Lending Club sees flat Q3, secures $1.3bn funding line from National Bank of Canada

By Daniel Lanyon on Monday 7 November 2016

Alternative Lending

The US platform saw a slight uptick from its difficult Q2 in the three months to 30 September but also secured a new institutional source of capital.

Lending Club saw loan originations in the third quarter of 2016 of $1.97bn, up 1 per cent compared to the $1.96bn in the second quarter of 2016 but down 12 per cent compared to $2.24bn in the same quarter last year, according to filings to the Securities and Exchange Commission.

The past six months has seen many investors losing confidence in Lending Club, since allegations of impropriety in the underwriting of loans being prepared for sale to an institutional investor.  The result of the news was the resignation of its co-founder and chief executive officer Renaud Laplanche, quickly followed by a major shakeup of its senior executive team in the following months as well as a plunge in its share price.

The ongoing challenges this fallout has created meant the firm only just saw a pickup from Q2’s numbers, reflecting a continued deprecation from the same period last year. Although, the firm clocked up another net loss of $36.5m for the third quarter of 2016, an improving situation compared to $81.4m reported in the second quarter of 2016. However, when you consider the net income of $1m the same quarter last year, it shows the firm is still not fully recovered its 2016 wobble.

It’s operating revenue this past quarter was $112.6m, up 10 per cent compared to Q2 but down 2 per cent compared to the same period last year.

“I am very pleased with our performance in the third quarter.  We actively reengaged with investors of all types to deliver on our plan and enable $2 billion in loan originations," said Lending Club's President and CEO, Scott Sanborn. "While we've made incredible progress, there is still work to be done.”

“In the months ahead we are focused on increasing the diversity and resiliency of our funding mix, realigning our resources, and regaining our operating rhythm. Today's results, along with our new executive team, and the return of banks to our platform, give me confidence as we begin our planning for 2017," he added.

Lending club also announced alongside its Q3 numbers that National Bank of Canada has approved investing up to $1.3bn to be deployed on the Lending Club platform over the next twelve months. The investment will be undertaken by Credigy, a U.S. subsidiary of National Bank of Canada, which specialises in consumer finance investment.

Lending Club has now facilitated nearly $23bn of loans since inception in 2006, As of the end of September 2016 it manages a servicing portfolio of nearly $10.9bn, up 42% compared to the $7.7 billion at the end of the same period last year.

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