Starling Bank profits expected to quadruple this year

Starling Bank expects to more than quadruple its profits this year, according to founder and CEO Anne Boden.

In her annual letter to customers, Boden said the bank saw annualised pre-tax profits of more than £250m and annualised revenue of almost £600m for December 2022, with total deposits hitting £10.7bn at the end of the year.

Reflecting on a year of change, Boden noted the bank’s current position holding an 8.9 per cent share of the UK market for SME banking and a year of immense growth for the company.

In its first full year of profit, Starling saw its employee headcount increase by one-third to 2,300 – with another 1,000 jobs set for its new Manchester office – it topped three million accounts, including 520,000 small business accounts, and, a highlight for Boden, launched free virtual cards.

This hasn’t always been the state of play for Starling though – not all that long ago it was a fledgling in the banking world.

“Becoming a leading player in the banking market takes some getting used to and this change of role presents its own challenges,” Boden wrote in her letter.

“Starling was always the underdog; the diligent, hardworking, socially aware, tech-savvy fintech. Never as cool as those businesses run by those 30 year old tech bros. 

“But as we have seen, markets have a nasty habit of correcting. Many start-ups and scale-ups are having difficulty raising funding now. And it’s fair to say that for a while some private market valuations became inflated, with predictable consequences for some.”

After a difficult year for many in the industry, Starling’s profitability and hiring spree set it apart from those that have been forced to downsize and slash valuations.

“We’re profitable, very well capitalised and have no need to raise money. It’s no accident that we have never sought a silly valuation, even when the prospect of one was dangled before us,” she wrote.

In addition to growth in both customer and business accounts, the bank’s lending portfolio has grown to £4.7bn this year, with more than £3.1 billion in its growing residential and owner-occupied mortgage books.

This growth was bolstered by Fleet, a buy-to-let mortgage firm Starling acquired in 2021, which completed £1.2 billion of mortgages in 2022.

Changing gears and doubling down on her stance on crypto, Boden also elaborated on her decision to put a ban on the currency in November in the letter.

“One day crypto will be safe and highly regulated on an international basis with protection for consumers and businesses. And one day I can see the potential,” Boden wrote.

“But this is not where we are today. Right now, crypto is lacking sufficient practical and moral purpose. 

“I call for regulators to ensure that crypto exchanges are regulated to the same standards as other financial institutions: if they are not regulated, then they cannot continue to trade.”

2023 looks set to be another big year for Starling, but while its profits might quadruple and its headcount might grow by another forty per cent, it looks set to be a while longer before we see its thoughts on cypto pivot.