Revolut says it is on track to reach $2 billion (€1.8 billion) in annual revenues this year despite a number of setbacks in 2023 that prompted shareholders to write down the value of their stake in the group.
The fintech, which published long-delayed results for 2022 on Friday, said it added close to 10 million customers last year, a record, driving deposits up by 71 per cent in the year to end of December last.
Crucially, Revolut’s auditor said it had been able to obtain “sufficient appropriate audit evidence” after an issue with the fintech’s 2021 accounts that delayed their release was “resolved”.
When the 2021 results were eventually published in March, BDO said it was unable to satisfy itself on the “completeness and occurrence” of almost three-quarters of Revolut’s revenue in that financial year. The auditors have now said the 2022 financial statements “give a true and fair view of the state” of the group’s finances at the end of last year.
The publication of Revolut’s 2022 results should help pave the way for the fintech to receive a UK banking licence, for which it has been on the hunt since 2021. Regulators had originally told the bank to expect the process to last just two years, according to people familiar with the matter who spoke to Bloomberg. Nearly three years on, bosses are still working through an evolving list of requirements from the Bank of England’s Prudential Regulatory Authority.
One of the issues facing regulators is that Revolut has significantly expanded its operations since applying for the licence.
The fintech said on Friday that it had launched Revolut Bank in 20 countries across the European Economic Area, launching local Ibans in France, Spain, Ireland and the Netherlands in 2023.
The company posted a pretax loss of £25.4 million in 2022 compared with a maiden pretax profit of £40 million the previous year, which had been fuelled largely by a surge in cryptocurrency trading. Revenue rose 45 per cent year on year to £923 million as its interest income rose to £83 million from £1.7 million, thanks to rate increases from central banks.
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 £270 million.
Administrative expenses rose to £667.1 million from £380.1 million as the group’s headcount more than doubled to nearly 6,000 employees.
The group was also hit by a £17 million loss in the first quarter after a flaw in its payment systems allowed criminals to steal millions from its corporate accounts over several months.
After receiving a tax credit in respect of previously unrecognised deferred tax, Revolut reported profits after tax of £5.8 million, down from £26.3 million in 2021.
Still, the results will be something of a balm for some investors and analysts after a difficult year for the fintech. In June, Dublin-listed Molten Ventures, which holds a 5 per cent stake in Revolut, wrote down the value of its investment by 40 per cent to £54.5 million (€63.6m).
“In spite of the challenging macroeconomic and geopolitical landscape, 2022 was an excellent year for Revolut,” said chairman Martin Gilbert. “We made significant investments in our products, technology, risk, compliance and governance, while exercising strict cost discipline. This strategy paid off as customers used our products more than ever before, with a 71 per cent increase in deposits and a 55 per cent increase in customers on paid plans.” – Additional reporting: Bloomberg / The Financial Times Limited 2023
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