July 23, 2021: -British digital bank Starling reported a sevenfold increase in revenue in the 16 months that ends in March 2021 as its lending soared, which helps cut losses in half.
Losses after tax totalled £23.3 million in the period, down from the £52.1 million Starling lost in its last annual accounts, covering the 12 months up to November 30.
Revenues went up 600% to £97.6 million from £14 million in its financial results of 2019.
Starling said it had changed its financial year-end from November 30 to March 31 to make it easier for shareholders to compare results quarterly.
The London-based firm has been growing its balance sheet significantly between an increase in lending thanks to government-backed financing schemes aiming to help businesses through the coronavirus pandemic.
Starling said the lending amount on its books spiked to £2.2 billion “from a shallow base.” This helped the bank break even for the first time in Oct. 2020, Starling said. It has made a profit each month since then, it added.
The shift toward the bank’s profitability marks a divergence from fellow fintech Monzo and Revolut, which saw their losses mounted in 2020.
Monzo racked up a post-tax loss of £113.8 million from 12 months to February 2020, up from £47.1 million a year. The London fintech, which saw its market value slashed by 40% to £1.25 billion in the previous year, warned disruption from Covid-19 had led to “significant doubt” about its ability to continue “as a going concern.”
Revolut reported a loss of £167.8 million in 2020, higher than the £106.7 million lost in 2019. However, Revolut said it was “strongly profitable” in the first quarter of 2021. The company raised funds at a $33 billion valuation, putting its market value ahead of British banking giant NatWest’s.
“They have seven times the customer numbers we have and only 60% of the deposits,” Boden said. The personal banking customers hold an average balance of £2,000 with the lender, according to Starling.
Starling is highly pushing into the small business banking market, now commanding a 6.3% share of the sector in the U.K. and aiming to reach a double-digit market share in the next 18 months. As of June 30, £3.9 billion of deposits of Starling were from businesses, while £2.8 billion were from retail users.
The company recently launched mortgages and plans to acquire a lender to bolster its balance sheet further. As for an initial public offering, Boden said she might float the business by 2022 or 2023.
“We’re going to do it in our time,” she said. “We’re not going to be forced to do it because it’s fashionable at the moment,” she added.
