Starling boss Boden look quadrupling of bank’s profits with barbs at unrealistic valuations of fintech peers

Digital bank Starling expects to more than quadruple its profits and ramp up a hiring spree this year as it becomes the latest lender to be buoyed by rising interest rates and a borrowing surge.

In a New Year update, founder and chief Anne Boden said the firm had raked in pre-tax profits of over £20m in December as deposits swelled to £10.7bn.

The update comes after Starling announced in July it had swung into the black to post its first full year profit of £30m.

Banks have been buoyed by sharp rate hikes across the world this year, with traditional lenders posting bumper profits across the board.

Starling’s profits have set it apart from many of its high-growth fintech peers which have faced a reckoning as investors shift their focus away from growth amid an economic downturn in the past year.

Boden fired barbs at venture capital investors and tech peers today. She said the firm was looking to further distance itself from the downturn that has rocked tech firms and led to sharp falls in valuations.

In a blog post she wrote: “We’re profitable, very well capitalised and have no need to raise money. It’s no accident that we have never sought a silly valuation, even when the prospect of one was dangled before us.”

“We, and here I mean the fantastic executive team, just had difficulty buying into the fanciful views of the world held by some of the funds that had so-called “Vision”.”

The comments come after tech firms have suffered heavy valuation haircuts and venture investors have been rocked by heavy losses, including Softbank’s Vision fund which posted losses of more than $23bn in the second quarter.

Starling added that it has also supercharged a hiring spree and increased its headcount by a third to top 2,300.  The firm announced 1,000 new jobs in Manchester at the end of 2022 with a new office, alongside its bases in London, Southampton, Cardiff and Dublin.

Loan growth

Starling’s loan book has swelled to £4.7bn this year, Boden said, with more than £3.1bn across its residential and owner-occupied mortgage books. Growth in its mortgage lending has been spurred by the 2021 acquisition of buy-to-let mortgage firm Fleet in 2021.

Starling has seen huge growth in lending in the past two years after it jumped on the government’s covid support schemes and dished out £1.3bn Bounce Back Loans to small businesses.

The firm has come under fire from some quarters however, and faced a high profile spat with former minister Lord Agnew over whether appropriate procedures were followed when approving loans. 

Speaking with the Public Accounts Committee in December, Boden revealed that over a third of the loans were at risk of default. She has dismissed claims of lax checks however and told reporters last year that Agnew’s claims were “just wrong”.