Starling Bank has reported its first full year of profitability, according to annual financial results released Thursday.
The UK-based startup bank posted a £32.1 million pre-tax profit for the 12 months up to March 31, 2022, compared to a £31.5 million pre-tax loss for the previous period ending March 31. The result was primarily driven by annual revenue of £188 million, a 93% increase. Previously, the company had only broken even on a monthly basis, making a profit of £800,000 in October 2020.
This makes the neobank the first among its contemporaries — such as Monzo, Revolut and N26 — to be profitable across a full financial year.
The bank also says that it has reduced its reliance on a UK government loan scheme created to help SMEs weather the pandemic. After acquiring Fleet Mortgages, the neobank now has more than £1.1 billion worth of mortgages on its balance sheet. However, loans to SMEs still constitutes a large majority of its lending, with more than £2 billion lent and £1.8 billion of that guaranteed through the government scheme as of March 31 2022.
Former UK government minister Lord Agnew previously criticized the neobank for using the scheme as a "cost-free marketing exercise" and not taking its anti-fraud responsibilities seriously enough.
In April, The Block reported that the neobank had raised £130.5 million at a £2.5 billion valuation. The funding came from existing investors Fidelity Management and Research Company, RPMI Railpen, Qatar Investment Authority, Goldman Sachs and billionaire Harald McPike.
At the time, the company said the money would enable it to continue growing and for an acquisition spree.
"We have made no secret of our M&A ambitions and expect targeted acquisitions to play a key role in the year ahead," said CEO Anne Boden in a statement in the results.
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