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Yes Pyueck , clearly some people will opt out of p2p lending and put their money back in the bank earning next to nothing and I sympathise with anyone who has lost money in any investment . I just feel that Funding circle is more stable as it has been backed by government investment and that of large institutions , and the reason that it is not making a profit is because it is trying to grow its market share as the bigger and more established they become , the better .
At what point will these numbers turn into a profit for FCH? Forecasts are still for further losses in next two years of over £100m
Portfolio2 I understand your thoughts but I think you are wrong. If you think that investors of platforms that have collapsed where they now know there were terrible controls and regulatory oversight in place and have lost thousands of hard earned money are thinking "ah well let's find another p2p platform to stick the rest of my life savings into" I believe you are very wrong. More likely they are thinking every p2p site seems good until it goes to the wall, once the site has collapsed its too late. With the current regulatory oversight clearly not fit for purpose I can have no confidence that the FCA regulations mean anything at all and the recent changes seem more designed to protect the FCA rather than consumers. Far better to get out of the sector entirely rather than hope that by luck the platform you stick your hard earned money in isn't one of the rubbish ones. As lenders know all to well now, if they pick a bad platform lenders are left high and dry.
I have lent money through Funding circle since 2014 , I have had a good return , started out getting 8% , now 5% . There was a problem with excessive defaults for a couple of years but they seem to be getting back on track . They are the market leader in this space and as others fail I believe Funding circle will gain more market share . I think they are a buy at this price .
Investors have totally lost confidence that FCA regulations provides any assurance of p2p sites control environments. I was a lender through funding secure. Lenders are not even the legal beneficiaries of the loans! No wind down plan. Administrators taking large fees from loan proceeds with no visibility of likely outcome for investors. Ex company directors look like they rank higher up as creditors than lenders! Reaction of other site directors....we are not like them. Reaction of FCA and FS directors....not our problem. Until regulation is overhauled the vacuum of confidence will remain. Almost all other p2p investors I know are pulling their money out. Platform risk not loan risk is the killer here.
Dont think they've has it, still running TV ads which arnt cheap but agreed nothing happends here, much more eventful over at mtro and sxx
Is it just me that thinks Funding circle shares will rise a fair bit when they release news that they are doing OK , or do you think they have had it ? Or is no one interested . very few shares being traded at the moment . Is there anybody out there ?
As a Funding circle lender I have cancelled the sale of my loan parts , firstly because the percentage earned has edged its way up and secondly to save the 1.25 % fee . I wonder how many others have done the same .
This was an amateur mistake. The SP has already lost most of the gains from the last earnings announcements. Having had time to fully absorb the numbers, the market has been less impressed.
Thanks. I see what you mean. I thought allowing people money quicker meant company was confident of liquidity but as you say it does put a risk on it or is maybe a misplaced tactic to grow lenders. And yes panicky people withdrawing money can be the end of many a financial scheme or bank but hopefully they have paced these changes as such. It means this is a cheap share at mo but one with a bit of risk I guess.
Hi Plface , The problem when people have fast access to their cash is that if there is a scare and everyone takes their money out just in case , then we get this kind of liquidity problem . We have seen groups of shorters stoking a panic in some other companies trying to gain from a drop in share price . the thing is once a few people fear there is a problem and others see them taking their money out then they think there is a problem and with a few scary reviews or press articles it can all escalate into a panic .
Seemed odd it dropped yesterday caught me by surprise but it seems customers not so much surprised as they got the e-mail first. People are nervy about loan companies atm but I'm not sure how allowing lenders quicker access to funds gives worries about liquidity, unless they have twisted the meaning. It seems many of the shareholders are the customers and if they don't like something they come on here and comment from a customer perspective or sell their shares. It seems a small recovery is in place. the last RNS was pretty positive so should see growth here. The fact competitors are struggling might be a good thing and it seems like the company is pretty pro-active in making improvements and getting new deals. I notice TV ads are running at mo.
