Alternative lending giant OakNorth reveals first loan defaults

By Oliver Smith on Monday 16 December 2019

Alternative Lending

Profitable fintech unicorn has long boasted of its perfect lending record.

Alternative lending giant OakNorth reveals first loan defaults
Image source: Rishi Khosla, OakNorth CEO and Founder.

Two property-backed loans provided by fintech lender OakNorth Bank have defaulted, ending the startup’s incredible four-year-run without any loans going bad.

The defaults, first reported by The Sunday Times, are said to represent “less than 1% of the bank’s £3bn net lending and have not yet led to credit losses” according to the newspaper.

OakNorth has long lauded its lack of defaults over rivals in the alternative lending sector, boasting that its combination of underwriting and technology gave it an edge over rivals, however that unbroken record of lending has now ended.

In a move unconnected to the defaults, OakNorth is also looking to offload chunks of five or six of its largest loans in order to reduce its exposure, something it's been doing since day one with institutions like Cogress.

The figure is said to be between £20m and £30m in each of these loans.

“We’ve lent £4bn since we launched in September 2015, lending to hundreds of businesses, so the fact that we’ve only had two defaults and no credit losses, is pretty phenomenal and I think speaks to the quality of our credit underwriting and monitoring,” said Rishi Khosla, OakNorth CEO and Founder.

Last year OakNorth reported profits of £33.9m, making it among the few profitable fintech unicorns.

In February OakNorth became one of the UK’s most-valuable fintechs with a price tag of $2.8bn after SoftBank’s Vision Fund led a $440m investment round in the business. The lender said it would use the cash for its upcoming US launch.

This year the startup has had several senior departures and appointments, including a new Chief of Staff and Director of Product, a new CEO of its OakNorth Analytical Intelligence arm, a new CTO and COO of its lending arm, a new Director of Digital Product, and the departure of its partnerships chief.

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