Durham-based digital lender Atom bank announced it has it achieved its first monthly operating profit as it reported “strong progress” in its latest annual report for the year to March 31, 2021.
BBVA and Toscafund are major investors in the mobile-only bank.
Atom bank said it achieved its first monthly operating profit in June, 2021.
In business lending, Atom bank’s balances have grown from £240 million to £662 million and the bank said it is “on track to have provided £1bn in total lending to SMEs by September 2021.”
The bank said recently it has completed £3 billion of mortgage lending since it launched in 2016.
Atom bank said it continued to narrow its losses and generated a monthly net interest margin (NIM) of 114bps by March 2021, up from 10bps in March of 2020.
“NIM continues to increase, reaching 130bps in June 2021,” said the bank.
“This progress strengthens Atom’s confidence that it will be generating sustainable month-on-month operating profit later this year.
“Losses continued to shrink for the full year to 31st March 2021, to an underlying operating loss of £36m (2020: £46m) and statutory loss before other charges of £49m (2020: £57m).
“As seen in Atom’s Q1 trading update (to 30th June 2021), strong cost control and an improving credit outlook together with a one-off gain from its liquid asset portfolio allowed Atom to record a monthly operating profit in June, further adding to this positive momentum.
“The momentum since March 2020 has been underpinned by a number of initiatives, with Atom diversifying its savings range by introducing its Instant Access Saver, completing its largest mortgage securitisation transaction to date (£0.8bn), and placing a strong focus on business lending which saw balances grow from £240m to £662m.
“Atom was also accredited as a CBILS lender in 2020, ensuring that it continued its support for UK businesses when it was needed most.
“The bank is on track to have provided £1bn in total lending to SMEs by September 2021.
“Continuing the focus on delivering an excellent customer experience, the bank has successfully commissioned its new banking technology stack.
“Atom partnered with Thought Machine to deliver Vault, a cloud native and smart contract based banking core, which was used to launch Atom’s Instant Access Saver, now with over £1bn of customer savings balances.
“All savings accounts and balances were successfully migrated to the new platform, and Atom has made important improvements to its banking apps, enhancing both their speed and usability.”
Atom bank CEO Mark Mullen said: “We continue to believe that the established banking model is well past its sell-by date.
“Too often it frustrates customers, antagonises regulators, disappoints investors and disengages employees.
“Why accept adequate when excellence is available?
“Atom has momentum, in recent years we have invested significantly in the business and now we’re seeing the results.
“Our losses are shrinking and we achieved our first monthly operating profit in June of 202.
“We’re confident that we will deliver sustainable profitability in the weeks and months ahead as we continue our journey to IPO”.