Monzo losses deepen in 2018, as operational costs increase faster than growth

Digital challenger bank Monzo has seen its losses increase fourfold over the last year, logging pre-tax losses of £33.1m in the year ending February 2018.

Up from just £7.9m the year before, Monzo said this was the result of its operating costs ballooning from £8m to £34.9m as it invested heavily into becoming "a fully operational bank".

The bank remains in a capital surplus position, however, thanks to two fundraising rounds undertaken throughout the year. At the end of the year, Monzo's total equity position sits at £56.2m, up from £18.4m in 2017.

Monzo's CEO Tom Blomfield said that the bank plans to break even "very soon", as it starts adding revenue-generating services like lending through overdrafts and a boost to its third-party marketplace, as well as cost cuts.

Interest income was boosted from zero to £150,000 this year, while fee and commission income rose to £2.2m from £112,000.

To date, users have spent more than £2bn through Monzo through more than 750,000 current accounts. The bank ended its expensive prepaid card programme earlier this year, cutting the cost to run an active account by 50 per cent in 10 months.

The bank has also seen several staffing changes over the last year, increasing its team numbers up to 300 and installing a new chief technology officer in the place of co-founder Jonas Huckestein.

According to the report, Monzo's highest pay packet for a director represented earnings of £305,000 in one year, up from £60,000 in 2017. This was made up of a mix of wages and share-based payments.

Blomfield said that the bank has now changed its mission statement to be "Monzo makes money work for everyone", sticking to its ambitious goal of reaching 1bn users.

It was listed as one of Europe's top 50 hottest fintech startups this year in the Fintech50 list, but didn't make it to the top five alongside competitor Revolut, which broke even and reached unicorn status earlier this year.