LendingClub Cutting 14% of Workforce as Interest Rates Pressure Marketplace

LendingClub is laying off 172 employees — about 14% of its workforce — to reduce costs and navigate the “challenging macroenvironment.”

The move will result in savings of about $30 million to $35 million compared to the second quarter, the digital marketplace bank said in a Thursday (Oct. 12) press release .

“We continue to proactively implement various measures to navigate the persistent and ongoing macroeconomic headwinds and the resulting pressure in our marketplace, primarily driven by higher interest rates,” LendingClub CEO Scott Sanborn said in the release. “To that end, we have made the very difficult decision to streamline our workforce. Longer term, we expect marketplace revenue to rebound as we capture the historically large credit card debt refinancing opportunity.”

In the same announcement, LendingClub provided preliminary results for the third quarter, saying that the company originated about $1.5 billion of loans during the quarter. The company also expects third-quarter revenue of $198 million to $200 million and net income of $4 million to $5 million.

“The expectations above are inclusive of the majority of severance charges, which were recorded in the third quarter of 2023,” the company said in the release.

The company’s third-quarter revenue expectations are in line with the consensus estimate of $199.2 million, Seeking Alpha reported Thursday.

The layoffs announced Thursday follow another workforce reduction announced at the beginning of the year. LendingClub cut 225 jobs in January — about 14% of its workforce at that time — and said the move came as a result of the “historic pace” of rate hikes made by the Federal Reserve. The rising interest rates reduced the demand for loans.

“We remain committed to championing the financial success of our customers while generating long-term profitable growth amid an increasingly challenging economic environment,” Sanborn said at the time.

It was reported Wednesday (Oct. 10) that subdued loan growth has also impacted the largest U.S. banks. Regional lenders have been hit particularly hard by the impact of rising rates, as evidenced by a series of bank failures earlier this year, Bloomberg reported .

Rising deposit costs and intensified competition have also put pressure on banks’ net interest income, the difference between the interest earned on loans and the interest paid on deposits, according to the report.