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Commercial lender Funding Circle Holdings PLC on Thursday posted a diving half-year profit as it is undergoing a transformation of its business.
Pretax profit in the six months to June 30 dived to £1.6 million from £35.4 million a year prior. Loans under management fell by 17% to £4.07 billion from £4.93 billion. Originations of the London-based lender halved to £803 million from £1.64 billion.
Total income fell 36% to £77.3 million from £120.6 million a year ago. Funding Circle lowered its income outlook for the second half of 2022 by £15 million to now be in the range of £140 million to £155 million. However, this would still be at least 81% higher than the most recent total income and 16% higher than in the first half of 2021.
Despite the vast fall in profit, Funding Circle shares rose 3.0% on Thursday morning in London to 37.45 pence each.
Peel Hunt analyst Robert Sage explained: ‘The company continues to deliver on its medium-term strategic pillars. While these numbers and downward guidance are unlikely to provide a positive catalyst for the share price and general sentiment, Funding Circle continues to trade at a meaningful discount to unrestricted cash, which now sits at £183.4 million’.
That unrestricted cash fell 8.0% from £199.4 million at the end of 2021. Overall cash increased 19% over the year to £200.7 million from £168.1 million, but was down 10% from £224.0 million in the second half of 2021.
‘In the last six months, we have made early progress on all three of our strategic pillars to transform the business into a multi-product platform. We are attracting more businesses, saying yes to more businesses and entering new product categories to enable small businesses to not only borrow with Funding Circle, but pay and spend as well,’ Chief Executive Lisa Jacobs said.
Looking ahead, CEO Jacobs stated: ‘We are well prepared to manage the business through the challenging macro environment and are confident in our ability to help small businesses do the same. With our market-leading technology, which continues to deliver a superior customer experience, we remain well placed to deliver on our mission to help more small businesses get the funding they need to win.’
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