Monzo PLC faces material uncertainties due to COVID-19, app bank warns
“For a growing business, it also makes the fundraising environment more challenging”
Mobile phone-based bank PLC has warned it faces an uncertain future due to disruption from coronavirus.
The app-based bank, beloved by Londoners and famous for its coral-coloured card, said today revenue had slowed and it has been badly affected by the pandemic.
Annual results for the year to end February 2020 published this week showed losses had risen to £114mln from £47mln.
Expenses over the year had also jumped to £151mln (£60mln) outweighing a rise in operating income to £35.6mln (£9mln).
Customers numbers jumped by 2.3mln in the past twelve months to 3.9mln with deposits of £1.39bn, but Monzo has been reliant on regular fundraising to fund this growth.
Organic customer growth had slowed due to word-of-mouth drops with reductions in revenues and higher credit losses likely, said president and founder Tom Blomfield.
Monzo’s accounts also included a substantial section on the business as a going concern due to COVID-19.
“For a growing business, it also makes the fundraising environment more challenging,” it said.
“These indicate that the ability of the group to continue as a going concern is subject to material uncertainties.
“COVID-19 is testing the sustainability and resilience of businesses in all industries, making going concern assessments more demanding and judgemental.
“We’re no different, and are exposed to the risk that revenues are significantly lower for a period of time,” it said.
“But, we have a highly liquid balance sheet, great products and customers, a focused team and supportive investors.”
In June, it raised £58mln, but at an implied valuation 40% below its previous funding round.
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