Lending Works reports stable investor returns
Lending Works has seen investor returns remain stable in the third quarter but has pledged to keep monitoring the situation closely due to the external economic environment.
The consumer lender reported average returns of 4.4 per cent per annum for its ‘growth’ product and 3.8 per cent for ‘flexible’ investments in the 2014-2019 cohorts.
The 2020 and 2021 cohorts’ average returns were 2.5 per cent per annum and 4.5 per cent for ‘growth’ and 1.8 per cent and 4.0 per cent for ‘flexible’ respectively, which are relatively stable compared to the second quarter of 2022 performance update.
Read more: Lending Works warns cost-of-living crisis will increase loss rates
The consumer lender – which announced that it was winding down its P2P business last December – said in a blog post: “Overall expected annual losses on the active portfolio remained relatively stable at around four per cent in the third quarter of 2022. However, we will continue to monitor it closely due to the external economic environment.”
Lending Works’ Shield – which acted as a provision fund – reported a relatively stable cash balance of £1.3m in the third quarter of 2022, compared to £1.12m in the second quarter 2022.
“Shield cash utilisation continues to be maximised to pay arrears and default to retail investors”, the firm said.
Read more: Lending Works rebrands as Fluro
Weighted average APR rose to 13.5 per cent in 2021, compared to 12.6 per cent in 2020. “We’ve prudently expanded our risk appetite and average APR to meet demand from a wider pool of borrowers”, Lending Works said in its quarterly report.
Meanwhile, expected annual loss rates by year of origination remained stable in the third quarter of 2022, while lifetime default rates are expected to increase.
“Lifetime default rates have increased over time, in line with our risk appetite expansion,” Lending Works said. “We expect lifetime default rates for recent cohorts to be more impacted by the Covid-19 pandemic.”
The third-quarter data is accurate as of 30 September 2022. Data for the fourth quarter will be available by 31 January 2023.
Lending Works rebranded its consumer-facing platform as Fluro in September as it aims to become the UK’s leading embedded lender.