- RateSetter made a pre-tax loss of £23.3 million in the year to March 2017.
- Figure inflated by a £12 million loan to an advertising company that RateSetter subsequently took over after it got into financial difficulty.
- Results show revenues also rose by 38% to £23.7 million, customer and borrower numbers also up.
LONDON — RateSetter, one of the UK’s three biggest peer-to-peer lenders, saw its losses jump last year after it took a hit from a bad loan.
RateSetter booked a pre-tax loss of £23.3 million in the year to March 2017, compared to a £5.3 million in the previous year. The company operates a peer-to-peer platform that matches retail investors with individuals looking to borrow money.
Operating losses were £9.2 million last year but the figure was pushed higher by a one-off write-down relating to a loan the platform made to Adpod Limited, an advertising business RateSetter lent £12 million.
RateSetter announced in July that it had taken the unusual step of taking over Adpod after the company got into financial difficulty. The company decided to stand behind the loan made to Adpod, agreeing to make repayments to RateSetter’s platform investors in the event that Adpod couldn’t.
“As this loan was outside RateSetter’s credit policy and was an exceptional case, RateSetter believed it was right for it as a company to absorb any losses from this loan, as opposed to the Provision Fund doing so,” the company said on Wednesday.
RateSetter operates a provision fund that is meant to cover the initial losses of any loans, giving platform investors a buffer.
The £14 million impairment charge represents the total lifetime value of Adpod’s loan repayments and RateSetter could end up spending less than that if Adpod gets onto a steady footing. Business Insider understands that the loan to Adpod is the only loan it has written to Read More Here