Starling trading update reveals revenues up 370%

Starling Bank has given a trading update, revealing that it generated £6.7 million during the month of July, which represents an annualised revenue run rate of circa £80 million.

This revenue was split between £3.9 million of net interest income and £2.8 million of gross fees and commissions income.

The digital challenger bank stated that it now has more than 1.5 million accounts in total, with almost 200,000 small and medium-sized business (SME) accounts and 1.25 million retail accounts.

The average age of a Starling retail customer is almost 37 years of age and continues to rise, while only 22 per cent of customers are based in London.

Coronavirus lockdown did have an impact on the bank though, with retail customer card spend decreasing per active customer by 15 to 20 per cent during the period.

Less international travel also resulted in an associated decrease in international spend, particularly outside of Europe - 88 per cent of retail customer spend in June was domestic, compared to 82 per cent in the first quarter.

At the end of July, Starling had total deposits of £3.05 billion, with an average deposit balance per active customer of at least 30 per cent for all primary account types in the first half.

The bank now has just over £1 billion of lending on its balance sheet, with £98 million being retail customer lending and the remaining £903 million being SME lending.

Starling's employee base has grown by 352 since the end of our last financial year, which includes a net increase of 147 people since the start of the lockdown, bringing the total to 958 by the end of July.

This did meant that staff costs increased to £35 million, up from £14 million the year before.

No staff have been furloughed, with no job or salary cuts across the business. "We’ve taken more space in our Cardiff office since the end of the 2019 financial year, bringing hundreds of jobs to the region and adding to our bases in London, Southampton and, internationally, in Dublin," read the update.

Chief executive Anne Boden called 2020 a "transformational year", despite the impact of the pandemic - with plans remaining on track to break even by the end of this year.

"A key to becoming profitable will be charging for certain accounts and services," she stated, adding that while Starling will continue to offer free banking, the fee-based euro accounts for personal and business customers have proved "extremely popular".

The Business Toolkit, costing £7 a month, and US dollar account for businesses, at £5 a month, have also done well since launch, so "we already working on our next paid-for products".

Boden commented: "At the heart of Starling’s strategy is the smart use of modern technology - in contrast to incumbent banks that rely on outsourced expertise, legacy systems or a mosaic of vendor packages and their own data centres, Starling has in-house engineering teams and its own core banking software running in the public cloud infrastructure.

"So we were uniquely positioned when lockdown was imposed in March to ensure business continuity and resilience, to move to remote working and to continue to support our customers 24/7."

In terms of new products, the ‘Connected Card’ was launched during lockdown, giving a second debit card attached to the customer’s account for use by trusted friends, family or carers, to help those self-isolating to get supplies.

Cheque imaging was rolled out to help customers pay in cheques from home, alongside an eligibility checker for businesses to find out what support they are entitled to.

"Last year, I reported that we were in discussions with the Central Bank of Ireland to gain an Irish banking licence, to enable our expansion there and to act as a springboard to our wider European expansion, starting in the Netherlands, France and Germany," explained Boden.

"Our Irish discussions were temporarily put on ice during lockdown, but are now being kickstarted again - we now expect to start our international expansion in 2021."

    Share Story:

Recent Stories

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

The Rise of Instant Payments
Instant payments are creating new business opportunities for banks by providing more touchpoints than ever. With these evolutions underway, Featurespace brought leading industry experts together to discuss how they are protecting customers from fraudsters in real time, utilizing innovative and disruptive solutions to reduce fraud. Click here to find out more.

Offloading Cyber Risk in the Cloud
As cyber attacks and data breaches are in the news on an increasingly regular basis - with regulatory penalties and customer trust on the line for financial services firms - it has never been more crucial to be compliant in the cloud.

This video, with Akamai’s EMEA director of security technology and strategy Richard Meeus, will help explain what your company can be doing to make sure it’s not embroiled in the next big fine or front-page scandal.