Revolut swings to loss as cost increases offset boost from higher rates

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Revolut swung to a loss last year as increased costs offset a windfall from higher interest rates, according to delayed annual accounts from the fintech group on Friday.

The results came as the group’s auditor BDO said previous issues around Revolut’s internal controls had been “resolved”, which could relieve some of the pressure on the company over a key regulatory decision on its UK banking licence.

The fintech company attracted scrutiny this year after BDO warned the bulk of its 2021 revenues “may be materially misstated”, noting shortcomings in Revolut’s IT controls.

In the company’s latest accounts, BDO said it had “resolved” these issues, adding that it had “been able to obtain sufficient appropriate audit evidence in respect of the relevant balances” for 2022.

BDO issued another qualified audit opinion on Revolut’s delayed 2022 accounts but said this was in respect to the comparisons between the current revenue figures and related balances with the previous year.

Chief executive Nik Storonsky said: “Looking ahead, our focus is on continued growth across all our markets. We remain committed to our ongoing UK banking licence application in addition to bringing the Revolut app to new markets and customers around the world.”

The company posted a pre-tax loss of £25.4mn in 2022 compared with a pre-tax profit of £40mn the previous year which had been fuelled largely by a surge in cryptocurrency trading.

Revenue rose 45 per cent year on year to £923mn as its interest income rose to £83mn from £1.7mn, thanks to rate increases from central banks.

The group recorded a 71 per cent increase in customer deposits as it attracted 9.8mn new customers in 2022, its highest yearly increase.

Revolut said the “surge of retail investing activity” in crypto that had boosted its revenue the previous year dropped “significantly” in 2022 as income in its wealth and foreign exchange division fell 23 per cent to £270mn.

Administrative expenses rose to £667.1mn from £380.1mn as the group’s headcount more than doubled to nearly 6,000 employees.

The group was also hit by a £17mn loss in the first quarter after a flaw in its payment systems allowed criminals to steal millions from its corporate accounts over several months.

Revolut’s 2022 results had been due to be filed by the end of September, nine months after the end of its financial year.

However, the group was handed an extension until the end of December from Companies House for a second consecutive year.

The accounts were filed just days before the extended deadline of December 31, meaning Revolut avoided breaching the UK Companies Act for a second year in a row.

Revolut’s banking licence application has also been clouded by governance issues and the departure of key executives last year when both its UK banking chief executive and chief financial officer resigned.

The fintech, which was valued at $33bn at its last funding round in 2021, appointed Francesca Carlesi to lead Revolut NewCo UK, the arm that will operate the banking services. Carlesi is due to start the job this month.

The company submitted its application in January 2021. Banking licences are usually granted within 12 months of application, according to the UK regulators’ guidance.