Starling Bank Trading Update - June 2021

London, 22 July 2021: Starling Bank today publishes a trading update for Q1 of its financial year - the three months ended June 2021. These results demonstrate the bank’s continuing profitability and responsible approach to growth, driven by strong momentum in customer acquisition and revenues, coupled with a stable opex base.

Starling continues to achieve monthly profitability while growing to more than 2.3m accounts, more than £6.7bn in deposits and more than £2.3bn of lending. Starling expects to continue to grow its business as it scales its balance sheet during the remainder of the year.

Key metrics	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
Total Revenue	£42.8m	£11.1m
Total Operating Expenses	(£32.7m)	(£19.4m)
Total Impairment Charge	(£2.8m)	(£4.8m)
PBT	£7.3m	(£13.1m)
ROE	16.7%	(40.9%)
CET1 Ratio	99.2%	57.5%
Total Customer Deposits	£6,755m	£2,759m
Total Gross Lending	£2,335m	£836m
NIM	1.39%	0.90%

Note: ROE calculated over average equity in period

Published Results

Starling Bank has also today published its Annual Report & Consolidated Financial Statements for the period ended 31 March 2021. The results presented above are for the first quarter of its new trading year.

Revenue

Compared to the same period last year revenue has nearly quadrupled to £42.8m, giving an annualised run rate of more than £170m. This has predominantly been driven by Net Interest Income of £26.6m, with the remainder made up of Fees and Commissions & Other Income of £16.2m.

Interest Income has grown substantially from lending through government-backed lending schemes, increasing by 359% to £27.1 million between periods.

Within Fees and Commissions & Other Income, Interchange income continues to perform well, as a result of increases in average customer spend and continued growth in Starling’s customer base. Fees and Commissions & Other Income have increased by 189% to £16.2 million between periods.

Starling offers chargeable products, recently improving functionality of the Kite card offering and enhancing existing products such as the SME Toolkit. Income from such products continues to grow and has improved customer engagement.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
Interest Income	£27.1m	£5.9m
Interest Expense	(£0.5m)	(£0.4m)
Net Interest Income	£26.6m	£5.5m
Fees and Commissions & Other Income	£16.2m	£5.6m
Total Income	£42.8m	£11.1m

Operating Expenses

Operating expenses increased by 69%, while supporting a 280% increase in revenue growth against the same period last year.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
Operating Expenses	£32.7m	£19.4m

Customer Accounts

Customer accounts continue to exhibit strong growth, particularly SME accounts which have more than doubled in the past year. Starling now has over 2.3 million open customer accounts, including more than 1.8m retail accounts, over 370,000 SME accounts and 126,000 euro and US dollar accounts. It has a 6.3% share of the UK SME banking market.

Customer Deposits

As at the end of June, customers have trusted Starling with more than £6.7bn of their hard-earned cash and they continue to grow their balances, with deposits from retail and SME customers more than doubling over the last twelve months.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
SME	£3,901m	£1,517m
Retail	£2,790m	£1,224m
BaaS	£64m	£18m
Total Deposits	£6,755m	£2,759m

Lending

Starling has lent more than £2.3bn to individuals and SMEs in the UK. Its balance sheet predominantly consists of £2.2bn of SME lending with the remainder made up from £104m of retail lending. Starling focused on supporting UK SMEs through the pandemic via the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) and continues to support SMEs through the Recovery Loan Scheme (RLS). It has also begun to deliver on its post government-backed lending strategy deploying the balance sheet into asset classes such as mortgages.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
BBLS	£1,593m	£547m
CBILS	£637m	£190m
RLS	£0.2m	£0m
Other SME	£0.2m	£0.2m
Retail	£104m	£99m
Total Lending	£2,335m	£836m

Note: Starling was accredited for RLS lending at the beginning of June 2021.

Funding

Central Bank Facilities consist of drawdowns under the Term Funding Scheme with additional incentives for SMEs (TFSME). Starling is using the TFSME to manage liquidity risk arising from long-dated lending in its balance sheet.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
Central Bank Facilities	£1,350m	-

Capital and Liquidity

Starling’s capital and liquidity position remains robust following its Series D funding round.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
Regulatory Capital Available	£362m	£120m
RWAs	£365m	£209m
Loan to Deposit Ratio	35%	30%
UK Leverage Ratio	12.4%	14.4%
Liquidity Coverage Ratio	561%	481%
Net Stable Funding Ratio	344%	317%

Customer Metrics

Our customers continue to hold increasing average balances. Existing customers continue to trust Starling with more of their money and newer customers are opening accounts with higher average balances that continue to grow over time.

	Q1-21 (ending Jun-21)	Q1-20 (ending Jun-20)
Number of Accounts - Retail	1.8m	1.2m
Number of Accounts - Business	374k	180k
Number of Accounts - Other Currency (EUR and USD)	126k	78k
Average Monthly GBP Deposit - Retail	>£2,000	>£1,300
Average Monthly GBP Deposit - SME	>£13,000	>£11,500

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