Starling Bank expects to quadruple its profits in 2023, according to founder Anne Boden MBE.
The neobank recorded its first full year of profitability in 2022, surpassed the milestone of three million accounts and launched Engine by Starling, a software-as-a-service offering.
Late last year the London-headquartered firm, which expanded its headcount by a third to 2,300 in 2022, revealed it is to create up to 1,000 new jobs in Manchester as it opens its fourth UK office.
“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,” said Boden.
“We generated annualised pre-tax profits of more than £250m on the back of almost £600m 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.
“Our lending portfolio, at £4.7bn, continues to grow, with more than £3.1bn being in our growing residential and owner-occupied mortgage books.”
Fleet, the buy-to-let mortgage specialist it acquired in 2021, completed £1.2bn of mortgages in 2022 despite the turbulent market; this was up 58% on the figure for 2021.
“How do you measure change; how do you know that you are changing for the good? Because what really matters is not just sentiment, it is numbers, financials and comparators,” added Boden.
“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.”
The boss says change is not the enemy.
“In many organisations 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,” she explained.
In 2019, the bank was 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.
Starling now commands an 8.9% share of the UK market for SME banking. “We have brought genuine competition and innovation to a market segment much in need of it,” said Boden.
Starling now sits at the top of the latest independent banking performance tables compiled by the UK government’s Competition and Markets Authority.
“Becoming a leading player in the banking market takes some getting used to and this change of role presents its own challenges,” said Boden. “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.
“But as we have seen, markets have a nasty habit of correcting. Many startups and scaleups 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.
“Starling is different: we’re profitable, very well-capitalised 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’.”