Funding Circle swings to annual profit

Funding Circle swung to an annual profit as costs fell and the company posted fair value gains instead of losses.

The peer-to-peer lender reported a £64.2m operating profit for the year to the end of December compared with a loss of £106.3m a year earlier as total income fell 7% to £206.9m.

Adjusted earnings before interest, tax, depreciation and amortisation (AEBITDA) swung to £91.8m from a loss of £63.8m. Loans under management rose 5.8% to £4.46bn.

Fee income rose 6.3% to £165.5m as net investment income dropped 38% to £41.4m in line with the group's strategy. Operating costs before exceptional items fell to £167.4m from £191.3m.

The company reported £28.6m of fair value gains compared with £118.3m of losses as the credit outlook improved.

Funding Circle forecast operating income of £145m-£155m and total income of £155m-£170m. By 2025 UK total income will be at least £220m and at least £70m of US total income with all parts of the group profitable.

Shares of Funding Circle rose 11.2% to 80.8p at 09:14 GMT.

Chief Executive Lisa Jacobs said: "Our focus for the last two years has been on profitable growth and today's results highlight the excellent progress we have made. I am particularly proud to announce AEBITDA of £92m and £64m of operating profit, exceeding our previous guidance."

Jacobs took over running the company from founder Samir Desai in January. The company has had a bumpy ride since its flotation in 2018. The shares are down more than 40% in the past year.