Atom bank has announced record financial results after operating profit jumped from £4 million to £27 million in FY23.
The app-based bank, headquartered in Durham, said the results were driven by a significant increase in lending while keeping costs exceptionally low. Administrative and general costs increased by just 4%.
After delivering its first year of operating profit in FY23, it has now hit the milestone of delivering 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.
The size of Atom’s loan book increased 39% to £4.1 billion. A key element was the growth in residential mortgage balances to £3.2bn, an increase of 55%, as Atom navigated a difficult market to help more people achieve their dream of buying their own home.
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.
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.
“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,” said CEO Mark Mullen.
“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.”