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Monzo moves into profit as credit loss provisions dent FY2023 accounts

Monzo moves into profit as credit loss provisions dent FY2023 accounts

UK digital bank Monzo reported 2.3x growth in revenue for FY2023 and moved into profitability for the first time in the first two months of the new financial year.

The UK neobank struck a positive note in its 2023 report, boosting customer numbers to 7.4 million and growing deposits by 34% to £6.06 billion. Revenue for the year hit £355.6 million, up from £154.2 million in 2022, aided by a strong push into the business banking market and an uplift in the number of fee-paying premium accounts.

Behind the headline figures, expenses were up by 42%, driven by a 10% increase in headcount and investments in technology and marketing.

The bank also reported a £101.2 million charge against expected credit losses, up from £14 million in 2022 as it tripled the amount lent to customers this year by £500.9 million to £759.7 million.

"Our borrowing available to customers on overdrafts and (BNPL product) Monzo Flex also increased £553.4m, to £921.9m," states the report. "This increase in lending has driven the majority of the credit loss expense. We’ve not yet seen an increase in customers going into arrears or struggling to pay us back, due to the cost of living crisis and current economic uncertainty, but we’ve adjusted our models to take into account higher expectations of loss."

As a consequence, the bank has barely moved the dial on year-end losses, which hit £116 million, against £119 million in 2022.

Chairman Gary Hoffman says: "Our losses remained large this year, which was expected as we continued to invest and grow our business, resulting in higher costs. But we’ve seen the benefits of this investment throughout FY2023 as revenues grew significantly and I’m thrilled that since the end of our audited financial year, this momentum has continued and we’ve reached profitability."

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