Loan-to-deposit ratio (LDR) is a critical financial indicator that reflects how much of a bank’s deposits are used for lending. It helps measure both liquidity risk and profitability. A higher LDR suggests more lending and potentially higher earnings, while a lower LDR may imply conservative lending or underutilized deposits.
As neobanks continue disrupting the European banking sector, understanding their LDRs provides insight into how sustainable and scalable their models truly are.
What Is Loan-to-Deposit Ratio?
The loan-to-deposit ratio (LDR) is calculated as:
LDR = Total Loans / Total Deposits
A healthy LDR typically ranges between 80% and 100%. An LDR below 70% might indicate overly cautious lending or a young bank still scaling up. An LDR above 100% could mean the bank is relying on external funding.
Why It Matters for Neobanks
Unlike traditional banks, neobanks (digital-only banks) often:
- Rely heavily on fee-based revenues
- Start with limited lending capabilities
- Use third-party banking infrastructure
But as the market matures in 2025, more European neobanks are expanding their loan books to drive profitability.
European Neobanks and Their Loan-to-Deposit Ratios (Q2 2025 Snapshot)
1. Monzo (UK)
- Deposits (2024): £11.2 billion
- Loans (2024): £1.4 billion
- Estimated LDR: ~12.5%
- Model: Conservative lending; focus on customer acquisition and subscription products
🔗 Popular in the UK with strong growth and recent profitability
2. Starling Bank (UK)
- Deposits (2024): £10.6 billion
- Loans: Estimated >£4.5 billion
- Estimated LDR: ~42%
- Model: Actively lending to SMEs; profitable since 2022
🔗 Positioned as a digital-first SME bank
3. N26 (Germany)
- Deposits: Estimated €7–9 billion
- Loans: Limited; mainly consumer credit and overdrafts
- Estimated LDR: Likely <20%
🔗 Heavily focused on consumer fintech tools and payment services
4. Revolut (UK/Lithuania)
- Deposits (2024): €12 billion+
- Loans: Very limited; focus on cash storage with central banks
- Estimated LDR: <10%
- Model: Revenue from FX, crypto trading, subscriptions
🔗 Operates under banking license in Lithuania for EU customers
5. bunq (Netherlands)
- Deposits: Estimated €2.5 billion
- Loans: Expanding slowly via mortgage and business lending
- Estimated LDR: ~15–25%
🔗 Known for ethical and eco-friendly investing
6. Monese (UK/EU)
- Deposits: Limited disclosures
- Loans: Limited to credit-builder features and partnerships
- Estimated LDR: Very low
🔗 Focused on migrant and unbanked segments; not yet lending at scale
7. Viva Wallet (Greece/EU)
- Deposits: Tied to merchant payments
- Loans: Business cash advances via card transaction data
- Estimated LDR: ~30–40%
🔗 Europe-wide payment-first fintech with lending tied to revenue flows
8. Holvi (Finland)
- Deposits: Focused on freelancers and micro-businesses
- Loans: Minimal, with services integrated via partners
🔗 Not a lending-heavy model, LDR likely under 10%
9. Zopa (UK)
- Deposits: £3+ billion
- Loans: £2.9 billion+
- Estimated LDR: >90%
- Model: Former P2P lender turned into a regulated digital bank
🔗 Aggressive lending with a profitable track record
What These Ratios Reveal About Neobanks
- Low LDR (<30%): Revolut, N26, bunq, Monese
- These banks focus more on deposits, payments, subscriptions, and fee revenues.
- Moderate LDR (30–70%): Starling, Viva Wallet
- These are moving toward full-service banking with healthy but cautious lending.
- High LDR (>70%): Zopa
- Aggressively growing their lending business with a full credit infrastructure.
Average Loan-to-Deposit Ratio in the EU (Q4 2024)
According to the ECB, the average LDR across euro area banks is 100.43%, reflecting balanced lending practices across the traditional banking sector.
This puts most neobanks below the average, highlighting their continued evolution from deposit-gathering fintechs to full-spectrum digital banks.
What It Means for Users and Investors
- Users benefit from neobanks’ conservative lending, which often means safer capital and better digital experiences.
- Investors may view low LDRs as a sign of untapped profitability — or, in some cases, a lagging growth strategy.
As regulation and competition tighten, expect neobanks to increase their loan books and move toward more traditional LDR benchmarks.
Conclusion: Neobanks in Transition
While neobanks have redefined user experience, profitability and lending growth remain the key frontiers. In 2025, we’re seeing the first wave of these digital banks pushing beyond low-risk models into more robust credit markets.
The loan-to-deposit ratio will be a telling sign of which neobanks will thrive as full-service banks — and which may stay as sleek wallets with limited lending.