Monzo Bank Limited Annual Report and Group Financial ...

1 28 February 2021 Registration number 09446231 Registered Office Broadwalk House 5 Appold Street London EC2A 2 AGMonzo Bank LimitedAnnual Report and Group Financial Statements03 Strategic report04 Who we are and why we re here05 Our history06 Monzo at a glance07 Our Board10 Our Executive team11 Chair s review13 Chief Executive s review16 Our statement on COVID-1919 Our business model and strategy21 A review of our performance30 Risk management in Monzo37 Governance at Monzo52 Non- Financial Reporting statement54 Our approach to people58 Our community and social matters61 Our approach to the environment65 Respect for human rights, anti-bribery and anti-corruption68 Group Directors report73 Statement of Directors responsibilities75 independent Auditor s report88 Statement of comprehensive income90 Statement of Financial position92 Statement of changes in equity94 Statement of cash flows96 Notes to the Financial statementsWhat s in this Report ?

2 Monzo Bank Limited Group Annual Report 202102 Strategic reportMonzo Bank Limited Group Annual Report 202103We re Monzo , a bank that lives on your phoneFor too long, managing your money has been harder than it needs to be. Traditional banking wasn t built for the way people use money in their everyday lives, and it hasn t evolved fast enough. By being relentlessly focused on customers, open about what we re doing and why, and focusing on solving real problems rather than just selling Financial products, we believe we can make banking s our mission to make money work for everyoneWe want to be the centre of your Financial life, taking away all the admin and worry over your finances. Spending, saving and managing cash even borrowing when you need to shouldn t be stressful or complicated, it should just work. And with the help of our amazing community of customers who suggest features, give feedback and help us test our ideas, we re building a genuinely different kind of than 5m people have opened a Monzo account to spend, save and manage their money.

3 But that s just the start: it s not about how many people have an account, it s about how we re changing their relationship with their finances. We don t believe it s possible to build a globally impactful company without carefully considering the impact we have on all the communities we serve. Too many people don t have access to vital banking services in the UK. So we re also working to improve Financial inclusion, support customers in vulnerable circumstances, and play our small part in creating a more just believe that these values of openness, empathy and inclusion will help us achieve our mission of making money work for we are and why we re hereMonzo Bank Limited Group Annual Report 202104 Our historyOur Financial Year (FY) runs from 1st of March to 28th/29th of announced Mondo to the world in a blog post. Mondo is a new challenger bank in the UK, focused on making your Financial life easier, rather than trying to catch you out with penalty fees and charges.

4 We re building a current account that lives on your smartphone and gives you control of your money. We started out with a prepaid account and around 5,000 Alpha cards. In the very early days, almost every Monzonaut (member of our team) played their part packing cards to post or hand deliver to new big one: we got our full UK banking opened the door to us offering customers a whole new range of services, and becoming a core part of their Financial crowdfund, this time aiming for in the end, 41,267 supporters pledged more than started rolling out our first full current accounts to early people opened Monzo launched our first TV ads and YouGov named us the UK s most recommended Current Account Switch Service (CASS) announced that for the first time, more people switched to Monzo than any other UK introduced Salary Sorter, Bills Pots, Get Paid Early, loans, overdrafts, energy switching and a savings launched a first test of business accounts to 2,500 small released the Mondo public Beta ran the fastest crowdfund in history, with supporters pledging 1m in just 96 changed our name!

5 Around 10,000 Mondo customers suggested new names, with the only criteria being it needed to start with M .. and we became upgraded from prepaid to full UK current of active account holders moved their accounts launched an industry-first gambling block that lets people self-exclude from making gambling payments through Monzo . To date, more than 330,000 people have used it, blocking around 600,000 gambling transactions every time again we raised 20m in record time and welcomed more than 36,000 customers as investor had record revenue despite the March 2021, 25% of our revenue came from products we launched during the extended pandemic lockdown people opened a Monzo account. We launched Monzo Plus and Monzo Premium, attracting over 134,000 Business grew from a small test to 77,000 the impact of COVID-19, we raised a total of 202m of new investment from new and existing our first eligible year, Ipsos MORI ranked us #1 in the UK for Overall Service Quality and Online and Mobile Banking Services in independent surveys carried out as part of a regulatory Bank Limited Group Annual Report 202105 Monzo at a glanceDespite lockdown, we ve continued to grow customers, up 23% from FY2020 (4m)92% of growth was from word of mouthOur service quality is best in class.

