N26 Breaks Even After BaFin Cap Removal, Posts Q3 Profit

N26, the digital bank that provides current accounts and financial services through a mobile app, has recorded its first quarterly profit following the removal of growth restrictions by German financial regulator BaFin in June 2024. 

The Berlin-based fintech reported a net operating income of €2.8m for the third quarter of 2024, marking its first profitable quarter since launching in 2013.

Monthly customer sign-ups have more than doubled compared to fiscal 2023, with over 200,000 new customers joining monthly. 

The company expects to reach 4.8 million revenue-relevant customers by the end of 2024, up from 4.2 million in 2023, with revenue forecast to reach €440m, representing 40% growth from €313.5m in 2023.

Product Innovation Drives Revenue

The bank has expanded its product range in 2024 to include equity trading through N26 Stocks, cryptocurrency trading via N26 Crypto (a service allowing users to buy and sell digital assets), and N26 Joint Accounts for shared finances. 

These additions have contributed to a projected 23% increase in annual transaction volume to €140bn in 2024.

Customer deposits have exceeded €10 billion for the first time in Q3 2024. As a licensed bank with a full European banking licence, N26 uses these deposits for treasury and retail lending operations. Interest revenue is expected to contribute 50% of total revenue in 2024, up from 40% in 2023.

Path to Profitability

Despite the quarterly profit, N26 projects a full-year net operating loss of around €20m for 2024, due to a one-off balance sheet optimisation in Q4. This represents a significant improvement from the €78.3m net operating loss in 2023 and €169.3m loss in 2022.

Word-of-mouth referrals continue to drive growth, accounting for 73% of new customer acquisition in 2024, helping maintain low customer acquisition costs. Each revenue-relevant customer is projected to transact an average of €29,000 through N26 in 2024.

The company has focused on strengthening its compliance and financial crime prevention infrastructure, following significant investments in 2022. 

This infrastructure development, combined with the removal of regulatory restrictions, has enabled N26 to resume its growth trajectory while maintaining operational efficiency.

N26 plans to expand its investment offerings and launch digital banking services for businesses in 2025, with a waitlist already open for potential business customers. The move into business banking represents a strategic expansion beyond its current retail banking focus.

“We are excited to be able to satisfy the significant demand for our digital banking products again in full,” says Valentin Stalf, Co-Founder and CEO of N26. “Over the past quarter, we have consciously accelerated our growth engine, delivering profitability for the first time in the bank's history, and record levels of customer activity.”

Despite the quarterly profit, N26 projects a full-year net operating loss of around €20m for 2024, due to a one-off balance sheet optimisation in Q4. This represents a significant improvement from the €78.3m net operating loss in 2023 and €169.3m loss in 2022.

Word-of-mouth referrals continue to drive growth, accounting for 73% of new customer acquisition in 2024, helping maintain low customer acquisition costs. Each revenue-relevant customer is projected to transact an average of €29,000 through N26 in 2024.

The company has focused on strengthening its compliance and financial crime prevention infrastructure, following significant investments in 2022. 

This infrastructure development, combined with the removal of regulatory restrictions, has enabled N26 to resume its growth trajectory while maintaining operational efficiency.

N26 plans to expand its investment offerings and launch digital banking services for businesses in 2025, with a waitlist already open for potential business customers. The move into business banking represents a strategic expansion beyond its current retail banking focus.

“We are excited to be able to satisfy the significant demand for our digital banking products again in full,” says Valentin Stalf, Co-Founder and CEO of N26. “Over the past quarter, we have consciously accelerated our growth engine, delivering profitability for the first time in the bank's history, and record levels of customer activity.”

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