Embattled Funding Circle steadies ship after turbulent year

Investors in peer-to-peer lender Funding Circle were thrown a rare piece of good news on Monday as the firm said it was on track to meet expectations this year.

The company, which lends to small and medium-sized businesses, said its loans under management hit a record £3.7 billion in the last three months, up by almost a third on the same period last year.

However, the value of the loans it processed over the quarter – originations – fell 0.5% to £561 million.

Funding Circle has faced a turbulent year, and shares, which listed for 440p 13 months ago, are now fetching less than 110p – a fall of three-quarters.

Chief executive Samir Desai said: “In the third quarter, loans under management reached £3.7 billion and projected returns for 2019 continued to show an improvement over recent years.

“We continue to manage the business prudently, which we are confident is the right course of action for the long-term growth and development of our business.”

Funding Circle sets up amateur lenders with small loan-takers, allowing the former to sell on their parts of the loan if they want to cash out.

However, last month it was revealed that the time investors had to wait to cash out had risen to three months from just a few days in January.

The company has blamed “an uncertain economic environment” – a phrase used by Mr Desai again on Monday – as loses widen.

Numis analyst James Hamilton predicts that loss before tax is likely to hit £49.7 million in the full year 2019, with the company unlikely to turn a profit until 2022.

He said the turnaround of the company’s portfolios was key.

“The operating environment remains tough with SME caution, tightened score cards and increased pricing in the US all having an impact,” he said.

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