Company criticized for late filing of accounts, earned profit of £26.3m in the year to December 2021
Revolut, the UK’s most valuable fintech company, alleges it is at the “finish line” of obtaining a UK banking license, as much-delayed accounts disclosed its first annual profit.
The company has been applauded as a high-growth success story by senior UK politicians including the chancellor, Jeremy Hunt, but it has also been criticized for the late filing of accounts, along with EU regulatory breaches and fines.
Claims of an aggressive work environment, which it has debunked, have also come under investigation as the company works towards a prized UK banking license.
The fintech, which has goals to be the “Amazon of banking” and which cannot yet hold deposits or offer loans to customers, earned a profit of £26.3m in the year to December 2021. The company’s revenues increased from £220m in 2020 to £636m the next year.
The company is on the brink of obtaining a banking license from City regulators, Mikko Salovaara, its chief financial officer, told the Guardian in an interview: “I think we’re at the very last stages. Really at the finish line.”
Salovaara said the UK license was a step towards attaining Revolut’s goal of becoming a “truly global bank”. It would enable the firm to offer “an increasing set of services to our customers, particularly credit,” he added.
Revolut did not set a deadline on when it was expected to get a UK banking license in the 2021 report, instead saying it was “in the advanced stages of its application” to British regulators.
It added that revenues exceeded £830m ($1bn) in the year to December 2022.
Nik Storonsky, its chief executive, said: “We have achieved our first full year of profit and shown that we can accelerate customer growth, at scale, and grow revenue across all of our product lines.”
“In 2021, we were granted a full banking license from the European Central Bank and welcomed millions of new customers.”
Revolut’s accounts for the year ending December 2021 were expected to be posted on the British business register, Companies House, in September 2022. An extension up to December was then also not met by the fintech.
The delay is seen to have occurred after BDO, which has been Revolut’s auditor since 2018, was criticized by the accountancy regulator for an “unacceptable” quality of a series of company audits, which – according to the Financial Times – included Revolut.
The FT report alleged Revolut was the unmentioned company behind accounts that the Financial Reporting Council said suffered from an “inadequate” approach to the way revenue was recognized.
This process appears to be documented in Revolut’s 2021 annual report. It sets out that the FRC’s audit quality review team reviewed BDO’s assessment of Revolut’s December 2020 financial statements and that “matters” were aired. An attempt to tackle these issues was “incorporated into the 2021 audit plan” and there were “changes made to the audit strategy and approach”.
Salovaara said the lengthy delays in announcing crucial financial information were due to having IT systems for accounting that were not fit for the firm’s larger scale in 2021.
“It [Revolut’s growth] outgrew the initial implementation of IT systems around and specifically for accounting. We recognized that and we remediated it.”
“It’s a one-off. We don’t expect further delays on an ongoing basis in our accounts.”
As a result, Revolut’s senior managers who are in charge of its financial reporting concluded: “the [2021] audit was effective and that none of the matters raised brought into question the integrity of the prior year financial statements”.
Buy Bitcoin NowRevolut refused to tackle specific questions from the Guardian on the turnover of its compliance employees earlier this month. These staff make sure businesses adhere to regulations, including those on sanctions and anti-money laundering.
However, in the 2021 report released on Wednesday, it said: “Last year we reported a significant expansion and upskilling of our risk and compliance function in terms of people, processes, tools, and infrastructure, which was commensurate with Revolut’s customer and commercial development.”
It added that it had boosted its headcount in this area from “147 to 206”.
