Starling Bank hits first full year profits at £32m
Starling Bank has reported its first full year of profits today after swinging into the black from a pre-tax loss of £31.5m last year.
The London-headquartered digital lender, which offers both personal and business banking, posted pre-tax profits of £32.1m for the 12 months to the end of March, as it felt the lift of a growing mortgage business and a jump in revenues to £188m.
The profits come after an acquisitive push into the mortgage market in the past 12 months, including the £50m purchase of Fleet Mortgages in July last year which had helped swell its book to more than £2bn by the end of March. Starling then struck a deal to snap up lender Masthaven last month for around £500m last month.
Unlike many fintech firms and digital rivals Monzo and Revolut, Starling has long emphasised its focus on a fast track route to profits rather than expansive and loss-making growth plans.
Boss and founder Anne Boden told reporters today that the profits placed the firm “in a category of one” as growth-focused fintech firms globally are hit by plunging valuations and an exodus of nervous investors.
“If you look at the listed markets, and and certain entities such as buy-now pay-later, we see a huge correction going on there,” she said on a call.
“And that tends to be in those organisations that have huge growth and huge numbers of customer numbers, but they’re not profitable yet, and have not figured out how they’re going to make money. Starling is very different.”
Boden told reporters today that the tech downturn was likely to scupper any chance of Starling’s much-anticipated IPO in the next year despite the firm’s profitability, however.
“I don’t think it’s gonna be next year. It could be next year, but I think it’s more likely to be a year after that,” She said. “So we’re probably talking about maybe 2023, most probably going to be 2024.
Starling’s break into profitability comes after it jumped to support the government’s covid emergency business support loans schemes in 2020, which saw its business lending book balloon.
The speed with which the firm dished out Bounce Back Loans has raised concerns from some quarters however. Anti-fraud minister Lord Agnew called out Starling for “acting against the government and taxpayers’ interests”.
Boden hit back at the claims today and described him as “just wrong”, adding that the firm “did all the checks necessary and more”.