Monzo hit profitability after borrowing £759.7 million for the period ending February 2023.
british neobank monzo bank Is revealed It achieved monthly profitability in 2023 after loan growth for the first time. In its annual report for the year ending February 2023, the online bank said it turned profitable two months into the year. Monzo said it delivered a 382% increase in net interest income to £164.2 million, driven by increased lending activity. In addition, the leading London-based digital bank also reported net operating income of £214.5 million ($266.1 million) for the year ending February 2023. The positive earnings result saw Monzo double its results year-on-year (YoY) from last year. Net operating income of £114 million.
Discussing Monzo’s profitability in a media session, CEO TS Anil said:
“Profitability was always an option as we continue to invest in growth with profitability. We could have chosen to be profitable a few quarters ago.
British Online Bank’s chief financial officer, James Davies, described it as a “diverse and stable revenue business”. Davis further said that Monzo was mainly helped by its “large, growing, individual and business customer base”.
For the year ending February 2023, Monzo made a substantial loss of £116.3 million. However, the loss was slightly lower than the net loss of £119 million reported in the year-ago period.
Monzo’s profitable run comes amid UK’s cost-of-living crisis
Monzo refrained from disclosing how much profit it is currently making, but said it is on track to achieve full-year profitability in 2024. The digital bank benefited from an increase in new income streams during the previous period. These include its lending and subscription businesses, which now see 350,000 accounts payable.
Monzo’s appreciable revenue came amid rising inflation and the cost of living being expensive for British consumers. Britain’s Challenger Bank’s lending volume tripled from last year to £759.7 million. However, Anil disputed suggestions that Monzo’s revenue performance was due to the UK’s cost of living crisis. Instead, the CEO explained that the importance of Monzo’s products, including savings pots and budgeting tools, is reflected.
Monzo is not the first British challenger bank to achieve monthly profitability
Despite Monzo’s recent profitable run, the company is not the first British digital bank to achieve this feat. In 2021, Myna Profitability was hit for the first time after Neobank’s revenue jumped 600% from £14 million to £97.6 million. At the time, challenger bank CEO Anne Bowden described the situation as “pretty much on track” to achieve 2022 full-year profitability.
Last June, the UK’s Alica Bank also achieved monthly profitability and saw a pre-tax profit of £3 million for the second half of 2022. Commenting on a promising 2022 for digital banks earlier this month, Elika CEO Richard Davies enthused:
“Elika enters 2023 with an excellent platform to grow and expand its offering for SMEs.”
Furthermore, Davis explained that the neo-bank has already experienced an increase in profitability for the first quarter of the year. According to the CEO, Elica’s Q1 2023 profitability was due to a “very prudent capital and liquidity position”.
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