Lending Review

The Liberum AltFi Volume Index (UK) currently stands at £5.59bn with just less than £100m in financing originated so far this year. Consumer and SME lending have 43% and 44% market share respectively based on last 3 month volume origination. According to statistics from the BBA, banks are providing nearly £7bn of new lending to SMEs each quarter. Peer-to-Peer business lenders financed £345.4m in the final quarter of 2015 and, whilst the sector grew steadily each quarter over the year, the scale of the opportunity for alternative lenders - greater in size relative to the consumer lending market - is clear to see.

Zopa currently leads monthly platform volume originations with £24.8m financed on the platform thus far, closely followed by RateSetter. RateSetter is on course to surpass £1bn in cumulative volume originations in January becoming the third UK platform to achieve such a feat. RateSetter has the highest Year-on-Year (YoY) growth of all heavyweights in the UK P2P market, recording 115% YoY growth. A significant contributing factor to this impressive growth rate has been the platform’s ambition to diversify its borrower offering. With rapid growth in RateSetter’s business lending. Zopa, on the other hand, has to date focused solely on unsecured consumer lending. 

Earlier this week AltFi Data produced a series of predictions for the UK and Continental European marketplace lending industry for 2016. Whilst there may be some limitations to the use of extrapolation for forecasting purposes, the research has nevertheless unearthed exciting predictions for the online lending space. Some of the highlights for 2016 include:

• UK platforms to originate £4.3bn in 2016, representing 53% YoY growth.
• Zopa, Funding Circle and RateSetter will originate just under £1bn each.
• Continental European platforms will collectively originate approximately €1.38bn in 2016 with stronger YoY growth (104.8%) than the UK.
• Funding Circle Continental Europe will become the leading platform for SME lending according to the Liberum AltFi Volume Index (Continental Europe).

Moving onto the Liberum AltFi Returns Index (LARI), the 12-month trailing return across the four largest platforms by 3 month market share currently sits at 6.26%.