Yahoo News Atom Bank toasts record results as operating profits top £27m
Directors at digital challenger bank Atom have toasted the company’s strongest financial results, driven by an increase in lending.
The Durham bank, the UK’s first app-based lender, has posted its annual results for the year ended March 31 2024, showing a 600% increase in operating profit to £27m. Strong loan book and revenue growth saw a 31% increase in Atom’s net interest income to £99.5m, while net interest margin equalled the previous year’s 2.8%.
Net operating income rose from £65.8m to £88.3m and the previous year’s pre-tax loss of £10.1m was converted to profit of £6.7m. Staff numbers also rose in the year, from an average of 452 to 504, with the bank’s technology divisions seeing the sharpest rise in employee numbers, increasing from 119 to 155, as a result of investment in the technology and change functions, and within the business and customer operations function.
Read more: NEL Fund Managers expands with new Teesside office
Read more: North East deals of the week: key contracts, investments and acquisitions
Atom raised £100m from existing investors in November 2023, and directors said the additional capital has been used to accelerate balance sheet growth and to further scale the business against a challenging market background.
Its loan book increased by 39% to £4.1bn, buoyed by 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 which it said contracted by 25%.
Despite the growth in mortgages, Atom said it maintained close control over credit quality, ending the year with 0.3% of residential loans in arrears or subject to forbearance measures. It also said growth in commercial mortgages, ending the year with balances of more than £600m, an increase of 19%, including completions of over £200m, and a retention rate of maturing loans of 43%.
During the year, the firm launched new initiatives including funding two new Women in Technology scholarships at Durham University, and the Atom Futures Fund, which provides financial support to year 13 students growing up in care or from low-income backgrounds in County Durham who apply to a Russell Group University.
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.
“We begin the new year with tailwinds in the form of strong asset pipelines, excellent technology, a highly engaged team, supportive investors and an enviable reputation with customers. Beyond the confines of banking, we have exciting plans to further reduce our impact on the planet and to create even more opportunities in our local community.
“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.”
Lee Rochford, the new chairman who was appointed in May, added: “All companies must cross the break-even threshold and grow to become both profitable and self-sustaining businesses. It’s the only way that they can fully realise their potential and progress on to deliver enduring shareholder value.
“Atom is now very well advanced on that journey. But it’s far from over. We must continue to grow our lending, stay safely within our risk appetite, keep a tight control on our costs, invest in our capabilities and deliver for our customers. We have a strong track record in all of these areas.”
