Another enhance for City as Digital financial institution Starling plots UK flotation

Digital bank Starling said it is eyeing a London stock market listing as it revealed profits have jumped 55 per cent.

Interim boss John Mountain said the lender’s board is holding regular talks with investors about an initial public offering (IPO).

In a boost for the City, he said London would be the ‘natural home’ for Starling if it decides to launch a float.

It would buck a recent trend that has seen companies choose to float in rival cities such as New York, or move their listings. 

And it comes after Raspberry Pi’s bumper debut on London’s stock market on Tuesday, which has fuelled hopes that the tide is starting to turn.

Delays: Plans for Starling to float in 2023 were put on hold when founder and ex-chief executive Anne Boden (pictured) stepped down

Starling has not set a date for an IPO after plans to float in 2023 were put on hold when founder and ex-chief executive Anne Boden stepped down.

Incoming chief Raman Bhatia is expected to provide an update on listing plans after he joins the bank later this month.

Mountain said yesterday that the prospect of an IPO is ‘still extensively discussed by the board and shareholders’.

‘A number of shareholders’ investment strategies are built around a private to public approach,’ he said, adding that the bank is ‘very committed’ to a public listing. 

He said the lender is ‘not considering’ markets other than London, which is a ‘natural home for Starling’. ‘We’ve always been very much a UK tech business,’ Mountain said.

Starling yesterday reported its third year of profitability as earnings surged in the year to March 31 on the back of higher interest rates.

Mountain said Starling is no longer a challenger bank but a ‘thriving, established’ lender as it reported pre-tax profits of £301.1million.

Higher UK interest rates, which are at a 16-year peak of 5.25 per cent, have boosted the bank’s net interest margin.

The figure, which measures the difference between what a bank pays out on savings and what it generates in loans, rose from 2.72 per cent to 4.34 per cent. 

Revenue was up 50.6 per cent to £682.2million and total deposits rose 4 per cent to £11billion in the year to March 31.

Loan impairment provisions were increased to £47million – up from £34.5million a year earlier as a result of a ‘very modest’ increase in arrears.

Starling said it was rolling out its banking software Engine globally and that side of the business could grow bigger than the retail banking arm.

Last year it signed Salt Bank in Romania and AMP Bank in Australia as its first two Engine customers.

Mountain said: ‘We’ve heavily invested in Engine because we’re confident it can one day become as big as the UK bank – or bigger.’