Revolut boss confident on UK bank license approval after record profit

LONDON — The boss of British financial technology giant Revolut told CNBC he is optimistic about the company’s chances of being granted a U.K. banking license, as a jump in users saw the firm report record full-year pre-tax profits.

In an exclusive interview with CNBC, Nikolay Storonsky, Revolut’s CEO and co-founder, said that the company is feeling confident about securing its British bank license, after overcoming some key hurdles in its more than three-year-long journey toward gaining approval from regulators.

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“Hopefully, sooner or later, we’ll get it,” Storonsky told CNBC via video call. Regulators are “still working on it,” he added, but so far haven’t raised any outstanding concerns with the fintech.

Storonsky noted that Revolut’s huge size has meant that it’s taken longer for the company to get its banking license approved than would have been the case for smaller companies. Several small financial institutions have been able to win approval for a banking license with few customers, he added.

“U.K. banking licenses are being approved for smaller companies,” Storonsky said. “They usually approve someone twice every year,” and they typically tend to be smaller institutions. “Of course, we are very large, so it takes extra time.”

Revolut is a licensed electronic money institution, or EMI, in the U.K. But it can’t yet offer lending products such as credit cards, personal loans, or mortgages. A bank license would enable it to offer loans in the U.K. The firm has faced lengthy delays to its application, which it filed in 2021.

One key issue the company faced was with its share structure being inconsistent with the rulebook of the Prudential Regulation Authority, which is the regulatory body for the financial services industry that sits under the Bank of England.

Revolut has multiple classes of shares and some of those share classes previously had preferential rights attached. One conditions set by the Bank of England for granting Revolut its U.K. banking license, was to collapse its six classes of shares into ordinary shares.

Revolut has since resolved this, with the company striking a deal with Japanese tech investor SoftBank to transfer its shares in the firm to a unified class, relinquishing preferential rights, according to a person familiar with the matter. News of the resolution with SoftBank was first reported by the Financial Times.

The fintech giant on Tuesday released financial results showing full-year pre-tax profit rose to £438 million ($545 million) in 2023, swinging to the black from a pre-tax loss of £25.4 million in 2022. Group revenues rose by 95% to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.

Victor Stinga, Revolut’s chief financial officer, said the company’s growth stemmed from a record jump in user numbers — Revolut added 12 million customers in 2023 — as well as strong performance across all its key business lines, including card fees, foreign exchange and wealth, and subscriptions.

“We consider 2023 to be what we would call a breakout year from the point of view of growth and profitability,” Stinga said in an interview this week.

Revenue growth was driven by three main factors, Stinga said, including customer growth, strong performance across its key revenue lines, and a significant jump in interest income, which he said now accounts for about 28% of Revolut’s revenues.

He added that Revolut made exercising financial discipline a key priority in 2023, keeping a lid on operating expenses and adopting a “zero-based budgeting” philosophy, where every new expense has to be justified and accounted for before it’s considered acceptable.

This translated to administrative expenses growing far less than revenues did, Stinga said, with admin costs growing by 49% while revenues nearly doubled year-on-year.

Revolut has been investing more aggressively in advertising and marketing, he added, with the firm having deployed $300 million in advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut devoting about 900 employees toward business-to-business sales.