Funding Circle income falls as government schemes wind down

Funding Circle reported a 35% year-on-year drop in originations to £1.5bn in its 2022 results on Thursday, in line with expectations.

The London-listed company said loans under management were down 16% to £3.7bn due to early repayments of CBILS loans in the UK and PPP loan forgiveness in the US.

Operating income was £131.4m, down 21% from the prior year, while investment income was down 58% to £17.3m.

The firm’s net assets remained “healthy” at £284.0m, including a cash balance of £177.7m.

Funding Circle also issued guidance for 2023, with a focus on expanding its FlexiPay product and doubling group total income by 2025.

“We’ve made good progress against our medium-term strategy, expanding our reach in distribution and depth in products,” said chief executive officer Lisa Jacobs.

“We introduced lending as a service in the US, and expanded our product set through the launch of super prime loans in the US and near prime loans in the UK.

“We have continued to see strong engagement with FlexiPay - so our customers can now not only borrow, but pay and spend with Funding Circle for the first time.”

Jacobs said she was “pleased” with how the business reacted to the evolution of the economic environment, and transitioned back to commercial lending, with government schemes phasing out in 2022.

“Overall we delivered a solid financial performance.

“We were prudent in our lending in 2022, and will continue to be whilst conditions remain challenging - as expected in the UK in 2023, where we have pushed out our 2025 income targets by a year.

“We're confident in the US and are excited about new FlexiPay growth over the medium term.

“Having built strong foundations to deliver against the plan, we expect to double Group income over the next three years.”

At 1026 GMT, shares in Funding Circle Holdings were down 2.22% at 58.67p.

Reporting by Josh White for Sharecast.com.