Tuesday, July 2, 2024 7:18 AM
Share on Facebook Share on Facebook X Share on Twitter LinkedIn Share on LinkedIn WhatsApp Share on WhatsApp Email Share by Email Revolut has been waiting for a while to get its banking license.
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 posted pre-tax profits of £438 million this year, reversing a £25.4 million loss in 2022. Gross profit margins rose 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 in order would be seen as a boost in Revolut's long-running fight to obtain a UK banking licence.
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 bigger threat to the biggest traditional lenders with their slick, mobile-first services and expanding customer bases, and their profit margins are rising, with Monzo reporting its first annual profit last month.
Revolut's profitability would be significantly boosted by receiving a U.K. banking license, which would allow the company to offer more lending products, such as credit cards and mortgages, in the domestic market, where it recently added 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 about $500 million (£395 million) of its existing shares, which could value Revolut at more than $40 billion (£32 billion), up from a valuation of $33 billion (£26 billion) in a 2021 funding round that made it Britain's largest fintech.
Read more Revolut to move headquarters to heart of Canary Wharf while waiting for UK banking license
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