Q4 slump caps off tough 2016 for US fintech lenders

By Ryan Weeks on Tuesday 4 April 2017

Alternative Lending

S&P data shows slowed origination in latter stages of 2016, consumer lenders worst hit.

S&P data shows slowed origination in latter stages of 2016, consumer lenders worst hit.

S&P Global Market Intelligence, a research arm of major ratings agency S&P, has released 2016 origination numbers for 13 major online lenders. The data is headlined by a 14.5 per cent year over year fall in originations for the entire group in the fourth quarter.

2016 will go down as a turbulent one for the online/marketplace lending sector. Investor confidence nosedived when former Lending Club CEO Renaud Laplanche’s was fired in May due to his involvement in the mis-selling of loans to an institutional investor.

Despite the difficult Q4, S&P estimates that the 13 lenders in question grew full-year originations in 2016 by 15 per cent. The student and SME focused lenders exhibited especially strong full-year origination growth, with 62.3 per cent and 43.0 per cent respectively.

These showings helped to offset a 9.2 per cent decline in full-year originations among the consumer lenders. Prosper and Avant’s full year originations fell by 39 and 12 per cent respectively, while Lending Club posted 4 per cent growth for the year.

Analysis from AltFi Data shows that originations in the UK’s marketplace lending sector grew 49 per cent in Q4 2016 on a year on year basis. This lends credence to the idea that the UK industry was fairly well insulated from the events of 2016, and indeed from any Brexit-related fallout.

SoFi was the largest online lender by volume in the US during Q4 2016, with roughly $2.5bn lent. But Lending Club just about remained the largest player by yearly origination volume with a little over $8.5bn lent, besting SoFi by around $600m.

Lending Club is fast approaching the $25bn mark in cumulative loan originations, and remains by some distance the largest online lender in the US by this measure. 

Source: S&P Global Market Intelligence (https://goo.gl/9qgJBW)

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