Funding Circle swung to a loss in the first half of the year as a sluggish UK economy and the winding down of government-backed Covid loans continued to drag on the small business lender’s bottom line.
The London-listed fintech posted a pre-tax loss of £16.6m in the six months to June, against a profit of £1.6m in the same period last year.
Funding Circle has been struggling to adjust to a shift back to commercial lending after the boom in government-backed recovery loan schemes (RLS) during the pandemic. Last year, the firm suffered a loss of £12.9m after posting profit of £64.1m in 2021.
In its half-year report this morning, bosses said loan origination had begun to tick up again in the first half, with total originations and transactions of £771m an increase of 14 per cent on the second half of last year.
Funding Circle chief Lisa Jacobs said it was a “solid set of results” in line with expectations.
“As expected, UK loans business originations were down against [the first half of 2022], when it was operating under the second iteration of the UK government-guaranteed RLS,” the firm said in its report.
“Since we reported in March 2023, the UK economic recovery has been slower than we anticipated.”
Funding Circle said its US division had showed “good growth” and its UK loan business was profitable but the overall loans under management slid to £3.48bn, down from £4.07bn in the same period last year.
Funding Circle floated in 2018 at a valuation of £1.5bn, but has since shed more than 90 per cent of its value.
Shares in the firm bounced 11 per cent after the half year update.