SAO PAULO (Aug 13): Brazilian digital lender Nubank's quarterly net profit surpassed US$1 billion for the first time, beating analysts' estimates and causing shares to surge after the bell on Thursday.

Nu Holdings posted net profit of US$1.06 billion for the April-June quarter, a 49% rise year-on-year on a foreign-exchange-neutral basis and above the US$967.2 million Visible Alpha estimate.

Shares in the lender, which serves nearly 139 million clients across Brazil, Mexico and Colombia and is preparing to start operating in the US, jumped some 9.5% in extended trading to about US$15.25 each.

The profit increase was driven by higher revenue and an improvement in risk-adjusted net interest margin, Chief financial officer Rob Livingston, who assumed the role last month, told Reuters.

Nubank's revenue increased 39% to US$5.88 billion, beating the US$5.60 billion projected in the Visible Alpha forecast, while the risk-adjusted net interest margin rose to 12.4% from 9.9% a year earlier.

Livingston told an analyst call that the current level of risk-adjusted net interest margin (NIM) is seen as sustainable in the foreseeable future.

"We believe bull investors were working with ~11% risk-adjusted NIM, meaning this is a solid beat even for investors who were positive into the print," JPMorgan analysts wrote.

Cost of credit, which weighed on shares last quarter after rising to US$1.79 billion, declined to US$1.69 billion, though it remained 60% higher than a year earlier.

Nubank benefitted from Brazil's Desenrola debt-refinancing programme, launched this year to help individuals renegotiate debt, according to the CFO.

However, he said the improvement would have occurred even without the programme, citing seasonal factors and noting that Desenrola accounted for only about 5% of the bank's total cost of credit.

The credit portfolio stood at US$39.4 billion, a 37% growth year-on-year and a 5% rise quarter-over-quarter.

Credit portfolio "did slow a little bit sequentially in terms of the growth rate relative to the first quarter," Livingston told Reuters, but noted the move came from an unusually strong recent expansion.

Early delinquency rates came in at 4.8%, up 0.3 percentage point year-on-year, but down from the 5% in the first quarter.

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