Zopa’s P2P arm posted £8.5m loss last year
Zopa’s peer-to-peer lending business swung into a pre-tax loss of £8.5m last year, due to a reduction in lending volumes and a move away from charging upfront fees.
This compares to a £575,000 profit the previous year, according to documents filed with Companies House.
Loan originations fell from £1.079m in 2019 to £456m in 2020.
Zopa announced earlier this month that it is closing its P2P operations in the new year, to focus on its digital bank which it launched last year.
As a result of the bank launch, “the overall availability of loans for matching on the P2P platform reduced due to the group’s strategy to allocate part of its loan platform volumes to the bank,” the latest annual accounts said.
Fee and commission income – which is received from acquiring and servicing loans – fell from £46.2m in 2019 to £22.4m in 2020.
It attributed this to the reduction in new lending volumes due to the impacts of the pandemic and the launch of Zopa Bank, and the move away from charging upfront fees.
“The company moved from upfront fee as the primary revenue source to a loan servicing fee spread over the lifetime of the loan,” the document said. “Whilst the lifetime fee revenue for a given loan is largely the same, the timing of the fee recognition resulted in a significantly lower revenue generation for P2P in 2021.”
Earlier this month, Zopa wrote to investors to say that it was closing its P2P business and all investment funds will be returned to holding accounts by 31 January 2022.
“We deliberated several options for how to close the P2P side of our business in a way that delivers the best outcome for our customers,” said Zopa Group chief executive Jaidev Janardana at the time of the announcement.
“After careful consideration, we have decided that the best way forward is the sale of all retail investor portfolios at full value.
“This will lock in the interest earned by investors so far and ensure the timely return of their money.
“To make this as smooth as possible, Zopa Bank will be buying the P2P loan portfolio and P2P customers will receive their investment balances back by the end of January.”