Nu Holdings (NU): Gaining share through the cycle, monitoring macroprudential risks

NU is down 3% since 2Q26 results, underperforming Brazil equities by 12pp. The weakness reflects concerns on the Brazil credit cycle and reports of potential macroprudential measures targeting unsecured lending. We examine loan growth through prior credit cycles and contrast this with NU's track record. NU has historically used periods of industry deceleration to gain market share and its current cost-of-risk trends remain consistent with a moderate, intentional risk expansion rather than a broad deterioration in credit quality. We view the stock underperformance as overdone, as NU's balance sheet remains relatively unlevered and our sensitivity analysis suggests earnings are resilient even under materially slower loan growth. We maintain our Buy rating, but note that recent news reports of a potential acquisition of Monzo could create overhang risks. The Brazilian Central Bank is analyzing potential macroprudential policies to target the riskiest credit products, such as an increase i