Revenues are rising across the UK’s largest peer-to-peer lenders despite mixed profitability, analysis shows.
It may be said that revenue is vanity and profit is sanity, but turnover is an important factor when assessing how popular a P2P lending platform is as it shows how much they are attracting in borrower fees and interest.
Growing fintechs may use some funds to invest in their platforms, which often pushes them into the red.
But research by Peer2Peer Finance News – based on Companies House filings by Zopa, Funding Circle, RateSetter and Assetz Capital – shows while the largest lenders in the sector may not all have reported profits in their latest accounts, they are all managing to grow their revenue.
Funding Circle is the UK’s largest P2P lender and also has the highest revenue growth among its competitors.
Its latest annual accounts for 2018 showed while it had a pre-tax loss of £14.5m, its revenue was up 36 per cent year-on-year in 2018 to £93.6m.
Half-year results from the publicly-listed platform last year also revealed its revenue was up 29 per cent annually.
Similarly, business lender Assetz Capital’s most recent accounts for the 12 months to March 2019 shows that it has the second highest revenue growth among this cohort, posting a 22 per cent year-on-year increase to £16.9m. However the firm posted a loss of £1.1m over the same period.
RateSetter has the same reporting period and said revenue from core operations rose 16 per cent to £29.6m despite posting a loss.
The platform last year said it is in touching distance of profitability.
Zopa may be the only platform in the big four that has posted a profit, based on its 2018 annual accounts, but its revenue grew by just 2.3 per cent to £47.5m.
Revenue is of course only one factor when assessing a platform and like-for-like comparisons can be misleading due to the different business models and reporting periods, but it is an important starting point as ultimately there is no operation without it.