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Starling Bank to quadruple profits

Starling Bank to quadruple profits

Starling Bank expects to quadruple profits this year, bolstered by strong growth in the SME market, where it has picked up 520,000 small business accounts, representing an 8.9% market share.

With more than 3.4 million customer accounts in total, Starling generated annualised pre-tax profits of more than £250 million on the back of almost £600 million of annualised revenue for the month of December 2022. At year-end, total deposits stood at £10.7 billion.

Starling's lending portfolio, at £4.7 billion, continues to grow, with more than £3.1 billion being in residential and owner-occupied mortgage books. Fleet, the buy-to-let mortgage specialist acquired in 2021, completed £1.2 billion of mortgages in 2022, despite the turbulent mortgage market; this was up 58% on the figure for 2021.

The figures were revealed by founder Anne Boden in her annual letter to customers.

"Starling was always the underdog; the diligent, hardworking, socially aware, tech-savvy fintech," she says. "Never as cool as those businesses run by those 30 year old tech bros. But as we have seen, markets have a nasty habit of correcting."

Starling has moved into profitiability without ever matching the sky-high valuations associated with its 'cooler' peers like Monzo.

"We’re profitable, very well capitalised and have no need to raise money," Boden boasts. "It’s no accident that we have never sought a silly valuation, even when the prospect of one was dangled before us."

Comments: (1)

David Gyori
David Gyori - BANKING REPORTS, LONDON - London 09 January, 2023, 15:37Be the first to give this comment the thumbs up 0 likes

Well done, Starling! I agree with EVERY word of Anne.

Founded in 2014, Starling Bank, a disruptor, turned (marginally) profitable first time in 2021. Significant profit in H2 2022 in my interpretation underlines that the 2021 numbers were actually meaningful (not merely result of temporary anomaly) in terms of indicating a level of maturity (e.g. scale) where the company begins to be able to fund its own growth. 

My prediction: Starling will soon become a target of acquisition attempts. But Anne will probably go the opposite way: Acquire some EMIs or PIs that are squeezed under liquidity (and/or capital) pressure. Or perhaps even acquiring (or merging with) a digital BANK such as N26 (which - unlike Starling - bleeds money). We will see this playing out! EXCITING!