By Brazil Stock Guide – Nubank is accelerating faster than at any point since its IPO, according to a new BTG Pactual report that lifted the price target for the ROXO34 BDR to R$20 and projected $4 billion in net income for 2026, a 42% year-on-year jump.
Analysts say the combination of stronger loan growth, healthier asset quality and sharply lower provisions signals a structural shift in the bank’s trajectory, powered by increasingly sophisticated AI-based risk and underwriting tools.
The lender is expanding more aggressively into lower-risk, higher-recurrence credit lines — such as payroll loans, collateralized products and SME financing — while improving performance in its legacy credit book. Risk-adjusted spread rose 70 basis points in the quarter, and provisions fell 3% sequentially, reflecting both the improvement in recoveries and the impact of AI algorithms that now deliver three-times better predictive accuracy. BTG argues that Nubank is one of the few financial institutions in Latin America able to scale rapidly with high-quality credit formation, keeping ROE above 29% from 2026 onward.
Management has doubled down on an “AI-first” roadmap that is reshaping product development and credit discipline. According to CEO David Vélez, AI is enabling faster and cheaper product rollout, more accurate credit scoring, higher card limits without added risk, and better fraud and collections performance. Executives argue that the technology is starting to open entirely new revenue pools, particularly in small-business lending, where demand is strong and incumbents remain slow to adapt.
Mexico remains Nubank’s most powerful long-term growth engine. The bank already has more than 13 million customers in the country, with the credit portfolio growing at double-digit rates. While the Mexican operation could already post a profit, the company prefers to reinvest to maximize future value. With the market still heavily cash-based, partnerships such as the one with convenience-store giant OXXO are deepening engagement, boosting salary deposits and accelerating market-share gains.
BTG now expects Nubank to deliver $5.1 billion in profit in 2027, with ROE nearing 31% and international operations becoming increasingly relevant to group earnings. Even as Brazil’s economy shows signs of deceleration, analysts say that low unemployment, the new income-tax exemption up to R$5,000 and a more cautious stance from incumbent banks in lower-income segments create a supportive backdrop. In BTG’s view, Nubank remains one of the “structural long-term winners” in Latin American finance, still trading at attractive forward multiples given the growth the bank is delivering.
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