/31/2024   03/31/2023
         
Interchange fees   339,703   265,380
Late fees   61,744   36,359
Recharge fees   7,651   25,050
Rewards revenue   5,676   5,547
Other fee and commission income   40,879   30,877
Total fee and commission income   455,653   363,213

 

Fee and commission income are presented by fee types that reflect the nature of the services offered by the Group. Recharge fees comprise the selling price of prepaid credit for mobile top ups to customers, net of acquisition costs.

 
17 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

c) Interest and other financial expenses

    Three-month period ended
    03/31/2024   03/31/2023
         
Interest expense on deposits   514,071   395,116
Financial bill expenses   30,521   5,729
Other interest and similar expenses   116,123   39,367
Interest and other financial expenses   660,715   440,212

d) Transactional expenses

    Three-month period ended
    03/31/2024   03/31/2023
         
Bank slip costs   5,100   6,306
Rewards expenses   15,746   12,116
Credit and debit card network costs   15,035   18,940
Financial system expenses   5,467   3,873
Other transactional expenses   21,600   11,543
Total transactional expenses   62,948   52,778

 

7. CREDIT LOSS ALLOWANCE EXPENSES

 

    Three-month period ended
    03/31/2024   03/31/2023
         
Net increase of loss allowance (note 13)   594,326   382,607
Recovery   (39,611)   (13,386)
Credit card receivables   554,715   369,221
         
Net increase of loss allowance (note 14)   289,815   109,330
Recovery   (13,168)   (3,756)
Loans to customers   276,647   105,574
         
Net increase (decrease) of loss allowance (note 16)   (314)   -
Recovery   -   -
Other receivables   (314)   -
         
Net increase (decrease) of loss allowance (note 12)   (329)   -
Recovery   -   -
Other financial assets   (329)   -
Total   830,719   474,795

 

 
18 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

 

8. OPERATING EXPENSES

 

   
    Three-month period ended 03/31/2024
    Customer support and operations   General and administrative expenses   Marketing expenses   Other income (expenses)   Total
                     
Infrastructure and data processing costs   (58,595)   (47,435)   -   -   (106,030)
Credit analysis and collection costs   (19,538)   (9,516)   -   -   (29,054)
Customer services   (30,025)   (1,659)   -   -   (31,684)
Salaries and associated benefits   (19,529)   (92,301)   (4,741)   -   (116,571)
Credit and debit card issuance costs   (7,763)   (10,371)   -   -   (18,134)
Share-based compensation (note 10)   (3,759)   (99,268)   (2,498)   -   (105,525)
Specialized services expenses   -   (16,089)   -   -   (16,089)
Other personnel costs   (4,939)   (12,945)   (543)   -   (18,427)
Depreciation and amortization   (6,431)   (12,034)   -   -   (18,465)
Marketing expenses   -   -   (39,045)   -   (39,045)
Taxes on financial income   -   -   -   (81,520)   (81,520)
Others   (33)   (24,434)   -   2,029   (22,438)
Total   (150,612)   (326,052)   (46,827)   (79,491)   (602,982)

 

     
    Three-month period ended 03/31/2023
    Customer support and operations   General and administrative expenses   Marketing expenses   Other income (expenses)   Total
                     
Infrastructure and data processing costs   (40,167)   (45,949)   -   -   (86,116)
Credit analysis and collection costs   (17,667)   (9,706)   -   -   (27,373)
Customer services   (22,257)   (1,926)   -   -   (24,183)
Salaries and associated benefits   (17,215)   (64,096)   (5,272)   -   (86,583)
Credit and debit card issuance costs   (4,898)   (14,437)   -   -   (19,335)
Share-based compensation (note 10)   -   (59,505)   -   -   (59,505)
Specialized services expenses   -   (3,248)   -   -   (3,248)
Other personnel costs   (3,598)   (11,591)   (500)   -   (15,689)
Depreciation and amortization   (1,978)   (11,201)   -   -   (13,179)
Marketing expenses   -   -   (13,500)   -   (13,500)
Taxes on financial income   -   -   -   (41,712)   (41,712)
Others   (35)   (15,222)   -   (1,573)   (16,830)
Total   (107,815)   (236,881)   (19,272)   (43,285)   (407,253)
 
19 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

9. EARNINGS PER SHARE

 

  Three-month period ended
    03/31/2024   03/31/2023
         
Earnings for the period   378,814   141,751
Weighted average outstanding shares - ordinary shares - basic (thousands)   4,773,284   4,709,469
Adjustment for the basic earnings per shares:        
Deferred M&A shares that will be issued solely based on the passage of time   -   36
Weighted average outstanding shares - ordinary shares - basic (thousands)   4,773,284   4,709,505
Adjustment for the diluted earnings per share:        
Share based payment   110,718   104,052
Business acquisition   2,359   4,643
Total weighted average of ordinary outstanding shares for diluted EPS (in thousands of shares)   4,886,361   4,818,200
Earnings per share – basic (US$)   0.0794   0.0301
Earnings per share – diluted (US$)   0.0775   0.0294
Antidilutive instruments not considered in the weighted number of shares (in thousands of shares)   20,844   -

 

The Company has instruments that will become common shares upon exercise, acquisition, conversion (SOPs and RSUs described in note 10), or satisfaction of specific business combination conditions. The effects of the potential antidilutive instruments were calculated using the treasury stock method and are included in the total weighted average of ordinary outstanding shares for diluted EPS if the effects are considered dilutive. The antidilutive instruments not considered in the weighted number of shares correspond to the total number of shares that could be converted into ordinary shares. Instruments are considered antidilutive if the average market value of ordinary shares during the period is less than the average value of the assumed proceeds (fair value of services that will be recognized as a cost in future periods plus exercise price multiplied by the number of options and shares to be issued on exercise of the options).

10. SHARE-BASED PAYMENTS

Share-settled awards

The Group’s employee incentives include share settled awards in the form of stock, offering them the opportunity to purchase ordinary shares by exercising options (Stock Options – “SOPs”), receiving ordinary shares (Restricted Stock Units – “RSUs”) upon vesting, and receiving shares upon the achievement of market conditions and passage of time ("Awards").

The cost of the employee services received with respect to the SOPs and RSUs granted is recognized in the statement of profit or loss over the period that the employee provides services and according to the vesting conditions. The Group also issued Awards in 2020 that grant shares upon the achievement of market conditions related to the valuation of the Company. RSUs incentive was implemented in 2020 and is the main incentive since then.

 
20 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

There were no changes to the terms and conditions of the SOPs and RSUs after the grant date. The changes in the number of SOPs and RSUs are as follows. WAEP is the weighted average exercise price and WAGDFV is the weighted average fair value at the grant date.

 

SOPs 03/31/2024   WAEP (US$)   03/31/2023   WAEP (US$)
               
Outstanding on January 1 59,942,062   1.04   101,276,327   0.72
Exercised during the period (9,802,204)   0.17   (10,207,564)   0.13
Forfeited during the period (146,588)       (1,409,572)    
Outstanding on March 31 49,993,270   1.21   89,659,191   0.78
Exercisable on March 31 45,597,804   1.14   74,708,715   0.63

 

RSUs 03/31/2024   WAGDFV (US$)   03/31/2023   WAGDFV (US$)
               
Outstanding on January 1 66,512,061   5.66   72,401,895   5.46
Granted during the period 23,744,164   11.15   29,717,517   4.52
Vested during the period (7,289,675)   4.82   (6,387,171)   4.33
Forfeited during the period (1,459,175)       (4,509,435)    
Outstanding on March 31 81,507,375   7.33   91,222,806   5.21

 

The following tables present the total amount of share-based compensation expense for the three-month period ended on March 31, 2024 and March 31, 2023, and the provision for taxes as of March 31, 2024 and December 31, 2023.

  Three-month period ended
  03/31/2024   03/31/2023
       
SOP and RSU expenses and related corporate and social security taxes expenses 123,252   52,789
RSUs and SOPs grant - business combination 1,607   7,460
Awards expenses and related taxes 2,975   4,931
Fair value adjustment - hedge of corporate and social security taxes (note 19) (22,309)   (5,675)
Total share-based compensation expenses (note 8) 105,525   59,505
       
Equity share-based compensation, net of shares withheld for employee taxes 60,314   50,762

 

  03/31/2024   12/31/2023
Liability provision for taxes presented as salaries, allowances and social security contributions 97,421   66,075
 
21 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

11. CASH AND CASH EQUIVALENTS

  03/31/2024   12/31/2023
       
Voluntary deposits at central banks 2,594,675   3,308,040
Bank balances 3,142,202   1,759,018
Short-term investments 296,708   854,846
Reverse repurchase agreement in foreign currency 60   61
Other cash and cash equivalents 13   1,475
Total 6,033,658   5,923,440

 

Cash and cash equivalents are held to meet short-term cash needs and include deposits with banks and other short-term highly liquid investments with original maturities of three-months or less and with an immaterial risk of change in value.

Short-term investments are mainly in U.S. dollars and remunerated by a fixed-rate index ranging from 1% to 5.4% per year as of March 31, 2024 and December 31, 2023.

Voluntary deposits at central banks are deposits made by the Brazilian subsidiaries at the Central Bank of Brazil. The average rate of remuneration as of March 31, 2024 and December 31, 2023, was 100% of the Brazilian CDI rate, with daily maturity.

