News, Culture & Society

Peer-to-peer firm Funding Circle beats revenue targets but expects more loan defaults

Buying or leasing a car in the UK? Check MOT of car before you do.

Peer-to-peer firm Funding Circle beats revenue targets but predicts loan defaults to be higher than previously stated

  • P2P lender’s revenue and the value of its loans both grew 55% last year
  • Beat forecasts of 50% set when it floated in September
  • However it now expects 3 – 3.8% of 2018 loans to default, potentially higher than both its main competitors 

Funding Circle beat its revenue targets for 2018 but saw a jump in the percentage of loans it expected to default, the peer-to-peer lender has announced.

The company, which started trading in August 2010, said its turnover and the value of loans under management both grew 55 per cent last year.

That beat an expected rise of 50 per cent, which was outlined when the lender floated in September.

Funding Circle CEO Samir Desai said the results were a strong end to 2018 and said the lender entered 2019 with ‘continuing confidence’, despite expecting a higher rate of defaults

It added the value of all loans applied for last year also grew, by 40 per cent to £2.3billion.

However, it revealed that it expected between 3 and 3.8 per cent of loans issued last year to default, higher than an estimate of between 2.5 percent and 3.5 per cent made three months ago.

Funding Circle is one of the big three lenders that dominate the peer-to-peer market, along with Zopa and RateSetter. 

Zopa was founded in 2005, while RateSetter began lending the same year as Funding Circle.

The platform pools investors’ cash to provide loans to small and medium-sized companies, and earns a fee on each loan it originates – RateSetter and Zopa focus on individuals instead.

Funding Circle’s latest default expectations could land it either between the other two lenders or see a higher percentage of its loans default. 

RateSetter’s latest forecasts indicated that it expected defaults on 3.18 per cent of its UK loans issued in 2018, while Zopa expected 3.32 per cent of loans made last year to do so.

Funding Circle floated on the London Stock Exchange at the start of October but performed dismally, seeing its value fall as much as a quarter on its first day of trading.

Shares in the lender rose 11.5p yesterday, and today sit at 348p, still nearly 100p lower than its 440p float price.

Samir Desai, Funding Circle’s founder and chief executive, said: ‘Funding Circle delivered a strong end to 2018, which resulted in exceeding our revenue and loans under management guidance.

‘We enter 2019 with continuing confidence and remain focused on delivering our growth strategy set out at IPO.’


Comments are closed.