Monzo Narrows Losses as Customer Numbers and Staff Costs Grow

(Bloomberg) -- Monzo Bank Ltd. narrowed its losses and more than doubled its revenue last year as it expands further into loans and business services. 

The British mobile bank posted a pretax loss of £116 million ($143 million) for the year through February compared to £119 million a year earlier. “We turned profitable in March. We expect to be profitable for the full year this year as well,” Monzo Chief Executive Officer TS Anil said in an interview.

Anil said the bank didn’t need to raise capital, although the firm could tap investors down the road if “big opportunities” arose. Monzo’s most recent fundraising in 2021 valued the firm at $4.5 billion. 

While rising interest rates helped Monzo almost double its net operating income and revenue from subscriptions grew during the year, expenses also jumped as it spent 35% more on staff. Monzo made provisions for doubtful loans of £101 million on a loan book of £759.7 million, which includes buy-now-pay-later credit under its Flex brand. 

“Our losses remained large this year, which was expected as we continued to invest and grow our business, resulting in higher costs,” Chairman Gary Hoffman said in a statement. Monzo is looking to launch an investment product next.

The firm, which now has 7.4 million customers, said deposits grew by about a third to £6 billion during the year. Hoffman said the firm’s performance came amid a “uniquely challenging backdrop” in the UK that saw “a combination of political turmoil, generationally high inflation and a blow to consumer confidence.”

The results come at a rocky time for UK fintech, with Monzo’s former head Tom Blomfield saying London’s “listing problem is very real” as more companies opt to sell shares in New York. 

“We’re certainly not being held back the UK,” Anil said, adding it was where Monzo got its banking license and still saw a large target market. He said it was still too early to discuss any plans for an initial public offering, noting instead the fintech’s goal to expand into other markets globally.

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