 

12. SECURITIES

a) Financial instruments at fair value through profit and loss ("FVTPL")

    03/31/2024   12/31/2023
            Maturities    
Financial instruments at FVTPL  

Amortized

Cost

  Fair Value   No maturity   Up to 12 months  

Over 12

months

  Fair Value
Government bonds                        
Brazil   309,717   309,773   -   -   309,773   309,353
Total government bonds   309,717   309,773   -   -   309,773   309,353
                         
Corporate bonds and other instruments                        
Bill of credit (LC)   8   8   -   -   8   1
Certificate of bank deposits (CDB)   1,705   1,745   -   715   1,030   5,770
Real estate and agribusiness letter of credit   554   562   -   50   512   186
Corporate bonds and debentures   15,757   15,657   -   -   15,657   23,667
Equity instrument (i)   12,403   13,175   13,175   -   -   13,199
Investment funds   32,239   32,239   32,239   -   -   16,164
Notes   250,084   251,087   -   251,087   -   -
Real estate and agribusiness certificate of receivables   485   485   -   -   485   234
Total corporate bonds and other instruments   313,235   314,958   45,414   251,852   17,692   59,221
Total financial instruments at FVTPL   622,952   624,731   45,414   251,852   327,465   368,574
 
22 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

 

    03/31/2024   12/31/2023
    Amounts in   Amounts in
Financial instruments at FVTPL   Original Currency   US$   Original Currency   US$
Currency:                
Brazilian Reais   1,777,761   354,524   1,681,223   346,134
U.S. Dollars   257,032   257,032   9,241   9,241
Others (i)   1,096,272   13,175   1,098,602   13,199
Total       624,731       368,574

(i) Refers to an investment in Jupiter, a neobank for consumers in India and an investment in Din Global ("dBank"), a Pakistani fintech company. As of March 31, 2024, the total fair value of these investments corresponded to US$13,175 (US$13,199 on December 31, 2023), classified as level 3 in the fair value hierarchy, as described in note 28.

b) Financial instruments at fair value through other comprehensive income ("FVTOCI")

    03/31/2024   12/31/2023
            Maturities    
Financial instruments at FVTOCI  

Amortized

Cost

  Fair Value   No maturity   Up to 12 months  

Over 12

months

  Fair Value
Government bonds (i)                        
Brazil   6,926,698   6,936,810   -   439,429   6,497,381   7,166,551
United States of America   131,763   131,913   -   -   131,913   126,914
Mexico   1,495   1,377   -   -   1,377   1,407
Total government bonds   7,059,956   7,070,100   -   439,429   6,630,671   7,294,872
                         
Corporate bonds and other instruments                        
Corporate bonds and debentures   1,230,391   1,233,180   -   82,133   1,151,047   1,243,841
Investment funds   121,124   119,997   31,936   17,459   70,602   54,803
Time deposit   362,942   362,603   -   193,650   168,953   194,390
Real estate and agribusiness certificate of receivables   15,851   16,045   -   -   16,045   17,839
Total corporate bonds and other instruments   1,730,308   1,731,825   31,936   293,242   1,406,647   1,510,873
Total financial instruments at FVTOCI   8,790,264   8,801,925   31,936   732,671   8,037,318   8,805,745

 

    03/31/2024   12/31/2023
    Amounts in   Amounts in
Financial instruments at FVTOCI   Original Currency   US$   Original Currency   US$
Currency:                
Brazilian Reais   37,658,414   7,509,904   37,333,260   7,686,169
U.S. Dollars   1,290,644   1,290,644   1,118,169   1,118,169
Others   22,801   1,377   23,880   1,407
Total       8,801,925       8,805,745

 

(i) Includes US$122,624 (US$23,050 on December 31, 2023) held by the subsidiaries for regulatory purposes, as required by the Central Bank of Brazil. It also includes Brazilian government securities margins pledged by the Group for transactions on the Brazilian stock exchange in the amount of US$142,791 (US$130,150 on December 31, 2023). Government bonds are classified as Level 1 in the fair value hierarchy, as described in note 28.

 
23 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

The Group has corporate bonds and debentures classified as FVTOCI, for which ECL measured for March 31, 2024 was US$329, as shown in note 7 and the exposure was classified as Stage 1. There was no transfer between stages during the three-month period ending on March 31, 2024.

c) Financial instruments at amortized cost

    03/31/2024   12/31/2023
        Maturities    
Financial instruments at amortized cost  

Amortized

Cost

  No maturity   Up to 12 months  

Over 12

months

 

Amortized

Cost

Government bonds                    
Colombia   28   -   -   28   -
Total government bonds   28   -   -   28   -
                     
Sovereign bonds and other instruments                    
Sovereign bonds (i)   52,118   -   52,118   -   52,650
Corporate bonds and debentures   4,376   -   -   4,376   -
Time deposit   12,972   -   12,972   -   51,770
Total sovereign bonds and other instruments   69,466   -   65,090   4,376   104,420
Total financial instruments at amortized cost   69,494   -   65,090   4,404   104,420

 

    03/31/2024   12/31/2023
    Amounts in   Amounts in
Financial instruments at amortized cost   Original Currency   US$   Original Currency   US$
Currency:                
Brazilian Reais   283,289   56,494   255,732   52,650
Others   50,172,590   13,000   878,640   51,770
Total       69,494       104,420

(i) Refers to an investment in sovereign bonds with the intention to collect contractual cash flows.

 
24 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

13. CREDIT CARD RECEIVABLES

Composition of receivables

    03/31/2024   12/31/2023
         
Receivables - current (i)   6,493,596   6,296,788
Receivables - installments (i)   7,516,565   7,212,775
Receivables - revolving (ii)   1,083,566   978,741
Total receivables   15,093,727   14,488,304
Fair value adjustment - portfolio hedge (note 19)   -   32
Total   15,093,727   14,488,336
         
Credit card ECL allowance        
Presented as deduction of receivables   (2,297,050)   (2,074,203)
Presented as "Other liabilities" (note 26)   (22,443)   (22,066)
Total credit card ECL allowance   (2,319,493)   (2,096,269)
Receivables, net   12,774,234   12,392,067
Total receivables presented as assets   12,796,677   12,414,133

 

(i) "Receivables - current" is related to purchases, withdrawals, payment slips ("boleto") and PIX (BACEN instant payments) financing made by customers due on the next credit card billing date. "Receivables - installments” is related to purchases in installments. Credit card receivables can be paid by Nu's clients in up to 36 monthly installments. The cardholder’s credit limit is initially reduced by the total amount and the installments become due and payable on the cardholder's subsequent monthly credit card statement. Brazil makes the corresponding payments to the credit card network (see note 22) following a similar schedule. As receipts and payments are aligned, the Group does not incur significant financing costs with this product, however it is exposed to the credit risk of the cardholder as it is obliged to make the payments to the credit card network even if the cardholder does not pay. “Receivables - installments” also includes the amounts of credit card bills not fully paid by the customers and that have been converted into payments in installments with a fixed interest rate ("fatura parcelada"), in addition to bill financing, which comprise bills paid in installments through the credit card, banking payment slips ("boleto") and PIX financing in more than one installment.

(ii) "Receivables - revolving" is related to the amounts due from customers that have not paid in full their credit card bill. Customers may request to convert these receivables into loans to be paid in installments. In accordance with Brazilian regulation, revolving balances that are outstanding for more than 2 months are mandatorily converted into fatura parcelada - a type of installment loan which is settled through the customer’s monthly credit card bills.

 
25 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

a) Breakdown by maturity

    03/31/2024   12/31/2023
    Amount   %   Amount   %
Receivables not overdue due in:                
<= 30 days   6,517,471   43.2%   6,263,292   43.2%
30 < 60 days   2,531,051   16.8%   2,485,690   17.2%
> 60 days   4,422,588   29.3%   4,327,880   29.9%
Total receivables not overdue   13,471,110   89.3%   13,076,862   90.3%
                 
Receivables overdue by:                
<= 30 days   429,992   2.9%   349,263   2.4%
30 < 60 days   209,162   1.4%   170,962   1.2%
60 < 90 days   162,453   1.0%   141,310   0.9%
> 90 days   821,010   5.4%   749,907   5.2%
Total receivables overdue   1,622,617   10.7%   1,411,442   9.7%
Total   15,093,727   100.0%   14,488,304   100.0%

Receivables overdue consist mainly of late balances, and receivables not overdue consist mainly of current receivables and future bill installments ("parcelado").

b) Credit loss allowance - by stages

As of March 31, 2024, the credit card ECL allowance totaled US$2,319,493 (US$2,096,269 as of December 31, 2023). The provision is estimated using modeling techniques, consistently applied, and is sensitive to the methods, assumptions, and risk parameters underlying its calculation.

The amount that the credit loss allowance represents in comparison to the Group’s gross receivables (the coverage ratio) is also monitored to anticipate trends that could indicate credit risk increases. This metric is considered a key risk indicator and it is monitored across multiple committees, supporting the decision-making process and is discussed in the Group's credit forums.

All receivables are classified in stages. The explanation of each stage is set out in the Company’s accounting policies, as disclosed in the Annual Financial Statements.

    03/31/2024
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio (%)
Stage 1   12,295,901   81.5%   767,113   33.1%   6.2%
                     
Stage 2   1,579,277   10.5%   545,326   23.5%   34.5%
Absolute Trigger (Days Late)   457,819   29.0%   341,191   62.6%   74.5%
Relative Trigger (PD deterioration)   1,121,458   71.0%   204,135   37.4%   18.2%
                     
Stage 3   1,218,549   8.0%   1,007,054   43.4%   82.6%
Total   15,093,727   100.0%   2,319,493   100.0%   15.4%
 
26 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
    12/31/2023
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio (%)
Stage 1   11,891,823   82.1%   693,151   33.1%   5.8%
                     
Stage 2   1,490,067   10.3%   477,714   22.8%   32.1%
Absolute Trigger (Days Late)   364,853   24.5%   277,035   58.0%   75.9%
Relative Trigger (PD deterioration)   1,125,214   75.5%   200,679   42.0%   17.8%
                     
Stage 3   1,106,414   7.6%   925,404   44.1%   83.6%
Total   14,488,304   100.0%   2,096,269   100.0%   14.5%

c) Credit loss allowance - by credit quality vs. stages

    03/31/2024
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio (%)
Strong (PD < 5%)   7,065,821   46.7%   149,066   6.5%   2.1%
Stage 1   7,045,705   99.7%   148,755   99.8%   2.1%
Stage 2   20,116   0.3%   311   0.2%   1.5%
                     
