Starling has just finished its third profitable year amid plans to expand its software operations.
The British neobank on Wednesday (June 12) released its annual report, showing a 54.7% increase in pre-tax profits, to 301.1 million pounds ($384.3 million). The firm’s revenues rose by 50.6% to 682.2 million pounds ($870 million), while total deposits crept up 4% to 11 billion pounds ($14 billion).
“This is our third full year of profitability demonstrating a robust financial performance,” John Mountain, the company’s interim CEO, said in a press release.
“It was a breakthrough year for Starling as we became a global provider of banking Software as a Service through our subsidiary Engine by Starling. We’ve heavily invested in Engine because we’re confident it can one day become as big as the UK bank, or bigger.”
The report showed the company’s total impairment and charge-offs increasing during the year by 39% to 13.9 million pounds ($17.7 million), “reflecting the impact of a high interest rates and inflationary environment on customers.”
Earlier this month, incoming Starling CEO Raman Bhatia — set to take up that role June 24 — said the company would not try to seek a banking license in Europe, but would instead work to expand internationally via its software business.
“I am very bullish about this approach around internationalization of what is the best of Starling, the proprietary tech versus market by market, idiosyncratic regulatory regime, capital requirements, and building trust and brand extension, which is unproven for any plan,” Bhatia told CNBC last week.
Starling, which has historically offered banking services to its customers — most of them based in Great Britain — had tried to expand by going after a banking license in Ireland, which would have given it access to the EU. The company withdrew that application two years ago.
But rather than applying again, Bhatia said Starling will try to push into new territories by selling Engine, its Banking-as-a-Service (BaaS) software offering, to banking customers.
Meanwhile, Mountain said Wednesday that Starling’s potential initial public offering (IPO) was being “extensively discussed” with investors, though the bank has no timeline for when it might happen. However, per a report by Bloomberg News, the executive noted that Starling’s status as a British company makes London “a natural home” for its listing.
Last week saw another U.K.-based neobank announce a profitable year, with Monzo reporting a profit before tax of $144 million (15.4 million pounds) compared to a loss of 116.3 million pounds the prior year.
