The bank pivoted to a £30+ million pre-tax profit from a £30+ million loss.

Starling Bank, the UK-based digital challenger bank, announced a maiden profit in its accounts for the financial year ended on March 31, 2022. Compared to a pre-tax loss of £31.5 million for the 16-month period to 31 March 2021, Starling earned a pre-tax profit of £32.1 million for the financial year ending 31 March 2022. Revenue for the latest year was £188 million, nearly doubling from the previous year. (Starling)

The bank’s Return on Tangible Equity (ROTE) for 2022 doubled to 17.5% from 8.7% in 2021.

Anne Boden, Founder and Chief Executive of Starling Bank, said: “With our first full year of profitability, we’ve placed ourselves firmly in a category of one. As an innovative digital bank with a sustainable business model and a strong balance sheet we are generating our own capital and we stand apart from both the old banks and other challengers.”

Starling Bank: June quarter update

Lending during the quarter jumped 72% (year-on-year) to £4 billion. The bank had more than £2 billion of mortgages on its balance sheet as at June 2022, the lending powered by the receipt of an additional £600 million in deposits during the quarter.

For the June 2022 quarter, Starling notched up a ROTE of 17.5%, up from 14.1% in the March quarter, and 8.7% during the period ended June 2021.

“The pre-tax ROTE for June 2022 is already best-in-class for a UK bank at 17.5%, compared to c.11% for the large high street banks and 16% for other specialist and mid-tier lenders,” Starling said in a statement. “This is despite Starling holding a significant capital surplus above its regulatory minimum as a result of its most recent funding round.”

However, in her annual CEO letter, Boden struck a note of caution.

“The cost of living crisis, which, with inflation reaching its highest level in the UK for 40 years in May, at 9.1%, is hitting some of the most vulnerable people in society. All this has been aggravated by a global supply chain crisis and labour shortages as the world starts to recover from the pandemic,” she wrote.

“The full effects of these headwinds on consumers and business have yet to be seen and we are watching closely to see how the most vulnerable are being affected. We remain extremely well capitalised and our growth remains strong.”

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