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Banking app Revolut revealed it swung to a loss last year as it stood by longstanding hopes of securing a UK banking licence.
The fintech company had cheered its first profitable year in 2021 after cashing in on a rise in crypto trading and growing its customers.
But it reported a pre-tax loss of £25.4 million over 2022, slumping from a £39.8 million profit generated in 2021, according to its delayed annual report.
Credit losses on lending products surged from £1 million in 2021 to £5.2 million in 2022, amid higher interest rates and the company rolling out more credit products in some countries.
Costs across the business increased as it said it was “investing in future growth”, spending more on its expanding workforce and on advertising and marketing campaigns.
Revolut, which has more than 35 million customers across 38 countries, has a banking licence in the European Economic Area (EEA) where the majority of customers are based.
We remain committed to our ongoing UK banking licence application in addition to bringing the Revolut app to new markets and customers around the world
Nik Storonsky, Revolut’s chief executive
It means it can provide a full range of banking services such as lending, credit cards and managing customer deposits.
But it does not have a licence in the UK, despite submitting an application nearly three years ago.
The firm’s auditor BDO raised concerns about revenues of more than £475,000 in its 2021 results, due to issues with the design of Revolut’s IT systems, resulting in the delayed publication of its financial results.
But it said the issue had been “resolved” in the latest annual report, which could help remove a hurdle on its path to becoming a bank in the UK.
Co-founder and chief executive Nik Storonsky insisted that the group remains “committed to our ongoing UK banking licence application”.
Meanwhile, the fintech saw its year-on-year revenues grow by 45% to £923 million.
The amount of cash in deposits swelled by 71% year-on-year, helping drive up the total assets on its balance sheet to £14 billion.
It also reported a 55% increase in customers on paid plans, which range from £3.99 a month to £45 a month.
More of its non-UK customers have transitioned to using the bank as their primary account, Revolut said, as it hopes to become a top choice for more people who want to “simplify all things money”.
Mr Storonsky said 2022 was “another great year for Revolut, one where we broke away from the pack of our competitors”.
He added: “We strengthened our financial position, grew our customer base, launched multiple new products, expanded into new markets, and bolstered our risk, compliance and governance infrastructure.
“Looking ahead, our focus is on continued growth across all our markets. We remain committed to our ongoing UK banking licence application in addition to bringing the Revolut app to new markets and customers around the world.”
Chairman Martin Gilbert said the firm had managed to grow “in spite of the challenging macroeconomic and geopolitical landscape”, adding: “We have a huge opportunity in front of us to become a primary financial services provider for customers globally.”
