U.K. Fintech Starling Bank Says ‘Historic Weaknesses' Caused Profit Drop
Starling Bank's CEO Raman Bhatia speaks at the Fintech Summit in Lisbon, Portugal. (Photo By Ramsey ... More Cardy/Sportsfile for Web Summit via Getty Images)
Starling Bank managed to report its fourth consecutive year of profitability and revenue growth on Wednesday, although the fintech's 'legacy matters' weighed heavily on its bottom line.
The bank said its pretax profit for the financial year fell to £223 million ($300 million), an almost 26% drop from a year earlier that was largely attributed to a regulatory fine for inadequate financial crime controls and a provision to cover issues with Covid-era loans.
Starling was fined £29 million by the Financial Conduct Authority (FCA) in October after it had repeatedly breached an agreed requirement not to open accounts for high-risk customers. The watchdog said at the time that the bank's anti-money laundering controls and sanctions screening systems left the financial system "wide open to criminals."
Starling also said it recognized a £28 million provision during the financial year after it voluntarily removed the government guarantee on some of the loans it had issued under the Bounce Back Loan Scheme (BBLS).
The BBLS was a government-backed program launched in May 2020 that was aimed at helping small businesses exposed to the economic shock caused by the pandemic. The scheme allowed banks to quickly lend businesses up to £50,000 at low interest rates and with a 100% state guarantee.
More than £46 billion in loans had been disbursed by various lenders through the scheme, according to the Department for Business and Trade, but the agency also admitted there had been more than 100,000 cases of loss due to fraud and error.
The government's decision to streamline the loan process meant that it had "limited verification and no credit checks on borrowers, which made it vulnerable to fraud and losses," according to the National Audit Office.
Starling's revenue growth slowed considerably last year. The bank's turnover rose 4.7% to £714 million, compared to a 51% jump in revenue that Starling posted in its 2024 fiscal year.
Starling's Chairman David Sproud characterized the bank's latest results as 'a resilient financial performance amid challenging markets and as we resolved some important legacy matters."
Founded in 2014 by veteran banker Anne Boden, Starling has grown rapidly as it aims to take on traditional banks with a mobile-only offering. Starling is one of a pack of digital banks, often described as neobanks or challenger banks, that emerged over the past decade and grabbed market share from legacy lenders. The likes of Starling, Monzo and Revolut have been attracting millions of customers with user-friendly apps and low fees.
Starling was granted a banking license by the Bank of England in 2016. Boden stepped down as CEO in 2023, saying at the time she wanted to avoid any potential conflicts of interest with her stake in the fintech.
Starling was approached by Shawbrook, another challenger bank, about a possible £5 billion merger earlier this year, Sky News reported in April. The approach was described as "highly preliminary," and did not involve any details about the proposed deal.
Starling didn't comment on the prospects of a merger on Wednesday, but it did point to its Engine unit, which sells software to other companies, as a source of future growth for the bank.
