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Peer2Peer Finance News | September 23, 2017

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How has the P2P sector fared in the year since the Brexit vote?

How has the P2P sector fared in the year since the Brexit vote?
Marc Shoffman

IT IS often said that a week is a long time in politics, so there has been plenty of scope for change in the 12 months since the controversial vote to leave the European Union.

The peer-to-peer lending sector has faced plenty of challenges separate to Brexit over the past year, from the race to full Financial Conduct Authority (FCA) authorisation to launching Innovative Finance ISAs (IFISA) and the perennial challenge of attracting lenders and borrowers.

So how has the industry changed since UK voters backed Brexit on 23 June 2016 – exactly one year ago today?

We have analysed the bigger lenders, based on members of the Peer-to-Peer Finance Association, using data up to the first quarter of 2017.

Read more: SMEs and P2P lenders back Brexit-heavy Queen’s Speech

New Lending
Funding Circle, which received full FCA authorisation last month, has seen new lending grow each quarter since the referendum, from £151,803 lent in the second quarter of 2016 to £182,854 in the third and £305,970 in the fourth. It lent £328,059 in the first three months of this year.

Similarly, Zopa, also now fully authorised, has seen lending increase each quarter, from £154m in the second quarter of 2016, to £175m in the third. There was £194.3m of lending in the fourth quarter and £246.4m at the start of the year.

RateSetter, the last of the big three still awaiting full FCA approval, has seen both consumer and business lending increase.

New business lending was at £59.8m in the second quarter of 2016, rising to £73.8m in the following three months before dropping to £60.5m at the end of the year. It bounced back to £72.5m at the start of 2017.

The platform’s consumer lending has been more impressive, at £92.9m in the second quarter, dropping slightly to £91.7m in the third quarter but then increased to £101m in the fourth quarter and £112m was lent in the first three months of this year.

Landbay has been more mixed, with new lending dropping from £5m in the second quarter to £282,820 in the third and £193,800 in the final three months of the year. New lending was back up to £833,300 at the start of the year.

LendInvest also saw a drop just after the referendum, from £87m in the second quarter to £76m in the following three months, before bouncing back to £79m at the end of 2016 and £116m in the first three months of this year.

MarketInvoice has been pretty consistent, at £79.2m in the second quarter of 2016, rising to £82.7m in the third, then £83.4m at the end of the fourth year. The invoice finance platform lent £97.9m in the first three months of 2017.

Thincats saw its new lending shrink between the second and third quarter of 2016 from £21m to £13.2m. It improved in the fourth quarter to £14.5m and bounced back to £15.5m at the start of the year

New loans at Lending Works were worth £4m in the second quarter, slipping to £3.6m in the third quarter. They increased in the last three months of 2016 and were at £9m at the start of the year, which could have been boosted by the launch of its (IFISA) in February.

New Lenders
All have seen an increase in lenders since the referendum.

RateSetter has seen the biggest increase, taking on 9,573 up to the first quarter of 2017 to 44,402.

Funding Circle was a close second, taking on 8,604 to 59,740, while Zopa took on 6,091, taking the total number of lenders to 60,755.

Only MarketInvoice saw a drop by 47 to 220.

New Borrowers
Zopa has taken on the most new borrowers at 41,310 since the referendum to 171,607 while RateSetter has taken 30,286 to 203,994.

Landbay and Thincats have taken on the least, at four and 34 respectively.

P2P funds
It has been an interesting year for P2P investment trusts.

Some such as VPC Specialty Lending have altered their strategy, shifting from marketplace to a focus on balance sheet loans.

Its share price has fallen 4.36 per cent over the past year, but its net asset value (NAV) return has been on the rise this year.

P2P Global Investments has been reducing its US exposure and seeking more on asset-backed platforms. It is also in the midst of a management overhaul in an aim to diversify and boost performance.

Its share price has increased by 3.04 per cent and its NAV has been growing.

Others with less UK – and thus Brexit – exposure, such as Ranger Direct Lending, have continued to enjoy positive returns, but that hasn’t stopped its share price falling 13.64 per cent over the year. This could be attributed to its exposure to bankrupt online lender Argon Credit.

The Funding Circle SME Income Fund has aimed to keep up with demand and raised £142m with a share placing in April. Its share price has increased 4.15 per cent.

Similarly, the Honeycomb investment trust, which has seen its share price soar by 15.6 per cent, raised £105m in May.

Navy line: VPC; Green: P2PGI; Yellow: Ranger Direct; Red: Funding Circle SME Income Fund; Blue: Honeycomb

Source: Google Finance

Read more: Investor’s IFISA guide