Nu Holdings Ltd. (NYSE:NU), the parent company of Nubank, is exploring a potential acquisition of UK digital bank Monzo in a cash-and-stock transaction that could value the fintech at £8 billion to £10 billion. The early-stage discussions would give Nu access to roughly 15.2 million Monzo customers, £25.7 billion in deposits and £1.7 billion in revenue, according to Needham analyst Kyle Peterson. Monzo was valued at £4.5 billion during its 2024 secondary fundraising round. Peterson said the deal could add a scaled, profitable European business while giving Nu an opportunity to expand Monzo’s relatively small lending operation. Monzo’s loans totaled £2.3 billion against £25.7 billion of deposits, implying a loan-to-deposit ratio of about 9%, compared with roughly 87% for Nu. The analyst said Nu could provide additional equity and apply its lending models to Monzo’s credit-card and personal-loan businesses, while potentially serving the large Latin American diaspora in the UK. Nu already operates in Brazil, Mexico and Colombia. Peterson maintained a Buy rating on NU with a $19 price target. The potential transaction comes as Nu reports record profitability. In Q2 2026, gross revenue rose 39% year over year to nearly $5.9 billion, while net income increased 49% to $1.1 billion. Risk-adjusted net interest margin expanded to 12.4% from 9.5% in the prior quarter, and return on equity reached 33%. Nu ended the quarter with 139 million customers globally, $39.4 billion in credit and $45.3 billion in deposits. It also launched as a full-scale digital bank in Mexico, where it had about 16 million customers as of July. Nu is expanding into the United States and introducing Nu Global, although management said building U.S.-specific credit models and data could take 12 to 30 months and pledged to limit the U.S. entry’s effect on its efficiency ratio to 100 basis points. Credit performance remains a consideration: the 15-to-90-day NPL ratio improved to 4.8%, while 90-plus-day delinquencies rose 35 basis points to 6.9% in Q2, largely because of seasonal migration. Itaú BBA downgraded NU to Market Perform in September, citing greater medium-term uncertainty around Brazil’s consumer environment. The number of hedge funds bullish on NU fell from 104 to 92 in Q2, although Lone Pine Capital, D1 Capital Partners, Kontiki Capital and Maverick Capital increased their stakes by 25%, 72%, 20% and 59%, respectively. As of September 29, NU traded at a forward P/E of 14.81. Short interest was 131.67 million shares as of September 15, up from 129.51 million the previous month, representing 3.50% of the float. The Monzo discussions could add a significant European platform to Nu’s expansion strategy, but the transaction remains uncertain. The broader question is whether Nu can extend its lending, technology and customer-acquisition model into new markets while maintaining the credit performance, efficiency and profitability behind its recent results. The source acknowledged NU’s investment potential but said certain AI stocks offered greater upside and less downside risk, and promoted a free report on an extremely undervalued AI stock that could benefit from Trump-era tariffs and the onshoring trend. It also directed readers to coverage of Infleqtion (INFQ) and AT&T’s expanded quantum deal involving D-Wave (QBTS). The disclosure was None, and readers were invited to follow Insider Monkey on Google News.