N26 reachedits first full year of net profitability in 2025, with revenue climbing past€500 million as the German digital bank leaned on higher deposit income and alarger base of paying customers. The lenderposted group net income of €1.6 million for the year, a swing from a €42million loss in 2024, according to figures the company released today (Thursday).N26 Swings to €1.6 Million ProfitRevenuerose 13% to €501.6 million, while gross profit grew 33% to €350.5 million. N26attributed the wider gap between the two to lower direct costs and what itcalled the operating leverage built into its platform, meaning revenue isgrowing faster than the cost of serving each customer.The resultlands during a period of upheaval at the top of the company. Mike Dargan, aformer UBS executive, took over as chief executive inApril, inheriting abank that had spent much of the prior year cycling through leadership changesand regulatory friction.Profit Milestone Rests ona Thin MarginTheheadline profit is small set against the size of the business. Net income of€1.6 million on €501.6 million in revenue works out to a margin of roughly0.3%, leaving little cushion. Most of theimprovement came from shrinking losses rather than a jump in earnings, with the€43.6 million year-on-year swing driven by cost discipline and rising interestincome.Theturnaround follows a rough stretch for the company's valuation, which fell sharply from its 2021 peak as fintech funding cooled andregulatory problems mounted.Netinterest income, which covers treasury and lending activity, rose 49% to €166.3million and supplied 47% of gross profit. Much of that rests on deposits, andN26 has been courting balances with instant savings accounts paying upto 4% acrossEuropean markets.Net fee andcommission income increased 21% to €184.2 million, the remaining 53% of grossprofit, helped by subscription growth and card spending. Revenue-relevantcustomers, the subset N26 counts as generating income, grew 16% to 5.6 million.Annual transaction volume rose 14% to €170.7 billion, and customer depositstopped €10.5 billion.Source: N26 management reporting frameworkTwo Accounting Frameworks,Two Sets of NumbersThursday'sfigures come from a press release, not a full audited report, which N26 has yetto publish. The numbers the company put front and center follow its ownmanagement reporting framework, which it says aligns with IFRS principles.Its auditedstatutory accounts, prepared under German banking rules known as RechKredV,tell a different story on the components. On that basis, N26 reported €191.3million in net interest income and €176.9 million in net fee and commissionincome, both diverging from the management figures. Grossrevenue under RechKredV came to €498.1 million, just shy of the €501.6 millionthe company led with.Group netincome is identical under both frameworks, the company said. Asked whenthe complete accounts would appear, N26 told Finance Magnates it would publishthe audited statements "in line with the applicable statutory filingdeadlines" and make them available through official registers.Revolut and Bunq Set theProfitability BarN26'smilestone arrives years after some European rivals crossed the same line, andon a far smaller scale. Revolut, the region's largest neobank, reported pretax profit of £1.7billion for 2025and net profit of £1.3 billion, its fifth straight profitable year, with acustomer base above 68 million.The Dutchchallenger bunq has been in the black since 2023 and reached 20 million users in 2025, reporting 65% profit growth in itsmost recent results. Both leaned on high interest rates to earn yield oncustomer deposits, the same lever that lifted N26's interest income.Where N26stands apart is its starting point. The bank spent years under a BaFin-imposedcap that limited it to 50,000 new customers a month, a restriction tied toanti-money-laundering failures that also drew a €9.2 million fine. Thatceiling held back the customer growth rivals used to scale, and lifted onlyshortly before fresh regulatory problems surfaced.Regulators Still WatchingCloselyProfitabilityhas not closed the book on N26's regulatory troubles. In 2025, BaFin imposedfresh restrictions after an audit flagged weaknesses ininternal controls,ordering the bank to hold extra capital, installing a special monitor for thesecond time since 2021, and barring new mortgage lending in the Netherlands.Thesupervisory pressure came alongside a boardroom reshuffle. Co-founder ValentinStalf stepped down as co-chief executive in 2025 after disputes between thefounders and investors, clearing the path for Dargan's arrival.N26 hasbeen widening its product range to lift income per customer, adding stock and ETF trading and rolling out savings productsacross Europe. The companysaid it plans to keep investing in banking, savings and investment offeringswhile expanding its use of artificial intelligence in customer service andinternal operations.Momentum Carries Into 2026Early 2026figures point to a stronger run. On a preliminary basis, N26 said it generatednet income of €9.8 million in the first quarter, on revenue of €130 million andgross profit of €92 million, already well above the full-year 2025 profit.Dargan saidthe financial position gives the bank room "to reinvest heavily" innew products. Chief Financial Officer Arnd Schwierholz said N26 would keep"delivering sustainable growth while continuing to invest in products,technology" and resilience.N26operates in 24 markets on a German banking license with a team of about 1,600.Whether it can turn a slim first profit into something more durable will hingeon keeping costs down while regulators keep watching.This article was written by Damian Chmiel at www.financemagnates.com.