Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Monzo Achieves First Annual Profit Despite Surge in Bad Loans

by June 3, 2024
June 3, 2024
Monzo Achieves First Annual Profit Despite Surge in Bad Loans

Monzo has recorded its first annual profit despite a significant rise in provisions for potential bad loans, as the digital bank’s lending portfolio expands and arrears increase.

TS Anil, Monzo’s chief executive, celebrated a “landmark year” for the nine-year-old company after annual results revealed a shift from a pre-tax loss of £116.3 million in 2023 to a profit of £15.4 million in the 13 months to the end of March. This marks Monzo’s first time in the black.

Gross revenues more than doubled to £880 million from £355.6 million, while the group’s deposit base soared by 88 per cent to £11.2 billion during the period, which included a change of year-end from February to March.

However, Monzo’s provisions for future expected credit losses rose sharply to £176.9 million from £101.2 million the previous year.

Anil explained that this 75 per cent increase in bad debt provision was in line with the 84 per cent rise in Monzo’s total lending balances, which reached £1.4 billion.

The bank’s lending has expanded rapidly, partly due to its move into the “buy now pay later” market through its Flex product. Customer borrowing, including overdrafts and Flex, rose to £1.5 billion from £540 million a year earlier.

Nonetheless, provisions were also driven higher by a growing number of borrowers falling behind on debt repayments, with about £49 million of gross lending in arrears and £84.6 million in default.

“We saw some minor increases in arrears as the cost-of-living crisis played out,” Anil noted, adding that Monzo lends “only a small portion of our balance sheet”.

Monzo’s loan-to-deposit ratio is under 15 per cent, and its realised losses as a percentage of average balances saw a “marginal increase” to 9.75 per cent from 7.58 per cent, according to Anil. Realised and expected credit losses totalled £204 million.

“We’ve always been incredibly disciplined with our lending,” he insisted.

Monzo is among a group of young online-only lenders and fintechs, including Starling Bank and Revolut, gaining market share from major high street banks. Founded in 2015, Monzo now serves 9.7 million customers, including over 400,000 business clients, and has been under Anil’s leadership for four years.

Like other banks, Monzo has benefited from higher interest rates, with its net interest income — the difference between what it charges on loans and pays for deposits — rising by 167 per cent to about £438 million.

The bank is now eyeing international expansion. While Monzo already operates in the US, it announced plans on Monday to enter continental Europe by opening an office in Dublin “in the coming months”.

Monzo is seen as a strong candidate for a stock market flotation, but Anil said it was too early to speculate on such plans.

Three years ago, Monzo disclosed that the Financial Conduct Authority (FCA) was investigating potential breaches of anti-money laundering regulations. On Monday, Monzo revealed that the FCA had notified the bank in November that “it was no longer assessing criminal liability” related to the potential breaches, but the inquiry would continue as a civil matter.

“This could have a negative impact on our financial position, but we won’t know when or what the outcome will be for some time,” Monzo stated.

Read more:
Monzo Achieves First Annual Profit Despite Surge in Bad Loans

0
FacebookTwitterGoogle +Pinterest
previous post
UK Gender Pay Gap Set to Close in 45 Years, Experts Warn
next post
UK Manufacturing Rebounds: Factory Output Hits Highest Growth in Nearly Two Years

You may also like

Overcoming content challenges for SMEs: tips for resource...

April 28, 2023

Navigating retirement with St. James’s Place

May 17, 2023

Valuing your business for sale? The key methods...

February 7, 2024

Why a Drill-Powered Water Pump is a Must-Have...

April 10, 2025

The Importance of Speed in PR: A Wake-Up...

July 8, 2024

How hospitality businesses can navigate a business rates...

October 14, 2024

Mastering Hybrid Working:  Benefits, Challenges and Strategies

April 13, 2023

Unlocking the Secrets of Forex Trading: A Beginner’s...

November 20, 2023

The Importance of digital detoxing for busy working...

April 30, 2024

Next buys Cath Kidston brand for £8.5m with...

March 29, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Ex-Biden advisor calls Jean-Pierre ‘kinda dumb,’ deletes tweet, says she’s not a ‘genius-level Black woman’

      June 5, 2025
    • Harmony Squad: Supreme Court Issues Six Unanimous Decisions

      June 5, 2025
    • Quick Login to AmourFactory: A Beginner’s Guide

      June 5, 2025
    • Disabling Trump’s “Tariff Button”

      June 5, 2025
    • ‘Sick puppy’ Tim Walz should never have been on Dems’ 2024 ticket, Trump says

      June 5, 2025
    • Federal judge orders Trump to restore funding to Clinton-era agency gutted by DOGE

      June 5, 2025

    Categories

    • Business (8,149)
    • Investing (2,011)
    • Politics (15,535)
    • Stocks (3,128)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved