Clearbank reports first annual profit as deposits double and customers boom

Clearbank has posted its first annual profit on the back of growth in fees, customers and deposits as its clients attracted business with competitive interest rates and sought security following high-profile bank failures last year.

The fintech clearing bank reported a pretax profit of £18.4m last year, swinging from a £7.1m loss in 2022. It previously hit monthly profitability in November 2022.

The UK’s first new purpose-built clearing bank in more than 250 years when it launched in 2017, more than 200 financial institutions use Clearbank’s technology to clear transactions and process payments.

It does not lend its customers’ money, meaning deposits are immune from the risks of a bank run. As a result, Clearbank reported a 20 per cent spike in deposit inflows immediately after the collapse of Silicon Valley Bank in the US last March.

Clearbank holds all of its cash at the Bank of England, which it said has made it attractive to customers looking for security and better returns from higher interest rates. Its deposits swelled 103 per cent last year to £6.1bn.

Clearbank’s total income grew 91 per cent year-on-year to £111.3m in 2023. It was boosted by the Bank of England hiking its base rate to a post-financial crisis high of 5.25 per cent, with Clearbank’s interest income growing 142 per cent to £81.9m.

End customers for its embedded banking products grew 93 per cent over the year, with 1.2m customers now holding FSCS-protected accounts through its partners, which include Chip, Raisin and Tide.

Clearbank’s income from fees rose to £31.4m, while its payments volumes increased 54 per cent to 108m amid a “significant expansion” of its client base.

“We’ve never written a piece of business from day one that wasn’t profitable, so unlike the neobanks just buying top-line growth or revenues, we’ve never bought market share at a loss,” chief executive Charles McManus told City A.M.

“We’ve started this year the same way we ended 2023 – very strong pipelines, very strong growth and some big names in the pipeline. So the formula is continuing to work very well.”

“Fundamentally we’re a very scalable business,” added chief financial officer Mark Fairless. “With a single banking platform that can handle volume and flow, we can take on more volume and more customers without additional costs – so a great operating leverage in the business.”

Clearbank is eyeing up international expansion, saying on Thursday that it expected a full EU launch later this year as it progresses its application for a European banking licence. It also has long-term plans to expand into the US and Asian markets.

McManus said Clearbank was not immediately planning an IPO and instead focusing on “building the core fundamentals of the business”.

“There is still a significant premium in relation to private versus public markets,” he added. “And the markets are still very penalising in relation to any form of surprise or miss.”