Starling Bank profits have taken a significant hit, marking a stark turn in the fintech firm’s financial narrative. For a company once considered the crown jewel of digital banking, this 25% drop in pre-tax profit signals more than a temporary blip—it highlights structural vulnerabilities, regulatory missteps, and the lasting impact of pandemic-era lending. The sharp decline in Starling Bank profits is raising concerns among investors, regulators, and industry watchers.
Regulatory fines hit Starling Bank profits
One of the core reasons behind the reduced Starling bank profits was a £29 million fine imposed by the Financial Conduct Authority (FCA). The regulator cited “shockingly lax” anti-money laundering controls, casting a shadow over the company’s internal compliance systems. This regulatory penalty not only reduced immediate profit figures but also damaged Starling’s reputation, making regulatory trust a top priority moving forward.
More on FCA’s regulatory standards can be found on the FCA’s official site.
Covid lending and its toll on Starling profits
Another factor dragging down Starling bank profits is the £28.2 million provision for the government-backed Bounce Back Loan Scheme (BBLS). Originally meant to support small businesses during lockdown, the scheme ended up exposing Starling to higher-than-expected credit risks. Over 54,000 accounts were opened for 49,000 high-risk clients between September 2021 and November 2022, many without adequate due diligence.
To understand more about BBLS, visit the UK Government’s guidance on Bounce Back Loans.
Key financial data
The bank’s pre-tax profits dropped to £223 million from £301 million—shedding roughly a quarter of the gains it had built up in previous years. Net interest income stayed flat at £590 million, benefiting from rising interest rates but ultimately neutralized by soaring operational costs. However, there were signs of resilience:
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Deposits rose to £12.1 billion
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Customer numbers grew by 400,000, reaching 4.6 million
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Engine, Starling’s tech platform, saw income rise to £8.7 million
These growth metrics suggest the potential to stabilize and even rebuild Starling profits.
Customer growth may buffer Starling profits
Despite the sharp decline, customer growth is proving to be a lifeline. The expanding user base indicates that trust in the brand hasn’t completely eroded. Starling now boasts a capital surplus of £400 million, giving it a strong buffer for operational and compliance improvements. The fintech is also aiming to double its revenue per employee over the next five years, which would meaningfully support the recovery of Starling bank profits.
For more on Starling’s long-term goals, visit the Starling Bank About Us page.
Technology and Engine
Starling’s Engine division is emerging as a potential savior. It’s a standalone tech platform designed to serve other banks and financial institutions. With fee income already hitting £8.7 million, the division could scale significantly if Starling manages to market it as a core software-as-a-service (SaaS) product. Industry analysts believe that Engine could help diversify revenue streams and ease the pressure on traditional banking services, improving Starling profits over time.
Investor outlook on Starling profits
Although current financials are underwhelming, investors are cautiously optimistic. The fintech has not ruled out acquisitions and even a public listing is still on the table. But first, Starling must rebuild credibility with regulators and the public. This includes ensuring that its updated anti-money laundering systems are robust, scalable, and foolproof.
A detailed evaluation of fintech IPO strategies can be found on TechCrunch.
Can Starling Bank profits bounce back?
The short-term outlook is challenging, but not hopeless. The combination of an expanding customer base, strong capital reserves, and a promising tech platform offers a glimmer of hope. If management can effectively leverage Engine and keep future loan losses minimal, Starling profits could recover within the next 18 to 24 months.
Explore how other fintechs are navigating profit challenges in our article on UK digital bank performance in 2025.
