US peer-to-peer lending platform LendingClub saw its loan originations fall by 90 per cent year-on-year in the second quarter, which it attributed to the Covid-19 crisis.
The platform’s loan originations dropped from $3.129bn (£2.385bn) in the second quarter of 2019 to $325.8m (£248.3m) in April, May and June this year. The lender achieved a net revenue of $43.9m in the second quarter of 2020, down 77 per cent compared to the same quarter last year.
“As anticipated, origination levels decreased in line with our expectations, reflecting the economic impact of Covid-19 on our investors, our decision to tighten underwriting and our decision to pause capital markets activities to preserve liquidity as we work towards completing the Radius acquisition,” said Tom Casey, chief financial officer of LendingClub.
“We feel good about the actions we have taken to align our operating cash expenses with revenue, maintain our liquidity, and increase our cash position in the quarter.”
LendingClub said it is navigating the business through the current challenging times by preserving liquidity and protecting investor returns.
In the second quarter, the platform cut cash expenses and preserved liquidity to end the quarter with cash and cash equivalents of $338m. It is now focussing on increasing its cash position as a percentage of total liquidity.
LendingClub said it has been encouraged by the overall performance of its portfolio with pre-coronavirus vintages expected to generate internal rates of return of three per cent. After tightening underwriting criteria, the platform said it is forecasting internal rates of return of five per cent for post Covid-19 loans.
The platform is in the process of acquiring US lender Radius Bank, which in February it agreed to purchase in a cash-and-stock deal valued at $185m, to help accelerate its recovery.
LendingClub added that the platform has been supporting its members with its member centre, a hub of resources and tools to support borrowers through the current uncertainty, and has expanded its range of reduced payment options.
The lender said it has kept staff safe via working from home and expects to continue doing so for the rest for the year at least.
“In the current challenging environment, we have remained focused on the things we can control and are successfully executing against our strategic priorities,” said Scott Sanborn, chief executive of LendingClub.
“We are pleased with our ability to maintain strong levels of liquidity, are encouraged by the payment behaviour of our members and the resilience of the loan portfolio and remain focused on the acquisition of Radius Bank.
“Approximately two-thirds of members who enrolled in our hardship plans have successfully exited the deferral period and resumed full payment.
“This demonstrates the willingness of our members to repay their loans and is supporting the early re-engagement of loan investors back onto the platform.”