Folk2Folk set to report record profits as forecasts further consolidation of alternative finance market

Folk2Folk expects to report record profits of nearly £2m for 2021 and is forecasting further consolidation in the alternative finance market.

The alternative lender says its unaudited accounts show it’s on track to report pre-tax profits of £1.98m for the year ending January 2022, nearly doubling the £1.1m profit it made the year previous.

It said the profit boost marked the third consecutive year the Cornwall-based marketplace was in the black.

Folk2Folk provides finance to regional business owners. It was founded in 2013 and became FCA authorised three years later.

Folk2Folk pinpointed several highlights during 2021, including double-digit loan book growth, an annual lending record of £108m, a move into Northern Ireland and a multi-million-pound investment commitment from British Business Investments, a subsidiary of the British Business Bank.

In 2020, it inked a deal with German company CrossLend which connects loan originators with institutional investors as the Cornwall-based lender looked to expand its investor base.

Managing director Roy Warren said he was expecting further consolidation of the alternative finance market.

Warren said: “We see huge opportunities to write considerable volumes of loans across the UK, and institutional investment is a key part of our strategy to support that.

“We also expect the alternative finance market to continue to consolidate and present opportunity for us to acquire loan books from other platforms."

One example of a recent loan book deal saw Allica Bank acquire a £600m loan book from AIB Group last year.

Warren added: “We see this as a growth area for us and are actively looking within the market to move forward with this.

“We have to anticipate that 2022 is likely to be a challenging year for everyone, with a backdrop of inflation, rising interest rates, and hostilities in Eastern Europe all feeding into an uncertain external environment.  

"This makes having a solid and sound base for any business ever more important.

"With only a small handful of lending platforms turning a profit, our strong profit levels evidence Folk2Folk’s stability in terms of finances, business levels and governance, and we know this supports investor and borrower confidence in us.”