Satisfactory (5% <= PD <= 20%)   4,135,390   27.5%   315,565   13.5%   7.6%
Stage 1   3,981,119   96.3%   304,583   96.5%   7.7%
Stage 2   154,271   3.7%   10,982   3.5%   7.1%
                     
Higher Risk (PD > 20%)   3,892,516   25.8%   1,854,862   80.0%   47.7%
Stage 1   1,269,077   32.6%   313,775   16.9%   24.7%
Stage 2   1,404,890   36.1%   534,033   28.8%   38.0%
Stage 3   1,218,549   31.3%   1,007,054   54.3%   82.6%
Total   15,093,727   100.0%   2,319,493   100.0%   15.4%

 

    12/31/2023
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio (%)
Strong (PD < 5%)   7,103,018   49.0%   142,047   6.8%   2.0%
Stage 1   7,081,674   99.7%   141,720   99.8%   2.0%
Stage 2   21,344   0.3%   327   0.2%   1.5%
                     
Satisfactory (5% <= PD <= 20%)   3,860,845   26.7%   294,591   14.0%   7.6%
Stage 1   3,699,167   95.8%   282,976   96.1%   7.6%
Stage 2   161,678   4.2%   11,615   3.9%   7.2%
                     
Higher Risk (PD > 20%)   3,524,441   24.3%   1,659,631   79.2%   47.1%
Stage 1   1,110,982   31.5%   268,455   16.2%   24.2%
Stage 2   1,307,045   37.1%   465,772   28.0%   35.6%
Stage 3   1,106,414   31.4%   925,404   55.8%   83.6%
Total   14,488,304   100.0%   2,096,269   100.0%   14.5%
 
27 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

d) Credit loss allowance - changes

The following tables show the reconciliations from the opening to the closing balance of the credit loss allowance by stages of the financial instruments.

    03/31/2024
    Stage 1   Stage 2   Stage 3   Total
Credit loss allowance at beginning of period   693,151   477,714   925,404   2,096,269
Transfers from Stage 1 to Stage 2   (79,501)   79,501   -   -
Transfers from Stage 2 to Stage 1   54,346   (54,346)   -   -
Transfers to Stage 3   (36,194)   (262,407)   298,601   -
Transfers from Stage 3   6,196   4,018   (10,214)   -
Write-offs   -   -   (315,394)   (315,394)
Net increase of loss allowance (note 7)   142,761   314,170   137,395   594,326
New originations (a)   30,860   619   351   31,830
Changes in exposure of preexisting accounts (b)   96,843   425   (571)   96,697
Other movements, primarily net drawdowns/repayments and net remeasurement from movements between stages and between risk bands within each stage   15,058   313,126   137,615   465,799
Effect of changes in exchange rates (OCI)   (13,646)   (13,324)   (28,738)   (55,708)
Credit loss allowance at end of the period   767,113   545,326   1,007,054   2,319,493

 

 

 

  03/31/2023
    Stage 1   Stage 2   Stage 3   Total
Credit loss allowance at beginning of period   322,970   254,181   473,517   1,050,668
Transfers from Stage 1 to Stage 2   (40,956)   40,956   -   -
Transfers from Stage 2 to Stage 1   35,909   (35,909)   -   -
Transfers to Stage 3   (16,431)   (137,392)   153,823   -
Transfers from Stage 3   4,095   2,855   (6,950)   -
Write-offs   -   -   (174,938)   (174,938)
Net increase of loss allowance (note 7)   60,720   183,162   138,725   382,607
New originations (a)   19,827   472   -   20,299
Changes in exposure of preexisting accounts (b)   45,619   636   (16)   46,239
Changes to models used in calculation (c)   20,204   8,759   22,773   51,736
Other movements, primarily net drawdowns/repayments and net remeasurement from movements between stages and between risk bands within each stage   (24,930)   173,295   115,968   264,333
Effect of changes in exchange rates (OCI)   18,252   14,280   25,159   57,691
Credit loss allowance at end of the period   384,559   322,133   609,336   1,316,028

The Net increase of loss allowance is distributed considering the stages at the end of the period, except in (c), which is calculated considering the stages at the beginning of the period.

(a) Considers all accounts originated from the beginning to the end of the period. ECL effects presented in the table were calculated as if risk parameters at the beginning of the period were applied.

 
28 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

(b) Reflects the movements in exposure (both drawdown and undrawdown limits) of accounts that already existed in the beginning of the period. ECL effects were calculated as if risk parameters of the exposures at the beginning of the period were applied.

(c) Changes to models that occurred during the period include, primarily, the calibration of ECL parameters to reflect more recent risk and recovery data, the changes in the Company's underwriting policies and in the collections strategies in these historic periods.

The following tables present changes in the gross carrying amount of the credit card portfolio to demonstrate the effects of the changes in the loss allowance for the same portfolio as presented above. “Net change of gross carrying amount” includes drawdowns, payments, and interest accruals.

    03/31/2024
    Stage 1   Stage 2   Stage 3   Total
Gross carrying amount at beginning of period   11,891,823   1,490,067   1,103,907   14,485,797
Transfers from Stage 1 to Stage 2   (676,470)   676,470   -   -
Transfers from Stage 2 to Stage 1   323,025   (323,025)   -   -
Transfers to Stage 3   (103,901)   (372,042)   475,943   -
Transfers from Stage 3   13,430   7,998   (21,428)   -
Write-offs   -   -   (315,394)   (315,394)
Net change of gross carrying amount   1,177,986   144,777   9,777   1,332,540
Effect of changes in exchange rates (OCI)   (329,992)   (44,968)   (34,256)   (409,216)
Gross carrying amount at end of the period   12,295,901   1,579,277   1,218,549   15,093,727

 

 

 

  03/31/2023
    Stage 1   Stage 2   Stage 3   Total
Gross carrying amount at beginning of period   7,750,270   917,178   598,777   9,266,225
Transfers from Stage 1 to Stage 2   (440,771)   440,771   -   -
Transfers from Stage 2 to Stage 1   199,883   (199,883)   -   -
Transfers to Stage 3   (53,612)   (227,005)   280,617   -
Transfers from Stage 3   5,156   3,580   (8,736)   -
Write-offs   -   -   (174,938)   (174,938)
Net change of gross carrying amount   850,562   73,470   (3,249)   920,783
Effect of changes in exchange rates (OCI)   367,435   44,752   30,340   442,527
Gross carrying amount at end of the period   8,678,923   1,052,863   722,811   10,454,597
 
29 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

14. LOANS TO CUSTOMERS

    03/31/2024   12/31/2023
Lending to individuals   4,478,706   3,713,770
Loan ECL allowance   (614,894)   (512,134)
Total receivables   3,863,812   3,201,636
Fair value adjustment - portfolio hedge (note 19)   -   698
Total   3,863,812   3,202,334

a) Breakdown by maturity

The following table shows loans to customers by maturity on March 31, 2024, and December 31, 2023, considering each installment individually.

    03/31/2024   12/31/2023
    Amount   %   Amount   %
Installments not overdue due in:                
<= 30 days   659,911   14.7%   551,677   14.9%
30 < 60 days   550,253   12.3%   520,450   14.0%
> 60 days   3,092,901   69.0%   2,495,650   67.1%
Total not overdue installments   4,303,065   96.0%   3,567,777   96.0%
                 
Installments overdue by:                
<= 30 days   65,426   1.5%   53,986   1.5%
30 < 60 days   41,119   1.0%   32,469   0.9%
60 < 90 days   27,213   0.6%   23,135   0.6%
> 90 days   41,883   0.9%   36,403   1.0%
Total overdue installments   175,641   4.0%   145,993   4.0%
Total   4,478,706   100.0%   3,713,770   100.0%
 
30 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

b) Credit loss allowance - by stages

As of March 31, 2024, the loans to customers ECL allowance totaled US$614,894 (US$512,134 as of December 31, 2023). The provision is estimated using modeling techniques, consistently applied, which is sensitive to the methods, assumptions, and risk parameters underlying its calculation.

The amount that the credit loss allowance represents in comparison to the Group’s gross receivables (the coverage ratio) is also monitored to anticipate trends that could indicate credit risk increases. This metric is considered a key risk indicator and is monitored across multiple committees, supporting the decision-making process and is discussed in the credit forums.

All receivables are classified in stages. The explanation of each stage is set out in the Company's accounting policies, as disclosed in the Annual Financial Statements.

    03/31/2024
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio
Stage 1   3,425,367   76.5%   173,882   28.3%   5.1%
                     
Stage 2   784,722   17.5%   293,835   47.8%   37.4%
Absolute Trigger (Days Late)   187,950   24.0%   154,010   52.4%   81.9%
Relative Trigger (PD deterioration)   596,772   76.0%   139,825   47.6%   23.4%
                     
Stage 3   268,617   6.0%   147,177   23.9%   54.8%
Total   4,478,706   100.0%   614,894   100.0%   13.7%

 

    12/31/2023
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio
Stage 1   2,831,131   76.2%   145,341   28.4%   5.1%
                     
Stage 2   648,296   17.5%   223,982   43.7%   34.5%
Absolute Trigger (Days Late)   138,919   21.4%   113,649   50.7%   81.8%
Relative Trigger (PD deterioration)   509,377   78.6%   110,333   49.3%   21.7%
                     
Stage 3   234,343   6.3%   142,811   27.9%   60.9%
Total   3,713,770   100.0%   512,134   100.0%   13.8%
 
31 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

c) Credit loss allowance - by credit quality vs stages

    03/31/2024
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio
Strong (PD < 5%)   1,623,268   36.2%   15,572   2.5%   1.0%
Stage 1   1,583,210   97.5%   14,888   95.6%   0.9%
Stage 2   40,058   2.5%   684   4.6%   1.7%
                     
Satisfactory (5% <= PD <= 20%)   1,476,338   33.0%   81,595   13.3%   5.5%
Stage 1   1,319,330   89.4%   70,932   86.9%   5.4%
Stage 2   157,008   10.6%   10,663   13.1%   6.8%
                     
