Starling profit jumps 55% as loan-loss provisions rise

Myna has completed its third profitable year amid plans to expand its software operations.

The British neobank released its report on Wednesday (June 12). annual reportIt reported a 54.7% rise in pre-tax profit to 301.1 million pounds ($384.3 million). The firm’s revenue rose 50.6% to 682.2 million pounds ($870 million), while total deposits rose 4% to 11 billion pounds ($14 billion).

“This is our third full year of profitability which reflects strong financial performance,” John MountainThe company’s interim CEO said in a statement, Press release,

“It was a successful year for Starling as we became a global provider of banking software as a service through our subsidiary Engine by Starling. We have invested heavily in Engine because we believe it can one day become as big as, or even bigger than, a U.K. bank.”

The report showed the company’s total losses and charge-offs rose 39% to 13.9 million pounds ($17.7 million) during the year, “reflecting the impact of higher interest rates and the inflationary environment on customers.”

Earlier this month, Starling’s incoming C.E.O. Raman Bhatia – who is due to take up the role on June 24 – said the company would not seek a banking licence in Europe but would instead look to expand internationally through its software business.

“I’m very optimistic about Starling’s best-in-class internationalization, market-to-market versus proprietary technology, unique regulatory regimes, capital requirements, and outlook for trust-building and brand extension,” Bhatia told CNBC last week, which is unproven for any plan.

Starling, which has historically provided banking services to its customers — most of them based in Great Britain — had attempted to expand by obtaining a banking license in Ireland, which would have given it access to the European Union. The company withdrew that application two years ago.

But Bhatia said that rather than reapply, Starling Banking would try to enter new areas by selling its banking-as-a-service (BaaS) software offering, Engine, to customers.

Meanwhile, Mountain said on Wednesday that Starling Potential initial public offering (IPO) was being “widely discussed” with investors, although the bank did not say when it might happen. However, according to a report by Bloomberg News, the executive said Starling’s status as a British company makes London “a natural home” for its listing.

Last week, another U.K.-based neobank announced a profitable year, Monzo Pre-tax profits were reported at $144 million (£15.4 million), compared with a loss of £116.3 million in the previous year.