More money misery for Monzo with £6.7m loss
Mobile-only challenger bank Monzo has reported a loss after taxation of £6.7 million in its latest financial results.
For the year ended 28 February 2017, the firm’s directors do not recommend a final dividend. In fact, it has got worse compared to the 2016 full year results. There was also no final dividend because the loss for that year after taxation amounted to £1.4 million.
Despite the lack of profit, Tom Blomfeld, CEO of Monzo, says it has had a “fantastic year” – citing its prepaid programme hitting 240,000 funded accounts, with more than £250 million spent in total.
He adds: “From a financial perspective, we’ve got enough capital for at least the first 12 months of life as a bank. To create a viable, sustainable business, it’s important that we reach profitability over time. However, profitability is not a key priority for this year, and we would prefer to focus on growth over driving revenue.”
In the results, Blomfeld stays upbeat with talk about growth in customer numbers and transaction volumes, and “delightful customer support”. (The comments on its blog are full of shiny, happy people who praise Monzo for its transparency.)
He also cites funding received. As reported in March, the bank raised another £2.5 million from more than 6,000 investors – the highest-ever number of any Crowdcube campaign. This follows its crowdfunding record of £1 million round last year, which closed in 96 seconds. At that time, the bank was valued at £65 million, up from £50 million in October 2016.
Over the next six months, Blomfeld says there are two “key priorities”. First, to grow its user base and roll out the current account – with the latter targeted for late summer. It also plans to raise more funding in early 2018.
According to the bank, its prepaid scheme loses around £50 per active customer per year.
Blomfeld says: “Simply by moving to current accounts powered by our own technology, we plan to significantly reduce this amount.”
The largest remaining costs are customer support and ATM usage. Around 40% of the per-customer loss is due to international ATM usage outside the UK or EU, with a “small minority” of its user-base driving the majority of this cost.
Looking ahead, on the revenue side, it will start experimenting with lending functionality. The bank will aim to run a number of quick, small-scale lending trials. There are no specifics yet.
Blomfeld says users “may start to see glimpses of new features or pricing that we’re trialling over the next few months!”.