Investing.com -- Wolfe Research issued an analysis Wednesday of Brazilian credit trends, noting deterioration across consumer lending products in system-level data while examining potential impacts on Nu Holdings Ltd (NYSE: NU) and XP Inc (NASDAQ: XP).

The Central Bank of Brazil released its monthly monetary and credit statistics report for March on Monday. Across Brazil, 90-day non-performing loans across nonearmarked household products increased 130 basis points year-over-year to 7.0% in March, an improvement from the 160 basis point year-over-year increase in February. The figure declined 20 basis points month-over-month versus historical seasonality of negative 3 basis points.

Similar increases were observed across card and personal loans beginning in the second half of 2025, according to the research. Despite signs of continuing industry pressure among Central Bank aggregates and select major lenders, 90-day NPLs at Nu Holdings decreased on a year-over-year basis throughout 2025 while industry NPLs increased by 100 to 200 basis points.

NPLs at XP Inc increased throughout last year before showing signs of improvement on 15-90 day metrics in the fourth quarter of 2025. Wolfe Research noted this reflects outsized credit portfolio growth and seasoning impacts, adding that XP has less underwriting history than Nu Holdings.

Among incumbent banks, Itau, which holds approximately 21% market share, and Bradesco, with roughly 12% share, maintained effectively stable 90-day-plus NPLs over the past year. Banco do Brasil, holding about 10% share, showed signs of material deterioration, while Santander Brasil, with approximately 9% share, experienced relatively modest deterioration.

The Selic rate was cut to 14.75% in March, with modest easing expected through the remainder of the year. Unemployment is trending at 10-year lows. Wolfe Research maintains Outperform ratings on both Nu Holdings and XP Inc.