N26: The business figures for 2021 at a glance

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

N26 has presented its figures for 2021. These are the key figures for you first:

• Turnover of 184.2 million euros, up 50 percent on the previous year
• Loss of 172.4 million euros, 14.4 percent higher than the previous year
• Costs at 269.8 million euros, 30.8% above the previous year

The background:

Just how bad 2021 was for smartphone bank N26 outside of the figures could only be guessed at when things first went wrong in June and then again in November. Until then, there had been repeated reports of possible money laundering problems, then the financial regulator Bafin cracked down and fined the bank 4.2 million euros, only to go one step further a few months later. There was a direct "growth restriction" in order to "re-establish a proper business organization." Sounds heavy 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, a watchdog from Bafin in the house.

N26: turnover and loss increase

On paper, there is initially little evidence of the growth restrictions. On Tuesday, the smartphone bank published its business figures for 2021 and founders Valentin Stalf and CFO Jan Kemper were able to present some successful figures at the associated press conference, which showed good growth for the fintech. On the bottom line, however, N26 posted a loss of 172.4 million euros. This 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 turnover in 2021

On the revenue side, the bank was able to score points in 2021. Compared to the previous year, it was able to increase its turnover by 50 percent to a total of 184.2 million euros. At the same time, N26 managed to acquire around one million new customers and now claims to have eight million customers. However, less than four million customers are "revenue-relevant" for the start-up from Berlin, meaning that the start-up also earns money from them. This comes in particular from account fees and a share of the revenue from card payments. Banks or fintechs receive these when a customer pays with their Visa or Mastercard in a store, for example.

N26 can increase transaction volumes

The fact that only half of the customers are "revenue-relevant" indicates that the other more than four million customers probably only have a free current account in which they have parked money but do not actually use it. On the other hand, the transaction volume rose by a significant 59 percent to 80 billion euros. This in turn shows that people who use an N26 account are increasingly using it as their main account and therefore as a replacement for their account at a savings bank, for example. Customer deposits amounted to EUR 6.1 billion at the end of 2021, more than 50% 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 US, which the management team later had to call off, and several other items cost the start-up a lot of money. For example, "administrative costs" rose by more than 40 percent and swallowed up more than 160 million euros at the end of the year. This also includes expenses for issues 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 on the market. "In 2021, we have consolidated our position as a leading company in the European digital banking market. We have continued to invest in our product, in our team and in the scalability of our platform," said the co-founder.