Nikolay Storonsky, the creator and CEO of Revolut, expressed his optimism regarding the approval of a banking license in the UK following impressive profit figures. Storonsky highlighted that despite the company’s substantial size, they are making progress towards obtaining the license, overcoming obstacles in the process.
Storonsky emphasized the confidence within the firm about the approval of the UK banking license, noting that while smaller companies have been granted licenses with fewer customers, Revolut’s size has led to a more extended approval process. He mentioned that typically, smaller institutions are granted licenses twice a year, and due to Revolut’s large scale, additional time is required.
Revolut currently operates as a licensed electronic money institution (EMI) in the UK, yet is unable to provide lending services like credit cards, personal loans, and mortgages. Acquiring a banking license would enable the company to offer these services within the UK market. The application for the license, filed in 2021, faced delays primarily due to issues with the company’s share structure not aligning with the regulations set forth by the Prudential Regulation Authority.
The resolution of Revolut’s share structure matter involved consolidating its multiple share classes into ordinary shares, as per the conditions outlined by the Bank of England for the banking license approval. The firm reached an agreement with SoftBank, a Japanese tech investor, to transfer shares and unify them into a singular class, thus relinquishing preferential rights associated with certain share classes.
Anticipated Growth in 2023
Recently released financial results by Revolut indicated a significant rise in full-year pre-tax profits in 2023, reaching £438 million ($545 million) compared to a pre-tax loss of £25.4 million in 2022. Group revenues also surged by 95% to £1.8 billion ($2.2 billion), showcasing the firm’s strong performance.
Victor Stinga, the Chief Financial Officer of Revolut, attributed the growth to a substantial increase in customer numbers, with 12 million new customers added in 2023. The company’s revenue boost was driven by robust performance across various business segments such as card fees, foreign exchange, and wealth services, along with a notable increase in interest income constituting about 28% of total revenues.
Stinga emphasized the firm’s focus on financial discipline in 2023, prioritizing prudent expense management through a “zero-based budgeting” approach. This strategy ensured that operating costs were contained, with administrative expenses growing at a significantly lower rate compared to revenue growth. Revolut also intensified its investments in advertising and marketing activities, with a substantial allocation of $300 million in the previous year.
Furthermore, the company’s emphasis on business banking solutions was underscored, with Revolut directing around 900 employees to drive business-to-business sales effectively.
Source: CNBC – Revolut Boss Confident on UK Bank License Approval After Record Profit
