Mercado Livre intensifies its strategies to become the largest digital bank operating in Latin America. In order not to lose space in your country, The company recently requested a banking license from the Central Bank of Argentina to improve service offerings in this segment. The company's market expansion is also taking place in Brazil and Mexico, but this latest announcement would directly impact the brand’s financial results.
If approved, The banking license will allow Mercado Livre to expand the range of financial products in the Argentine market, offering current account, savings account, credit and debit cards, exchange operations and also asset custody. Market analysts claim that the license symbolizes a “strategic hedge” for the company, which will enable lower funds and maintain net interest margin after losses of 50% registered.
Mercado Livre's financial strategy is a response to the growth of large digital banks in Argentine territory, like Nubank and Revolut. At the moment, Europe's biggest startup, a Revolut, is also growing in Brazil by strengthening product offerings. Staying competitive and innovative, Mercado Livre had already announced the launch of the credit card in Argentina, with bets to be launched in the second half of this year.
Mercado Livre is experiencing a positive moment
The financial strategies adopted have demonstrated the positive moment in which the company is. Argentina is Mercado Livre's largest financial and e-commerce market. The country also contributed to the company starting the year with an increase in 44% of net profit in this first quarter, reaching US$ billion. Revenue in Argentina also grew 125% during that same period.
After applying for a banking license, the record is that the company's shares accumulated a rise of 44,1% per year, recording the market value of US$ 128,5 billion. Itaú analysts state that the country's contribution margin is around 40%, presenting twice the performance of Brazil and Mexico. The contribution percentage in these is 20% e 18%, respectively.
