Revolut CEO confident on UK bank license approval as fintech firm hits record $545 million profit

LONDON — The boss of British monetary expertise big Revolut advised CNBC he’s optimistic concerning the firm’s probabilities of being granted a U.Okay. banking license, as a bounce in customers noticed the agency report document full-year pre-tax earnings.

In an unique interview with CNBC, Nikolay Storonsky, Revolut’s CEO and co-founder, mentioned that the corporate is feeling assured about securing its British financial institution license, after overcoming some key hurdles in its greater than three-year-long journey towards gaining approval from regulators.

“Hopefully, eventually, we’ll get it,” Storonsky advised CNBC through video name. Regulators are “nonetheless engaged on it,” he added, however to this point have not raised any excellent considerations with the fintech.

Storonsky famous that Revolut’s large dimension has meant that it is taken longer for the corporate to get its banking license permitted than would have been the case for smaller corporations. A number of small monetary establishments have been capable of win approval for a banking license with few prospects, he added.

“U.Okay. banking licenses are being permitted for smaller corporations,” Storonsky mentioned. “They normally approve somebody twice yearly,” they usually sometimes are usually smaller establishments. “In fact, we’re very giant, so it takes further time.”

Revolut is a licensed digital cash establishment, or EMI, within the U.Okay. However it could possibly’t but provide lending merchandise equivalent to bank cards, private loans, or mortgages. A financial institution license would allow it to supply loans within the U.Okay. The agency has confronted prolonged delays to its software, which it filed in 2021.

One key situation the corporate confronted was with its share construction being inconsistent with the rulebook of the Prudential Regulation Authority, which is the regulatory physique for the monetary providers business that sits beneath the Financial institution of England.

Revolut has a number of courses of shares and a few of these share courses beforehand had preferential rights connected. One situations set by the Financial institution of England for granting Revolut its U.Okay. banking license, was to break down its six courses of shares into atypical shares.

Revolut has since resolved this, with the corporate putting a take care of Japanese tech investor SoftBank to switch its shares within the agency to a unified class, relinquishing preferential rights, in accordance with an individual accustomed to the matter. Information of the decision with SoftBank was first reported by the Monetary Occasions.

The fintech big on Tuesday launched monetary outcomes exhibiting full-year pre-tax revenue rose to £438 million ($545 million) in 2023, swinging to the black from a pre-tax lack of £25.4 million in 2022. Group revenues rose by 95% to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.

Victor Stinga, Revolut’s chief monetary officer, mentioned the corporate’s progress stemmed from a document bounce in consumer numbers — Revolut added 12 million prospects in 2023 — in addition to sturdy efficiency throughout all its key enterprise strains, together with card charges, international alternate and wealth, and subscriptions.

“We take into account 2023 to be what we’d name a breakout yr from the standpoint of progress and profitability,” Stinga mentioned in an interview this week.

Income progress was pushed by three important elements, Stinga mentioned, together with buyer progress, sturdy efficiency throughout its key income strains, and a major bounce in curiosity earnings, which he mentioned now accounts for about 28% of Revolut’s revenues.

He added that Revolut made exercising monetary self-discipline a key precedence in 2023, preserving a lid on working bills and adopting a “zero-based budgeting” philosophy, the place each new expense must be justified and accounted for earlier than it is thought of acceptable.

This translated to administrative bills rising far lower than revenues did, Stinga mentioned, with admin prices rising by 49% whereas revenues almost doubled year-on-year.

Revolut has been investing extra aggressively in promoting and advertising, he added, with the agency having deployed $300 million in promoting and advertising final yr. The corporate’s enterprise banking options are additionally a prime precedence, with Revolut devoting about 900 workers towards business-to-business gross sales.