Starling Bank Navigates Legacy Loan Woes as Profits Tumble
Here’s a twist in the usual fintech success story. Starling Bank, one of the UK’s brightest digital banks, just posted a hefty 26% fall in pre-tax profits for the year ending March 2025. That sharp drop landed profits at £223 million. The reason? Starling had to make a one-off provision of £28.2 million for old loans made during the heat of the pandemic—specifically, the government-supported “bounce back” loans. These loans, designed for speedy pandemic relief, have now come under scrutiny for not meeting certain guarantee requirements set by the British Business Bank.
Those bounce back loans were a lifeline to many small businesses when lockdowns hit. For Starling, they ended up representing a big chunk of its lending book. But catching up with the fine print has meant putting aside extra cash—a decision that’s eating into today’s profit numbers.
Solid Growth Behind the Headlines
Setbacks aside, it’s not all doom and gloom behind Starling’s numbers. Let’s talk about what’s actually working. Customer deposits hit a record £12.1 billion, up from £11 billion last year. That shows people still trust Starling as a home for their money—even after all the fast-moving changes in digital banking.
The number of accounts is up, too. With a 10% jump, Starling now serves 4.6 million customers. Revenue climbed as well, topping £714 million, compared to £682 million in the previous year. Zoom in on the real day-to-day business, and Starling’s underlying profit (which removes the one-off provisions) actually landed at £281 million.
What about the safety net? The bank’s capital surplus, which is basically the financial cushion regulators love to see, swelled by 40% to over £400 million. That gives Starling plenty of room to handle bumps in the road and keep lending.
CEO Raman Bhatia stayed upbeat while sharing these results. He pointed out that new customers keep coming, and he’s confident in how Starling’s services stack up—especially as the bank gears up to chase more retail, small business (SME), and even international clients. The so-called “Engine by Starling” tech is already helping Starling make friends beyond the UK.
If you’ve followed Starling over the past few years, you’ll know this isn’t a one-hit wonder story. It’s the fourth year in a row Starling has posted profits, which says a lot for a digital bank in a tough economy. While fixing mistakes from the past can sting, all signs point to a business that’s not just surviving, but finding ways to grow—and that’s worth paying attention to.
The real takeaway? Even after setting aside cash for unexpected hits from the COVID-era, Starling Bank is proving it can weather storms and keep moving forward in the competitive world of digital banking.
