So far, so good for Starling. For Monzo, the challenge of hitting break-even, let alone profitability, remains. Today, Starling reports its first full year of profitability. Specifically, Starling swings to a pre-tax profit of £32.1m for the financial year to end March 2022. This compares with a pre-tax loss of £31.5m for the year ago period.

Indeed, Starling has reported monthly profitability every month since October 2020. In April this year, the bank secured an additional £130.5m as part of an internal fundraising, more than doubling its valuation to $2.5bn ($3.3bn).

The round was an extension to Starling’s Series D funding round that first closed at a valuation of £1.1bn in March last year.

Starling customer numbers now total 2.7 million, up from 2.1 million at the end of fiscal 2021. Total deposits rise by 55% to £9.03bn. At the same time, Starling’s new mortgage lending strategy boosts gross loans and advances by 45% to £3.26bn. Other recent highlights include the acquisition of Fleet Mortgages in July 2021.

Starling mortgage lending tops £2bn

Starling now reports more than £2bn of mortgages on the balance sheet as at June 2022. This type of lending now accounts for the majority of its loan book and in the current financial year the government-backed BBLS and CBILS schemes represent around 44%. This proportion will shrink further as Starling continues to diversify its lending portfolio. Its strategy is to retain a low loan to deposit ratio, and to do more organic lending its own customer base. Its strategy is working. And wisely, it announced a U-turn the other day as regards its plans to target the Irish market.

Meantime, Monzo continues to focus on growing customer numbers and remains in the red. Customer numbers total 6 million. Deposits rose by 42% to £4.4bn. By contrast with Starling, lending remains small scale but for the record, gross lending now totals a rather modest £259m. It continues to lose around £20 per customer per year. It can at least report that losses remain flat at around £119m for the last fiscal. It is however rolling out a buy now pay later product-good luck with trying to make money from that enterprise.