According to its latest results, the growth in mortgage lending was “achieved organically” via Fleet originations and through the acquisition of two mortgage books.
It added that mortgages represented around 71 per cent of its lending, which is an increase from 36.7 per cent in the year prior.
The company said that during the year, it acquired two additional mortgage portfolios with a combined balance of £984m on acquisition in 2022. The report noted that there was a £503m portfolio of residential mortgage loans and a £482m portfolio of buy-to-let loans.
The firm said its mortgage yields grew by 162 basis points to 4.08 per cent, compared to 2.46 per cent in the prior year. It attributed this to its “hedging strategy that has benefitted significantly from increased interest rates”.
It added that it grew its specialist buy-to-let lending through Fleet Mortgages, with the firm reporting around £1.5bn in lending as of 31 March 2023. Starling acquired the company in 2021 for around £50m.
The bank’s profit before tax for the year to 31 March came to around £195m, a sixfold increase on the year prior which was its first full-year of profitability.
The company’s impairment provision for mortgage lending came to around £8m, which is up from around £3m in the year prior.
The bank said that in the future, it “plans to draw on its unbeatable user experience” to offer residential mortgages in the UK, enhance its retail product offering and generate a “reliable source of high quality assets”.
It continued: “Being so well capitalised, we’re still on the lookout for good M&A opportunities. But if we can’t find a company with the right fit, we’ll wait. We do not seek growth at any cost.”
Anne Boden, founder and chief executive of Starling Bank is stepping down from her role but will remain on the board of directors.
John Mountain will take over as interim chief executive to lead the “next phase of growth”. He joined the firm in 2015 and is currently chief operating officer.
Boden said when she founded the bank in 2014, she was “told no one ever starts a bank, nobody wins market share and you’ll never make a profit” and today’s results proved them wrong.
She continued: “We’ve succeeded in disrupting an entire industry. I’m immensely proud of these results, which are a testament to how far we have come as a team and how fast we’ve moved as a business.
“I have spent nearly a decade here as both the founder and CEO, a dual role which is unique in UK banking. It’s been all-consuming and I’ve loved every minute of it.”
Boden said moving from being an “aspiring challenger to an established bank”, it was clear that the “roles and priorities of a CEO and a large shareholder ultimately differ and require distinct approaches”.
“As Starling continues to evolve and grow, separating my two roles is in the bank’s best interests. Handing over my responsibilities to John Mountain will enable me to focus on my position as a shareholder, championing Starling and ensuring we hold true to our values and vision of changing banking for the better.
“To the team, thank you. Together we have revolutionised the face of banking. To our 3.6 million customers – thank you for believing in and trusting us,” she added.
