Funding Circle swings to half-year loss

The lender, which provides credit to small and medium-sized enterprises in the UK and US, reported a 15% decline in loans under management in the six months to 30 June to £3.5bn. The decline was driven primarily by the repayment of government loan schemes introduced during the pandemic.

Originations and transactions, meanwhile, eased to £771m from £803m a year previously, with UK loan originations falling to £471m from £641m. Funding Circle pointed to the British economic recovery being "slower than we anticipated" as well as a successive rate rises.

It said: "Bank of England base rate increases through the half have raised the cost of borrowing for SMEs, but targeted marketing, strong relationships and continued focus on customer experience have enabled us to make progress despite these headwinds."

Total income dipped to £76.6m from £77.8m, while pre-tax losses came in at £16.6m against pre-tax profits of £1.6m in the first half of 2022.

However, the lender struck an upbeat note looking forward, and left its guidance for the full year unchanged. That helped send the shares 11% higher to 45p as at 11.30 BST.

Lisa Jacobs, chief executive, said: "We delivered a solid set of results in line with our expectations, and once again demonstrated the resilience of the business and our aptitude at responding to the changing economic environment.

"Our UK loans business is profitable, we’ve seen good growth in US loans, and FlexiPay is showing great momentum as we expand our offering to access a larger market and serve more of our customers’ needs.

"We’re making good progress towards our medium-term targets and are in a strong position to grow as the economic backdrop recovers."