Starling Bank is moving closer to a London stock market listing after higher interest rates boosted its profits for a third consecutive year.
Interim CEO John Mountain said a potential flotation is being "extensively discussed" with shareholders, reported The Times.
The bank reported a 55 per cent increase in annual pre-tax profits to £301.1 million for the year ending March 31, as net interest income surged by 70 per cent to £592.9 million.
According to the newspaper, customer accounts grew to 4.2 million from 3.6 million.
The Financial Conduct Authority has opened an investigation into Starling's compliance with UK anti-money laundering rules, starting in November. The impact of this investigation is currently "unquantifiable."
Founded a decade ago, Starling is a digital-only lender gaining market share from traditional banks.
Former CEO Anne Boden previously indicated that a stock market listing was the group's goal. Mountain affirmed that London is Starling's "natural home" for a share sale, though no timeframe was given for the IPO, The Times reported.
Raman Bhatia, who will become the permanent CEO this month, will likely lead the bank through its IPO. The bank poached energy supplier Ovo’s chief executive Bhatia in March this year. Bhatia succeeds Mountain, who has been interim CEO since Boden stepped down last year.
Starling's growth was accelerated by providing state-backed emergency loans during the Covid pandemic. It has since expanded into mortgages, which now make up 81.7 per cent of its lending, the newspaper reported.
The bank reported a £12.2 million impairment charge for potential bad loans, attributed to the growth of its mortgage lending and increased default rates in unsecured SME lending.
