Funding Circle tanks as it halves revenue growth expectations

Shares in Funding Circle tanked on Tuesday as it slashed full-year revenue growth expectations, warning that an increasingly uncertain economic outlook has reduced demand for loans.

The peer-to-peer lending platform, which has tightened its loans policy when it comes to higher risk band businesses, cut revenue growth expectations from 40% to approximately 20%. It said increased selectivity will affect overall origination volumes but will protect net returns for investors on its platform.

The company posted a 30% jump in revenue for the first half of the year, while the adjusted earnings before interest, tax, depreciation and amortisation loss margin was expected to be about 25% and is forecast to improve from the negative 20% level achieved in 2018 across the full year.

Loans under management increased to £3.5bn, up 37% compared to the first half of last year, while new loan originations were up 14% at £1.2bn.

Samir Desai, chief executive and co-founder of Funding Circle, said: "The uncertain economic environment has reduced demand from small businesses and led us to proactively tighten lending criteria. As a result, revenue growth will be impacted. We recognise that this is a change from our previous guidance, but we are taking the prudent course of action for the long-term growth and development of our business."

Desai said the board remains confident in its aim to become the world's largest small business loans provider, helping millions of businesses to create jobs and support economic growth.

At 0840 BST, the shares were down 22% at 127.50p.