Higher Risk (PD > 20%)   1,379,100   30.8%   517,727   84.2%   37.5%
Stage 1   522,827   37.9%   88,062   17.0%   16.8%
Stage 2   587,656   42.6%   282,488   54.6%   48.1%
Stage 3   268,617   19.5%   147,177   28.4%   54.8%
Total   4,478,706   100.0%   614,894   100.0%   13.7%

 

    12/31/2023
    Gross Exposures   %   Credit Loss Allowance   %   Coverage Ratio
Strong (PD < 5%)   1,437,136   38.7%   14,129   2.8%   1.0%
Stage 1   1,396,591   97.2%   13,441   95.1%   1.0%
Stage 2   40,545   2.8%   688   4.9%   1.7%
                     
Satisfactory (5% <= PD <= 20%)   1,228,949   33.1%   69,361   13.5%   5.6%
Stage 1   1,081,293   88.0%   59,291   85.5%   5.5%
Stage 2   147,656   12.0%   10,070   14.5%   6.8%
                     
Higher Risk (PD > 20%)   1,047,685   28.2%   428,644   83.7%   40.9%
Stage 1   353,247   33.7%   72,609   17.0%   20.6%
Stage 2   460,095   43.9%   213,224   49.7%   46.3%
Stage 3   234,343   22.4%   142,811   33.3%   60.9%
Total   3,713,770   100.0%   512,134   100.0%   13.8%
 
32 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

d) Credit loss allowance - changes

The following tables show reconciliations from the opening to the closing balance of the credit loss allowance by the stages of the financial instruments.

    03/31/2024
    Stage 1   Stage 2   Stage 3   Total
                 
Credit loss allowance at beginning of period   145,341   223,982   142,811   512,134
Transfers from Stage 1 to Stage 2   (44,121)   44,121   -   -
Transfers from Stage 2 to Stage 1   18,002   (18,002)   -   -
Transfers to Stage 3   (11,770)   (123,395)   135,165   -
Transfers from Stage 3   3,472   5,771   (9,243)   -
Write-offs   -   -   (169,733)   (169,733)
Net increase of loss allowance (note 7)   67,814   169,271   52,730   289,815
New originations (a)   272,380   20,085   4,897   297,362
Other movements, primarily net drawdowns/repayments and net remeasurement from movements between stages and between risk bands within each stage   (204,566)   149,186   47,833   (7,547)
Effect of changes in exchange rates (OCI)   (4,856)   (7,913)   (4,553)   (17,322)
Credit loss allowance at end of the period   173,882   293,835   147,177   614,894

 

 

 

  03/31/2023
    Stage 1   Stage 2   Stage 3   Total
                 
Credit loss allowance at beginning of period   76,454   148,233   75,536   300,223
Transfers from Stage 1 to Stage 2   (21,812)   21,812   -   -
Transfers from Stage 2 to Stage 1   11,967   (11,967)   -   -
Transfers to Stage 3   (5,451)   (86,237)   91,688   -
Transfers from Stage 3   1,075   1,631   (2,706)   -
Write-offs   -   -   (106,614)   (106,614)
Net increase of loss allowance (note 7)   17,283   71,352   20,695   109,330
New originations (a)   142,123   7,050   146   149,319
Changes to models used in calculation (b)   (1,578)   (3,059)   (1,500)   (6,137)
Other movements, primarily net drawdowns/repayments and net remeasurement from movements between stages and between risk bands within each stage   (123,262)   67,361   22,049   (33,852)
Effect of changes in exchange rates (OCI)   3,365   6,283   3,324   12,972
Credit loss allowance at end of the period   82,881   151,107   81,923   315,911

The Net increase of loss allowance is distributed considering the stages at the end of the period, except in (b), which is calculated considering the stages at the beginning of the period.

 
33 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

(a) Considers all accounts originated from the beginning to the end of the period. ECL effects presented in the table were calculated as if risk parameters at the beginning of the period were applied.

(b) Changes to models that occurred during the period include, primarily, the calibration of ECL parameters to reflect more recent risk and recovery data, the changes in the Company's underwriting policies and in the collections strategies in these historic periods.

The following tables present changes in the gross carrying amount of the lending portfolio to demonstrate the effects of the changes in the loss allowance for the same portfolio as discussed above. “Net change of gross carrying amount” includes drawdowns, payments, and interest accruals.

 

    03/31/2024
    Stage 1   Stage 2   Stage 3   Total
                 
Gross carrying amount at beginning of the period   2,831,131   648,296   234,343   3,713,770
Transfers from Stage 1 to Stage 2   (396,851)   396,851   -   -
Transfers from Stage 2 to Stage 1   144,714   (144,714)   -   -
Transfers to Stage 3   (26,321)   (163,352)   189,673   -
Transfers from Stage 3   4,005   6,501   (10,506)   -
Write-offs   -   -   (169,733)   (169,733)
Net increase of gross carrying amount   965,278   63,452   32,721   1,061,451
Effect of changes in exchange rates (OCI)   (96,589)   (22,312)   (7,881)   (126,782)
Gross carrying amount at end of the period   3,425,367   784,722   268,617   4,478,706

 

    03/31/2023
    Stage 1   Stage 2   Stage 3   Total
                 
Gross carrying amount at beginning of period   1,521,040   351,166   104,293   1,976,499
Transfers from Stage 1 to Stage 2   (187,645)   187,645   -   -
Transfers from Stage 2 to Stage 1   72,813   (72,813)   -   -
Transfers to Stage 3   (12,482)   (108,394)   120,876   -
Transfers from Stage 3   1,179   1,781   (2,960)   -
Write-offs   -   -   (106,614)   (106,614)
Net increase of gross carrying amount   368,482   6,625   714   375,821
Effect of changes in exchange rates (OCI)   71,472   15,450   4,791   91,713
Gross carrying amount at end of the period   1,834,859   381,460   121,100   2,337,419
 
34 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

15. COMPULSORY AND OTHER DEPOSITS AT CENTRAL BANKS

 

    03/31/2024   12/31/2023
         
Compulsory deposits (i)   3,394,981   3,342,894
Reserve at central bank - Instant payments (ii)   2,050,192   2,953,515
Reserve at central bank - Electronic money (iii)   1,560,773   1,151,074
Total   7,005,946   7,447,483

 

(i) Compulsory deposits are required by BACEN based on the amount of RDB and CDB held by Nu Financeira. These resources are remunerated at Brazilian SELIC rate (special settlement and custody system of the BACEN).

 

(ii) Reserve at central bank - Instant payments relates to cash maintained in the Instant Payments Account, which is required by BACEN to support instant payment operations, and it is based on the average of PIX transactions per day based on the last month along with including additional funds as a safety margin. These resources are remunerated at Brazilian SELIC rate (special settlement and custody system of the BACEN).

(iii) Reserve at central bank - Electronic money refers to funds kept in a BACEN reserve, which serves as a safeguard to protect customer deposits invested in Nu Pagamentos. These resources are remunerated at Brazilian SELIC rate (special settlement and custody system of the BACEN).

 

16. OTHER RECEIVABLES

 

    03/31/2024   12/31/2023
         
Other receivables   1,408,209   1,691,665
Other receivables - ECL Allowance   (2,240)   (2,635)
Total   1,405,969   1,689,030

 

Other receivables are related to the acquisition from merchants of their credit card receivables due from acquirers, measured at fair value. The ECL expenses for the three-month period ended March 31, 2024 was US$314, as shown in note 7. As of March 31, 2024 and December 31, 2023, the total amount of the Group's exposure was classified as Stage 1 Strong (PD<5%) and there was no transfer between stages for the three-month period ended on March 31, 2024.

All receivables are classified in stages. The explanation of each stage is set out in the Company's accounting policies, as disclosed in the Annual Consolidated Financial Statements as of December 31, 2023.

 
35 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

17. OTHER ASSETS

 

    03/31/2024   12/31/2023
         
Deferred expenses (i)   245,505   230,676
Taxes recoverable (ii)   25,824   428,742
Advances to suppliers and employees   62,540   96,395
Prepaid expenses   148,331   81,687
Judicial deposits (note 24)   3,649   3,506
Other assets   81,703   95,203
Total   567,552   936,209

 

(i) Refers to credit card issuance costs, including printing, packing, and shipping costs, among others. The expenses are amortized based on the card’s estimated useful life, adjusted for any cancellations.

(ii) The current income tax assets and liabilities are presented offset on March 31, 2024 and did not impact the Consolidated Statements of Profit or Loss.

 

18. INTANGIBLES ASSETS AND GOODWILL

 

a)Composition of intangible assets and goodwill

(i) Intangible assets

 

    03/31/2024   12/31/2023
    Cost   Accumulated amortization   Net value   Cost   Accumulated amortization   Net value
                         
Intangibles related to acquisitions   107,181   (48,390)   58,791   107,181   (45,547)   61,634
Internally developed intangible   272,608   (34,077)   238,531   250,236   (25,538)   224,698
Other intangibles   30,481   (20,404)   10,077   28,815   (19,266)   9,549
Total   410,270   (102,871)   307,399   386,232   (90,351)   295,881

 

 
36 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

(ii) Goodwill

 

    03/31/2024   12/31/2023
    Goodwill
         
Easynvest's acquisition   381,298   381,266
Cognitect's acquisition   831   831
Spin Pay's acquisition   5,060   5,060
Olivia's acquisition   10,381   10,381
Total   397,570   397,538

 

b)Changes on intangible assets and goodwill
    03/31/2024
    Goodwill   Intangible assets
        Intangibles related to acquisitions   Internally developed intangible   Other Intangibles   Total Intangibles
Balance at beginning of the period   397,538   61,634   224,698   9,549   295,881
Additions   -   -   27,319   211   27,530
Disposals   -   -   (2,128)   -   (2,128)
Amortization   -   (3,635)   (9,386)   (1,285)   (14,306)
Effect of changes in exchange rates (OCI)   32   792   (1,980)   1,602   414
Balance at end of the period   397,570   58,791   238,523   10,077   307,391

