Lending Club Still Logging Losses, But Not For Long?

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Scott SanbornLendingClub released its second quarter report this Tuesday.

Loan originations reached a new high of $3.1B, but the year-over-year growth rate for the quarter clocked in at only 11%, down from the 18% growth experienced the three straight previous quarters in a row. The company also generated a net loss of $10.6M. Beyond Q2 however, this appears to be in line with their plan for 2019, as they are forecasting to have a loss ranging from $23-38 million by year’s end, much better than the 2018 loss of $128.2M and 2017 loss of $154M.

“Since I took over as CEO three years ago, we have increased originations by 60% while tripling contribution dollars. We are leveraging our data, scale and marketplace model to execute with discipline and compound our competitive advantages,” LendingClub CEO Scott Sanborn asserted to investors in the earnings call. “Better use of data, increased automation and new communications approaches have increased our conversion rate, reduced our unit cost of operations and accelerated time to approval. For example, in Q2, 72 percent of our personal loan customers went from application to approval within 24 hours – that is up from 46 percent only a year ago.”

LendingClub’s recent decision to forward small business loan inquiries to Funding Circle and Opportunity Fund, did not come up. Funding Circle similarly did not elaborate on any developments relating to this partnership in their August 8th, 2019 H1 report.

Lending Club aimed its focus on the Select Plus Platform, a program that aims to make it easier for prospective investors to find borrowers who might otherwise be unseen due to their non-conformity to certain criteria, broadening the range of those who receive loans. “It really is addressing customers across the credit spectrum,” Sanborn told an investor when asked about Select Plus, “All of this fitting into the broader product-to-platform idea of just opening up our marketplace to other people who can serve the consumers that we have validated identity and income, and assessed credit worthiness, how else can we serve them not just through our own efforts but through the efforts of others.”

Last modified: August 9, 2019
Brendan Garrett

Category: Online Lending


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