Starling Bank’s losses doubled to £53.6m in the last year

Even though UK-based FinTech unicorn Starling Bank has seen its losses skyrocket to reach £53.6m in the last year, it still has reason to celebrate.

Even though its losses went up from £26.9m in 2018, the challenger bank has seen lending on its platform shot to the clouds thanks to the government’s Covid-19 financing schemes. By the end of July, it had £1bn in lending on its balance sheet.

Although, as some readers may recall, the same loan schemes did cause some headaches for the business a few months back.

In May, the digital lender was criticised by angry small business owners who had been relying on the digital lender to accept them for Bounce Back Loans, only to find themselves denied access to the funds.

The founder and CEO Anne Boden argued at the time that Starling Bank couldn’t in good consciousness accept loans to would-be loan takers when it didn’t feel confident that they would be able to repay them, which would only land them in worse financial troubles.

Anyhoo, the lending seems to have provided the bank with a huge boost to its top line, with the net increase making up the majority of the £6.7m revenue it enjoyed last month. It is now saying it has a run rate of £80m, according to CNBC.

The British neobank is now confident that it will be able to leverage the rebound activity from the pandemic to break even by the end of 2020.

There are a few reasons for its bullishness. For instance, its revenues rose from a measly £750,000 in 2018 to £14.2m in the year ending November 30.

“We are doing really well financially and it’s a horrible thing to say but the crisis has has given us the opportunity of really spending some time to focus on getting new products out, getting new things launched and consolidating our position,” Boden told reporters on a call Thursday. “We are back on track to be profitable by the end of the year.”

Building on its momentum, Starling Bank has resumed talks with the Irish central bank to secure a banking licence in Ireland, the Irish Times reported.

The talks had been put on ice in order to ensure the bank could cope with the  coronavirus fallout.

The expansion to the republic would be a first step towards Starling Bank expanding internationally and it is expected to begin its rollout in 2021.

Starling Bank most recently closed a £40m round in May. JTC and Merian Chrysalis Investment Company Limited injected the fresh capital, which the bank said it would use to  scale and to provide additional support to businesses struggling from the pandemic.

Starling Bank was not the only digital lender to announce its annual results last week. Monzo also published its results, revealing that its post-tax losses had doubled from £47.1m in 2019 to £113.8m in 2020.

Copyright © 2020 FinTech Global

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