 

    03/31/2023
    Goodwill   Intangible assets
        Intangibles related to acquisitions   Internally developed intangible   Other Intangibles   Total Intangibles
Balance at beginning of the period   397,397   78,047   85,754   18,363   182,164
Additions   -   -   38,890   2,903   41,793
Disposals   -   -   (2,318)   -   (2,318)
Amortization   -   (4,402)   (2,684)   (1,905)   (8,991)
Effect of changes in exchange rates (OCI)   89   -   2,368   287   2,655
Balance at end of the period   397,486   73,645   122,010   19,648   215,303
 
37 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

19. DERIVATIVE FINANCIAL INSTRUMENTS

The Group executes transactions with derivative financial instruments, which are intended to meet its own needs to reduce its exposure to market, currency and interest-rate risks. The derivatives are classified at fair value through profit or loss, except those in cash flow hedge accounting strategies, for which the effective portion of gains or losses on derivatives is recognized directly in other comprehensive income. The management of these risks is conducted through determining limits, and the establishment of operating strategies. The derivative contracts are considered level 1, 2 or 3 in the fair value hierarchy and are used to hedge exposures, but hedge accounting is adopted only for forecasted transactions related to the cloud infrastructure, intercompany transactions and certain software licenses used by Nu (hedge of foreign currency risk), to hedge interest of the fixed rate credit portfolio (hedge of interest rate risk of portfolio) and to hedge the future cash disbursement related to highly probable future transactions and accrued liabilities for corporate and social security taxes at RSU vesting or SOP exercise, as shown below.

    03/31/2024
        Fair values
    Notional amount   Assets   Liabilities
Derivatives classified as fair value through profit or loss            
Interest rate contracts – Futures   222,124   33   42
Foreign currency exchange rate contracts – Futures   448,461   2,705   92
Interest rate contracts – Swaps   213,228   -   19,090
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   212,257   2,362   8,263
Warrants   10   20   -
             
Derivatives held for hedging            
Designated as cash flow hedge            
Foreign currency exchange rate contracts – Futures   184,675   1,138   1
Equity - Total Return Swap (TRS)   258,643   14,818   -
Total   1,539,398   21,076   27,488

 

    12/31/2023
        Fair values
    Notional amount   Assets   Liabilities
Derivatives classified as fair value through profit or loss            
Interest rate contracts - Futures   758,536   6   4
Foreign currency exchange rate contracts – Futures   421,306   1,963   -
Interest rate contracts – Swaps   213,568   -   22,294
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   114,478   -   5,875
Warrants   10   20   -
             
Derivatives held for hedging            
Designated as cash flow hedge            
Foreign currency exchange rate contracts – Futures   188,748   1,050   -
Equity - Total Return Swap (TRS)   88,193   17,882   -
             
Designated as portfolio hedge            
DI - Future   241,995   60   -
Total   2,026,834   20,981   28,173
 
38 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Futures contracts are traded on the B3, having B3 as the counterparty. The total value of margins pledged by the Group in transactions on the stock exchange is presented in note 12.

Swaps of interest risk contracts are settled at the maturity date and are traded over the counter with financial institutions as counterparties.

Nu Holdings entered into non-deliverable forward contracts to hedge loans and intercompany loans with Nu Colombia in U.S. dollars with settlements in June 2024.

Swap TRS contracts are settled only at maturity and are traded over the counter with financial institutions as counterparties.

Breakdown by maturity

The table below shows the breakdown by maturity of the notional amounts:

    03/31/2024
    Up to 3 months   3 to 12 months  

Over 12

months

  Total
Assets                
Interest rate contracts – Futures   170,061   -   27,849   197,910
Foreign currency exchange rate contracts – Futures   613,781   -   -   613,781
Interest rate contracts – Swaps   6,945   -   3,683   10,628
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   97,779   20,000   -   117,779
Warrants   -   -   10   10
Total assets   888,566   20,000   31,542   940,108
                 
Liabilities                
Interest rate contracts – Futures   -   267   23,947   24,214
Foreign currency exchange rate contracts – Futures   19,355   -   -   19,355
Interest rate contracts – Swaps   -   202,600   -   202,600
Equity - Total Return Swap (TRS)   24,546   65,722   168,375   258,643
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   94,478   -   -   94,478
Total liabilities   138,379   268,589   192,322   599,290
Total   1,026,945   288,589   223,864   1,539,398

 

 
39 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
    12/31/2023
    Up to 3 months   3 to 12 months  

Over 12

months

  Total
Assets                
Interest rate contracts – Futures   -   728,473   13,698   742,171
Foreign currency exchange rate contracts – Futures   610,054   -   -   610,054
Interest rate contracts – Swaps   -   -   10,968   10,968
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   -   20,000   -   20,000
Warrants   -   -   10   10
Total assets   610,054   748,473   24,676   1,383,203
                 
Liabilities                
Interest rate contracts – Futures   -   234   16,131   16,365
Interest rate contracts – Swaps   -   202,600   -   202,600
Equity - Total Return Swap (TRS)   9,388   78,805   -   88,193
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   -   94,478   -   94,478
DI - Future   123,446   108,808   9,741   241,995
Total liabilities   132,834   484,925   25,872   643,631
Total   742,888   1,233,398   50,548   2,026,834

The table below shows the breakdown by maturity of the fair value amounts:

    03/31/2024
    Up to 12 months  

Over 12

months

  Total
Assets            
Equity - Total Return Swap (TRS)   9,650   5,168   14,818
Interest rate contracts – Futures   11   22   33
Foreign currency exchange rate contracts – Futures   3,843   -   3,843
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   2,362   -   2,362
Warrants   -   20   20
Total assets   15,866   5,210   21,076
Liabilities            
Interest rate contracts – Futures   3   39   42
Interest rate contracts – Futures   3   39   42
Interest rate contracts – Swaps   19,090   -   19,090
Foreign currency exchange rate contracts – Futures   93   -   93
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   8,263   -   8,263
Total liabilities   27,449   -   27,488

 

 
40 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
    12/31/2023
    Up to 12 months  

Over 12

months

  Total
Assets            
Equity - Total Return Swap (TRS)   17,882   -   17,882
Interest rate contracts – Futures   6   -   6
Foreign currency exchange rate contracts – Futures   3,013   -   3,013
DI - Future   60   -   60
Warrants   20   -   20
Total assets   20,981   -   20,981
             
Liabilities            
Interest rate contracts – Futures   4   -   4
Interest rate contracts – Swaps   22,294   -   22,294
Foreign currency exchange rate contracts - Non-deliverable forwards (NDF)   5,875   -   5,875
Total liabilities   28,173   -   28,173

a) Hedge of foreign currency risk

The Group is exposed to foreign currency risk on forecast transaction expenses, related to the cloud infrastructure, certain software licenses and intercompany expenses. The Group managed its exposures to the variability in cash flows of foreign currency forecasted transactions to movements in foreign exchange rates by entering into foreign currency exchange rate contracts (exchange futures). These instruments are entered into to match the cash flow profile of the estimated forecast transactions and are exchange-traded with fair value movements settled on a daily basis.

The Group applies hedge accounting to the forecasted transactions related to its main cloud infrastructure contract and other expenses in foreign currency including intercompany expenses. The effectiveness is assessed monthly by analyzing the critical terms. The critical terms of the hedging instrument and the amount of the forecasted hedged transactions are significantly the same. Derivatives are generally rolled over monthly. They are expected to occur in the same fiscal month as the maturity date of the hedged item. Therefore, the hedge is expected to be effective. Subsequent assessments of effectiveness are performed by verifying and documenting whether the critical terms of the hedging instrument and forecasted hedged transaction have changed during the period in review and whether it remains probable. If there are no such changes in critical terms, the Group will continue to conclude that the hedging relationship is effective. Sources of ineffectiveness are differences in the amount and timing of forecast and actual payment of expenses.

    Three-month period ended
    03/31/2024   03/31/2023
         
Balance at beginning of the period   (8,254)   (2,610)
Fair value change recognized in OCI during the period   86,466   (10,365)
Total amount reclassified from cash flow hedge reserve to the statement of profit or loss during the period   6,811   2,801
to "Customer support and operation"   3,199   2,352
to "General and administrative expenses"   636   502
Effect of changes in exchange rates (OCI)   2,976   (53)
Deferred income taxes   (3,308)   3,026
Balance at end of the period   81,715   (7,148)

The expected future transactions that are the hedged item are:

 
41 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

 

    03/31/2024   12/31/2023
    Up to 3 months   3 to 12 months   Total   Total
Expected foreign currency transactions   174,218   -   174,218   187,456
Total   174,218   -   174,218   187,456

 

b) Hedge of corporate and social security taxes over share-based compensation

The Group's hedge strategy is to cover the future cash disbursement related to highly probable future transactions and accrued liabilities for corporate and social security taxes at RSU vesting and SOP exercise from the variation of the Company's share price volatility. The derivative financial instruments used to cover the exposure are total return swaps ("TRS") in which one leg is indexed to the Company's stock price and the other leg is indexed to Secured Overnight Financing Rate ("SOFR") plus spread. The stock fixed at the TRS is a weighted average price. The hedge was entered into by Nu Holdings and therefore there is no income tax effect.

The Group applies the cash flow hedge for the hedge structure thus the market risk is replaced by an interest rate risk. The effectiveness assessment is performed monthly by (i) assessing the economic relationship between the hedged item and the hedging instrument; (ii) monitoring the credit risk impact in the hedge effectiveness; and (iii) maintaining and updating the hedging ratio. Given the possibility of forfeiture impacting the future cash forecast of the employee benefit plan, the Group manages exposures to keep the hedging level within an acceptable coverage. The derivative fair value is measured substantially based on the stock price which is also used in the measurement of the provision or payment for corporate and social security taxes. There is no expectation for a mismatch between the hedged item and hedging instrument at maturity other than the SOFR.

