Starling Bank reported a pre-tax profit of £223 million for the financial year ended 31 March 2025, a 26% decline from £301 million in the prior year, as a regulatory fine and provisions related to government-guaranteed Covid-era loans offset continued revenue growth at the UK digital bank.

Revenue grew to £714 million from £682 million in FY2024. Two specific items drove the profit decline: a £29 million fine imposed by the Financial Conduct Authority over weak financial crime controls, including sanctions screening failures and repeated breaches of a requirement not to open accounts for high-risk customers, and a £28.2 million provision connected to the voluntary removal of government guarantees on a portion of the bank's Bounce Back Loan portfolio.

FCA FINE

The £29 million FCA fine arose from the regulator's assessment that Starling had weaknesses in its financial crime controls, including a sanctions screening system the FCA described as "shockingly lax" and repeated breaches of a requirement not to open accounts for high-risk customers.

Chief executive Raman Bhatia said the bank had "demonstrated our commitment to addressing legacy matters" over the year. The FCA fine was announced in October 2024, during the financial year.

BOUNCE BACK LOAN PROVISIONS

The £28.2 million provision related to Bounce Back Loans represents the second material charge on the FY2025 income statement. The Bounce Back Loan Scheme was a government programme introduced during the Covid-19 pandemic to provide rapid emergency finance to small businesses through accredited lenders, with loans carrying a 100% government guarantee against credit losses. Starling was an accredited lender under the scheme.

The bank's decision to voluntarily remove government guarantees on a portion of that portfolio — thereby accepting the underlying credit exposure and triggering the provision — reflects the bank's finding that those loans potentially did not comply with the scheme's guarantee requirements. The combination of the FCA fine and the loan provisions compressed reported profitability below the prior year.