Coverage: weekly note · Information to 27 March 2026
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TGB Weekly Research Note · 27 March 2026
Nubank's deposits reached $41.9bn and Monzo's £16.6bn, while Lloyds and NatWest grew deposits by 3% and 2.4% and UK incumbents turned to acquisitions to add balances.
The desk view
Nu Holdings ended 2025 with $41.9bn of deposits, up 29% on an FX-neutral basis, and Monzo's deposits rose 48% to £16.6bn in its year to 31 March 2025. Lloyds and NatWest grew deposits by 3% and 2.4% in 2025. The sharper difference is what the money funds: Monzo's lending book was 9% of its balance sheet and Starling's loan-to-deposit ratio fell to 39.5%, against 97% at Lloyds. Nu's ratio, by contrast, rose as lending outgrew deposits. Incumbents have added balances by acquisition and digitisation: NatWest absorbed Sainsbury's Bank, Santander agreed to buy TSB and its £35bn of deposits, and Lloyds' Commercial Banking division cited a fixed term deposits mobile journey. In our view the contest is moving from winning balances to pricing and deploying them.
Nubank's deposit growth slowed as lending caught up
Nu Holdings reported total deposits of $41.9bn at the end of 2025, up 29% year on year on an FX-neutral basis, with a cost of funding equal to 87% of interbank rates. A year earlier, deposits had grown 55% on the same basis to $28.9bn, at a funding cost of 89% of blended interbank rates. In reported dollars the balance rose by $13.0bn over the year.
The interest-earning portfolio rose 47% to $18.5bn and the total credit portfolio 40% to $32.7bn. On Nu's definition, the interest-earning portfolio divided by deposits, the loan-to-deposit ratio rose from 39% to 44%. Nu added 17 million customers in 2025 to reach 131 million, including 113 million in Brazil, or 62% of the adult population.
Deposit gathering outside Brazil has a cost: the risk-adjusted net interest margin of 10.5% in Q4 2025 absorbed a one-off contribution to Prosofipo, the deposit protection fund for Mexico's Sofipos, and Nu lists advancing its Mexican banking licence among its 2026 priorities. The rate backdrop is also turning, as Brazil's Copom cut the Selic rate to 14.75% on 18 March 2026, having held it at 15.00% in January. Lower policy rates would ease Nu's funding cost but also reduce its return on surplus liquidity.
UK challengers' deposit growth was led by savings
Monzo's customer deposits rose 48% to £16.6bn in the year to 31 March 2025, an increase of £5.4bn. Instant Access savings made up £8.9bn of the total against £7.7bn in current accounts. Starling's deposits rose 10.0% to £12.1bn over the same financial year, led by its Easy Saver account, which attracted over £1.5bn, while current account balances fell 2.6%. Starling described an increasingly competitive market for savers and current accounts, and its cost of deposits rose to 0.78% from 0.38%.
Neither bank lends out most of what it holds. Monzo's lending book was 9% of its balance sheet, and it began investing excess deposits in an investment-grade credit portfolio; over 40% of its deposit balances are structurally hedged. Starling's loan-to-deposit ratio fell to 39.5% from 42.7% as deposits outgrew lending. For both banks, most new deposits are therefore deployed outside the loan book. That model depends on rates, and the Bank of England held Bank Rate at 3.75% at its meeting ending on 18 March 2026.
Deposits and loan-to-deposit ratios, latest reported year
| Bank | Year end | Customer deposits | Annual change | Loan-to-deposit ratio |
|---|---|---|---|---|
| Nu Holdings | December 2025 | $41.9bn | 29% (FX-neutral) | 44% |
| Monzo | March 2025 | £16.6bn | 48% | not reported |
| Starling | March 2025 | £12.1bn | 10.0% | 39.5% |
| Lloyds Banking Group | December 2025 | £496.5bn | 3% | 97% |
| NatWest Group | December 2025 | £441.7bn | 2.4% | 88% |
Source: Nu Holdings, Q4 and full-year 2025 results, 25 February 2026; Nu Holdings, Q4 2024 earnings release, 20 February 2025; Monzo, Annual Report 2025, 29 May 2025; Starling Bank, Annual Report 2025, 26 May 2025; Lloyds Banking Group, 2025 results, 29 January 2026; NatWest Group, 2025 Annual Results, 13 February 2026.
Definitions differ: Nu's ratio uses its interest-earning portfolio; NatWest's deposits exclude central items and its ratio excludes repos and reverse repos.
Incumbents are buying deposits and digitising
Lloyds Banking Group's customer deposits rose 3% to £496.5bn in 2025, and NatWest Group's, excluding central items, rose 2.4% to £441.7bn. In Retail, Lloyds' deposits rose £5.5bn, helped by about £7.5bn of additional ISA balances, although deposit churn was a headwind to net interest income. In Commercial Banking it cited a fixed term deposits mobile journey among the digital propositions driving deposit and lending growth.
Acquisitions add balances in larger blocks. NatWest integrated around one million Sainsbury's Bank customers, and its Retail Banking deposits rose £7.8bn, or 4.0%, supported by the acquired balances. On 1 July 2025 Santander agreed to buy TSB, with about 5 million customers and £35bn of deposits, for £2.65bn, saying Santander UK would become the third largest UK bank by personal current account balances and gain greater access to high-quality deposits. At announcement, completion was expected in the first quarter of 2026.
In Brazil, Itaú Unibanco's loan portfolio grew 6.0% in 2025, and it said higher liability volumes helped expand its margin. Its non-interest expenses rose 7.5% to R$66.8bn, mainly reflecting investment in technology.
None of these incumbents attributes its moves to challengers, but the direction in the UK is consistent: incumbents are adding deposits through acquisitions and digital journeys, while the challengers' next test is converting surplus deposits into lending.
What to watch
- 30 April 2026: Bank of England publishes the minutes of the MPC meeting ending on 29 April.
- Summer 2026: expected completion of NatWest's £2.7bn acquisition of wealth manager Evelyn Partners, agreed on 9 February 2026.
Primary sources: Nu Holdings, Q4 and full-year 2025 results, 25 February 2026; Monzo, Annual Report 2025, 29 May 2025; Starling Bank, Annual Report 2025, 26 May 2025; NatWest Group, 2025 Annual Results, 13 February 2026; Santander, TSB acquisition announcement, 1 July 2025; Lloyds Banking Group, 2025 results, 29 January 2026; Nu Holdings, Q4 2024 earnings release, 20 February 2025; Banco Central do Brasil, Copom statement, 277th meeting, 18 March 2026; Banco Central do Brasil, Copom statement, 276th meeting, 28 January 2026; Bank of England, Monetary Policy Summary, March 2026, 19 March 2026; Itaú Unibanco, 2025 results release, 4 February 2026.