    Three-month period ended
    03/31/2024   03/31/2023
Balance at beginning of the period   20,671   (4,876)
Fair value change recognized in OCI during the period   (40,958)   12,360
Total amount reclassified from cash flow hedge reserve to the statement of profit or loss during the period (note 10)   (22,309)   (5,675)
to "Customer support and operation"   (1,144)   -
to "General and administrative expenses"   (20,175)   (5,675)
to "Marketing expenses"   (990)   -
Balance at end of the period   (42,596)   1,809

 

Expected cash disbursement

    03/31/2024   12/31/2023
    Up to 1 year   1 to 3 years   Above 3 years   Total   Total
Considering the reporting date fair value of the hedged item:                    
Expected cash disbursement for corporate and social contributions   105,619   162,120   10,923   278,662   110,596
Total   105,619   162,120   10,923   278,662   110,596
 
42 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

 

c)Hedge of portfolio's interest rate risk

 

As of March 31, 2024, the Company no longer has derivatives for the hedge of the portfolio's interest rate risk.

 

    12/31/2023
    Hedge object  

Fair value adjustment to the

hedge object

 

Derivative hedge

instrument

      Asset   Liability   Fair value variation
Interest rate risk                
Interest rate contracts - Future - portfolio hedge - credit card   5,368   32   -   (16)
Interest rate contracts - Future - portfolio hedge - loan   164,733   698   -   (601)
Total   170,101   730   -   (617)

 

20. INSTRUMENTS ELIGIBLE AS CAPITAL

    03/31/2024   12/31/2023
Financial liabilities at fair value through profit or loss        
Instruments eligible as capital   3,990   3,988
Total   3,990   3,988

 

There were no defaults or breaches of instruments eligible as capital or on any financial liability during the three-month period ended March 31, 2024, and as of December 31, 2023.

In June 2019, Nu Financeira issued a subordinated financial note in the amount equivalent to US$18,824 at the issuance date, which was approved as Tier 2 capital by the Central Bank of Brazil in September 2019, for the purposes of calculation of regulatory capital. The note bears a fixed interest rate of 12.8%, matures in 2029, and is callable on June 14, 2024.

The Group designated the instruments eligible as capital at fair value through profit (loss) at its initial recognition. The gains of fair value changes arising from its own credit risk in the amount of US$18 were recorded in other comprehensive income (gains of US$45 in the three-month period ended March 31, 2023). All other fair value changes and interests in the amount of US$109 (US$2,985 in the three-month period ended March 31, 2023) were recognized as profit or loss.

    03/31/2024   03/31/2023
         
Balance at beginning of the period   3,988   11,507
Interest accrued, net of gain from repurchase   117   (3,030)
Fair value changes   (8)   45
Own credit transferred to OCI   (18)   (45)
Repurchase   -   (5,870)
Effect of changes in exchange rates (OCI)   (89)   325
Balance at end of the period   3,990   2,932

 

 
43 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

21. FINANCIAL LIABILITIES AT AMORTIZED COST – DEPOSITS

    03/31/2024   12/31/2023
         
Bank receipt of deposits (RDB)   20,494,261   21,054,443
Deposits in electronic money   3,488,952   2,388,601
Bank certificate of deposit (CDB)   271,672   248,086
Total   24,254,885   23,691,130

Currently, deposits in electronic money in Brazil include "Conta do Nubank" and also "Conta NuInvest" balances, the latter corresponding to on-demand deposits of the Groups’ investment brokerage clients. In Mexico, it includes "Cuenta Nu".

"Conta do Nubank" is a prepaid account in which the amounts deposited by customers are classified as electronic money and must be allocated to government securities (see note 12b) or in a specific account maintained at the Central Bank of Brazil (see note 15), in accordance with Brazilian regulatory requirements. "Conta NuInvest" balances also have to be allocated to government securities or maintained in reserves at the Central Bank of Brazil. Therefore, these types of deposits cannot be used for any other type of investment or as a financing source for credit operations. Conversely, "Cuenta Nu" balances are not required to be invested in specific assets. Therefore, they can be used as a financing source for the credit card operations in Mexico.

The RDBs are an investment option inside "Conta do Nubank" and can have daily liquidity or defined future maturity. Deposits in RDB have guarantees from the Brazilian Deposit Guarantee Fund (“FGC”). Unlike the deposits in electronic money, Nu is required to follow the compulsory deposits requirements for RDB deposits (see note 15), however it is not required to invest the remaining resources in government securities or in specific account maintained at the Central Bank of Brazil - these amounts can be used as a financing source for lending and credit card operations.

There are also RDBs with a defined future maturity date, which have a maturity of up to 27 months and a weighted average interest rate of 106% of the Brazilian CDI rate as of March 31, 2024 and December 31, 2023.

The interest paid on both "Conta do Nubank" and RDB deposits (except fixed term RDBs) is 100% of the Brazilian CDI rate as of the initial date if the balances are kept for more than 30 days.

For "Cuenta Nu" in Mexico, the balances deposited in "Cajitas" yield 15% per year as of March 31, 2024. "Cajitas" has both daily yield accrual and daily liquidity.

Breakdown by maturity

    03/31/2024
    Up to 12 months  

Over 12

months

  Total
Bank receipt of deposits (RDB)   20,321,765   172,496   20,494,261
Deposits in electronic money   3,488,952   -   3,488,952
Bank certificate of deposit (CDB)   243,081   28,591   271,672
Total   24,053,798   201,087   24,254,885
 
44 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

 

    12/31/2023
    Up to 12 months  

Over 12

months

  Total
Bank receipt of deposits (RDB)   20,900,095   154,348   21,054,443
Deposits in electronic money   2,388,601   -   2,388,601
Bank certificate of deposit (CDB)   213,707   34,379   248,086
Total   23,502,403   188,727   23,691,130

 

22. FINANCIAL LIABILITIES AT AMORTIZED COST – PAYABLES TO NETWORK

 

    03/31/2024   12/31/2023
         
Payables to credit card network (i)   9,516,090   9,755,285
Payables to clearing houses   56,431   -
Total   9,572,521   9,755,285

 

(i) Corresponds to the amount payable to the acquirers related to credit and prepaid card transactions. Brazilian credit card payables are settled according to the transaction installments, substantially in up to 27 days for transactions with no installments; 1 business day for international transactions; and sales in installments ("parcelado") have monthly settlements, mostly, over a period of up to 12 months. For Mexican and Colombian credit card transactions, the amounts are settled in 1 business day. The segregation of the settlement is shown in the table below:

Payables to credit card network   03/31/2024   12/31/2023
         
Up to 30 days   5,313,168   5,347,665
30 to 90 days   2,218,126   2,361,563
More than 90 days   1,984,796   2,046,057
Total   9,516,090   9,755,285

Collateral for credit card operations

As of March 31, 2024, the Group had US$324 (US$320 on December 31, 2023) of security deposits granted in favor of Mastercard. These security deposits are measured at fair value through profit (loss) and are held as collateral for the amounts payable to the network and can be replaced by other security deposits with similar characteristics. The average remuneration rate of those security deposits was 0.40% per month in the three-month period ended March 31, 2024 (0.40% per month in the year ended December 31, 2023).

 
45 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

23. FINANCIAL LIABILITIES AT AMORTIZED COST – BORROWINGS AND FINANCING

    03/31/2024   12/31/2023
Borrowings and financing   1,403,349   1,136,344
Total   1,403,349   1,136,344

a) Borrowings and financings

Borrowings and financings maturities are as follows:

 

    03/31/2024
    Up to 3 months   3 to 12 months  

Over 12

months

  Total
Borrowings and financings                
Term loan credit facility (i)   -   86,623   -   86,623
Syndicated loan (ii)   3,305   7,939   820,304   831,548
Financial letter (iii)   -   -   485,178   485,178
Total borrowings and financings   3,305   94,562   1,305,482   1,403,349

 

    12/31/2023
    Up to 3 months   3 to 12 months  

Over 12

months

  Total
Borrowings and financings                
Term loan credit facility (i)   3,832   94,943   -   98,775
Syndicated loan (ii)   14,820   -   806,681   821,501
Financial letter (iii)   -   -   216,068   216,068
Total borrowings and financings   18,652   94,943   1,022,749   1,136,344

(i) Corresponds to two term loan credit facilities obtained by Nu Servicios and reassigned to Nu Financiera, both Mexican subsidiaries in Mexican pesos.

(ii) Corresponds to two syndicated credit facilities. The first, in which Nu’s subsidiaries in Mexico and Colombia are the borrowers and the Company is acting as guarantor, the total amount of the credit facility is US$650,000, of which US$625,000 is allocated to Nu Mexico and US$25,000 to Nu Colombia. Out of this facility, Nu Mexico has withdrawn a partial amount of US$435,000 and Nu Colombia, the entire US$25,000. The second, in which Nu Colombia has been granted a 3-year facility from IFC (International Finance Corporation), the total amount corresponds to US$265,100 from IFC, also guaranteed by the Company, and was fully withdrawn.

(iii) As of March 31, 2024, the Group had issued financial letters in Brazilian reais in the amount equivalent to US$468,417 on the issuance dates and U$198,691 as of December 31, 2023.

 
46 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

The terms and conditions of the loans outstanding as of March 31, 2024, are as follows:

    03/31/2024
Borrowings and financing   Country   Currency   Interest rate   Maturity   Principal amount in US$
                     
Term loan credit facility   Mexico   MXN   TIIE (2) 182 + 1.0%   July 2024   70,000
Syndicated loan   Mexico   MXN   TIIE (2) 91 + 1.00%   April 2025   435,000
Syndicated loan   Colombia   COP   IBR (1) + 1.6% up to 1.9%   April 2025   87,500
Syndicated loan   Colombia   USD   SOFR (4) + 4.1%   January 2026   202,600
Financial letter   Brazil   BRL   CDI (3) + 1.2% up to 1.8%   From June 2025 up to November 2025   468,417

 

(1)IBR: Colombian Bank Reference Indicator (Indicador Bancario de Referencia).
(2)TIIE: Mexican Bank Reference Indicator (Tasas de Interés Interbancarias).
(3)CDI: Brazilian Bank Reference Indicator (Certificado de Depósito Interbancário).
(4)SOFR: Secured Overnight Financing Rate.

