Annual Report 2020


Everything else good

Good report TLDR


Thinking monzo would be bought is a big big stretch. I don’t see anyone buying a company that would lose them over £100 million a year, when they can just let monzo fail and get those customers and their deposits for free

Did anyone see a figure for how many use Monzo as their main account?

It might be there but that grey text is really hard to read

Big takeaway from all of this is that monzo fans go on about monzo being a bank and revolut not being a bank.

Monzo 2019-2020 revenue: £67.2 million
Revolut 2018-2019 revenue: £58.2 million

With an extra year in their pocket, monzo is up $9m on revolut. I suspect Revolut will have over £100 million in revenue for their 2019-2020 report.

We’ll see reductions in revenues and higher credit losses
Not exactly what you want to hear from the founder and president.

Is that Revolut’s uk figure?

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That caught my eyes as well :eyes:

The savings ISA was launched last April so I guess that’s what they were on about

Reading that - made me realise that I had let my monzo petty account upto a couple of thousands - got it back down to a nice round £100. Monzo feels like an also-ran at this point.

I think @MalaiseForever was thinking that it sounds like the Report hints that they (Monzo) have launched an ISA, whereas they’re just reselling someone else’s at the moment IIRC?

Plus it looks they’re doing them at all now?

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I think that’s dropped a lot, so they’re not including it.

Makes for some interesting reading.

I hope they release more things than just the travel plus account before feb.

Really think they need to push for IBAN support, shared pots and things along those lines to make more people consider using monzo as their main account as opposed to package accounts.

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Technically they have as Monzo are the ISA manager

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On the £20M losses:

£4m are a subjective additional overlay added into the Feb account to cover COVID.

Monzo don’t yet have a write off policy meaning that bad accounts booked in prior years remain on Balance sheet, and thus so do their (£3.1m) provisions.

Under IFRS9 you need to book at least one year of credit losses at the point a loan is written (so the remaining £13M) is for ‘at least’ the next years losses.

Plus under IFRS9 if the credit risk of account deteriorates materially since it was originated then you need to hold ‘lifetime’ credit losses.

Given the current situation it’s fair to estimate that a good proportion of accounts will have deteriorated materially - meaning Monzo will be holding losses for at least 5 years worth of credit losses.

So basically IFRS9 is really really conservative And forward looking so it’s worth bearing that in mind when reviewing the losses level.


The going concern statement is quite worrying. I wouldn’t be surprised if a legacy bank swooped in and acquired Monzo, especially as fundraising will be challenging. The two main income streams are also severely impacted by Covid (interest rate cut to 0.10%, and lower levels of spending).


Did anyone else spot this detail right at the end of the report?

Following a regulatory review, in June 2020, we began a review of our financial crime control framework which is still ongoing.

ETA: page 69 has a few more details, it would appear.

Reviewing our systems and controls to make sure that they are fit for purpose and comply with UK laws;

and on page 75:

Regulatory reviews will also lead to stricter financial crime requirements.

I guess even though we haven’t seen it before, the persistent complaints have had some effect.

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Maybe a case of prepare for the worst and hope for the best, so when things carry on just about OK, people are more forgiving

They were very much expected and actually came in below what was estimated in Monzo’s FY20 financial plan (other than the COVID adjustment). See my post below on IFRS9 which explains a bit more about why they look high.

Yes, that was what I was referring to, I also thought it seemed like a blunt statement. If I understand correctly, it’s the auditor who decides whether a going concern disclosure has to be added - specifically if they think there’s doubt over company’s ability to continue as a going concern for a reasonable time.


Is it really a surprise that disclosure is included?

Their expenses last year were £150m and revenue was entirely driven from consumer spending, loans and interest from our deposits held at the Bank of England. Looking forward, consumer spending will drop, some loans will default given the impact of COVID and interest rates are practically zero for the next 2-3 years. Is there a risk that Monzo cannot raise more equity funding to increase their runway? Of course. Its not probable, but its possible.

Every loss-making FinTech will have the same disclosure in their financials this year, its just that Monzo are one of the few FinTechs volunteering an Annual Report.

I suspect every single retail bank in the UK will post losses this year. That’s what happens in a recession, surprise surprise.


That sounds to me like even more complaints