UK’s Starling Bank Expects to More than Quadruple Pre-Tax Profits in Annual Results

Starling Bank expects to “more than quadruple its pre-tax profits in its Annual Results for the year ending 31 March 2023.”

According to an update shared with CI, the bank “generated annualized pre-tax profits of more than £250 million on the back of almost £600 million of annualized revenue for the month of December 2022.”

As of the end of December 2022, total deposits “stood at £10.7 billion.”

These results were published on January 6, 2023 by Anne Boden, founder and CEO at Starling Bank.

Boden wrote in a blog post that nothing surprises and delights her “as much as the ability to change.” She added that she begins the year excited by the opportunities for change and for good that she believes “lie before us in 2023, but mindful also of the very difficult circumstances we find ourselves in.”

According to Boden, in many organizations change is “seen as something to wrestle into submission, to contain and to fear.” But to view change “as an enemy stifles innovation.” At Starling “we like change – it’s why we exist, after all,” Boden added.

She also shared:

“In 2019, we were awarded £100 million from the Capability and Innovation Fund, which was created to bring about change in banking and to “develop and improve the financial products and services which are available to SMEs. We’ve invested that grant in building a better bank for SMEs in the UK. I’m pleased to confirm that this programme came to a successful conclusion in December 2022, with all of our commitments delivered, subject to approval. Starling now commands an 8.9% share of the UK market for SME banking and we have brought genuine competition and innovation to a market segment much in need of it.”

Starling’s talent for execution, coupled with a hunger to learn from their customers, “are among the reasons why Starling now sits at the top of the latest independent banking performance tables compiled by the UK government’s Competition and Markets Authority (CMA).”

Boden continued:

“Should you wander into a branch of one of the big High Street banks, you’ll see a prominent notice on the wall with Starling’s name in the No.1 spot for overall service quality for both personal and small business accounts. (For those of you outside of the UK, posting these results in branches is a CMA requirement.)”

Boden pointed out that “becoming a leading player in the banking market takes some getting used to and this change of role presents its own challenges.”

Starling was “always the underdog; the diligent, hardworking, socially aware, tech-savvy fintech. Never as cool as those businesses run by those 30 year old tech bros,” Boden noted.

She continued:

“But as we have seen, markets have a nasty habit of correcting. Many start-ups and scale-ups are having difficulty raising funding now. And it’s fair to say that for a while some private market valuations became inflated, with predictable consequences for some.”

She added:

“Starling, though, is different. We’re profitable, very well capitalized and have no need to raise money. It’s no accident that we have never sought a silly valuation, even when the prospect of one was dangled before us. We, and here I mean the fantastic Executive team, just had difficulty buying into the fanciful views of the world held by some of the funds that had so-called ‘Vision’.”

She also mentioned:

“One thing that Starling will not change in 2023 is our commitment to innovation. While we have lofty ideas about our part in the evolution of financial services, we built Starling to deliver banking services and products that are really useful. What I’m most proud of in the last couple of months is the launch of free virtual cards. Anyone with a Starling personal account can have access to them; no premium subscription required.”

She further noted:

“We are a sophisticated financial institution, with deep expertise across our financial, treasury and capital markets teams. Because of this, our hierarchy of metrics at Starling may differ considerably to that at many other fintech businesses.”

She also shared:

“With more than 3.4 million customer accounts, including 520,000 small business accounts, we expect to more than quadruple our pre-tax profits in our 2023 Annual Results. We generated annualised pre-tax profits of more than £250 million on the back of almost £600 million of annualised revenue for the month of December 2022. Our balance sheet and asset strategy continue to develop and as of the end of December 2022, total deposits stood at £10.7 billion.”

She also mentioned that in 2023 they’ll be investing in innovative projects through their ongoing carbon offsetting program that “delivers against several of the UN’s Sustainable Development Goals, supporting both renewable energy initiatives as well as carbon capture projects.”

She concluded:

“Starling set out to change banking for good by building an app based on customer need and utility, overlaid with a beautiful user experience. We’re delighted to see that banks around the country, indeed the world, are now copying many of our most popular features. It is proof positive that even in the most traditional of industries, imagination, hope, determination and ambition (plus a little luck) can bring about meaningful change.”

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