Tuesday, July 2, 2024 7:16 AM
Share on Facebook Share on Facebook X Share on Twitter Share on LinkedIn WhatsApp Share on WhatsApp Share via Email Revolut has been waiting for a UK banking licence for three and a half years.
Fintech company Revolut filed its first timely financial report in years, reporting record annual profits and nearly doubling its 2023 revenue.
The London-based banking app reported pre-tax profits of £438 million for the current financial year, recovering from a £25.4 million loss in 2022. Gross profit margins increased to 76% from 70%.
Revenue last year was £1.8 billion, up from £920 million in 2022 and beating Revolut's own forecasts. The company said in December it expects revenue to reach $2 billion (£1.7 billion) in 2023.
The financial results mark the first time since 2020 that Revolut has not sought an extension to its filing beyond the September statutory deadline. The company received a three-month extension last year for its 2022 financial results, but Revolut's 2021 financial results were not due to be released until March 2023.
Resolving the audit issues and showing its accounts are adequate will be a boon for Revolut's struggle to obtain a banking license in the U.K. Audit firm BDO issued an unqualified opinion on Revolut's 2023 accounts after warning in March last year that it couldn't verify much of the company's revenue.
Like its larger rivals, the startup benefited from rising European interest rates last year, boosting its profit margins. Revolut's interest income jumped from £83 million to £500 million between 2022 and 2023.
The company's fee income also jumped from £793 million to £1.2 billion as Revolut added around 12 million retail customers during the year, bringing its total to 38 million. Customer balances grew 38% to £18.2 billion.
The company hit 45 million retail customers last month and added that it is “positioned for rapid growth” as it strives for so-called super app status.
Revolut's profits were held back by a surge in credit losses on lending and non-lending products totalling £47 million, up from £14 million in 2022, as it rolled out personal loans in France, Germany and Spain, and credit cards in Ireland and Spain. The company's loan book ballooned to £528 million from £204 million.
Revolut and other neobanks pose a major challenge to big traditional lenders with their slick, mobile-first services and expanding customer bases, and they are also becoming more profitable, with Monzo reporting its first annual profit last month.
A big boost for Revolut is receiving a banking license in the UK, which will allow it to offer credit cards, mortgages and other lending products in the domestic market, where it recently gained 9 million customers.
The regulatory process typically takes a year, but Revolut has been waiting since January 2021. “We remain focused on our ongoing UK banking license application, in addition to bringing the Revolut app to new markets and customers around the world,” Revolut co-founder and chief executive Nick Storonski said on Tuesday.
Revolut received a European banking license from the Bank of Lithuania in December 2021 and has been directly supervised by the European Central Bank since the beginning of this year.
The company's profits were pressured by an increase in administration costs from £667m to £933m last year as it expanded aggressively. Staff costs rose from £362m to £498m as the company added 2,239 staff during the year.
Labor costs are expected to rise further in 2024 as Revolut embarks on a hiring drive to increase its global headcount to 11,500 by the end of this year, a 40% increase from 2023.
Revolut also invested heavily in advertising and marketing last year, almost doubling its spend from £129m to £241m.
The company, founded in 2015, is believed to have recently hired bankers to help sell around $500 million worth of existing shares, which could value Revolut at more than $40 billion, up from a $33 billion valuation in a 2021 funding round that made it the UK's largest fintech.
Read more Revolut to move headquarters to heart of Canary Wharf while waiting for UK banking license
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