Another boost for City as digital bank Starling plans a UK flotation after profits soar 55%
Digital bank Starling said it is eyeing a London stock market listing after it showed profits up 55 percent.
Interim boss John Mountain said the lender’s board is in regular discussions with investors about an initial public offering (IPO).
In a boost for the City, he said London would be the “natural home” for Starling if it decides to launch a float.
It would go against the recent trend of companies choosing to float in rival cities such as New York, or move their listings.
And it comes after Raspberry Pi’s bumper debut on the London stock market on Tuesday, which has fueled hopes that the tide is starting to turn.
Delays: Plans for Starling to float in 2023 were shelved as founder and ex-chief executive Anne Boden (pictured) resigned
Starling has not yet set a date for an IPO after plans for a 2023 IPO were put on hold when founder and ex-chief executive Anne Boden resigned.
Incoming head Raman Bhatia is expected to provide an update on the listing plans later this month after he joins the bank.
Mountain said yesterday that the prospect of an IPO “continues to be extensively discussed by the board and shareholders.”
“A number of shareholder investment strategies are built around a private to public approach,” he said, adding that the bank is “very committed” to a stock exchange listing.
He said the lender “does not consider” markets other than London, which is a “natural home for Starling”. “We have always been a British technology company,” says Mountain.
Starling reported its third year of profitability yesterday as profits rose sharply in the year to March 31 due to higher interest rates.
Mountain said Starling is no longer a challenger bank but a “thriving, established” lender as it reported pre-tax profits of £301.1 million.
Higher UK interest rates, which are at a 16-year high of 5.25 percent, have expanded the bank’s net interest margin.
The figure, which measures the difference between what a bank pays out in savings and what it generates in loans, rose from 2.72 percent to 4.34 percent.
Turnover rose 50.6 percent to £682.2 million and total deposits rose 4 percent to £11 billion in the year to March 31.
Provisions for loan impairment were increased to £47m – up from £34.5m a year earlier due to a ‘very modest’ increase in arrears.
Starling said it is rolling out its banking software Engine globally and that side of the business could expand beyond the retail banking arm.
Last year it signed Salt Bank in Romania and AMP Bank in Australia as its first two Engine customers.
Mountain said: ‘We have invested heavily in Engine because we are confident it can one day become as big as the UK bank – or bigger.’