Berlin start-up
N26 reports higher loss despite strong earnings growth
The German internet bank N26 was able to increase its turnover by more than 50 percent in 2021. photo
© Christophe Gateau/dpa
The smartphone bank N26 had trouble with the financial regulator Bafin last year and has had to live with growth restrictions ever since. Nevertheless, business was good.
The smartphone bank N26 was able to increase sales by more than 50 percent to 182.4 million last year. This was announced by N26 co-founder Valentin Stalf and CFO Jan Kemper at a press conference on Tuesday. However, due to the high marketing expenses, expenses for the failed market launch in the USA and other costs, the Berlin start-up closed its 2021 financial year with a loss of 172.4 million euros – 14.4 percent more than in the previous year.
Despite this, Stalf and Kemper were extremely satisfied with the course of business. “In 2021 we consolidated our leading position among European digital banks,” said Stalf. There are also signs of a strong increase in revenues for the current year, of the order of around 30 percent. “We are pursuing the goal of moving towards profitability in the coming years.”
N26’s revenue growth could have been even higher if N26 hadn’t received a condition from the financial regulator Bafin in October, which limited N26’s growth to 50,000 new customers per month. In addition, the Bafin imposed a fine of 4.25 million euros because N26 submitted suspected money laundering reports to the supervisory authority late. In addition, Bafin appointed a special representative to monitor the implementation of the measures.
The number of customers and sales increase
Despite the requirements of the Bafin, N26 was able to expand its customer base. The number of registered customers rose from 7 to 8 million. The start-up also generated sales with almost half of them (3.7 million). In 2020, N26 only had 3 million revenue-relevant customers. The main sources of revenue are premium account fees and revenue sharing when N26’s Mastercard debit card is used to make payments. If customers only park money on the free account variant and make conventional transfers, the bank does not make any sales.
The N26 managers were satisfied with the development of the transaction volume, which rose by 59 percent to 80 billion euros in 2021. This is also an indication that more and more customers are no longer just trying out an account with N26, but are using it as the main account on which the salary ends up. As a result, customer deposits rose by 52 percent to 6.1 billion euros.
N26 also wants to increase sales through new services, such as cryptocurrencies. The product is programmed. However, the general order of the European regulator is in place, according to which all crypto products are to be specifically checked again. Since there are no uniform rules in the EU, N26 has to respond to the requirements of the respective countries. We are working on that now.
In addition to Germany, the Berliner Neo-Bank is also in Belgium, Denmark, Estonia, Finland, France, Greece, Ireland, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, the Netherlands, Norway, Austria, Poland, Portugal, Sweden and Switzerland , Slovenia, Slovakia and Spain. Attempts to gain a foothold in Great Britain and the USA failed.