N26: Business figures for 2021 at a glance

The smartphone bank can increase sales, but also has to contend with rising losses. Costs are piling up, especially in administration. The full figures in the analysis.

N26 has presented its figures for the year 2021. These are the most important key figures for you up front:

• Revenue at 184.2 million euros and thus 50 percent above the previous year
• Loss at 172.4 million euros and thus 14.4 percent above the previous year
• Costs at 269.8 million euros, up 30.8 percent on the previous year

The background:

How badly the year 2021 went for the smartphone bank N26 away from figures could only be guessed at when it first popped in June and then again in November. Until then, there had been repeated reports of possible money laundering problems, and then the financial supervisory authority Bafin cracked down and fined the bank 4.2 million euros, only to go one step further a few months later. There was directly a "growth restriction" to "re-establish a proper business organization." Sounds severe and had serious consequences: In plain language, this meant a restriction on new customer business at the bank otherwise known for its growth and, on top of that, an overseer from Bafin in the house.

N26: Revenue and loss increase

On paper, there is initially little to see of the growth restrictions. On Tuesday, the smartphone bank published its business figures for 2021 and the founders Valentin Stalf and CFO Jan Kemper were allowed to present some success figures at the associated press conference, which showed a good growth of the fintech. However, N26 had to post a loss of 172.4 million euros on the bottom line. That is 14.4 percent more than a year ago. At that time, the bank made a loss of just over 150 million euros. High costs are to blame.

N26 can increase sales in 2021

On the revenue side, in fact, the bank was able to score in 2021. Compared to the previous year, it was able to increase its revenue by 50 percent, bringing it to a total of 184.2 million euros. At the same time, N26 managed to acquire around one million new customers and, according to its own information, can now count eight million people among its customers. However, fewer than four million customers are "relevant to sales" for the Berlin-based startup, i.e. the startup earns money from them. This comes in particular from fees for accounts and a share in the revenues from card payments. Banks or fintechs receive these when a customer pays with his Visa or Mastercard in a store, for example.

N26 can increase transaction volume

The fact that only half of the customers are "relevant to sales" suggests that the other more than four million customers probably only have a free checking account in which they have money parked but do not actually use it. On the other hand, the volume of transactions increased by a significant 59 percent to now 80 billion euros. This in turn shows that people who use an N26 account are also increasingly using it as their main account and thus as a replacement for their account at the savings bank, for example. Customer deposits stood at 6.1 billion euros at the end of 2021, more than 50 percent higher than in 2020.

N26 has to contend with high costs

Despite the strong growth figures, 2021 is unlikely to be one of the best years for the fintech in the long term. A botched market entry in the U.S., which the management team later had to call off, and several other items cost the startup a lot of money. For example, "administrative costs" rose by more than 40 percent and swallowed up more than 160 million euros by the end of the year. This includes expenses for topics such as "compliance," which could also be due to significantly increased costs for money laundering prevention and fraud prevention.

According to Stalf, the figures are encouraging, as they show that N26 has established itself in the market. "In 2021, we consolidated our position as a leader in the European digital banking market. We have continued to invest in our product, in our team and in the scalability of our platform," the co-founder said.