'Our ambition is global, and with Engine we are now poised to bring our proprietary technology to a global addressable market of some £100 billon,' Starling CEO Raman Bhatia said. 'In the coming year we will expand Engine's unique Software-as-a Service (SaaS) proposition to new markets in North America and the Middle East.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Macron says Europe must become 'space power' again
President Emmanuel Macron said Friday that Europe must again become a global space power, warning that France risked being squeezed out of the global low-orbit satellite constellation market. Macron spoke at the Paris Air Show in Le Bourget outside the French capital a day after France more than doubled its stake in satellite operator Eutelsat, the EU rival to Elon Musk's Starlink. Macron called for more investment as the European space industry struggles to remain competitive in the face of US and Chinese rivals. "SpaceX has disrupted the market, Amazon is also getting involved. China is not far behind, and I think we all need to be very clear-headed," Macron said. Europe must become "a space power once again, with France at its heart", he said. He warned that Europeans were "on the verge of being completely" squeezed out of the low Earth orbit (LEO) satellite constellation market. Orbiting just a few hundred kilometres above the Earth, low Earth orbit satellite networks can play a crucial role in various fields including telecommunications, emergency response, space exploration, and defence. Growing geopolitical tensions have forced countries to focus on the independence of their satellite infrastructure. Macron said France and its partners should not be reliant on non-European constellations in low orbit, calling it "madness". He called non-European players to team up with France. "This must be the solution for our major strategic partners in the Gulf, India, Canada and Brazil," he said. "We really need to succeed in increasing our collective investment effort," Macron added, noting the importance of private investors and public-private collaboration. He also said France planned to organise a space summit in early 2026 to "mobilise our public and private partners across the globe." As part of the overall deal with other investors worth 1.35 billion euros ($1.5 billion), the French state is set to become Eutelsat's largest shareholder. The European satellite operator is vying to be seen as an alternative to Starlink, as companies in Europe and elsewhere look askance at Musk's manoeuvrings and seek to secure sovereign solutions. Boasting more than 600 satellites since merging with British firm OneWeb in 2023, Eutelsat is the world's second-largest operator of low Earth orbit satellites, behind Starlink. fff-tq-as/ekf/js
Yahoo
an hour ago
- Yahoo
Investing in Cash Converters International (ASX:CCV) five years ago would have delivered you a 141% gain
Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, the Cash Converters International Limited (ASX:CCV) share price is up 65% in the last 5 years, clearly besting the market return of around 46% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 53% in the last year, including dividends. So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). During the five years of share price growth, Cash Converters International moved from a loss to profitability. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Cash Converters International share price is up 22% in the last three years. During the same period, EPS grew by 14% each year. This EPS growth is higher than the 7% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.95. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Cash Converters International's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Cash Converters International's TSR for the last 5 years was 141%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return. We're pleased to report that Cash Converters International shareholders have received a total shareholder return of 53% over one year. And that does include the dividend. That's better than the annualised return of 19% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for Cash Converters International you should be aware of. There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Vogue
an hour ago
- Vogue
Ralph Lauren Spring 2026 Menswear Collection
Even as the USA's reputational stock falters, global regard for Ralph Lauren—the most all-American of American brands—is on the up: Vogue Business last month reported the company's sales in Europe and China had increased 12 per cent and 9 per cent respectively in the fiscal year 2025. That uptick means that the majority of the company's total $7.1 billion of revenue for the same period was generated beyond the Land of The Free. So during a period where luxury more broadly has also been faltering, how has RL been bucking the trend two-fold? This evening's Ralph Lauren Purple Label pointed to at least part of an answer. Once you'd steered beyond the vintage car in the courtyard, the presentation was split into two sections. The first cluster of looks were garments for an idealized version of the New York Yacht Club: wearable American magic. Navy washed against white on a piped terry boating blazer worn with a bengal stripe shirt and cravat over pleated linen shorts and ankle-strapped espadrilles. A four-button (silver) navy double breasted blazer with ersatz branded club badge was commodore-level quality. Thickly woven textured silk navy short sleeve shirting and drop shoulder color block knits, or classic Ralph (via the Marylebone Cricket Club) cable-knit sweaters all added to the breezy feel. The next section, housed in the brand's Milan palazzo's first-floor courtyard, was a tonal triumph. Of the maybe 25-strong cast of globally-sourced heartthrobs, around 23 wore shades running from the pale khaki of a game-pouched fishing jacket over a safari shirt and action pant to the richly-burnished, nutty brown of a distressed leather flight jacket with complementarily-strapped pilot's watch. From the slubby silk linen windowpane check field jackets to the tailored linen takes on mid-century military shirting via the darker interjections of art-deco intarsia tuxedo jackets, these were clothes for sophisticated yet unstuffy heroes. The jaunty cravats and woven short sleeve shirting recalled Cary Grant as John Robie The Cat; the masterful khakis were slimmed down Hemingway fare for living large on The Keys; and the flight jacket and tux were prime Pitt and Clooney material. Lauren has always said he designs cinematically: this was American luxury that evoked a reassuring, aspirational, and highly-idealized version of its homeland—and which seemed all the more desirable thanks to that vision's current distance from reality.
