Starling’s profit slides as falling interest rates bite
Starling’s profit took a dip in the latest financial year as the lower interest rate environment took a chunk out of the digital bank’s bottom line.
The UK fintech notched a £217m pre-tax profit, down three per cent from the £223m secured in the prior year.
This came as revenue slipped 5.6 per cent to £887m, with the Bank of England’s declining base rate cited as the primary headwind. Rates dropped by an average 91 basis points over the year, which led to interest income falling £52.5m to £759.2m.
The dip was also amplified by controlled account closures, where the bank said some customer growth was deliberately constrained in the short term whilst it focused on cleaning up historical control gaps and economic crime enhancement.
Some of the revenue hit was cushioned by a 24.5 per cent surge in Starling’s software-as-a-service arm Engine, which picked up ‘Innovation of the Year’ at the CityAM awards. Engine brought in just shy of £11m to group revenue. A mammoth £20m investment from the group into Engine was also cited as a trigger for the profit slip.
Around 900,000 new accounts were opened with the group in the last year, an increase of 17 per cent, taking the group’s overall count to 6.2m.
This was driven by a more than 60 per cent increase from Engine, which grew by another 500,000 accounts managed through partnerships. New accounts opened directly with Starling Bank increased 6.5 per cent to 4.9m.
But transaction volumes received a bump to £217bn, up from £197bn in the previous year, which chief exectuive Raman Bhatia said came as “more customers used [Starling] as their primary bank”.
Customers deposit more with Starling
Total customer deposits increased 5.2 per cent to £12.7bn, with the average deposit rising eight per cent to £4,241.
Starling has sought to beef up its small business lending in the last year, notably through its takeover of Ember to use its tax and bookkeeping software.
The deal, which Starling did not disclose the price of, will make Ember’s HMRC-recognised software exclusive to the fintech. Ember serves the customers of banking giants including HSBC, Revolut, Barclays and Lloyds.
Total drawn small business lending by Starling dropped nearly 50 per cent to £222.3m in 2026, down from £441.4m in 2025.
But this came after the firm’s portfolio was heavily dominated by legacy UK government-backed COVID-19 support schemes, which are steadily winding down.