Funding Circle profits fall to £1.5m following pandemic loan schemes wind down

By Daniel Lanyon on Thursday 8 September 2022

Alternative Lending

Amid a worsening economic outlook, Funding Circle is still gearing for growth.

Funding Circle profits fall to £1.5m following pandemic loan schemes wind down
Image source: Lisa Jacobs/Funding Circle.

Listed fintech lender Funding Circle has recorded a £1.5m profit for the first six months of 2022, according to a stock market update published today.

Funding Circle’s latest figures show it saw loan originations drop by c.51 per cent to £803m compared with £1.6bn for the same period last year.

The fall, the lender says, is in line with expectations following the conclusion of the government-guaranteed loan schemes last year but is still up on the second half of 2021 by 21 per cent.

Nonetheless, the change means while Funding Circle is still recording a profitable first half of the year the figure is materially lower than its £35m profit in in the first half of 2021.

Operating income for this latest period hit £66.4m, a 30 per cent fall year on year when it was £94.5m.

Funding is still expecting income to grow for the second of half of 2022, buoyed by its expansion into new lending products such as its ‘flexipay’ and embedded finance divisions, despite a worsening macroeconomic outlook 

The company said while it is taking a prudent approach to the macro environment in the UK and the US its income outlook is in the range of £140m - £155m and it expects to be AEBITDA positive for the whole of 2022.

“In the last six months, we have made early progress on all three of our strategic pillars to transform the business into a multi-product platform. We are attracting more businesses, saying yes to more businesses and entering new product categories to enable small businesses to not only borrow with Funding Circle, but pay and spend as well,” said Lisa Jacobs, CEO of Funding Circle. 

Its loans under management now stand at £4.1bn compared with £4.5bn at the start of 2022, a drop of 9 per cent. following expected early repayments of CBILS loans and PPP loan forgiveness. 

The company still has a sizeable cash pile with net assets of £299.3 million including cash of £200.7 million, a 10 per cent reduction from the £224m at the start of 2022.

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