Kuda Group, the Nigerian neobank holding company, reported that 2023 revenue reached $32.1 million below its previous $40 million target projection. Even though the bank fell short of its revenue projection, the institution experienced a significant growth of 49% over 2022’s $21.5 million result. Kuda Group management managed to grow revenue even though the naira lost 40% of its value against the U.S. dollar in 2023.
During 2023 Kuda Bank saw its application users grow to 7.2 million people which marked a 47% increase compared to 4.9 million users in 2022.
The company recorded increased yearly losses which amounted to $40 million in 2023 as opposed to $18.5 million in 2022. Total losses increased through the year because Kuda hired 456 staff members while raising operational costs to $39.9 million.
Kuda similar to other neobanks follows the typical pattern of operations through initial losses during customer acquisition and new product development when operational income remains limited. In 2020 Monzo reported a financial loss of $143 million while Revolut announced a deficit of $135 million in its 2019 financial year.
In 2023 Kuda accumulated $5 million while its annual operating expenses amounted to approximately $55 million. The bank maintains sufficient liquid assets which far exceed customer deposits by more than $20 million. Some evidence provided by auditors revealed that the business faces no immediate threats to its survival but needs extra funding to sustain operations.
The leadership team started dialogues to secure a $20 million bridge funding at its 2021 valuation amount of $500 million but failed to complete the round in 2023. Since its establishment in 2019, Kuda has successfully mobilized more than $81 million through its funding activities. CEO Babs Ogundeyi informed stakeholders the company needs fresh capital to carry out its strategic plan while existing investor relations continue to seek more funding.
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The company disallowed requests for comment when interviewed about this matter.
At $500 million Kuda carries a revenue multiple exceeding 15 times what profitable neobanks Nubank and Monzo achieve with 8.4x and 5.4x respectively.
Kuda primarily makes money through:
- Customer loan interest accounted for $9 million in the 2023 financial year.
- Returns from treasury investments and fixed deposits ($8 million).
- Fees from banking services ($4.5 million).
- Commissions from partners ($8.3 million).
The bank maintains its financial lending system with cautious approaches. Kuda issued $12.6 million worth of overdrafts in 2023 while decreasing its credit loss allowance from $12.4 million to $10.4 million.
The financial institution maintains $96 million from its customers while its total assets reached $125 million though both numbers slightly improved from 2022 figures ($94 million in customer funds and $140 million in assets). The customer deposit balance at Guarantee Trust holds a lower value than the totals accumulated by tier-2 commercial banks Unity Bank ($1.35 billion) and Wema Bank ($1.9 billion).
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