Nubank (NYSE: NU) announces the signing of agreements with the states of Rio de Janeiro and Minas Gerais to expand the offering of payroll loans.
With these two new contracts, the company reaches a “total of 11 agreements and expands its total addressable market (TAM) for payroll loans from 50% to 70%, once these new contracts are fully integrated and available to our customers.”
Besides the states of RJ and MG, Nubank currently holds “agreements for future payroll loans in the public sector for employees and former employees linked to the Brazilian Armed Forces (Brazilian Air Force, Brazilian Navy, and Brazilian Army); the municipalities of São Paulo, Rio de Janeiro, and Belo Horizonte; and the state of Paraná.”
The gradual release of this service for the beneficiaries of these new “agreements is expected to take place throughout 2025.”
With this expansion, Nubank’s 100% digital payroll loan service “will reach a potential of over two million active and inactive public sector employees within its base.”
According to the Brazilian State Atlas, released “by IPEA (Institute of Applied Economic Research, in free translation for the acronym meaning), there were about 11 million active public sector ties by 2021.”
Federal public sector employees linked “to the Government through registrations in the SIAPE (the Brazilian Integrated Human Resources Administration System) and with an active Nubank account already have access to payroll loans via the app.”
This was the first group served with the NuConsignado offer, which began in March 2023. The company is also integrated “into the INSS (the Brazilian National Social Security Institute) database to serve retirees and pensioners.”
Public Payroll Loans at Nubank: Average Interest Rate 19% Lower Than the Market
Between July 2023 and June 2024, on average, federal public sector employees “who took out this type of loan via the Nubank app obtained an interest rate 19% lower than the market rate – 1.42% versus 1.75% per month, respectively.”
This data comes from a survey conducted by Nubank “using public data from the Central Bank of Brazil.”
In this same one-year period, on average, federal public sector employees “who used Nubank’s payroll loan opted to pay in 60 monthly installments during the contracting process.”
In the market, according to the Central Bank of Brazil data, the average is “about 95 months for public sector payroll loans.”
Livia Chanes, Nubank Brazil CEO:
“The impact on the customer’s wallet, with lower rates and savings, is precisely due to the flexibility that Nubank offers for installment payments, plus the operational efficiency of digitizing the contracting process without intermediaries. By having the freedom to plan their payments, our customers can reduce their debt levels and use credit in a sustainable way within their financial plans.”
In addition to the 100% digital contracting process, Nubank also “offers customers the option of payroll loan portability all through a comprehensive experience via its app.”