UK challenger bank Starling said it expects to break even by the end of 2020 due to taking part in the government's emergency funding schemes.
The London-based fintech startup saw an increase in lending activity, according to CNBC, with £1 billion worth of loans on its balance sheet by the end of July.
The estimates for 2020 came after the company revealed it doubled its losses for 2019, posting a pre-tax loss of £53.6 million in the year ending 30 November. That was roughly twice as much as it had lost in 2018 where it was down by £26.9 million.
However, in a separate trading update, founder and CEO Anne Boden told reporters that Starling would break even by the end of this year thanks to the spike in lending. The vast majority of that was government-backed as businesses scrambled for loans to compensate for the impact of the coronavirus.
"We are doing really well financially and it's a horrible thing to say but the crisis has given us the opportunity of really spending some time to focus on getting new products out, getting new things launched and consolidating our position," Boden told reporters. "We are back on track to be profitable by the end of the year."
The pandemic had resulted in a 15-20% decrease in customer spend, according to the bank, but in the last few months, it not only recovered its surpassed pre-pandemic levels. Looking ahead, Boden expects the company to achieve monthly profitability by 2021.
The same can't be said for rival startup Monzo, which recently reported its annual losses had doubled during the pandemic. The London startup reported its post-tax losses had gone from £47.1 million in 2019 to £113.8 million in 2020. This was despite its yearly revenue tripling to £67.2 million and further plans to expand in the US.
As a result, the firm said there was a risk to its business plan, which could "adversely impact its ability to generate a profit".
