UK challenger Atom Bank records first ever annual operating profit
UK digital challenger Atom Bank has recorded its first annual operating profit of £4 million over the last financial year off the back of strong customer growth numbers.
Atom Bank records its first annual operating profit
The bank, which claims to be the first to operate in the UK exclusively via an app-based format, reported the milestone in its latest financial results for FY23. It previously recorded a £2 million loss over FY22.
And while the bank’s total operating costs rose this year by £8 million to £59 million, the increase was offset by a simultaneous 62% rise in both its revenue growth and net interest income (NII), which increased from £47 million during FY22 to £76 million this year in line with the growth of its balance sheet.
With this, Atom has now achieved three consecutive quarters of double digit return on tangible equity (ROTE) to the end of Q1 FY24.
Its current quarterly run-rate is generating an additional £100 million in annualised NII and a further £25 million in operating profit.
Likewise, the figures indicate that its customer net interest margin (NIM) remained strong at 2.84%, having stood at 2.93% last year. The bank saw its customer count jump from around 123,000 during FY22 to 224,000 at present.
Atom attributes its success to developing the efficiency of its business model while simultaneously “exposing the operational costs and inefficiency of the legacy banks”.
‘The customer pays for everything’
Commenting on the results, Mark Mullen, Atom’s chief executive officer, reflected on an “important year” for the bank, during which he “kept our costs tight and delivered our first annual operating profit”.
According to Mullen: “Lowest cost and highest quality wins every time. If that isn’t the new banking paradigm, then it ought to be.”
“We never allow ourselves to forget that ultimately, the customer pays for everything,” he adds.
The results come three months after Schroders Capital Global Innovation Trust, part of asset management firm Schroders, marked its holding in Atom Bank down by 31%.
Yet despite this, the UK-listed investment trust said at the time that it was “encouraged with the operational progress at Atom Bank”, its second largest holding after Oxford Nanopore, adding that “the business continues to scale up and is now profitable”.
Now, signals of the bank’s latest performance appear to be affirming its shareholder’s previous statement.
