The UK-based digital challenger bank’s annual losses surge to 113.8 million pounds ($149.5 million).

Monzo reported a loss of £113.8 million ($149.5 million) in its 2020 fiscal accounts, up from the £47.1 million loss in 2019. However, revenues more than tripled to £67.2 million from £19.7 million. The bank made sizable investments on hiring, marketing, and a U.S. expansion during the year.

The bank warned that the disruption from the coronavirus pandemic had cast in doubt its ability to continue to operate. (CNBC)

Funding, not a problem

However, the bank’s directors said they were confident they could raise new funds if needed to execute its business plans.

Last month, the bank raised £60 million at a valuation of £1.25 billion, in a 40% down round. In June 2019, Monzo was valued at £2 billion and ranked as the UK’s second most valuable startup.

Massive lending spree, at what cost?

Monzo lent a huge £143.9 million in 2020, compared to £19.2 million in its 2019 year. Unfortunately, that came at a huge cost – credit losses are a potential £20.3 million – up from £3.9 million.

The bank provided £4.1 million for these credit losses.

However, in an interview with FT, TS Anil, the bank’s new chief executive, said the bank would launch new blockbuster products to recoup its profitability such as business and premium accounts.

He further said the group had successfully laid the “foundations” for a sustainable business over the past 12 months.

Anil also said Monzo had taken several measures to cut costs as the pandemic mounted. These included closing down one overseas office and cutting 100 jobs in the UK.

Anil took over from Monzo co-founder Tom Blomfield, who stepped down to become president to concentrate on banking products.

Blomfield told This Is Money.UK that the current year would be challenging for the bank, and that “our focus right now is on becoming a sustainable company that’s here for the long haul.”

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