 

Changes to borrowings and financings are as follows:

    03/31/2024
    Term loan credit facility   Syndicated loan   Financial Letter   Total
                 
Balance at beginning of the period   98,775   821,501   216,068   1,136,344
New borrowings   -   -   269,726   269,726
Payments – principal   (11,465)   -   -   (11,465)
Payments – interest   (5,777)   (30,263)   -   (36,040)
Interest accrued   2,984   24,978   9,672   37,634
Transaction costs   -   (181)   -   (181)
Amortization of transaction costs   -   452   -   452
Effect of changes in exchange rates (OCI)   2,106   15,061   (10,288)   6,879
Balance at end of the period   86,623   831,548   485,178   1,403,349

 

    03/31/2023
    Term loan credit facility   Syndicated loan   Total
             
Balance at beginning of the period   118,194   467,374   585,568
New borrowings   -   19,713   19,713
Payments – interest   (4,387)   (14,416)   (18,803)
Interest accrued   3,527   15,162   18,689
Transaction costs   -   (783)   (783)
Amortization of transaction costs   -   46   46
Effect of changes in exchange rates (OCI)   9,493   37,258   46,751
Balance at end of the period   126,827   524,354   651,181
 
47 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Covenants

The credit facilities and syndicated loans above-mentioned have associated restrictive clauses (covenants) which establish the maintenance of minimum financial indicators resulting from capital, funding and liquidity (cash) position, as well as profitability metrics and leverage ratios including, but not limited to, net debt to gross profit, in addition to non-financial indicators according to each contract. The non-compliance with financial covenants is considered as an event of default and may lead to debt acceleration. There are also cross-default clauses triggered in the event Nu Holdings and/or some subsidiaries fail to pay any material indebtedness. The covenants are monitored on a regular basis.

 
48 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Guarantees

The Company is guarantor to the above-mentioned syndicated loans and term loan credit facilities from Colombia and Mexico. The sole term loan credit facility that also counted on Nu Pagamentos as guarantor was prepaid by Nu Financiera in March 2024.

 

24. PROVISION FOR LAWSUITS AND ADMINISTRATIVE PROCEEDINGS

    03/31/2024   12/31/2023
Civil risks   12,801   7,532
Labor risks   778   550
Total   13,579   8,082

The Company and its subsidiaries are parties to lawsuits and administrative proceedings arising from time to time in the ordinary course of operations, involving civil and labor matters. Such matters are being discussed at the administrative and judicial levels, which, when applicable, are supported by judicial deposits. The provisions for probable losses arising from these matters are estimated and periodically adjusted by management, supported by external legal advisors’ opinion. There is significant uncertainty relating to the timing of any cash outflows, if any, for civil and labor risk.

a) Provision

Civil lawsuits are mainly related to credit card operations. Based on management’s assessment, and inputs from Nu’s external legal advisors, the Group has provisioned US$12,801 (US$7,532 on December 31, 2023) considered sufficient to cover estimated losses from civil suits deemed probable.

b) Changes

Changes to provision for lawsuits and administrative proceedings are as follows:

    03/31/2024   03/31/2023
    Tax   Civil   Labor   Tax   Civil   Labor
                         
Balance at beginning of the period   -   7,532   550   15,747   2,096   104
Additions   -   9,903   504   -   1,486   61
Payments/Reversals   -   (4,328)   (256)   -   (281)   (27)
Effect of changes in exchange rates (OCI)   -   (306)   (20)   676   121   5
Balance at end of the period   -   12,801   778   16,423   3,422   143
 
49 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

The Group reviewed the provision methodology during the three-month period ended on March 31, 2024. Therefore, for processes received and not assessed individually, the provision is constituted using the average of financial losses observed in previous cases considering the characteristics of the process as the location, instance of judgment and historical percentage of loss. This change had an impact on the additions for the period, as presented on the table above.

c) Contingencies

The Group is a party to civil and labor lawsuits, involving risks classified by management and the legal advisors as possible losses, totaling approximately US$11,913 and US$14,506, respectively (US$14,212 and US$12,333 on December 31, 2023).

d) Judicial deposits

As of March 31, 2024, the total amount of judicial deposits shown as “Other assets” (note 17) is US$3,649 (US$3,506 on December 31, 2023) and is substantially attributed to the judicial deposit carried on behalf of the shareholders of Nu Invest, prior to the acquisition, due to a tax proceeding related to withholding taxes inappropriately deducted from amounts paid to employees.

 

25. DEFERRED INCOME

    03/31/2024   12/31/2023
Deferred revenue from rewards program   63,317   62,578
Deferred annual fee from reward program   1,227   2,762
Other deferred income   2,961   3,020
Total   67,505   68,360

 

Deferred revenue from rewards programs is related to the Group's rewards programs for its credit card customers, called "Nubank+" and "Ultravioleta". The programs consist of accumulating points according to the use of the credit card in the ratio of R$1.00 (one Brazilian real, equivalent to US$0.20 as of March 31, 2024 and US$0.21 as of December 31, 2023) equal to 0.5 and 1 point in cashback for Nubank+ and Ultravioleta, respectively. The points do not expire, and there is no limit on the number of Rewards an eligible card member can earn. Deferred annual fees from the reward program comprise amounts related to the rewards fees which are paid in advance by customers.

The redemption of the points occurs in cash or when the customers use them in various purchase categories, such as air tickets, hotels, transportation services, and music.

Nu uses financial models to estimate the redemption rates of rewards earned to date by current card members, and, therefore, the estimated financial value of the points, based on historical redemption trends and current enrollee redemption behavior, among others. The estimated financial value is recorded in the statement of profit or loss when the performance obligation is satisfied, which is when the reward points are redeemed.

 
50 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

26. OTHER LIABILITIES

    03/31/2024   12/31/2023
Payment transactions - other   228,478   219,426
Sundry creditors   177,466   158,169
Credit card ECL allowance (note 13)   22,443   22,066
Insurances   15,655   14,798
Intermediation of securities   10,931   12,835
Other liabilities   61,970   105,037
Total   516,943   532,331

 

27. RELATED PARTIES

In the ordinary course of business, the Group issues credit cards or loans to Nu’s executive directors, board members, key employees and close family members. Those transactions, as well as the deposits and other products, such as investments, occur on similar terms as those prevailing at the time for comparable transactions to unrelated persons and do not involve more than the normal risk of collectability.

As described in note 3, Basis of consolidation, all companies from the Group are consolidated in these unaudited interim condensed consolidated financial statements. Therefore, related party balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in the unaudited interim condensed consolidated financial statements.

As of March 31, 2024 and December 31, 2023, the Company did not have any transactions with other related parties.

 

28. FAIR VALUE MEASUREMENT

The main valuation techniques employed in internal models to measure the fair value of the financial instruments as of March 31, 2024 and December 31, 2023 are set out below. The principal inputs into these models are derived from observable market data. The Group did not make any material changes to its valuation techniques and internal models in those periods.

a) Fair value of financial instruments carried at amortized cost

The following tables show the fair value of the financial instruments carried at amortized cost as of March 31, 2024, and December 31, 2023. The Group has not disclosed the fair values of financial instruments such as compulsory and other deposits at central banks, other financial assets at amortized cost, deposits in electronic money, RDB, time deposit, and borrowings and financing, because their carrying amounts are a reasonable approximation of fair value.

 
51 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
    03/31/2024   12/31/2023
    Carrying amount   Fair value   Carrying amount Fair value
      Level 1   Level 2   Level 3     Level 1   Level 2   Level 3
                                 
Assets                                
Credit card receivables (i)   12,796,677       -   13,654,228   12,414,101       -   12,821,731
Loans to customers (i)   3,863,812       -   4,048,272   3,201,636       -   3,212,542
Compulsory and other deposits at central banks   7,005,946               7,447,483            
Other receivables (ii)   1,405,969       1,408,370   -   1,689,030       -   1,691,884
Other financial assets   167,666               131,519            
Securities   69,494   28   69,611   -   104,420       104,668   -
Total   25,309,564   28   1,477,981   17,702,500   24,988,189   -   104,668   17,726,157
                                 
Liabilities                                
Deposits in electronic money   3,488,952               2,388,601            
Bank receipt of deposits (RDB)   20,494,261               21,054,443            
Bank certificate of deposit (CDB)   271,672   -   271,672   -   248,086   -   249,009   -
Payables to network   9,516,090   -   9,459,962   -   9,755,285   -   9,605,576   -
Borrowings and financing   1,403,349   -   1,403,882   -   1,136,344   -   1,136,978   -
Total   35,174,324   -   11,135,516   -   34,582,759   -   10,991,563   -
                                 

 

(i)For 2023, excludes the fair value adjustment from the hedge accounting. As of March 31, 2024, the Company no longer has derivatives for the hedge of the portfolio's interest rate risk.
(ii)Fair value methodology consists of discounting the cash flows from acquired credit card receivables, using observable spreads from the credit card issuers.

Borrowings and financing include the fair value calculated by the discounted cash flow method, and also cases in which the fair value is the same amount as the book value (cases with prepayment clauses at the amortized cost). The fair value of floating rate demand deposits is assumed to be equal to carrying amounts.

The valuation approach to specific categories of financial instruments is described below.

i) Fair value models and inputs

Credit card: The fair values of credit card receivables and payables to the network are calculated using the discounted cash flow method. Fair values are determined by discounting the contractual cash flows by the interest rate curve and credit spread. For payables, cash flows are also discounted by the Group's own credit spread.

Loans to customers: Fair value is estimated based on groups of clients with similar risk profiles, using valuation models. The fair value of a loan is determined by discounting the contractual cash flows by the interest rate curve and a credit spread.

