Funding Circle operating losses rise but sees long-term lending opportunity

LONDON (Reuters) - Funding Circle FCH.L reported a first-half operating loss of 113.5 million pounds on Thursday, more than three times its 31.3 million pound loss a year earlier as the pandemic hurt momentum in its peer-to-peer lending business.

The British-based company, which matches borrowers with retail and institutional investors, said however that it would reinstate previous guidance that it will get close to breakeven in the second half of 2020.

Its widened first-half loss was driven largely by a 60 million pound hit to loans held on its books that it planned to securitise and sell on to investors to broaden its funding channels.

“We were very unfortunate with the speed and severity of how COVID hit, we’d ordinarily have been able to sell those positions in a normal recession but the market peak to trough was just a few weeks versus nine months in the 2008 crisis,” CEO Samir Desai said.

Despite the loss, Desai said Funding Circle could reinstate its projection of getting close to breakeven this year as it benefits from participation in governments’ loan-support schemes for businesses.

Funding Circle has claimed a 20% share in the Coronavirus Business Interruption Loan Scheme in Britain, as well approving around $1 billion in Paycheck Protection Program loans in the United States.

Funding Circle shares were down 5% at 0801 GMT versus a 0.5% drop in the FTSE 250 index .FTMC.

Reporting by Sinead Cruise and Lawrence White; editing by Carolyn Cohn and Jason Neely