Atom bank, the UK’s first app-based bank, delivered its first full year of profit both before and after tax, in its 10 years of operations

Atom bank has hit a milestone of full profitability, both before and after tax, with operating profit rising to £27m, up from £4m last year. The bank was founded back in April of 2014.

Atom bank, the UK’s first app-based bank, has announced its strongest ever financial results, driven by a significant increase in lending while keeping costs exceptionally low. Operating profit grew to £27m, a 600% increase on last year, with costs up just 4%, „demonstrating the success of its efficient, sustainable and scalable business model” – the bank said.

Atom delivered its first year of operating profit in FY23, and has continued to build on this. Alongside the significant growth in operating profit, the Bank has now delivered its first full year of profit both before and after tax.

Atom raised £100m from existing investors in November last year, and the additional capital has been used to accelerate balance sheet growth and to further scale the business. „This raise, against a very challenging market backdrop, was a hugely significant vote of confidence in Atom’s business model.” – according to the press release.

Despite this growth, administrative and general costs have increased by just 4%. This growth has not come at the expense of customers either, and Atom bank has maintained an outstanding customer service reputation, with a 5* ratings across Trustpilot, iOS and Android, whilst delivering a customer Net Promoter Score (NPS) of 88+, the highest in Atom’s history.

With a disparity in capital requirements between dominant incumbents and challenger banks still impeding growth and competition, the digital lender remains focused on delivering its IRB programme as Atom believes it to be the best route to address the competition imbalance that exists today in UK banking.

Lending drives growth

Strong loan book and revenue growth saw a 31% increase in Atom’s net interest income, to £100m, while net interest margin remained strong at 2.8% (FY23: 2.8%). The size of Atom’s loan book increased significantly by 39% to £4.1bn. A key element was the growth in residential mortgage balances to £3.2bn, an increase of 55%. The digital lender delivered residential mortgage completions of almost £1.6bn – a 20% increase, in a market that contracted by 25%. Despite the growth in mortgages, Atom maintains very close control over credit quality, ending the year with just 0.3% of residential loans in arrears or subject to forbearance measures. This figure is 0.7% across the whole portfolio, including business lending.

This growth was achieved while maintaining market leading levels of service, and a median application to offer time of just four days (industry average 11 days) across the residential mortgage range up to 95% LTV. Atom has also focused on supporting customers with less than perfect credit, who have struggled to secure a mortgage with high street lenders in the current climate, through its tailored Near Prime mortgage offering.

The bank has also seen significant growth in commercial mortgages, ending the year with balances of more than £600m, an increase of 19%. This includes completions of over £200m, and a retention rate of maturing loans of 43% (FY23: 5%). During the year, Atom further automated commercial mortgage loan origination, making more than 100 transformative changes to its broker portal and underwriting process. Over the year, this reduced the time from loan application to securing an Agreement in Principle by 94%, down to just one working day by the end of March 23.

Mark Mullen – Chief Executive Officer at Atom, said:

“This has been our best year yet at Atom bank. We have achieved profitability across all measures, grown our loan book significantly, maintained robust credit quality, avoided fraud losses altogether, kept our costs tightly controlled and enhanced our already industry leading customer experience metrics.

UK banking remains dominated by players with low growth, high costs and indifferent customer service. We remain entirely focused on serving the needs of borrowers and savers, without the soaring costs and operational complexity of transactional banking products like current accounts. Ultimately, this is the only way to disrupt the status quo.”

Atom Bank was founded back in April of 2014. „Along the way, Atom has said hello — and sometimes goodbye — to more than 1,000 people. Right now, our team is 530 people. We are profitable. We’re growing.” – said Mark Mullen.

In the ten years since Atom has arrived on the fintech scene, the digital bank has helped 300,000 people save for a rainy day, lent over £5 billion to 45,000 mortgage customers and sssisted over 1,500 businesses with more than £1 billion of financing.