Starling Becomes First Profitable Digital Bank

UK-based Starling Bank recently announced that it has become the first of the new breed of digital banks to break even, thanks to strong momentum in customer accounts and revenues, coupled with a stable opex base.

The digital bank published a trading update for the three months to 31 October on last Friday. It turned a positive operating profit of £0.8 million for the month of October 2020, which represents £10.1m on an annualised basis.

The bank has around 1.8 million accounts, with £4 billion in deposits and £1.5 billion on its lending books.

It generated £9 million in revenue in October, projecting an annualized run rate of £108 million. This figure is split £5.5m of net interest income and £3.5m of gross fees and commissions income.

While the operating costs of the bank increased by 30 percent last year, its fixed costs remained flat. The customer accounts of the bank also doubled in the period.

Anne Boden, founder and CEO at Starling Bank, remarked:"Today, I’m pleased to say that Starling has become the first of the new breed of digital banks to become profitable. I’m equally certain that we will become a formidable competitor in the European banking market as we gear up to scale across Europe. We know that our technology is hugely scalable because our tech team runs a constant simulation at around ten times our current capacity. We’re prepared for a sudden influx of customers and transactions.”