Zopa Bank has doubled its profits as it heads into its second year running in the green.
Founded in 2005 initially as a peer-to-peer lender, London-based Zopa later pushed into banking services, gaining a full banking licence in 2020. It currently has 1.4m customers.
The digital bank posted £34.2m in pre-tax profits (excluding share-based payments), according to financial results released on Thursday, compared to the £16.8m the year before, as revenue grew from £233m to £303.4m. Deposits held at the neobank almost doubled year-on-year from £3.4bn to £5.5bn.
The financial results mean Zopa is the latest addition to the circle of Europe’s neobanks, which include Starling, SME-focused OakNorth and Dutch neobank Bunq, which have also enjoyed consecutive years in the green.
Diversifying income streams
The vast majority of Zopa’s revenue derives from its lending and savings products. But the neobank is also making a push into the competitive current account space, which it’s currently trialling in beta to 50k customers.
“In an ideal world, in three to four years, I would like to see more than a million customers using the current account product, leaving more than a billion of their money with us,” says Zopa’s CEO Jaidev Janardana.
To compete with rivals such as Revolut, Starling and Monzo, the Zopa current account offers features such as 2% cashback on up to £1.5k of direct debits and exclusive access to a 7.5% AER savings rate.
“I don’t think, given today’s interest rate environment, customers are getting great value from their current account providers,” he says.
Along with the current account product, Zopa is currently internally testing an AI financial assistant with the view to releasing the product in beta this year. This would provide recommendations for securing loans on favourable terms or suggest that a user should deposit leftover money in an interest-bearing savings account.
Janardana also says it would consider making an acquisition to break into new products and expand into new geographies.
IPOs and acquisitions
While Zopa has looked at potential acquisition targets to break into the SME lending space, nothing has quite taken the company’s fancy yet.
“It remains of interest,” he says. “Our view is that if we don’t find something that is of interest by the end of this year, it might be something we look to do more organically next year.”
Zopa previously acquired embedded finance fintech DivideBuy in 2023.
The company’s IPO ambitions are similarly on hold as well. Last year, Janardana told Sifted that while it has no plans to go public in the near future, the UK would be the natural destination for a float.
But the Zopa CEO now says the company could stay private “forever” if the circumstances required it, saying most of its investors are in no rush to exit. For those that do need liquidity, Janardana says it’s been able to facilitate small-scale secondary transactions for early-stage investors.
“I don’t think we have a clock ticking when it comes to IPOs,” he says.
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