Dutch challenger bank, Bunq, which describes itself as the second largest neobank in the European Union region, has reported its first quarterly profit. The challenger bank generated a pre-tax profit of €2.3 million during the fourth quarter of 2022.

Bunq in a press statement on Tuesday reported that it has reached “structural profitability,” adding that the boost in profit will fuel its continued growth and expansion. The profitability came months after the company, which was founded in 2012, broke even for the first time in December 2021.

Furthermore, Bunq disclosed that its net fee income increased 37% between September and December 2022 as compared to the same period in 2021. In 2021, the challenger bank’s net fee income came in at €23.1 million.

In addition, the Dutch neobank’s user deposits shot up 64% to €1.8 billion at the end of 2022. The deposits at the end of 2021 stood at over €1.1 billion, having jumped from €813 million in the prior year.

Bunq Hits Quarterly Profit after 10 Years

Speaking on the new record, Ali Niknam, Bunq’s Founder and Chief Executive Officer, stated that the company’s “service-oriented” business model has proven profitable just 10 years after its founding. Niknam founded Bunq after securing the first European banking permit in over 35 years. He was Bunq’s sole investor until 2021. He personally financed the challenger bank with €98.7 million until two years ago.

In July 2021, the Dutch challenger bank secured €193 million from a Series A funding round led by the British private equity firm Pollen Street Capital. The company described the fund as the largest series A round ever secured by a European fintech . The deal was valued at about €1.6 billion at the time.

Fintech Funding Slashed by Almost Half in 2022

Bunq’s first quarterly profit follows a tumultuous 2022 that saw some fintech businesses exit the industry. In April 2022, the checkout startup Fast, which previously raised over $102 million, shut down its business, citing slow growth and high cash burn. Another US-based startup, Nirvana Money, packed up only 22 days after launching.

Moreover, other startups closed down their services in 2022, including the German carbon-accounting startup , Planetly, the UK challenger banking app, Dozens and Australia’s first online bank, Volt Bank.

Furthermore, global fintech funding suffered in 2022 as investment into fintech slumped by almost half (46%) to $75.2 billion. According to CB Insights’ 2022 State of Fintech Report, during the last quarter of the year, the industry generated $10.7 billion in funding, which is its lowest amount since 2018.