Folk2Folk reports fourth year of profit and recommits to retail
Folk2Folk has reported a profit for the fourth year in a row, and pledged to focus on retail investment going forward.
The peer-to-peer lending platform made a pre-tax profit of £1.373m in the 12 months ending 31 January 2023. This compares with a profit of £1.969m during the previous 12 months.
According to records filed on Companies House, the company’s turnover was roughly in line with the previous year, but administrative expenses rose by almost £1m.
The platform acknowledged that the ongoing economic volatility has added risk to the market, and said that “institutional funding continued to be a challenge in 2022.” As a result, Folk2Folk modified its strategy to focus primarily on the retail investment market.
“We will be reviewing our institutional investment strategy again when the interest rate environment becomes more settled,” the company said.
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Folk2Folk added that while “the current difficulties are not over and the likelihood of more distressed borrowers is evident,” it’s pro-active portfolio management has helped to minimise any unexpected shocks.
“Despite the challenging economic environment, 2022 saw that fourth consecutive year of profitability for Folk2Folk,” said director Louis Mathers on behalf of the board.
“The company has adopted a more flexible working model, which has proved popular with staff and enabled us to recruit the best talent in more distant locations. Rising interest rates have placed us in a far more competitive marketplace, which is new territory for Folk2Folk. The company responded proactively by increasing its interest rates, whilst continuing to maintain a balance between investor loyalty and borrower appetite.”
In its financial report, Folk2Folk noted that during the past 12 months it has surpassed £600m in cumulative ending and remains “highly profitable.” The company is on course to pay a dividend for the third consecutive year.
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“I am delighted to announce another year of profit, which demonstrates the trust and confidence that businesses and investors have placed in Folk2Folk,” said Roy Warren (pictured), managing director of Folk2Folk.
“Our strong performance reflects the strength of our business model, the dedication of our team and our unwavering commitment to regional small businesses and retail investors.
“Platform profitability is undeniably an increasingly important factor retail investors consider when choosing where to place their funds, and I strongly feel that maintaining a profitable platform is the responsible thing to do for all our stakeholders and the wider P2P sector.”
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