Atom Bank Reaches Profitability

Atom Bank has announced its first operating profit and has stated that it expects to reach regular profit by 2022.

The milestone has been attributed primarily to the mortgage-lending arm of the business, with more than £3 billion in its mortgage portfolio at the end of June. However, an increase of deposits by 16 per cent also saw that amount reach £2.5 billion.

Growing Revenues For The Challenger

Atom Bank is based in Durham and has been in operation for eight years, with operating losses recorded each year so far. The quarter to June is the first time that the bank has turned an operating profit, and it has stated that it expects to be reporting a month-on-month operating profit later in 2021, to ensure that it is fully profitable in 2022.

Alongside the lucrative mortgage arm of the business and the personal banking, Atom also has a CBILS portfolio worth £759 million.

CBILS (Coronavirus Business Interruption Loan Scheme) is a government-backed scheme that allowed businesses to get financial support if they were negatively impacted by the COVID-19 pandemic.

Loans under £250,000 are covered by the government, with no personal guarantee from the lender, meaning that Atom has been able to offer loans with little to no risk.

Lending is now at 1.3 per cent interest as well, which is increased from 1.02 per cent in the previous quarter, which led to an increase in income from interest alone to £9.8 million, 30 per cent higher than the prior quarter. The operating costs for the quarter were pegged at £12.3 million.

It’s been an outstanding quarter for Atom. We have achieved several important milestones and continued to drive the growth of our savings and loans. Atom achieved a monthly operating profit for the first time in the company’s history and we’re determined to accelerate further and faster both this year and next as we continue our journey towards sustainable profitability and IPO. Mark Mullen, Atom Bank CEO

IPO On The Horizon

Atom Bank has declared that it remains on track of an IPO in 2022. This would see it raise further investment in the public market and allow it to grow further.

It is not the only challenger bank that is considering going public — Monzo and Starling have both been revealed as potential offerings for 2022 which could be the year that the challengers really take their businesses up a notch.

Challenger banks are becoming more popular as more people move into digital banking services. This has been exacerbated by the number of high street banks closing branches, removing some of the traditional appeal for remaining with them.

At the same time, banks such as Tesco and M&S are closing their current account offerings, forcing existing customers to look elsewhere.

Innovative app solutions and customer engagement have helped Atom Bank, Starling and Monzo grow a sizeable following already, although the big high street names are bringing in more technical talent to improve their own digital offerings.

2022, with the UK’s financial recovery and the potential of these major names going public, could be a milestone year for the UK banking scene.