Digital Bank Monzo Says ‘Too Early' For IPO Talk As Profit Soars 300%

Forbes

2 days ago

TS Anil, CEO of Monzo, speaking at the Web Summit in Lisbon, Portugal, on November 2, 2022.
Monzo reported sharply higher profits on Monday that will inevitably fuel further speculation about an initial public offering, but the digital bank wants to downplay those expectations.
Monzo's CEO TS Anil told reporters that it was 'way too early' to talk about IPO plans.
'We believe we'll make a great public company one day, and we're well on the trajectory to doing that when we choose to, but it's just not something we're focused on right now,' he said.
Monzo is said to be working with Morgan Stanley to arrange meetings with potential investors for an IPO that could take place as early as the first half of next year, according to a report by Sky News. Citing people close to the company, Sky said the timing, size and location of the listing are still to be decided and will depend on market conditions in London and New York.
The London-based bank saw a more than fourfold increase in profits last year. Monzo reported a pretax profit of £60.5 million ($81.8 million) for the year ended March 31, compared to £13.9 million a year earlier.
The firm's revenue jumped 48% to £1.2 billion, which Anil said is a testament to Monzo's diversifying business model. He pointed out that three of the bank's revenue streams – deposits, transactions and lending – each contribute more than £200 million in annual revenues.
'Our growth across FY2025 is reinforced by the growing trust customers have in Monzo as they bring more and more of their financial lives to us,' Anil said.
Customer deposits rose to £16.6 billion, a 48% increase from a year earlier. A third of its customers now use Monzo as their primary bank. Monzo also signed up another 2.4 million people to its platform last year, bringing its customer base to more than 12 million.
The digital bank said its lending portfolio swelled to £1.9 billion, an increase of 36% from a year ago, but it managed to reduce its expected credit losses through better risk management.
Monzo, which was founded a decade ago, has grown to become the U.K.'s seventh-largest bank. The majority of its customers are in Britain, but the firm is also aiming to expand overseas.
Last year, Monzo hired former Stripe executive Michael Carney to lead its push into the European market. In 2023, the bank appointed Conor Walsh, a former executive at Block's Cash App, to lead its expansion in the U.S. market.
Monzo is one of a host of digital banks, often described as neobanks or challenger banks, that emerged over the past decade and managed to take market share from Britain's biggest lenders.
Monzo, which was originally named Mondo until it faced a trademark challenge, began as a 'scrappy startup' issuing prepaid debit cards in 2015 before obtaining a bank license two years later. Since then, Monzo has grown to become one of Britain's most valuable fintech companies.
Last year, Monzo was valued at £4.5 billion ($5.9 billion) in a secondary share sale that allowed employees to sell some of their stock. Investors who participated in the round included StepStone Group and Singapore's sovereign wealth fund GIC.