The neobank, which was founded in 2015, reported a £15.4 million pre-tax profit in the year to the end of March, which was up from a £116.3 million loss the previous year. Its revenue more than doubled to £880 million, as the fintech’s net interest income, the difference between what banks pay on deposits and what they earn from loans rose 167% to £438 million due to higher interest rates.

Monzo’s revenue was also boosted by transaction fees, with net transaction income growing by £60.9 million to £167 million despite customers spending less abroad due to the cost-of-living crisis. Revenue from its subscription plans, including Monzo Plus, Monzo Premium, and Monzo Business, grew to £27.4 million, up from £19.5 million the previous year.

Monzo CEO, TS Anil, commented on the news on his LinkedIn: “I’ve never believed in the idea that a company has to choose between either being mission-oriented, or focused on business outcomes. FY2024 proved Monzo is doing both – and that our strategy of placing the customer at the heart of everything we do is working at scale.

“Over the past few weeks we’ve had many questions about our recent capital raise. What did investors see? What were they saying? They saw a business delivering scale, growth AND profitability. And alongside all of that – they saw the huge opportunity that is ahead of us, and the conviction that we can win it at scale. This is our biggest and best year yet and sets us up brilliantly for future success.”

Monzo has reported that its gross lending has grown 84% to £1.4 billion, comprised of overdrafts, unsecured personal loans, and Monzo Flex, its buy now, pay later credit card used by 500,000 customers. This has up from last year’s £0.76 billion.

However, alongside that increase, the neobank raised its provisions for expected credit losses to £176.9 million, up from £101.2 million, as more of its customers struggled to make repayments and fell into arrears. The bank stated it expected the provisions for credit losses to continue to grow.

In its annual report, Group Chief Financial Officer, James Davies, commented: “This year, we launched several new products and banking tools to our 9.3 million personal customers, while growing our existing products. We introduced Investments, teaming up with BlackRock to help customers invest in their future. Cashback and international money transfers also drove customer growth and engagement, and our Instant Access Savings Pots have been hugely popular. The success of these launches and growth was demonstrated by personal account customers spending more than ever with us – over £47.8 billion, an increase of 42% on last year. This helped increase the average revenue per user (ARPU) that we earn across our products from weekly active customers by 29% to £145.

“We now have more than half a million personal subscription customers paying for added benefits through Monzo Plus and Monzo Premium, which is a 45% increase in customer numbers from last year. That increase has led to a 53% jump in the revenue we earn from those products. In April we launched our refreshed subscription plans, further expanding our offering based on feedback from customers. At the end of March 2024, our total instant access and current account customer deposits were £11.2 billion, 88% higher than at the end of February 2023. Net interest income on deposits and treasury investments increased 200% compared to FY2023, and includes £134 million of interest we paid to our customers who trusted us with their savings.”

Customer trust in Monzo is increasing, however, neobanks such as Monzo and Revolut, still only have an 8% share of UK current accounts, with most customers using them alongside traditional banks, which still dominate lending and deposits. Monzo’s first annual profit suggests a brighter future for digital-only neobanks.