Zopa narrows losses despite banking arm investment

ZOPA narrowed its losses from £6.6m to £4.2m last year despite a major investment into its new banking arm.

Revenues increased by 32 per cent to £50m, representing a slowdown in growth from 2016 when revenues soared by 61 per cent.

Loan origination grew by 43 per cent to £1bn, up from £700m in 2016, the platform’s latest set of accounts show.

Zopa became the first P2P platform to pass the £2bn cumulative loan origination milestone in the first quarter of 2017.

In November 2017, the P2P lending business had a record month with £100m of loans originated.

“These milestones were achieved despite the tightening of its credit criteria in response to market conditions, and because of its commitment to long-term, sustainable growth,” the company said.

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Zopa said its overall loss of £4.2m was driven by the cost of developing technology and capabilities to obtain a banking licence for its “next generation bank”. It said it submitted its banking licence application in February this year.

Zopa’s average headcount increased from 188 to 267 last year, a rise of 42 per cent.

Zopa said its key priorities for 2018 include achieving continued growth of its customer base and new lending, while ensuring its technology and operational arrangements can support this growth.

“The group’s investment in infrastructure will continue in 2018, with a focus on automation to ensure an increasingly seamless experience for customers,” it added. “It will also continue to focus on the build and launch of its new products and services for the proposed bank and obtaining a banking licence will remain a key part of this plan.”

Steve Hulme, Zopa’s chief financial officer, said the results reflect the substantial investment Zopa has made in building its own technology to underpin the upcoming bank.

“This will enable Zopa to continue leading the way in providing customers with a range of products that are great value and fair,” he said. “By investing significantly in our people and technology now – and not taking any shortcuts – we’re ensuring that our customers will continue to receive the great experience they currently have with Zopa, while maintaining our low operating cost model.”

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