Is Nu Holdings' Mexico Business Finally Carrying Its Own Weight?

Nu Holdings (NYSE: NU) owns NuBank, the largest digital bank in Latin America. It served 139 million customers in the second quarter of 2026, representing 30% growth from a year earlier. As a digitally native bank, it expanded much faster than its brick-and-mortar peers.

Most of Nu's customers are located in Brazil, where it already serves more than half of the country's adult population. To gradually reduce its dependence on that maturing market, Nu is aggressively expanding in Mexico -- but that market has a higher ratio of non-performing loans. Nu is also ramping up its spending on additional products in Mexico -- including credit cards, bank deposits, loans, and other services -- to grow its revenue per active customer.

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Nu's customer base in Mexico grew 32% year over year to nearly 16 million customers in the second quarter. However, that expansion boosted its credit risk and average cost per active customer while compressing its margins. The Mexican government recently authorized Nu Mexico to operate as a full-fledged bank in the country. Still, that approval could also expose it to tighter regulations, stricter capital requirements, and other banking expenses. So is Nu's Mexican business finally starting to carry its own weight, or is it still its weakest link?

What milestones has Nu's Mexican business achieved?

Nu expanded into Mexico in 2020. Over the following five years, it launched its credit card, Cuenta Nu savings and debit accounts, Cajita digital savings app, and personal loans. It now serves 98% of all municipalities in Mexico, as well as 78% of customers outside major cities.

Before joining NuBank, 35% and 52% of its Mexican customers lacked bank accounts and credit cards, respectively. Only 63% of Mexican adults had bank accounts at the end of the second quarter, compared with 94% in Brazil. Nu still only serves 16.5% of Mexico's adult population -- so it still has plenty of room to expand.

Nu's Mexican business broke even for the first time in the first quarter of 2026. It reached that milestone two years faster than its flagship Brazilian business, and silenced the bears who had claimed the Mexican market would become a money pit.

Its average revenue per active customer (ARPAC) in Mexico also reached $12.30 in the second quarter, compared to Brazil's $5.60 at the equivalent phase of its expansion in the second quarter of 2020. All of those figures clearly indicate that Nu's Mexico business isn't just carrying its own weight -- it's becoming the fintech company's core growth engine.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nu Holdings. The Motley Fool has a disclosure policy.