I was wondering how exposed some of the high profile challengers are to defaults and write offs on overdrafts in light of the rona situation. I have had a look at Monzo and was a bit surprised when seeing some of the numbers in their last audited accounts as I was not aware that they have had so much capital out in overdrafts that long.
The clips that I found more relevant are below.
Looking at year end Feb 19 they had about 18m gross overdraft with a provision of 3m against it for accounts where the OD’s that have experienced significant increase in credit risk since initial recognition but no objective evidence of impairment.
I would presume that the outstanding OD’s have grown significant in the 12 months since Feb 19 and given the customer base who may have been impacted a lot by the Rona, there may be some quite large numbers in the Feb 20 accounts that might bring questions on the models and risk profiles.
I have no experience of how they handle debt management and collection/renewals of OD’s etc , but would be interested to know others thoughts especially if they have experience as a customer