Nubank, a prominent fintech bank, recently made the decision to suspend trading for its cryptocurrency, Nucoin. The announcement came amidst growing concerns about the bank’s financial stability. Originally launched in late 2022 on the Polygon blockchain, Nucoin was intended to be a part of a reward program offering various benefits to users. However, as of a September 10 blog post, Nucoin can no longer be bought or sold within the Nubank app. Instead, it will serve as an asset to unlock benefits and rewards within the bank’s ecosystem.
The exact reasons behind the suspension of Nucoin trading remain unclear. However, the decision appears to be a proactive measure to prevent potential fluctuations in the cryptocurrency’s value on the market. This move also comes at a time when Nubank is facing scrutiny over its financial health, including concerns about rising non-performing loans and the quality of its assets.
One of the key factors contributing to the scrutiny of Nubank’s financial stability is the rising percentage of non-performing loans within the bank. In the second quarter, the bank’s non-performing loans, which are overdue by 90 days or more, reached a record high of 7%, surpassing the industry average of 5.5%. Despite this, Nubank reduced its bad debt provisions, leading to some analysts questioning the bank’s practices.
Analysts have expressed reservations about Nubank’s financial performance, with some labeling the company as “overvalued.” This sentiment is reflected in recent actions taken by investment firms such as Persevera Asset Management, which sold off its entire position in Nubank due to concerns over credit quality. Similarly, JPMorgan Chase and UBS downgraded their ratings for Nubank to “neutral” in July, citing deteriorating asset quality.
Despite the criticism from analysts and investors, Nubank’s executives have defended the bank’s lending practices. Chief Operating Officer Youssef Lahrech emphasized the bank’s focus on long-term strategies during an earnings call, prioritizing sustainability over short-term metrics such as non-performing loans. However, the decision to suspend Nucoin trading may suggest that the bank is taking proactive steps to address growing concerns over its financial stability.
The suspension of Nucoin trading by Nubank reflects broader issues facing the bank in terms of financial health and asset quality. While the exact reasons behind the decision remain unclear, it is clear that Nubank is facing increased scrutiny from analysts and investors. Moving forward, the bank will need to address these concerns and provide transparent communication to rebuild investor confidence in its operations.
