Starling CEO Boden marks a quadrupling of the bank’s profit with barbs at fintech colleagues

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

In a New Year update, founder and chief executive Anne Boden revealed the firm had taken in pre-tax profits of more than £20m in December as deposits rose to £10.7bn.

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

Banks have been bolstered by sharp interest rate rises around the world this year, with traditional lenders enjoying big profits across the board.

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

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

In a blog post, she wrote: “We are profitable, very well capitalized and do not need to raise money. It’s no accident that we’ve never looked for a stupid valuation, even when the prospect of one was hanging in front of us.”

“We, and by this I mean the wonderful management team, just had a hard time buying into the fanciful views of the world held by some of the so-called ‘Vision’ funds.”

The comments come after tech firms have been hit by heavy valuations and venture capitalists have been rocked by heavy losses, including Softbank’s Vision fund which posted losses of more than $23 billion in the second quarter.

Starling added that it has also stepped up a hiring spree, increasing its headcount by a third to peak at 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 for mortgages and mortgages. Mortgage growth has been spurred by the 2021 acquisition of buy-to-let mortgage company Fleet in 2021.

Starling has seen huge growth in lending over the past two years after it jumped on the government’s covid support schemes and handed out £1.3bn of revolving loans to small businesses.

However, the firm has come under fire from some quarters, facing a high-profile spat with former minister Lord Agnew over whether appropriate procedures were followed when approving loans.

Boden revealed in a conversation with the accounts committee in December that over a third of the loans were at risk of default. However, she has rejected claims of lax checks and told reporters last year that Agnew’s claims were “simply wrong”.