Monzo has been the talk of the City in recent months due to its eagerly awaited IPO, and the fintech unicorn’s latest financial results suggest that the buzz is set to intensify.
The UK fintech stalwart achieved another milestone over the past 12 months by generating over £1bn in annual revenue, as reported by City AM.
This surge in income was driven by an increase in new customer numbers as the neobank rolled out a range of new products.
Monzo reported 12.2 million customers for the year ending 31 March, a 25 per cent increase from 9.8 million.
Over the past year, the company expanded its offerings with the launch of Monzo Pensions – enabling users to manage and invest their retirement savings – and Monzo for Under 16s.
The product for younger customers attracted over 180,000 waitlist signups in its first week.
Lending rose by 36 per cent to £1.9bn and deposits increased by 48 per cent to £16.6bn. Despite this growth, the decade-old business saw a 10 per cent decrease in impairment charges on bad loans to £153m, which Monzo said demonstrated the safe scaling of its operations.
The reporting period marked the second consecutive year of profitability for Monzo, with profits soaring over 300 per cent to £60.5m. The neobank also posted an adjusted profit – excluding the one-off £53.4m cost of a secondary share sale – of £113.9m.
City banking on Monzo IPO
Top Treasury and London market officials are eyeing Monzo as a must-have public listing.
The firm is among a select group of fintech standouts the Treasury has engaged in dialogue with, aiming for a London listing.
Monzo has enlisted the expertise of Morgan Stanley, according to Sky News, to lead the charge on an IPO potentially valuing it at upwards of £6bn. The Wall Street titan is anticipated to be formally engaged in the next few months.
While the destination of the listing remains up in the air, rumours suggest that chief executive TS Anil favours a US-based float, though Monzo’s board reportedly prefers a London-based IPO. Postponing any immediate public offering ambitions, Anil refuted speculations following the company’s annual reports earlier this week, making it clear that an IPO was not currently on the table.
He commented, “The honest answer is that, you know, we believe we’d make a great public company one day, and we’re well on the trajectory to doing that when we choose to, but it’s just not something we’re focused on right now.”
Paint the City coral
Monzo’s recent report boasted its recognition as “Best British Bank” by Smart Money People and its garnering of the “Brand of the Year” title from the Marketing Society.
These accolades follow swiftly after the firm rolled out a fresh brand campaign in May 2024, reinforcing their position in the digital banking realm – from their highly praised user experience to their iconic coral cards.
Unveiling its strategic branding has evidently yielded success for Monzo in an industry often overshadowed by regulatory concerns.
The Competition and Markets Authority (CMA) issued a stern rebuke to Monzo in November 2024 for several “especially concerning” violations of the Retail Banking Market Investigation Order 2017.
The breaches involved publishing inaccurate service quality surveys, failing to properly display the monthly maximum charge for current accounts, and not publishing the representative loan rate for business banking, as per the CMA’s findings.
This reprimand followed closely on the heels of a hefty £29m fine imposed on Starling, Monzo’s neobank competitor, by the Financial Conduct Authority for regulatory shortcomings.
Despite these setbacks, Monzo has swiftly rectified its missteps, recording an increase in both products and customers, and has become the most downloaded UK banking app.
This surge in growth sets Monzo on course for its most significant move yet – a highly anticipated flotation that City insiders are eager to see culminate in a splash of coral on the London Stock Exchange.
