By Oliver Smith on Friday 31 July 2020
Auditors increase due diligence of the fintech as losses spiral.
Monzo’s losses for the year to February 2020 jumped by over 140 per cent on the previous year as the bank’s investment in hiring, marketing and product development further outstripped its revenues.
According to Monzo’s 2020 annual report published last night, the bank’s losses reached £113.8m in the past year, up from £47.2m after tax in FY2019.
The sharp increase in losses along with only a moderate rise in revenues to £67.2m (up from 19.7m in FY2019) led Monzo’s directors to compile its results under the basis of there being: “material uncertainties, which may cast doubt over the Group’s ability to continue as a going concern.”
In response, the bank’s auditors EY increased the amount of due diligence it undertook on the bank, listing a host of additional measures including discussing Monzo’s capital requirements with the Prudential Regulation Authority, inspecting board meeting minutes, stress testing the bank’s plans for the next 12 months, and inspecting correspondence Monzo has had with its various regulators.
AltFi understands that the publication of Monzo’s 2020 annual report was delayed by this process, with auditors waiting to sign off the business as a going concern.
TS Anil, in his newly-appointed role of Monzo CEO, called out the “significant impact” the bank has seen from Covid-19 and the economic downturn.
“While I’m confident these are short-term, we’ve taken decisive measures to reduce the financial impact.”
Elsewhere in the report Monzo’s lending increased during the year to £143.9m, up from £19.2m the previous year, with credit losses also rising sharply to £20.3m.
When its figures were compiled for the report in February 2020 Monzo reported 1,495 employees, up from 713 the previous year, with a staffing cost of £77.5m (up from £25.7m in FY2019).
The bank’s operating expenses rose from £33.4m in FY2019 to £70.4m for the last year.