Monzo has reported losses of £113.8m in its full-year of trading, more than doubling against the £47.2m loss recorded the year prior.
According to the challenger bank, the decline reflects its increased investment in marketing, teams, products and systems, as well as increased impairment charges, despite total revenues rising from £19.7m to £67.2m in the period.
Net interest income was almost five times higher than the year before, soaring from £4.9m to £24.4m in the period.
The group also increased interest income from lending to £18.4m, up from £3.2m in its last full-year results. This was largely driven by more customers using overdrafts in the year.
Net fee and commission income was over four times higher at £29.4m, up from the £6.6m reported in 2019. It comes as customers spent a total of £10.9bn on their cards this year, compared with £3.6bn in 2019.
Nonetheless, the group has set aside £20.3m in provisions, against expected credit losses (ECL) of £3.9m reported in 2019.
The ECL increase “broadly reflects the higher amount customers have borrowed in the year and also due to the emerging credit risk associated with the Covid-19 pandemic”. The group booked an additional £4.1m of ECL in February to reflect the risk of the escalating crisis.
Meanwhile, personnel expenses increased to £77.5m from £25.7m, while other operating expenses increased to £70.4m from £33.4m in 2019.
President Tom Blomfield said: “The impact of the Covid-19 pandemic poses a significant risk to the UK and global economy, and this year will be a challenging time for many businesses, including Monzo.
“With this unexpected change in landscape, we’ve seen organic customer growth slow as word-of-mouth drops, and we’ll see reductions in revenues and higher credit losses.”
He added: “We’ve recently closed a new funding round bringing in a significant amount of new money, which will help to see us through the economic downturn and ensure Monzo can continue to grow.
“This year will be pivotal. We’re all working towards our mission of making money work for everyone, which is even more important in these difficult times.”