Credit risk performance update - April 2023
We are pleased to publish our Q1 2023 performance update on our statistics page.
In Q1 2023, we continued to closely monitor the impact of the cost of living challenges and the broader macroeconomic conditions that may have an impact on our active loan customers. We continue to enhance our processes and procedures to support borrower customers who may face changes in their financial circumstances.
Both expected annual returns and loss rates have remained relatively stable compared to our Q4 2022 update.
Finally, 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 loss rates have remained broadly stable compared to our Q4 2022 update.
Expected annual losses have been updated to reflect the most recent portfolio performance based on the latest quarter and the latest economic forecast, which an independent third party provides.
Overall expected annual losses on the active portfolio has remained relatively stable at 3.7% in Q1 2023. 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; this continues to be 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, maintained from the previous update.
Finally, we will continue to pay at the target interest rate level for all cohorts.
The Lending Works Shield
The Shield cash balance decreased slightly to £1.1m, compared to £1.2m in Q4 2022. Shield cash utilisation continues to be maximised to pay arrears and default to retail investors while accounting for future unrealised losses.
Our next statistics page update will be in July 2023.