Funding Circle has said it expects first-half income and adjusted earnings to come in “well ahead of previous expectations”, sending its share price up 20 per cent in morning trading.
The peer-to-peer business lender has guided to core adjusted earnings of at least £40m and total income of at least £120m, thanks to its participation in government-backed loan schemes on both sides of the Atlantic.
“Following a good start to the year, trading has been stronger than expected due to higher origination volumes in the UK and the extension of the PPP scheme in the US,” Funding Circle said.
“The loanbook is stable and performing better than expected so far this year – in our forecasts we continue to expect some credit stress as the UK and US economies reopen.”
In a trading update issued ahead of the P2P lender’s annual shareholder meeting today, Funding Circle said its guidance for the balance of the year remains unchanged and it expects to be profitable for the full year, with profitability skewed towards the first half of the year.
This is due to an expectation of reduced lending later in the year, as the platform transitions back to operating its core loan product alongside government guarantee programmes in the UK and US.
It said loans under management and originations over the course of the full year will depend on how quickly the economies recover in the UK and US.
“Our machine learning and technology platform is transforming the small business borrowing experience and as a result of Covid we are seeing an acceleration in the adoption of online borrowing, which has opened up an enlarged opportunity for Funding Circle,” said Funding Circle chief executive and founder Samir Desai (pictured).
“Whilst we remain mindful of the uncertain economic environment, we are well-placed to continue helping small businesses in 2021.”
Funding Circle group reported an operating profit of £7.2m in the second half of 2020, while its UK arm posted an operating profit of £21.3m.
Funding Circle’s shares were trading 19.27 per cent higher at 177p at 10.30am.