6 #1 current account provider in Great Britain for Overall Service Quality and for Online and Mobile Banking Services. (CMA 2020, 2021)170+ Net Promoter Score2nd Most Recommended Brand in the UK (YouGov, 2020)We ve had huge growth in operating income and kept our underlying losses in increase in underlying losses3 from in FY2020 to in FY202174% net operating income growth from in FY2020 to in FY2021 Engagement increased faster than customer growth. This means our customers are using Monzo for more and more of their Financial increase in deposits, from to increase in card spend, from to Pots opened every month in 2020We ve achieved record revenues, despite the COVID-19 pandemic. 105m+ record Annual Run Rate (ARR) by Dec 20202210k+ Monzo Plus, Monzo Premium and Monzo Business customers25% of revenue is from new products1 independent CMA survey carried out in Great Britain by Ipsos MORI between January 2020 and December 2020 and July 2019 - June 2020 Overall Service Quality and Online and Mobile Banking Services.

7 Results at The total revenue in December 2020 multiplied by 12 months. December was the last month before the national lockdown started in January 20213 See Our Financial review on page 25 Monzo Bank Limited Group Annual Report 202106 Gary Hoffman Chair of the Board of DirectorsGary joined Monzo on 1 February 2019. He started his career at Barclays where he stayed for 25 years and took on several senior roles before becoming the CEO of Northern Rock, steering them successfully through the 2008 Financial crisis. He then went on to become the CEO of NBNK Investments and later CEO for Hastings Insurance Group , which he led through an IPO, as well as serving as Non-Executive Chair of Visa Europe and Non-Executive Director of Visa has extensive experience in Financial services including retail banking, insurance and consumer lending, and led significant growth stories and turnarounds while innovating along the appointments: Gary is also the Chair of Coventry Building Society and Chair of the The Football Association Premier League Woollard independent Non-Executive DirectorKeith s also Chair of our Risk Committee and joined our Board on 23 May 2016 .

8 He s a risk and compliance specialist with more than 40 years experience in a number of senior positions across the Financial services sector, including M&S Bank (where he was a board member), Post Office Limited and the Financial Services Authority. His key areas of expertise include governance frameworks, supporting growth through risk management and retail appointments: BoardMonzo Bank Limited Group Annual Report 202107 Amy Kirk independent Non-Executive DirectorAmy s also Chair of our Remuneration Committee and joined our Board on 24 January 2017. She brings more than 25 years of UK and international retail banking and consumer lending experience. She s held executive positions in lending, risk and operations at Wonga Group Ltd, OneSavings Bank plc and Bank of America Europe Card Services. Before she moved to the UK, Amy was the Director of Credit for the largest credit card issuer in the United States, MBNA America.

9 She has deep experience in credit and fraud strategy, and portfolio risk appointments: Amy is also a Non-Executive Director of FCMB Bank (UK) Ltd and Griffin Financial Technology McBain independent Non-Executive DirectorFiona joined our Board on 1 January 2020. She has more than 35 years of regulated retail Financial services experience, in industry and as an auditor, both in the UK and US. Fiona brings wide-ranging strategic and operational experience at both board and senior executive management level. She was Chief Executive of Scottish Friendly Assurance Society Ltd operating across the UK and the Republic of Ireland for 11 appointments: Fiona is also the Chair of Scottish Mortgage Investment Trust plc and an independent Non-Executive Director of Dixons Carphone plc as well as Direct Line Insurance Group Riese independent Non-Executive DirectorPhillip joined our Board on 1 July 2019. He brings more than 20 years of high performance operating experience in key executive roles in consumer Financial services, including 18 years at American Express and chairing the Board of Zopa.

10 He then founded his own investment company Riese & Others where he applies his strategic, operating and data analytics expertise to invest in and advise fintech companies appointments: Phillip is also a non-executive director for several Riese & Others portfolio Dias independent Non-Executive DirectorValerie is our newest independent non-executive director (iNED) having joined the Board on 1 June 2021. She s worked in the Financial services sector for over 25 years in various leadership roles. She brings a wealth of finance, risk, governance and operational experience having worked as a senior executive at Visa Europe, first as their chief Financial officer and then as their chief risk officer. She also serves as an independent non-executive director and either as Chair of Audit, Chair of Risk or Chair of Remuneration committee for several organisations in the Financial services sector. She s also served as a trustee for non-profit appointments: Valerie is an independent non-executive director with Elavon Financial Services, Hastings Insurance Services Limited , and Aston Lark Group (Insurance Brokers).