Peer-to-peer lender Zopa has returned to the black on the back of strong growth in revenue and money lent out.
Profit after tax for the full year hit £1.5 million as revenue grew by 40% to £46.5 million. Last year, the company reported a £5 million loss on revenue of £33.2 million.
Initially marketed as a business for people to invest in low cost loans to carefully screened applicants, Zopa has more recently extended its lending criteria to higher-risk applicants which has seen a rising level of defaults.
But in a low-interest environment, investment demand remains strong, with the company having to shut out new applicants in March last year, before re-opening to new customers in January. This followed a period of investment in back office infrastructure and its proprietary systems architecture to streamline and scale up the lending process.
Zopa CEO, Jaidev Janardana, says: “We’re proud to see the company’s efforts reflected in our record lending figures, profitability and strong customer growth. We’ve invested significantly in technology, in our proprietary back office infrastructure, and in our people, all of which have helped Zopa to continue to scale and grow sustainably.”
In April, Zopa announced plans to restructure its business into three distinct entities as it prepares for the launch of its challenger bank proposition in the UK.
The re-organisation will establish separate boards for the Zopa P2P business, proposed bank - subject to banking licence approval - and Group to reflect the increasing scale of the business and ensure good corporate governance.
Zopa is rumoured to be in talks over a fresh £50 million raise, which would value the company at up to £400 million. An IPO within two years is also on the cards.