Zopa Bank reports first full year profit 

We launched Zopa Bank in 2020 to fight complexity and unfairness in financial services. We’re passionate about fundamentally changing the relationship between people and their money for the better.  

Our ambition is that every Zopa Bank product provides not only good value, but also an overall experience that is welcoming, intuitive and reassuring. To make this happen, Zopa Bank leverages proprietary technologies, innovative product development and a customer-first mindset to create better financial solutions.  

We’re already one of the UK’s leading digital banks, with a market-leading net promoter score from over a million customers. This stands us in good stead to pursue our aim of being Britain’s best bank, one that delivers both for its customers and its shareholders. 

Delivering for our customers 

Our customers have continued feeling the effects of the cost-of-living crisis, with inflation and interest rates remaining high for most of 2023. Many of our customers have seen increases in rent or mortgage payments. 

It’s therefore no surprise that customers are paying more attention to their finances than ever before. Many want a bank that can be relied on to lend responsibly, with fairly priced credit, and to provide strong returns on their savings, supporting their financial journey. 

In 2023, we’ve made further progress on solving the problems our customers are facing: 

  • In lending, we’ve lent to more people while reducing the rate of customers falling behind on payments. Loans on balance sheet grew to £2.7bn in 2023, representing year-on-year growth of 27%. Since 2015, we’ve been a pioneer in using artificial intelligence to make lending decisions, and last year, we launched our next generation credit models that have delivered 15% lower risk and allowed us to expand our lending growth by 14%. 

  • In savings 81,500 more customers chose to entrust us with their money, helping us reach £3.4bn in total deposits across our multi-award-winning savings products. In 2023, we’ve continued to offer competitive rates that are generally significantly higher than the four biggest UK banks, where most savings reside. We’ve also launched Smart ISA, allowing customers to benefit from the associated tax-free allowance, and diversified our channels through partnerships.  

  • We’ve also made big investments in our Zopa app to serve more customer needs.  Customers tell us that they’re ‘over-apped’ and ‘over-banked’, and we want to end this fragmentation. So, in Q4 2023, we launched new features in our mobile app to simplify their financial lives, leveraging open banking to the fullest. Our customers can now see, manage and move money across all their different accounts from one place: the Zopa app. 

Delivering for our shareholders  

Our focus on the customer and building great products is reflected in our financial results and feeds our growth.  

In 2023, we achieved £15.8m in profit before tax, while growing total operating income by 48% year-on-year, reaching £222m. It’s important to note this result isn’t based on riding the tailwinds of the higher interest rate environment. Analysis indicates that our business profitability would likely improve marginally under a falling rate environment due to the improved disposable income for borrowers.   

Our strong analytical capabilities enable us to offer competitive borrowing and savings rates while we expand our margin and keep our cost of risk stable. Meanwhile, our technology allows us to offer straightforward experiences at speed and to operate efficiently, further driving our cost-to-income ratio down to 38.7%.  

Our growth last year has only been possible thanks to the continued support of our shareholders. In 2023, the Group completed two capital raises, with £75m common equity tier 1 capital in January, and £75m of tier 2 capital in September. 

Delivering for Zopians and our society  

Our people represent our strongest competitive advantage. In 2023, we were Newsweek’s second most loved workplace in the UK and won the Employee Experience Award from Personnel Today. This reflects the investments we’ve been making in our people, including a more comprehensive benefits offering and the continuation of our cost-of-living support for eligible employees.   

We launched the 2025 Fintech Pledge with ClearScore to drive 25 million positive financial actions for our customers by 2025. By the end of 2023 we had already attracted 50 members and achieved 10 million actions. 

Reaching full year profitability 

Building on our successful strategy, in 2023 we achieved full-year profitability for the first time.  

Launched in June 2020, the milestone makes Zopa one of the fastest digital banks in the UK to turn an annual profit despite the challenging economic environment dominated by high inflation and macro-economic uncertainty.  

Today’s milestone is a validation of our strategy and financial trajectory that lays the foundations for healthy, sustainable growth in 2024 and beyond.  

Zopa Bank’s profitability in numbers 

  • Zopa Bank achieved a pre-tax profit of £15.8 million for the financial year ending 31 December 2023, up from a pre-tax loss of £26 million for the year ending 31 December 2022.  

  • Our total operating income for the same period to 31 December 2023 was £222 million, up 47.8% year-on-year.   

  • Our customer base grew to over 1 million in the period across its newly expanded product offering.  

  • Our deposit base increased 14.9% to £3.4 billion. 

  • Loans on balance sheet increased 27.3% to £2.7 billion.   

  • Alongside our impressive growth, we maintained our industry leading net promoter score (NPS) of 72 aided by our proprietary technology which enabled us to offer great value, straightforward experiences at speed.  

  • Our technology has also allowed us to operate efficiently as we have scaled, further driving our cost-to income ratio down to 38.7%.    

Looking ahead  

Since we launched as a fully operational bank three years ago, we’ve come a long way in our mission to become Britain’s best bank. But our journey is only just beginning. Across all our products, the opportunity is huge.  

In 2024, we’ll focus on adding more features and capabilities to our existing products and continue to build the Zopa account that offers ease and great value, all in one place. We’ll also remain focused on efficiency through the launch of new artificial intelligence tools to fuel our productivity. 

I would like to thank our Zopians for their incredible work this year and our shareholders for their continued support. 

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