Durham’s Atom Bank doubles savings deposits to £6.6bn

Atom bank CEO Mark Mullen

Durham-based Atom Bank, the UK’s first app-based bank, has announced its first annual operating profit, revenue growth of 62%, and a doubling of savings deposits to £6.6 billion.

Customer numbers have almost doubled to 224,000.

“Following a year of enormous progress, Atom delivered its first ever underlying operating profit of £4m, with momentum continuing into the next quarter …” said Atom Bank.

“Revenue growth of 62% hugely outstripped rise in operating costs, validating the strength of Atom’s customer-centric and cost-efficient model …

“Savings deposits reached £6.6bn, more than double the previous year, as Atom offered savers better value than incumbent banks …”

“A keen focus on the customer experience, and treating them fairly, saw customer numbers almost double to 224,000.”

Atom said customer net interest margin (NIM) remained “strong” at 2.84% (FY22: 2.93%), and net interest income (NII) increased by 62% to £76 million (FY22: £47m) “off the back of strong and profitable balance sheet growth.”

Total operating costs rose to £59 million (FY22: £51m), as the bank continued to invest in its people and capabilities.

Atom said it has now achieved three consecutive quarters of double digit return on tangible equity (ROTE) to the end of Q1 FY24.

“Atom passed on the majority of the base rate rises to its savings customers, unlike big banks who have continually dragged their heels,” said Atom, which employs 500 people.

“Fixed Rate Saver products ranked top-5 by Moneyfacts for 47 weeks in FY23, while the Instant Access Saver was top-5 for 25 weeks. As a result, total savings deposit balances doubled to £6.6bn (FY22: £3.2bn), while loans under management slightly increased to £3.4bn (FY22: £3.3bn).

“Atom is also conscious of the pressure rising interest rates are having on borrowers, and is proactively identifying customers who may be struggling with repayments to offer them assistance in the form of personal ‘income and outgoings’ reviews and budgeting.

“Also, unlike the established banks, Atom chose to not pass on the June base rate increase to its Standard Variable Rate (SVR) mortgage customers, in order to better support them and reduce the financial strain they may be facing.

“Atom has been able to support savers and borrowers due to its cost-efficient, scalable operating model. This contrasts with the largest UK banks, who have used rate rises as an opportunity to squeeze further profits from customers who fund an expensive legacy model.”

Atom CEO Mark Mullen said: “It has been an important year for Atom. We’ve grown strongly, kept our costs tight and delivered our first annual operating profit.

“We’ve also passed on more than 70% of the Bank of England’s base rate increases to our savers but only 70% of them to our Standard Variable Rate mortgage borrowers. And we’ve done it while maintaining our 5-star Trustpilot and App Store ratings.

“Over the course of the year Atom has shown that banks can provide exceptional customer service and offer customers better value for money. We never allow ourselves to forget that ultimately, the customer pays for everything.

“We believe that the lowest cost wins. Lowest cost and highest quality wins every time. If that isn’t the new banking paradigm, then it ought to be.”