Goldman-backed digital bank Starling reports its first annual profit as other fintechs stumble

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British digital bank Starling on Thursday reported its debut annual profit as revenues at the firm almost doubled.

The lender swung to a pre-tax profit of £32.1 million ($38.3 million) in its fiscal year ending March 2022, having lost £31.5 million a year earlier.

Revenues at the start-up reached £188 million, up nearly 93% from 2021.

It marks a rare show of strength in the fintech sector at a time when some firms in the space are dealing with reduced valuations and racking up hefty losses.

Klarna, the Swedish buy now, pay later firm, recently saw its valuation nosedive 85%, while publicly-listed rival Affirm has fallen 69% year-to-date.

«What we're seeing is that there is a correction in fintech stocks that are not profitable,» Starling CEO Anne Boden told reporters on a call Thursday.

«If you look at the listed markets and certain entities such as buy now pay later and such like, we see a huge correction going on there.»

Some fintechs are also pushing back their initial public offering plans as fears of a possible recession around the corner put the markets on edge.

In Starling's case, the company likely won't list its shares publicly until 2023 or 2024, Boden said.

Based in London, Starling is one of a multitude of digital-only banks that flooded the U.K. in the past decade. Start-ups in the space have gone on to attract millions of customers and lofty valuations, with Revolut now valued at $33 billion and Monzo worth $4.5 billion.

Starling itself was last privately valued at £2.5 billion in a funding round closed earlier this year. The firm's shareholder base includes the likes of Goldman Sachs, Fidelity and the Qatar Investment Authority.

The firm benefited from a sharp increase in mortgage lending