They all seem to have liquidity problems. Zopa mentioned to me about developing some new IT for micro loan size management. I just hope that I don't need to access the cash asap. Or I am stuffed
Yes thats my take too. I have been studying their email earlier. And Ratesetter have a similar cunning plan to boost their liquidity. Some new products were launched at start of month. The queue was huge. I know. P2P is not what it used to be.
Also they will be charging the seller 1.25% of the loan which will go to the buyer , which I think is a damn cheek as a seller but it does offer a rather nice incentive for buyers which is what is needed at the moment . those of us who are already invested may think about not wanting to pay that charge and therefore not selling , which again would help balance liquidity . It is a solution which I am sure will annoy a lot of people but it does work for Funding circle .
Hmm , interesting drop in share price today , coinciding with an email I got this morning from Funding circle saying that in December they are introducing a new way of selling loan parts which gives sellers some money back before the whole lot are sold . At first I was annoyed that I may have to wait longer to get my money out , but after thinking about it this is probably a good way for the company to manage liquidity and at least I will get some chunks of money more quickly . My partner just got £20,000 out from sold loan parts (after a long wait) so at least they are still paying out . I just wonder if buying shares in Funding circle may be more lucrative while they are low as I believe eventually things will get back to normal .
There is a quite simple reason for the default rate not rising, FCH are delaying the default of clearly defaulted loans. This will make their default rates seem better than reality. See example below:
Please accept our sincere apologies for the delay in this update. The refinance has been progressing. Valuations have been conducted and reports provided to the new lender. Accounting for costs, the anticipated recovery is approximately 30% of the total debt. We will look to default the loan once the refinance completes so that funds can be distributed amongst investors pursuant to the pari passu principle. We do not anticipate there being further recoveries beyond this due to the financial position of the borrower. We will update investors further in October.
solid RNS and decent reaction.
Not at all unhappy about pretty well selling out my mums holding (at her age she does not need the risk), decent figures. The only thing I am bemused by is the UK bad debt rate is down ... considering how many of mum's holdings are very late, downgraded or have been moved to bad debt I am not sure I agree.
Anyway, As Portfolio2 pointed out ... its more about current liquidity....
1) Media (e.g. Times and Telegraph) have stoked minor panic amongst investors. The share price however is not related to the safety of their capital.
This is not a product that is easy access or liquid enough for you to sell your loan parts quickly. Hence a minor stampede resulting in a 100+ day time-frame to turn loans into a cash withdrawal.
2) Good market reaction to today's Q3 update. Loans are growing, US is growing and so too will Germany and Holland in time. However, can they turn loss into profit? Wait until March 2020 for full year results.
117 days .. finally all sold .... yeah
Can't comment on the numbers.. but I do tend to agree on liquidity.
That said, this seems a result of less new investors and greater defaults
Hi faramog , you mention solvency , the figures I have are approx £62 million annual cash burn whilst holding reserves of £270 million . It looks like they could survive for at least about four years without trying too hard . I think the present situation is just a liquidity problem which they should have time to resolve . What do you think ?
Now running at 115 days and no sign of the holding being sold .... tick-tock ... but the level of bad debt has gone up and the level of late payments has gone up a fair bit..
Already at the point that even if everything vanished the loss on capital would be around 25% (ouch but had a fair bit of interest). Of the approx 5.3K remaining I expect to loose 1.5K in default (currently just a few quid under 1K) .... all assuming FC stays solvent.
Tomorrow's Grand Designs includes a property in Devon which over £3m of investors money has been poured into and as of yet not a penny returned. Don't wan't to spoil the episode, but let's just say the thing has not gone to plan. Last time FC updated on the status they were predicting a 30% return, quite frankly though based on the reports I have heard I think this is optimistic.
Clearly Grand Designs is a property programme and no idea if they will even mention the funding from Funding Circle. However I hope it will shed some light over their processes, or lack of, to ensure that investors money is appropriately being spent. I know FC stopped property lending a few years ago, and rightly so based on this, but still it's not good.
I am not going to say more for now as not watched programme yet so I will reserve judgement until after I see it.