Lending Works Shares Credit Risk Performance Update for July 2022

Lending Wokrs is pleased to release their Q2 2022 performance update on their statistics page.

In Q2 2022, Lending Works have “continued to focus on understanding the impact of cost of living challenges on [their] active loan customers and the overall impact on portfolio performance.”

Both expected annual returns and expected annual loss rates “have remained relatively stable compared to [their] Q1 2022 update.”

The firm is also “pleased to inform you that the interest rate diversion to the Shield will be reduced for the 2017-2019 cohort.” The 2020 and 2021 cohorts will “continue to pay the target interest rate.”

Both expected annual returns and expected annual loss rates “have remained broadly stable compared to our Q1 2022 update.”

Expected annual losses “have been updated to reflect the most recent portfolio performance and the latest economic forecast.” Lending Works claims that it continues “to closely monitor the impact of the cost of living challenges on the economy, UK consumers and our active loan customers.”

Overall expected annual losses on the active portfolio “remained relatively stable at 4.0% in Q2 2022, compared to 4.1% in Q1 2022.” However, the firm noted that they “may see an increase in loss rates if loan customers fall into financial distress as the cost of living increases.” This will be “monitored extremely closely.”

Expected annual returns “have remained relatively stable and broadly aligned with the Q4 2021 performance update.”

Average returns on past cohorts (2014-2019) “are 4.5% p.a. for Growth investments and 3.8% p.a. for Flexible, compared to 4.4% and 3.8% in Q1 2022, respectively.”

The 2020 and 2021 cohorts’ average returns “are 2.6% p.a. and 4.5% p.a. for Growth and 1.9% and 4.0%p.a. for Flexible, respectively, which are stable compared to the Q1 2022 performance update.”

Lending Works are pleased “to inform you that the interest rate diversion to the Shield will be reduced for the 2017-2019 cohorts.” The 2020 and 2021 cohorts will “continue to pay the target interest rate.”

The Lending Works Shield

The Shield cash balance “has remained relatively stable at £1.2m in Q2 2022, compared to £1.1m in Q1 2022.” Shield cash utilization continues “to be maximized to pay arrears and default to retail investors.”

Lending Works confirmed that their next statistics page update will be in October 2022.

As clarified by the firm, the Lending Works Shield does “not give you a right to a payment so you may not receive a pay-out even if you suffer loss.”

The Lending Works Trustee “has absolute discretion as to the amount that may be paid, including making no payment at all.” Therefore, investors should “not rely on possible pay-outs from the Lending Works Shield when considering whether or how much to invest.”

For more details on this update, check here.

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