Kuda Bank Microfinance Bank, a London-based startup led by Nigerian entrepreneur Babs Ogundeyi, reported a loss of more than $14 million from its operations due to a significant increase in credit impairment costs and operating expenses during its 2021 fiscal year.
According to figures in the digital-only bank’s recently released financial statement, its losses at the end of its 2021 fiscal year jumped to N6.09 billion ($14.2 million), a 602-percent increase over the N868.06 million ($2.02 million) loss that it reported in 2020.
The performance, which follows the bank’s high non-performing loans, marks the bank’s second consecutive year of losses, bringing its total losses from operations since January 2020 to N6.96 billion ($16.2 million).
Despite experiencing a 4,315-percent increase in revenue from N7.6 million ($17,721) in 2020 to N3.2 billion ($7.46 million) as a result of the platform’s rapid uptake, the bank had to write off some of its credit, which had a significant impact on earnings.
The digital-only bank’s personnel costs increased by 500 percent, from N215.44 million ($502,400) in 2020 to N1.28 billion ($3 million), having a negative impact on earnings in addition to its over N2.2-billion ($5.1 million) impairment charges. This was due to Kuda reviewing the salaries of its employees and hiring new management staff at a high cost.
Overall, Kuda’s operating experiences rose 652 percent to N7.03 billion ($16.4 million) from N935.6 million ($2.2 million), dwarfing its total revenue of N3.2 billion ($7.5 million).
The startup’s $14.2-million loss has sparked a discussion about how well the more modern fintech firms are actually doing in the Nigerian financial services sector, as many of them continue to struggle to break even, while the more traditional banks continue to rake in millions of dollars in profit from their conservative operations.
In an effort to reduce its operating costs and put its earnings on the rise, Kuda announced earlier this year that it had laid off less than five percent of its 450 workforce, or about 23 workers.
Nevertheless, despite going two years without making a profit, Kuda recently hired Elena Lavezzi, a former Revolut executive in Europe, as its chief strategy officer, and Pavel Khristolubov, a former Tinkoff executive, as its global chief operating officer, to oversee efforts in this area and expand its more than 4 million customer base.
Co-founded in 2017 by Ogundeyi, who is the company’s CEO, startup announced the closing of a $55-million Series-B funding round at a $500-million valuation last year. This valuation was higher than that of some Nigerian banks, including Ecobank, Fidelity Bank, and Sterling Bank.
