Leveraging Latin America

Over the past two weeks, two of our Latin American holdings, Mercado Libre (MELI) and Nu Holdings (NU), released their second-quarter 2025 results, showcasing continued momentum in their respective markets. 

Mercado Libre: E-Commerce Meets Fintech 

Mercado Libre operates a dual business model, combining e-commerce and digital banking. The company leverages its e-commerce platform (typically lower-margin) to drive adoption of its higher-margin fintech services. This cross-selling approach allows MELI to deepen customer engagement, gain market share, and improve monetization. 

One key advantage is MELI’s ability to offer favourable financing to sellers on its platform. With granular insights into sellers’ performance, MELI can assess creditworthiness more accurately than traditional lenders. 

In Q2, MELI reported: 

• Revenue of $6.8 billion, up 34% YoY 

• Operating income of $830 million, up 14% YoY 

• Total payments volume of $64.6 billion, up 39% YoY 

The company highlighted strong growth in its savings and yield-bearing accounts, which helped drive broader adoption of its fintech products.  

Nu Holdings: Banking the Mass Market 

Nu Holdings is a digital financial services platform operating primarily in Brazil, Mexico, and Colombia. Its core focus is the retail mass market, a segment historically underserved by traditional banks. Of its 123 million customers, 105 million falls into this category. 

In Q2, Nu reported: 

• Revenue of $3.67 billion, up 29% YoY 

• Net income of $640 million, up 30% YoY 

Nu’s credit portfolio reached $27.3 billion, growing 44.4% YoY. About two-thirds of this portfolio consists of credit card loans, with the remainder split between secured and unsecured lending. While Nu’s loan book is larger, Mercado Libre’s credit portfolio is growing at a faster pace. MELI’s credit portfolio grew 91% YoY to $9.3 billion.  

Despite their strong growth trajectories, both Mercado Libre and Nu Holdings face notable risks. Macroeconomic volatility in Latin America – such as inflation, currency fluctuations, and political instability – can impact consumer spending and credit quality. Additionally, competition from global and regional players could pressure margins and customer retention. For Nu, rapid credit growth raises concerns around asset quality and default risk, while Mercado Libre’s reliance on cross-selling between e-commerce and fintech means any disruption in one segment could affect the other. 

Interestingly, Nu Holdings—through its digital banking arm Nubank—announced a US$150 million investment in Tyme Group, operating in South Africa and Philippines with Patrice Motsepe a major shareholder of Tyme Group.