British challenger bank Monzo has been hit with a devastating £114m loss due to the ongoing impact of the COVID-19 crisis. Losses for the disruptive firm have doubled during the pandemic.
The bank’s losses increased from £47.2m to £113.8m – all while in the midst of a high profile hiring spree and US expansion.
Monzo announced that revenues had more than tripled to £67.2m from £19.7m prior to the lockdown in March.
The bank revealed that it had lent £143.9m in loans, compared to just £19.2m in 2019. As a result, credit losses are predicted to rise to £20.3m from £3.9m.
In preparation of this announcement, Monzo last month raised £58m from its investors at a 40% discount to its previous valuation.
A statement from Monzo read: “Our revenue streams have been significantly impacted by the COVID-19 pandemic and resulting macro-economic uncertainty. Regulatory reviews will also lead to stricter financial crime requirements. This may result in lower forecasted customer numbers and revenues, along with increased costs associated with correcting areas of concern. This increases the risk that the Group will not be able to execute its business plan, which could adversely impact its ability to generate a profit or raise sufficient capital to meet future regulatory capital requirements.”
Due to the devastation caused by coronavirus, Monzo have had to close its US office and announced 100 redundancies across England. Prior to the lockdown, Monzo’s main source of revenue was through its transaction fees generated when a customer pays with their bank card. However, due to the implications, the virus has had on the retail and leisure sectors, this has significantly decreased.
Monzo CEO TS Anil said: “Similar to many businesses, we’re seeing a significant impact from COVID-19 and the resulting economic downturn. While I’m confident these are short-term, we’ve taken decisive measures to reduce the financial impact.
“Over the coming months, we’ll launch powerful new products that help people manage their money better, as well as drive revenue, and cement our place as the UK’s most recommended and fastest-growing bank.”