RATESETTER swung £4.9m into the red last year, but the peer-to-peer lender said the results were “in line with expectations” due to a new fee structure and investing in the business.
The firm posted a pre-tax loss of £4.9m in the last financial year, compared to a pre-tax profit of £476,000 the previous year, it announced on Monday afternoon.
However, revenue rose by 46 per cent to £18.5m over the period.
RateSetter said that in 2015, it began to charge a greater proportion of its fees over the lifetime of the loan rather than purely up front. It said this creates a more sustainable recurring income stream and reduces pressure to lend to generate revenue when credit conditions are poor.
“If all fees had been taken upfront when loans were written, rather than charged over the lifetime of loans, RateSetter would have recorded a pre-tax profit in 2015-16,” it said.
The company, which is backed by star fund manager Neil Woodford, said it expects to grow “considerably” in the next financial year, but expects to record a loss again due to investment into the business.
“The switch from upfront to recurring fees was not a decision we took lightly,” said chief executive Rhydian Lewis. “However, it greatly enhances the sustainability of our business – we strongly feel that it will prove to be a very positive development and anticipate that others in our industry will follow our lead.”
RateSetter added that it has invested in marketing and IT, hired more employees and moved to a larger office in the City of London.
The company said loans under mangement grew by 70 per cent over the period to £581m, while the number of active investors grew from 18,608 to 31,036.
The lender also said that it had seen a 70 per cent increase in new active investors in the period since the EU referendum compared with the same three months last year.
The low interest rate has provided an extra boost for P2P platforms; last week, RateSetter told Peer-to-Peer Finance News that the number of new investor accounts opened per day has doubled since the Bank of England cut interest rates to 0.25 per cent last month.