Monzo profits surge with rise in customer base to £12 million

Monzo, the UK’s leading digital bank, has reported a dramatic increase in profits, highlighting a dynamic year of growth. The bank, which now boasts over 12 million customers, grew revenues by 48 per cent to £1.2 billion in the year to March. Deposits surpassed an impressive £16 billion, and underlying profits surged eightfold, reaching £114 million. Even when accounting for a one-off cost related to staff share options, pre-tax profits rose fourfold to £60.5 million.

Bristol-born Monzo, founded in 2015 with its distinctive “hot coral pink” cards, has solidified its position as a major player in the digital banking sector. According to the Competition and Markets Authority, Monzo ranks second in the UK for overall service quality among banks, only trailing Chase. TS Anil, Monzo’s chief executive, described the results as a testament to “bringing the best in tech together with the best in banking.”

The bank’s business accounts have contributed significantly to its performance. Monzo’s business banking segment posted an impressive 49 per cent increase in clients, achieving 625,000 customers. Remarkably, one in six start-ups in the UK now banks with Monzo. This division has become a key engine of growth for the business, supplementing its already robust consumer banking operations.

Monzo’s revenue streams continue to diversify. The bank generates additional income through subscription services such as Monzo Perks, which offers benefits like discounted railcards and free Greggs sausage rolls for a £7 monthly fee. Nearly 900,000 customers currently pay for Monzo’s subscription services. However, the bank did see its net interest margin contract slightly from 4.41 per cent to 4.09 per cent, in line with other retail banks following recent base rate changes.

Despite its successes, Monzo has faced challenges. An ongoing investigation by the Financial Conduct Authority into possible shortcomings in its anti-money laundering controls may come with financial repercussions. Nevertheless, Monzo remains forward-looking. While speculations of an initial public offering (IPO) have risen, Anil stated that Monzo is prioritising scaling its business over floating shares. Last year, the bank secured £500 million in funding, valuing the company at £4.5 billion. Its investors include Alphabet and Tencent, with a loyal fan base of shareholders from early crowdfunding initiatives.

Monzo’s expansion efforts are also gaining momentum. The bank continues to increase its UK market share while exploring international opportunities. With existing operations in the United States and plans to enter the EU market through Ireland, Monzo aims to replicate its domestic success abroad. However, challenges such as adapting the Monzo model to foreign markets and navigating untested economic conditions remain hurdles to cross.

With a ten-year journey marked by innovation and resilience, Monzo has firmly established itself as a modern financial powerhouse. Its ability to evolve and address the next set of challenges will determine whether it can sustain its remarkable growth trajectory.