 
52 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Other receivables: Fair value is calculated by discounting future cash flows by the interest rate curve and a credit spread.

b) Fair value of financial instruments measured at fair value

The following table shows a summary of the fair values, as of March 31, 2024, and December 31, 2023, of the financial assets and liabilities indicated below, classified on the basis of the various measurement methods used by the Group to determine their fair value:

    03/31/2024
   

Fair value

Level 1

 

Fair value

Level 2

 

Fair value

Level 3

  Total
                 
Assets                
Government bonds                
Brazil   7,246,611   -   -   7,246,611
United States   131,913   -   -   131,913
Mexico   1,377   -   -   1,377
                 
Corporate bonds and other instruments                
Certificate of bank deposits (CDB)   -   1,745   -   1,745
Investment funds   34,983   48,164   69,089   152,236
Time deposit   -   362,603   -   362,603
Notes   -   251,087   -   251,087
Bill of credit (LC)   -   8   -   8
Real estate and agribusiness certificate of receivables   417   16,112   -   16,529
Real estate and agribusiness letter of credit   -   562   -   562
Corporate bonds and debentures   1,126,863   121,975   -   1,248,838
Equity instrument   -   -   13,175   13,175
Derivative financial instruments   3,876   17,180   20   21,076
Collateral for credit card operations   -   324   -   324
                 
Liabilities                
Derivative financial instruments   135   27,353   -   27,488
Instruments eligible as capital   -   3,990   -   3,990
Repurchase agreements   -   628,947   -   628,947

 

 
53 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
    12/31/2023
   

Fair value

Level 1

 

Fair value

Level 2

 

Fair value

Level 3

  Total
                 
Assets                
Government bonds                
Brazil   7,475,904   -   -   7,475,904
United States   126,914   -   -   126,914
Mexico   1,407   -   -   1,407
                 
Corporate bonds and other instruments                
Certificate of bank deposits (CDB)   -   5,770   -   5,770
Investment funds   -   70,967   -   70,967
Time deposit   -   194,390   -   194,390
Bill of credit (LC)   -   1   -   1
Real estate and agribusiness certificate of receivables (CRIs/CRAs)   234   17,839   -   18,073
Real estate and agribusiness letter of credit (LCIs/LCAs)   -   186   -   186
Corporate bonds and debentures   1,124,154   143,354       1,267,508
Equity instrument   -   -   13,199   13,199
Derivative financial instruments   3,079   17,882   20   20,981
Collateral for credit card operations   -   320   -   320
                 
Liabilities                
Derivative financial instruments   4   28,169   -   28,173
Instruments eligible as capital   -   3,988   -   3,988
Repurchase agreements   -   210,454   -   210,454

 

i) Fair value models and inputs

Securities: The securities with high liquidity and quoted prices in the active market are classified as level 1. Therefore, all government bonds and some corporate bonds are included in level 1 as they are traded in active markets. Brazilian securities values are the published prices by the "Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais" ("Anbima"). For US and Mexico bonds, fair values are the published prices by Bloomberg. Other corporate bonds and investment fund shares, the valuation of which is based on observable data, such as interest rates and interest rate curves are classified as level 2. Credit Rights Investment Funds (FIDCs) comprised of fixed rate receivables from retail clients are classified at level 3 of the fair value hierarchy and have their fair value calculated using the discounted cash flow model, based on the underlying assets of the fund.

Derivatives: Derivatives traded on stock exchanges are classified as level 1 of the hierarchy. Derivatives traded on the Brazilian stock exchange are fairly valued using B3 quotations. Interest rate OTC Swaps are valued by discounting future expected cash flows to present values using interest rate curves and are classified as level 2.

Equity instrument: For the fair value of the equity instrument, the Group used contractual conditions as inputs that are not directly observable, and therefore it is classified as level 3.

 
54 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

Instruments eligible as capital: If the instrument has an active market, prices quoted in this market are used. Otherwise, valuation techniques are used, such as discounted cash flows, where cash flows are discounted by a risk-free rate and a credit spread. Instruments eligible as capital were designated at fair value through profit (loss) in the initial recognition (fair value option).

Repurchase agreements: The fair value is calculated by discounted cash flow.

c) Transfers between levels of the fair value hierarchy

For the three-month period ended March 31, 2024 and 2023, there were no transfers of financial instruments between levels 1 and 2 or between levels 2 and 3.

The table below shows a reconciliation from the opening to the closing balances for recurring fair value measurements categorized within Level 3 of the fair value hierarchy.

    03/31/2024
    Equity instrument   Derivative financial instruments   Investment funds   Total
                 
Financial assets at beginning of period   13,199   20   -   13,219
Acquisitions   -   -   70,609   70,609
Total gains or losses   (24)   -   (976)   (1,000)
In profit or loss   (24)   -   151   127
In OCI   -   -   (1,127)   (1,127)
Effect of changes in exchange rates (OCI)   -   -   (544)   (544)
Financial assets at end of period   13,175   20   69,089   82,284

 

    03/31/2023
    Equity instrument   Derivative financial instruments   Total
             
Financial assets at beginning of period   22,082   27,908   49,990
Total gains or losses   131   (18,298)   (18,167)
In profit or loss   131   (18,298)   (18,167)
Financial assets at end of period   22,213   9,610   31,823

 

29. INCOME TAX

Current and deferred taxes are determined for all transactions that have been recognized in the unaudited interim condensed consolidated financial statements using the provisions of the current tax laws. The current income tax expense or benefit represents the estimated taxes to be paid or refunded, respectively, for the current period. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities. They are measured using the tax rates and laws that will be in effect when the temporary tax differences are expected to reverse.

 
55 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  

a) Income tax reconciliation

The tax on the Group's pre-tax profit differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities. Thus, the following is a reconciliation of income tax expense to profit for the period, calculated by applying the combined Brazilian income tax rate of 40% for the three-month period ended March 31, 2024 and 2023.

        Three-month period ended
        03/31/2024   03/31/2023
Profit before income tax       578,537   243,629
Tax rate (i)       40%   40%
Income tax       (231,415)   (97,452)
             
Permanent additions/exclusions            
Share-based payments       (4,566)   (6,517)
Operational losses and others       (3,422)   (3,812)
Foreign exchange variation on investments abroad       -   1,777
Effect of different tax rates - subsidiaries and parent company       8,332   3,382
Interest on capital       12,845   -
Other amounts (ii)       18,503   744
Income tax       (199,723)   (101,878)
             
Current tax expense       (415,042)   (205,864)
Deferred tax benefit       215,319   103,986
Income tax in the statement of profit or loss       (199,723)   (101,878)
Deferred tax recognized in OCI       (4,847)   3,211

(i) The tax rate used was the one applicable to the financial Brazilian subsidiaries, which represents the most significant portion of the operations of the Group. The tax rate used is not materially different from the average effective tax rate considering all jurisdictions where the Group has operations. The effect of other tax rates is shown in the table above as “effect of different tax rates – subsidiaries and parent company”.

(ii) Mostly related to the amount of deductions and incentives.

b) Deferred income taxes

The following tables present significant components of the Group’s deferred tax assets and liabilities as of March 31, 2024 and 2023, and the changes for both periods. The accounting records of deferred tax assets on income tax losses and/or social contribution loss carryforwards, as well as those arising from timing differences, are based on technical feasibility studies which consider the expected generation of future taxable income, considering the history of profitability for each subsidiary individually. The use of the deferred tax asset related to tax loss and negative basis of social contribution is limited to 30% of taxable profit per year for the Brazilian entities and there is no time limit to use it.

 
56 
 

Nu Holdings Ltd.

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2024

  
        Reflected in the statement of profit or loss        
    12/31/2023   Constitution   Realization  

Foreign

exchange

  Reflected in OCI   03/31/2024
Provisions for credit losses   1,330,733   421,991   (223,692)   (32,617)   -   1,496,415
Provision PIS/COFINS - Financial Revenue   (2,108)   -   2,108       -   -
Other temporary differences (i)   192,070   53,052   (39,839)   (5,142)   (1,473)   198,668
Total deferred tax assets on temporary differences   1,520,695   475,043   (261,423)   (37,759)   (1,473)   1,695,083
                         
Tax loss and negative basis of social contribution   92,918   5,285   (6,815)   (1,346)   -   90,042
Deferred tax assets   1,613,613   480,328   (268,238)   (39,105)   (1,473)   1,785,125
                         
Futures settlement market   (11,509)   (107)   3,050   68   -   (8,498)
Fair value changes - financial instruments   (9,332)   (167)   32   223   (66)   (9,310)
Others   (54,937)   (3,298)   397   735   -   (57,103)
Deferred tax liabilities   (75,778)   (3,572)   3,479   1,026   (66)   (74,911)
                         
Deferred tax, offset   1,537,835   476,756   (264,759)   (38,079)   (1,539)   1,710,214
                         
Fair value changes - cash flow hedge   (5,375)   29,441   (26,119)   (14)   (3,308)   (2,067)
Deferred tax recognized during the period       506,197   (290,878)       (4,847)    

(i) Other temporary differences are composed mainly of other provisions and supplier provisions.

        Reflected in the statement of profit or loss        
    12/31/2022   Constitution   Realization  

Foreign

exchange

  Reflected in OCI   03/31/2023
                         
Provisions for credit losses   583,791   210,688   (96,465)   31,305   -   729,319
Provision PIS/COFINS - Financial Revenue   6,299   -   -   270   -   6,569
Other temporary differences   123,103   37,037   (35,045)   5,215   -   130,310
Total deferred tax assets on temporary differences   713,193   247,725   (131,510)   36,790   -   866,198
                         
Tax loss and negative basis of social contribution   97,857   5,197   (9,392)   4,319   -   97,981
Deferred tax assets   811,050   252,922   (140,902)   41,109   -   964,179
                         
Futures settlement market   (13,739)   (3,043)   4,574   (196)   -   (12,404)
Fair value changes - financial instruments   (3,291)   (823)   (114)   (212)   185   (4,255)
Others   (24,088)   (1,048)   (4,818)   (1,348)   -   (31,302)
Deferred tax liabilities   (41,118)