Zopa losses reach £41.6m in 2021
Zopa Group posted a pre-tax loss of £41.6m in 2021, following a year of transition which saw the business close its peer-to-peer lending operation and move firmly into the banking space.
During the 12-month period, the group’s operating income increased by 186 per cent to £60.5m, based on an annualised revenue run-rate of £114m.
Gross new lending totalled £1.1bn (comprising unsecured personal loans and car finance), representing a 74 per cent increase year-on-year, with a net interest margin of 10.6 per cent.
The bank issued 208,000 new credit cards within the first 16 months of launch, with a total of 180,000 issued in 2021 alone.
Chief executive Jaidev Janardana (pictured) attributed the group’s £41.6m loss to a 433 per cent increase in loan growth, which has been accompanied by an impairment charge of £41.8m for expected credit losses. This is up from £12.8m in 2020.
Under IFRS 9, the bank must immediately recognise expected credit losses for newly originated assets. It said its allowance for expected credit losses totalled £53.4m at year-end, which corresponds to a coverage ratio of 4.4pc of total gross loans and advances to customers.
Janardana was keen to highlight the firm’s strong capital position at the end of 2021, having raised £240m in new equity during the year. Net loans on the group’s balance sheet grew to £1.2bn, funded by £968m of retail customer deposits.
Growth ambitions
The chief executive also laid out the group’s ambitions to more than double the business in 2022, in relation to revenues and balance sheet size, in a bid to create a profitable business.
In April of this year, he said the digital bank had become profitable and was likely to remain profitable. He expected to close 2022 with a balance sheet of £2bn.
In the group’s 2021 accounts, he outlined plans to diversify Zopa’s funding sources to include a new easy access product, its existing fixed-term savings product, as well as exploring wholesale funding sources.
“We’ll also look to improve efficiencies by deploying further automation through areas such as self-serve tools and doing more with technology and data,” he added.
Read more: Zopa to announce profitability as post-P2P plans emerge
During the year, Zopa took in £835m of deposits, up 372 per cent year-on-year with an average deposit of £36,939 per customer. The group’s loan-to-deposit ratio stood at 121 per cent at the end of 2021, down from 127 per cent in 2020. Meanwhile, net fee and commission income more than halved to £7m during the year.
Operating expenses rose by 22 per cent to £60.6m, reflecting an increase in headcount as 300 new staff members joined, bringing the roster up to 525 people.
Chief financial officer Steve Hume expects the firm’s cost-to-income ratio to fall over the course of 2022, pointing to contributions from automated underwriting, technology investments and digital servicing.
