Nikolay Storonsky, founder and CEO of Revolut.
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LONDON — The boss of British financial technology giant Revolut told CNBC he is bullish on the company’s chances of getting a UK banking license as user growth led to the company reporting a full-year pre-tax profit.
In an exclusive interview with CNBC, Nikolay Storonsky, CEO and co-founder of Revolut, said the company feels confident about securing a UK bank license after overcoming some key hurdles in its three-year journey to gaining regulatory approval.
“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 have not raised any outstanding concerns with the fintech.
Storonsky noted that Revolut’s sheer size meant it took longer for the company to get its banking license approved than it would for smaller companies. Several small financial institutions managed to win approval for a banking license with few customers, he added.
“UK banking licenses are being approved for smaller companies,” Storonsky said. “They usually approve someone twice every year,” and they usually tend to be smaller institutions. “Of course, we are very old, so it takes extra time.”
Revolut is a licensed electronic money or EMI institution in the UK, but cannot yet offer lending products such as credit cards, personal loans or mortgages. A bank license would allow it to offer loans in the UK. The company faced long delays in its application, which it submitted in 2021.
A key issue the company faced was that its shareholding structure was not in line with the Prudential Regulation Authority, which is the regulator for the financial services industry under the Bank of England.
Revolut has multiple share classes and some of these share classes previously had preferential rights. A condition set by the Bank of England on granting Revolut its UK banking license was that its six classes of shares be broken down into common shares.
Revolut has since resolved this, with the company striking a deal with a Japanese tech investor SoftBank to transfer its shares in the company to a consolidated class, waiving preemptive rights, according to a person familiar with the matter. News of the settlement with SoftBank was first reported by the Financial Times.
In 2023 a “year of thawing”
The fintech giant on Tuesday published financial results showing full-year pre-tax profit rising to £438 million ($545 million) in 2023, moving into the black from a pre-tax loss of £25.4 million in 2022. of the Group increased by 95% to £1.8 billion ($2.2 billion), from £920 million ($1.1 billion) in 2022.
Victor Stinga, Revolut’s chief financial officer, said the company’s growth came from a record jump in user numbers — Revolut added 12 million customers in 2023 — as well as strong performance across its core business areas, including card charges, currency and wealth. and subscriptions.
“We see 2023 as what we would call a breakout year in terms of growth and profitability,” Stinga said in an interview this week.
The revenue growth was driven by three main factors, Stinga said, including customer growth, strong performance across its core revenue lines and significant growth in interest income, which it said now represents about 28 % of Revolut’s revenue.
He added that Revolut has made exercising financial discipline a key priority in 2023, keeping a lid on operating expenses and adopting a “zero budget” philosophy, where any new expenditure must be justified and accounted for before it is considered acceptable.
That translated into far less growth in administrative expenses than revenue, Stinga said, with administrative costs rising 49% while revenue almost doubled year over year.
Revolut has invested more aggressively in advertising and marketing, he added, with the company spending $300 million on advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut dedicating around 900 employees to business-to-business sales.
