Digital bank Starling reports first profit on back of strong loan book
Starling Bank has reported its first annual profit thanks to a surge in lending, though executives played down the impact that a controversial boom in Covid loans had on its path to profit.
The chief executive and founder, Anne Boden, said the latest set of earnings were a “landmark” for the eight-year-old digital bank. Starling, which is backed by investors including Goldman Sachs and Austrian billionaire Harald McPike, swung to an inaugural annual profit of £32m for the year to March, from a loss of nearly £14m over the previous 12 months.
That swing was due to a jump in fees from loans that pushed revenue up 93% to £188m.
However, executives said profits were driven by home loans, following its acquisition of Fleet Mortgages last year, rather than its handling of bounce back loans and coronavirus business interruption loans, which were intended to support small businesses at the height of the Covid crisis. Those loans are covered by taxpayer cash if customers default.
A spokesperson for the bank said those government-backed loans made up about 20% of Starling’s revenues, and currently account for 44% of Starling’s loan book.
But Boden, a former Royal Bank of Scotland and Allied Irish Banks executive, played down the impact that the Covid schemes had on the company’s path to profit. “Would we have been profitable if we had not done Covid loans? Yes, we would.”
She added that the loans would make up a smaller proportion of its loan book going forward, as Starling pushes into other forms of lending.
The chief executive was forced to defend the bank’s handling of the Covid loans last month after former minister Lord Agnew claimed Starling had used the programme “against the government’s and taxpayer’s interests”, and as a
Read more on theguardian.com
