UK digital bank Starling has reported its third year of profitability as high interest rates buoyed the UK neobank’s top line.
According to its latest financial results released Wednesday, Starling posted an annual pre-tax profit of £301.1m for the year ending in March 2023 — a 55% increase on the bank’s £195m profit reported the year prior.
Reported revenues were £682.2m — a 51% year-on-year increase — thanks to a 53% boost to its loan book, which reached £2.3bn by 31 March 2023. Total customer deposits with the bank also increased modestly by 4% to £11bn.
Interim CEO John Mountain called it “a breakthrough year for Starling”, lauding the potential of the fintech’s software-as-a-service platform Engine, which helps other banks — like Salt Bank in Romania and AMP in Australia — create digital operations of their own.
“We’ve heavily invested in Engine because we’re confident it can one day become as big as the UK bank, or bigger.”
The push into lending
Starling is one of the UK’s largest neobanks — and, unlike many of its competitors, is focused solely on the UK market.
It now holds the envious position of being the only consumer neobank in the UK that’s managed to stay in the black for three consecutive years. Rival Monzo reported profitability for the first time earlier this month. In recent results covering 2022, Revolut sunk back into the red with a pre-tax loss of £25.4m after making a £39.8m profit the year before.
Its profitability streak isn’t tempting it to rush into an IPO, however. On an earnings call on Wednesday, Mountain declined to give an update on its IPO intentions — but said that it was only considering a London listing, describing the London Stock Exchange as its “natural home”.
Last year founder Anne Boden stepped down from her role as CEO. Former HSBC exec Raman Bhatia is set to replace her by the end of the year, following regulatory approval.
