Lending Club May Still Be Small, But It's Growing Exponentially

LendingClub Corp (NYSE: LC) reported better-than-expected quarterly earnings following market closing on Wednesday. Adjusted EPS for the quarter came in at $0.02 on revenue of $81 million, compared to the adjusted EPS of $0.00 on revenue of $38.7 million for the same quarter last year.

Founder and CEO of Lending Club Renaud Laplanche was on CNBC post the results to weigh in on the numbers and the competition he faces from big banks.

Big Growth, Small Size

"We have been growing fast, and we reached a nice scale," Laplanche began, "but we are still very small by the size of the banking industry.

"If you look at the total credit card balances outstanding in the U.S., it's about $900 billion and the main use case for our customers to come to us is really to pay off a high interest rate credit card balance.

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"Most credit cards are priced at 17 percent and higher and refinance of that balance with a Lending Club loan at a fixed rate and at a fixed monthly payment and the lower rate in the order of 12 percent."

He continued, "So, significant savings for consumers. So, even though we had $1.6 billion of these balances get re-financed this quarter, it's still very small amount compared to the total size of that particular market."

Competition From Big Banks

On how he perceives big banks making an entry into the marketplace lending space, Laplanche said, "There is a reason why we are the market leader in marketplace lending. I think there are actually pretty significant barriers to entry and significant network effects.

"We really look at banking as an engineering problem. As a set of processes that can be simplified and optimized with better technology.

"That's not necessarily the mindset of traditional banks and I think that mindset really helps us automate more tasks and then help us generate more efficiency and makes the process easier for our customers," Laplanche concluded.

 
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