Monzo Reports First Profit in Milestone Year

UK digital bank Monzo has achieved its first-ever annual profit, driven by higher interest rates and increased income from transactions and subscriptions. The neobank reported a pre-tax profit of £15.4 million for the year ending in March, compared to a significant loss the previous year. However, the bank is also setting aside more funds for potential bad loans due to the cost-of-living crisis impacting customers.

Despite a challenging economic climate, Monzo experienced substantial revenue growth, with net interest income rising significantly due to higher interest rates. The bank's subscription services and transaction fees also contributed to the positive financial results. However, the growing loan book has led to increased provisions for expected credit losses, indicating a potential rise in customer defaults. Monzo's CEO expressed confidence in the bank's lending practices and emphasized its commitment to disciplined credit underwriting.

The neobank, which is valued at over £4 billion, is gearing up for expansion into the European market, starting with Ireland. Additionally, Monzo has started accepting politically exposed people as customers and is working to enhance its anti-financial crime capabilities. The bank's success in attracting deposits and increasing revenue per user further solidifies its position as a major player in the UK banking sector.