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Funding Circle swings to loss as it gets hit by lower transaction fees

2nd Mar 2023 19:05

(Alliance News) - Funding Circle Holdings PLC on Thursday reported an annual loss as operating income fell and loans under management declined.

Shares in Funding Circle closed 6.2% lower to 56.30 pence in London on Thursday.

The commercial lender said operating income in 2022 amounted to GBP131.4 million, down 21% from GBP165.5 million a year ago, as it was hit by a decline in transaction fees to GBP77.5 million, down from GBP115.0 million.

The decline meant Funding Circle swung to a pretax loss of GBP12.9 million from a profit of GBP64.1 million a year before.

Loans under management declined to GBP3.73 billion, down 16% from GBP4.46 billion, following anticipated early repayments of Coronavirus Business Interruption Loan Scheme loans in the UK and Paycheck Protection Programme loan forgiveness in the US.

For 2023, the company guided for total income including its new credit offering FlexiPay of GBP160 million to GBP170 million. Adjusted earnings before interest, tax, depreciation and amortisation are expected between GBP0 million to GBP10 million in its UK and US loans business, while a GBP10 million to GBP20 million loss is predicted at FlexiPay.

By 2025 Funding Circle expects total income of at least GBP295 million, margins of 25% to 30% and to be adjusted earnings before interest, tax, depreciation and amortization positive.

Funding Circle said general credit quality has weakened in the UK and with the increasing economic uncertainty in the UK, it has tightened its credit criteria and introduced interest rate increases on loans in line with rises in the base rate.

By Jeremy Cutler, Alliance News reporter

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