Finance

Atom Bank files £36m loss as it aims for 2022 breakeven

Fintech lender Atom Bank narrowed its annual operating loss to £36m this year, as it aims for profitability ahead of an initial public offering of its shares.

Losses at the savings, business and mortgage lender, which was previously backed by former star fund manager Neil Woodford, shrunk in the year to the end of March 2021 from £46m the year before.

The Durham-based startup said in its annual report that it plans to break even sustainably next year, after filing a one-off monthly operating profit and net interest margin of 130bps in June. It is targeting a listing in the financial year 2022/23, most likely in London.

READ Atom Bank posts first profitable month ahead of IPO plans

Digital banks such as Atom, Monzo, Starling Bank and Revolut are racing to reach long-term profitability as they mature, with plans to launch their shares publicly drawing near.

Atom chief executive Mark Mullen told Financial News earlier this year that reaching profitability is a matter of timing, but that it would be unwise for the bank to go public without its books in the black.

“Atom has momentum, in recent years we have invested significantly in the business and now we’re seeing the results,” Mullen added in a 25 August statement alongside the report.

“We’re confident that we will deliver sustainable profitability in the weeks and months ahead as we continue our journey to IPO.”

READ Atom Bank mulls listing via Spac ahead of IPO plans

The bank, which benefitted from lending through government-backed coronavirus support schemes for businesses last year, said it is on track to deliver £1bn on total lending to small businesses by next month.

Business lending at Atom increased from £240m in 2020 to £662m by March this year as a result of the schemes, which provided a boon to business banks struggling during the pandemic.

The lender narrowed losses even as the valuation of its overall business declined. Following the close of the financial year, Atom raised a £40m funding round in April with shares priced approximately 40% lower than the £530m valuation it received in 2019.

To contact the author of this story with feedback or news, email Emily Nicolle

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