Credit risk performance update - January 2023
We are pleased to publish our Q4 2022 performance update on our statistics page.
In Q4 2022, we continued to focus on the impact the cost of living challenges and the broader macroeconomic conditions can have on our active loan customers and the overall impact on portfolio performance.
Both expected annual returns and expected loss rates have remained relatively stable compared to our Q3 2022 update.
We are also pleased to inform you that based on the most recent portfolio performance, we will continue to pay at the target interest rate level for all cohorts.
Expected annual returns
Both expected annual returns and expected annual loss rates have remained broadly stable compared to our Q3 2022 update.
Expected annual losses have been updated to reflect the most recent portfolio performance and the latest economic forecast provided by an independent third party.
Overall expected annual losses on the active portfolio remained stable at 3.8% in Q4 2022. However, we will continue to monitor it closely due to the external economic environment.
Expected annual returns have remained relatively stable and broadly aligned with the previous performance update.
Average returns on past cohorts (2014-2019) are 4.4% p.a. for Growth investments and 3.8% p.a. for Flexible, maintained from the previous update.
The 2020 and 2021 cohorts' average returns are 2.5% p.a. and 4.5% p.a. for Growth and 1.8% and 4.0%p.a. for Flexible, respectively, also maintained from the previous update.
We will continue to pay at the target interest rate level for all cohorts.
The Lending Works Shield
The Shield cash balance decreased to £1.2m, compared to £1.3m in Q3 2022. Shield cash utilisation continues to be maximised to pay arrears and default to retail investors while accounting for future unrealised losses.
Next update
Our next statistics page update will be in April 2023.
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 information click here.