Starling Bank has reported a 26 per cent fall in profits to £223m in the year ending March 2025, after its finances were hit by two legacy regulatory issues.
Starling, one of the UK’s most prominent challenger banks which has around 4.6m customers and is backed by Goldman Sachs and Chrysalis, reported revenues were up from £682m to £714m in the period.
Its profit figure marked Starling’s fourth consecutive year of profitability.
However, pre-tax profits fell year-on-year 26 per cent to £223m, after its finances were hit by two legacy regulatory issues.
Last year, Starling, a digital-only bank, was fined £29m by the UK financial regulator, the FCA, for “shockingly lax” financial screening controls.
Today, Starling also said it had made a £28.2m provision relating to the removal of a government guarantee on a limited number of loans issued via the government’s Bounce Back Loan Scheme during the Covid pandemic.
Starling said the loans “may not comply with the guarantee requirement”. According to The Times, the loans that did not comply equate to 1.8 per cent of the total £1.6bn that Starling lent through the programme.
Loans issued through the scheme helped propel Starling’s business in the period, but Starling faced scrutiny over its Covid-period lending.
Lord Agnew, previously an anti-fraud minister, accused Starling of acting “against the government and taxpayers’ interests” alleging that its fraud prevention controls were not up to scratch. Starling denied the accusation.
Commenting on its financial results, Raman Bhatia, Starling group chief executive, said: “These results represent an important milestone, marking the group’s fourth consecutive year of profitability and revenue growth.
“This performance derives from our commitment to providing customers with innovative banking solutions and exceptional service.
“We are particularly pleased with Starling Bank’s success in attracting new customers, as evidenced by the continued growth in our deposit base and open accounts.
“In the last year we demonstrated our commitment to addressing legacy matters, investing in our people and capabilities so we now move forward from a position of strength.
“We will leverage our robust capital position to continue to scale our growth in the UK by helping our customers become better with money. We will also make great strides in turning Engine by Starling into a global success.”
Starling said its revenue uplift indicated a “robust performance” across all its businesses while customer deposits were up year-on-year from £11bn to £12.1bn.
The number of Starling account holders grew to 4.6m from 4.2m in 2024.
On Starling’s SaaS business Engine, Starling said Engine was building a “strong pipeline” that could see it achieve recurring revenues in excess of £100 million in the short to medium term.
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