How does the investment thesis change now that the US business is operational?

  • Nubank launched savings, credit cards and cross-border transfers in the US in September 2026, moving its expansion from a strategic concept into actual operations. Morgan Stanley maintains its Overweight rating and $21 price target. Its earnings forecasts do not include a meaningful contribution from the US, and its bullish thesis remains based on Brazil, Mexico and Colombia.
  • The annual revenue pool for US consumer banking is approximately $1 trillion–$1.3 trillion, but the market a new entrant can actually reach is much smaller. Compared with when Nubank first entered Brazil, most US consumers already have banking and payment products, so growth depends mainly on winning funds and transactions from existing accounts.

Why are free remittances a more promising entry point than high interest rates alone?

  • The US has approximately 70 million Latino residents, about 70% of whom are concentrated in five states; 31% of Hispanic households are underserved by financial services, compared with 12% of white households. This gives Nubank an opportunity to focus its marketing and establish initial relationships through cross-border needs.
  • In the third quarter of 2025, the average cost of sending $200 from the US to Mexico was approximately $9, including fees and exchange-rate markups. Nubank offers transfers to Mexico, Brazil and Colombia with zero fees and zero exchange-rate markups, giving customers a clear reason to try it.
  • The value of free remittances comes from subsequent conversion into deposits, spending and credit use. Primary checking account relationships in the US last an average of 18 years, making it difficult to replace a primary account directly; about half of newly opened checking accounts are additional accounts, providing a path to establish a secondary relationship first and gradually increase share of use.

Why not pursue scale with the highest interest rates and cash back?

  • At launch, the US savings product offered an annual percentage yield of 3.50%, rising to 4.50% on up to $10 thousand in eligible balances when credit card usage conditions are met. The balance cap controls subsidy costs, while the usage conditions encourage customers to use both savings and credit cards.
  • Nubank does not yet have a mature US loan portfolio for which retail deposits could replace existing high-cost funding. If it first attracts large deposits with high interest rates before lending reaches scale, it will incur expensive funding costs upfront.
  • The no-annual-fee credit card offers 1.50% cash back, rising to 2.00% when conditions are met, while several comparable products already exist in the US. Differentiation must come from the combination of savings, remittances and credit cards; although revolving borrowing can generate interest, funding costs, rewards and bad debts also erode the spread.

Can Latin America's low-cost advantage withstand US credit losses?

  • Nubank's current efficiency ratio is approximately 28%, below the roughly 52% level at JPMorgan Chase and Bank of America, but US customer acquisition, rewards, compliance and servicing costs may be higher. Large banks' existing customer relationships, mature receivables and marketing systems also weaken this apparent cost advantage.
  • The new credit card portfolio lacks seasoned existing accounts to smooth losses: delinquencies typically accelerate 6–12 months after credit is extended, and losses peak at around 18–24 months. Low early losses may simply reflect the portfolio's short seasoning; Latin American risk-management experience still needs to be combined with local US data, and early underwriting mistakes could be enough to offset the operating-cost advantage.

What will determine the pace of expansion in 2027?

  • Management sees the end of 2027 as a potential decision point for accelerating expansion, by which time it expects to have accumulated approximately 12–18 months of local credit performance data. Initial US investment is expected to raise the group's efficiency ratio by approximately 1 percentage point; the experiment itself already has a cost.
  • Morgan Stanley is watching customer acquisition costs, repeat transfers, payroll deposits, card spending and balance retention, as well as whether credit performance can support risk-adjusted returns. The operational shift from a partner-bank model to an independently licensed bank will also affect the ultimate economics; the number of accounts opened is only a starting point.