Revolut records €517 million pre-tax profit in 2023 as it continues push for UK banking licence

Fintech giant Revolut registered £437.8 million (€517 million) in pre-tax profit during 2023, as it continues its push to obtain a UK banking licence.

This was announced in the company’s Annual Report for the year ended 31st December 2023, published on Tuesday.

Revolut is an app-based banking alternative that was launched in 2015 by Nikolay Storonsky and Vlad Yatsenko. It was granted a full banking licence by the European Central Bank (ECB) in December 2021 and is now operating as a licensed bank in 30 countries in the European Economic Area (EEA), one being Malta.

It is seen as an essential app for many businesses working in riskier industries, such as iGaming and medical marijuana. Revolut does not provide figures for the number of users per country, however community members closely following sales presentations put the number of users in Malta as at September 2021 at 190,000, placing its market penetration rate at 36.6 per cent.

Indeed, it is widely hailed as having had a major impact on the local banking industry by being the first to provide a technology-first solution in the sector.

In the report, Revolut stated that despite operating in an increasingly complex geopolitical, macroeconomic, and regulatory environment, its revenue for the year totalled £1.8 billion (€2.1 billion). This represents a sharp rise of 94.9 per cent from the £922.5 million (€1.1 billion) recorded in 2022.

Cost of sales were also on the rise, going up from £280.9 million (€331.5 million) in 2022 to £427.3 million (€504.4 million).

After taking into account £937.8 million (€1.1 billion) in administrative expenses, Revolut’s pre-tax profit for the year amounted to €517 million, a substantial improvement from the £25.4 million (€30 million) pre-tax profit recorded in the previous year.

Net profit grew to £344.1 million (€406.1 million) in 2023. To put the company’s growth over the year into context, in 2022 it reported a net profit of just £5.8 million (€6.8 million).

This means that it is the third-straight year that it has reported a net profit.

Revolut has also cemented itself as one of the leading financial institutions across many of its markets.

In fact, throughout 2023, Revolut added 11.8 million new customers globally, the highest year-on-year increase in the company’s history, thus bringing the total to 38 million in 2023.

The company stated that 70 per cent of new retail customers joined organically or were referred by someone they know. Word-of-mouth growth was complemented by further investment in marketing and sales functions, including for Revolut Business which was onboarding 20,000 small and medium enterprises (SMEs) each month by the end of the year.

In his review, Revolut Chair Martin Gilbert noted that 2023 proved to be a “strong year” for the company.

“As we look to the future, we will continue with our mission to simplify all things money by expanding our product range and all aspects of how we serve our customers,” he continued.

On his part, Mr Storonsky, Revolut CEO, said that during the year, the company took its “biggest steps yet” in its journey to simplify money.

“We accelerated customer growth and increased the adoption of our products across the board, driving a record year for Revolut financially,” he added.

One of the major hurdles that Revolut has faced in recent years is the long delay in its application for a UK banking licence, having filed it back in 2021.

A banking licence would allow the neobank to offer lending products such as credit cards, personal loans, or mortgages in the UK.

In a recent interview with CNBC, Mr Storonsky stated that due to Revolut’s large size, having a banking licence approved is taking longer than it would have for smaller companies.

A key issue in this is that Revolut’s share structure proved to be inconsistent in the rulebook of the Prudential Regulation Authority (PRA), the regulatory body for the financial services industry sitting under the Bank of England.

Revolut has various classes of shares, with some of them having preferential rights attached. One of the conditions set by the Bank of England for Revolut to have its banking licence was to collapse its six classes of shares into ordinary shares.

According to a report from the Financial Times, the company has since resolved this issue, striking a deal with Japan’s SoftBank to transfer its shares in the firm to a unified class, relinquishing preferential rights.

In the Annual Report, Revolut did not make many references to the UK banking licence application, with Mr Storonsky and stating that the company is “committed to progressing” its application, working closely with the PRA in this regard.

He also said that as of June 2024, Revolut reached 45 million retail customers, and “remains poised for exponential growth.”

“Our customer base is expanding at impressive rates year after year, and our diversified business model continues to fuel exceptional financial performance,” he continued.