ZOPA’S peer-to-peer lending business saw pre-tax profits tick up to £145,000 last year, while the group’s pre-tax losses widened due to heavy investment in its new bank.
Zopa Group – which incorporates the P2P platform and upcoming digital bank – reported a pre-tax loss of £18.295m for the year ended 31 December 2018, compared to a pre-tax loss of £5.536m the previous year.
“The increased loss reflects the focus and investment by the group to build and launch its new products and services for the next generation bank,” it said in its annual report, filed with Companies House.
Zopa Group raised £60m last year, of which £39.2m was invested into developing the bank, the annual report said.
Meanwhile, group revenue fell year-on-year from £43.98m to £38.55m, which Zopa attributed to its decision to close the Safeguard fund on its P2P platform in 2017.
Zopa said at the time that it was shutting down its provision fund as a result of its successful campaigning for tax changes. Since 2015, investors can now claim for relief on losses from bad debt, removing the need for Safeguard. It said the move would enable it to provide higher returns for investors.
Excluding the impact of the Safeguard fund, revenue increased slightly from £35.862m to £36.981m over the period, due to a higher volume of loan disbursals on the P2P platform.
The closure of the Safeguard product also resulted in a corresponding reduction in cost of sales, which kept gross profit stable at £34m in 2018.
Zopa Group said that its key priorities for 2019 would be the continued development of its bank and the completion of the capital raise required to enable the regulators to lift the remaining restrictions on its banking licence.
Looking ahead, Zopa Group said that consumer demand for credit continues to be healthy and noted a shift towards digital channels.
“The group benefits from this trend owing to its strong digital offering and seamless loan application process,” it said.
It also added that default levels appear to be normalising following the historic lows recorded in recent years.
Zopa’s P2P business hit a number of milestones in 2018. Originations surpassed the £1bn mark and in the first quarter, it became the first consumer P2P lender to pass the £3bn milestone in cumulative originations.
In October 2018 it enjoyed a record month, having lent out £103m.