Further reading
A year ago, the return on equity of Brazilian digital lender Nubank was zero (or 0.001% to be precise). Today, it is 23%.
Similarly, a year ago the RoE of another digital firm, Banco Inter, was -0.2%, while today it is 8.5%, having grown by two percentage points in each of the past three quarters. Inter’s chief executive, João Menin, is targeting a RoE of 30% by 2028 and believes that the longer-term sustainable RoE is somewhere above that number.
Meanwhile Banco Pan reported 11% RoE in the fourth quarter of 2023, and chief executive Carlos Eduardo Guimarães tells Euromoney it will be between 20% and 22% in two years’ time.
What is happening to drive such profit growth at the digital banks? Is it simply the evolution of a business model that always...
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