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(Alliance News) - Small business lending platform Funding Circle Holdings PLC on Thursday reported a widened interim loss on higher marketing and staff costs and reiterated its concern about high risk lending.
In the six months to June 30, Funding Circle's pretax loss widened to GBP30.8 million from GBP27.1 million the year before.
The company's revenue jumped 29% to GBP81.4 million from GBP63.0 million. The rise in revenue was offset, however, by the 25% rise in operating expenses to GBP112.7 million.
Marketing and new staff costs increased 43% and 19%, respectively.
Funding Circle's loans under management ended the half at at GBP3.54 billion, 37% higher from the GBP2.58 billion seen at the same point a year ago. The platform's loan originations increased 14% in the first half to GBP1.19 billion.
The company said its loan performance across its platform remains in line with expectations.
"Across all geographies, investor returns on a net basis are expected to deliver between 4.4% to 8.4% in the 2018 cohort and between 5.0% to 8.5% in the 2019 cohort," Funding Circle said.
In the UK, where 69% of Funding Circle's loan originate, Funding Circle said its portfolio risk "remained consistently stable" for the 85% of its loans in the A+ to C risk band. In higher risk bands, typically D and E, Funding Circle said it has seen "some deterioration".
"This has been driven by a deterioration in the consumer credit environment since 2016, which affects smaller and younger companies and in response we tightened our risk criteria for higher risk band loans. We continue to monitor the macroeconomic environment, proactively making adjustments where appropriate," Funding Circle said.
With this "further tightening" lending to higher-risk band businesses, Funding Circle said it has affected volumes.
The company's UK loans under management increased 30% in the half to GBP2.45 billion with originations growing 12% to GBP798.0 million.
In July, Funding Circle warned economic uncertainty is leading to lower loan demand. The company reiterated Thursday it still expects to grow its revenue by 20% in 2019.
In 2018, the company posted GBP141.9 million of revenue, so 2019 guidance is for approximately GBP170 million.
"We continue to benefit from strong repeat dynamics from borrowers, with 46% of group revenue coming from existing customers, and attracting new investors to the platform," said Chief Executive Samir Desai.
Shares in Funding Circle were 0.9% higher in London on Thursday at 99.93 pence each.
