British digital bank Monzo hits monthly profitability for the first time after spike in lending

cnbc.com:

Monzo on Wednesday said it hit profitability for the first time this year, in a major milestone for one of the U.K.'s most prominent digital banks.

In its annual report for the year ending February 2023, Monzo reported net operating income of £214.5 million ($266.1 million), almost doubling year-over-year from £114 million.

Losses at the bank nevertheless came in at a substantial £116.3 million — though this was slightly lower than the £119 million net loss Monzo reported in 2022.

Still, the company managed to reach profitability in the first two months of the year.

In its annual report, Chief Financial Officer James Davies said Monzo is «now a business with diverse and stabilising revenue from a large, and growing, personal and business customer base.»

«Profitability was always a choice as we balance continuing to invest in growth with profitability,» Monzo's CEO, TS Anil, told CNBC in an interview. «We could have chosen to be profitable a few quarters ago.»

Monzo is not the first digital bank to hit profitability. Starling Bank reached that milestone for the first time in 2021. Fellow fintech Allica Bank reached monthly profitability last year.

Monzo's move into the black was largely thanks to a substantial increase in income from newer revenue lines, such as lending and subscriptions. Paid accounts now total 350,000.

Monzo declined to share a figure on how much of a profit it is making currently. The firm said it is on track to reach full-year profitability by the end of 2024.

Monzo's strong revenue performance was driven by a bumper year for its lending business. This came against a backdrop of pain for U.K. consumers, who're grappling with a harsh cost-of-living crisis as inflation soars.

Total lending volume