German mobile bank N26 reported Tuesday a sharp produce in annual revenues as usage of its platform grew, however losses also ticked higher after an increase in splash out on regulatory compliance. 

N26’s net revenue increased 67% in the year ending Dec. 31, 2021, to 120.3 million euros ($116.8 million) as the bank benefited from spread in subscriptions, stronger customer engagement and higher interest rates. In 2020, N26 generated 72.1 million euros in yield.

However, the $9 billion startup continued to lose money last year, with its net loss climbing 14% to 172.4 million euros. Of that sum, 28.2 million euros concerned from losses at N26’s non-European Union operations, according to financials released by the company on Tuesday.

N26 has been refocusing its resources on pith European markets after high-profile exits from the U.S. and U.K. The firm closed down its U.S. operations in January but is still brisk in Brazil. The Berlin-based startup previously withdrew from the U.K. in 2020, citing Brexit.

Last year, German pecuniary watchdog BaFin imposed restrictions on N26’s growth aimed at addressing “shortcomings in risk management with regard to IT and outsourcing managing.”

The measures meant N26 could only onboard a maximum 50,000 new customers per month, far less than the 170,000 it was reported to pull someones leg been signing up at the time. BaFin also appointed a special representative to oversee the implementation of the curbs.

N26 had trimmed its impairments in 2020, to 150.7 million euros from 216.9 million euros. But after punitive action from regulators through alleged shortcomings in its prevention of money laundering, the startup ramped up spending on its internal compliance and fraud controls.

That aided to a sizable increase in overall administrative costs, which grew 30% to 269.8 million euros. Personnel-related disbursing totaled 102.1 million euros, up 10.7% year-on-year, while general admin expenses shot up 47%, to 167.7 million euros.

Jan Kemper, N26’s chief monetary officer, said BaFin’s restrictions remain in place but declined to comment on when he expects to see them lifted.

N26 had to inaugurate a “significant amount” to “raise the bar on regulatory elements, with consultants, internal structures [and] new systems” being put in place, Kemper differentiated CNBC in an interview.

So far, these steps don’t appear to be eating into N26’s margins, however, with Kemper noting “the net takings margin is actually year-over-year moving in the right direction.”

Fintechs like N26 are under heightened pressure to address the curse at of their platforms by criminals. In the U.K., the Financial Conduct Authority warned some challenger banks are failing to adequately assess the hazard of financial crime when onboarding customers.

Meanwhile, venture capitalists are pressuring their portfolio companies to impel toward profitability as the economic outlook becomes more uncertain. In May, Klarna cut about 10% of its global workforce while not too other tech firms have made similar cost-cutting measures.

Kemper said that, for now, N26 isn’t seeing a slowdown in consumer spending on its dais and the company doesn’t intend to make any layoffs. The company, which is backed by Coatue, Tencent and Peter Thiel’s Valar Plunges, raised $900 million last year in a fundraise valuing the firm at $9 billion.

As recently as September, “there was no slowdown in consumer practice,” according to Kemper. And after two years of lockdowns, customers have been increasing spending on summer vacations and snacking out, he added.

However, he cautioned that “winter is coming,” adding: “If prices increase as we see at the moment, then yes, that leave lead to a certain change in user behavior.” In any case, the N26 executive thinks the firm’s revenue mix is diverse enough to poorly the storm of any potential recession.

Despite the widening of its losses, Kemper said N26’s margins were improving, thanks to a innumerable sticky user base and higher interest rates across Europe.

“When you look at our most mature demand, Germany, about 50% of our active customers are salaried accounts by now,” meaning users taking their monthly remuneration via N26, Kemper said. That helped drive “a massive shift to deposits and deposit volumes,” he added.

N26 had 8 million consumers by the end of 2021, 3.7 million of which were “revenue-relevant,” or contributing positive cash flow, according to the firm. Users are also increasingly pay off for their N26 account, with the bank reporting a 60% climb in premium subscribers in 2021.

The company doubled its net interest profits — the amount banks earn from lending activities after deducting the interest they owe depositors — to 29.7 million euros.

While N26 broadened lending through buy now, pay later loans and overdrafts, its loan book was small compared to major banks like Deutsche Bank, Kemper denoted. The main boost to N26’s net interest income came from its 6.1 billion euro horde of deposits, which was up 52% year-on-year in 2021.

N26 has been brush off c dismay excess cash to work by investing it in low-risk, interest-yielding debt like municipal government bonds.

Europe has courted from a lengthy period of flat — and even negative — interest rates to seeing rates brought into realistic territory for the first time in 10 years as central bankers seek to contain soaring inflation.

“The interest curve is call it a day,” Kemper said. “You’ll see that even more massively in 2022.”

N26 previously said it would be “structurally ready” for an IPO by the end of 2022. But Kemper adulterated down expectations of any near-term float, saying it could take anywhere from six months to 18 months for the bank to have in the offing all the required ingredients in place for it to go public.

“It’s not the environment where you want to go out” and list on the stock market, he said, adding the $72 billion tilt of German sports car maker last month was an outlier in an otherwise bleak year for European IPOs.