The protracted attempt by Revolut to secure a banking licence from City regulators has received a boost after the fintech company’s external auditor said it had cleared up questions about the company’s revenues.
Revolut faced intense scrutiny in March when its much-delayed accounts for 2021 showed that BDO had raised concerns about almost £477 million of the company’s annual revenues that year.
The auditors had cautioned that the design of Revolut’s IT systems had meant they had been “unable to satisfy ourselves” about the “completeness and occurrence” of those revenues. As a result, BDO could only give a qualified opinion of the 2021 accounts. This created a hurdle to Revolut’s longstanding efforts to obtain a banking licence from the Bank of England’s Prudential Regulation Authority.
In Revolut’s 2022 accounts, which are being published today, BDO has once again given a qualified opinion but said this was “solely in respect of the comparability of the current year’s figures for revenue and related balances and the prior year figures”.
In a fillip to Revolut, BDO said it had “resolved” the issues that had dogged its previous audit and that it had “been able to obtain sufficient appropriate audit evidence in respect of the relevant balances” for 2022.
Revolut also said it had “remediated’ the “deficiencies” in its IT control environment that had been encountered by BDO and that after the delays to its last two sets of figures “we are now back in a position to return to a regular reporting schedule”.
Nik Storonsky, chief executive of Revolut, added that the business remained “committed to our ongoing UK banking licence application”.
The London-based Revolut is one of Britain’s biggest fintech companies, which was valued at $33 billion in its last funding round in 2021, and its latest figures shed fresh light on its fast growth.
Revenues rose by 45 per cent to £922.5 million last year, including a boost from higher interest rates, which sent its interest income up to £82.7 million from £1.7 million in 2021. It also expanded its workforce during 2022 to 5,913 employees from 2,795. Revolut now has more than 8,000 employees.
However, the corresponding increase in staff costs, as well as higher spending on advertising and marketing, helped to drive Revolut’s annual administrative expenses to £667.1 million, compared with £380.1 million in 2021. This pushed the company to a pre-tax loss of £25.4 million from a profit of £39.8 million a year earlier. Revolut also confirmed in the accounts that it had been a victim of a “card payment fraud” in the United States that resulted in a £17 million loss to the company, but not its customers.
The privately owned Revolut was set up in 2015 as a money transfer and foreign exchange business by Storonsky, 39, and Vlad Yatsenko, 40, its chief technology officer. It now has sprawling operations encompassing everything from cryptocurrency trading to insurance, with almost 38 million customers in 38 countries.
A banking licence from its home regulator would enable it to further expand its operations in the UK and would also ease its ability to grow elsewhere. It first applied to the PRA in January 2021 but a process that typically completes within a year has dragged on because of a series of obstacles. These included its complicated share class structure, which Revolut simplified this year.