The following table lists the loan originations of p2p lending marketplaces in April. Lendinvest leads ahead of Ratesetter and Funding Circle UK. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.
Last month Younited Credit (formerly Prêt d’Union) originated first loans in Italy. Geoffroy Guigou told P2P-Banking.com, Younited Credit had a great start, with 416,500 Euro loans originated.
Table: P2P Lending Volumes in April 2016. Source: own research Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
In October 2012 I started to invest into p2p lending at Bondora. I periodically blog about my experiences – you can read my update from Dec. 2015 here. Over the total time I did deposit 14,000 Euro and withdrew 13,380 Euro. So as you see I cashed out an amount almost equal to the amounts I deposited. The good news is that I still own 705 loan parts with an outstanding principal of 10,362 Euro at an average interest rate of 23.74%. Of these 6,355 Euro are in current loans, 1,004 Euro in overdue loans and 3,003 Euro in 60+ days overdue loans. The reason that I still have such a large loan book despite cashing out nearly as much as I paid in, is that I reinvested nearly all interest and principal repayments from 2012 till 2015.
Bondora shows a net return of 24.6% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.0% return.
Let’s look how my remaining portfolio is distributed by several criteria
Chart 1: My portfolio by country
Chart 2: My portfolio by rating
Chart 3: My portfolio by loan purpose
Recent developments
A lot has changed in the past four months. With the introduction of new regulation in Estonia, Bondora now prefunds all loans and also keeps a stake in the loans (‘skin in the game‘). Manual bidding on loans is not as straightforward as previously because now investors can make bids, which are not binding until allocation happens. This leads to situations were say 155% of the loan amount has been bid for, but the allocation has not happened yet, because some of the bidding investors have not enough cash in their account to match their bids and those bids that are sufficiently funded don’t add up to 100%. Furthermore Bondora gives bid preference to bids with larger amounts. If at allocation time bids with enough cash add up to more than 100%, then the bids for higher amounts will succeed, while the smaller amount bids will be rejected.
In August 2015 the new p2p lending marketplace Finbeelaunched in Lithuania. Finbee finances small unsecured consumer loans. The CEO told me that they meet all borrowers in person and that these are mostly looking to refinance other debts at higher rates, which they have paid in accordance to schedules punctually over months or years. Typical interest rates for investors are in the range of 20% to 32%. The platform is still very young, but recently loan volume picked up and Finbee crossed the milestone of 1M Euro loans financed since launch.
I started small and deposited only 50 Euro right after launch to test it and gain first hand experiences. Only two months ago I started depositing more and right now my deposited total amount is about 1,550 Euro.
The auction mechanism
Finbee lists all loan request and investors can bid either manually or via autoinvest (autolend). There is an auction period for each loan with investors underbidding each others in an reverse auction, meaning the interest rate will sink once the loan is filled. A pecularity of Finbee is, that each investor with a winning bid gets the individual interest rate he made the bid on, meaning there is no uniform lending rate for investors in the same loan (this is different from the way most other platforms handle reverse auctions, where usually all investors with winning bids get the same rate which is set at the highest winning rate at auction closing).
Loan requests at Finbee. The ones with the green button at right are open for bidding. Auction periods are initially set to 14 days but then reduced to 48 hours, once the loan is 100% filled by bids.
This auction mechanism often causes a mad rush in the last 5 minutes. Lots of bids are made right before closing and it is usual that the top closing interest rate drops 3-5% in these last minutes.
This is aided by a mechanism abbreviated ‘ARBU’ (Automated Response to Bumbed-off Underbids). Investors can enable ARBU to make lower bids on their behalf, once their original bid is outbid. The mechanism is quite configurable in selectable settings, but the catch is that it will not make more than 5 lower bids per loan. This led me to do quite a bid of configuring and experimenting with my settings. I also changed my strategy from multiple smaller bids on the same loan (e.g. 5 bids at 20 Euro), to now just 1 or 2 bids per loan at 30 to 35 Euro.
My strategy
In the first months I have just observed what is happening on the Finbee marketplace. Since February I go for the riskiest loans, risk category ‘D’ and sometimes ‘C’ with the highest loan amounts and the highest interest rates. I do all bids manually and have ARBU enabled with my settings, which I tweaked quite a bit. If I have multiple successful bids in one loan I try to sell some of the loan parts on the secondary market at premium in order to reduce the concentration. On the secondary market only current loans, that have made at least one repayment, can be sold. I also try to sell my late loans on the secondary market, but that means I have to wait for them to turn current again before I can sell them. Continue reading →
The following table lists the loan originations of p2p lending marketplaces in March. Funding Circle leads ahead of Ratesetter and Zopa. I added MoneyThing to the list. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending platforms.
Table: P2P Lending Volumes in March 2016. Source: own research Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations. *Prosper and Lending Club no longer publish origination data for the most recent month.
The first P2P lending platform in Lithuania, SAVY, is organizing their second annual P2P lending conference on the 23rd of March in Vilnius, Lithuania. Guest speakers from all over the world, including the co-founder of LendIt Conference Jason Jones and the leaders of the top Baltic P2P lending companies – Mintos, Bondora and SAVY, amongst others, will engage in a number of panel discussions and presentations.
The conference will be focused on the possibilities of P2P lending and Crowdfunding, while the participants will touch some important topics related to the prospects, challenges and trends for Alternative Financing on a global scale and in the Baltic region specifically, as it offers a considerably higher return on investments than most Western European countries.
https://www.youtube.com/watch?v=B29ozFU0CQE
Live stream of conference starting at 13:30 GMT+2 on March, 23rd
*Sponsored post: This post was paid for by Savy.lt, the conference organizer. I rarely publish sponsored posts, but in this case I thought the content is a very interesting fit for the blog audience.
Latvian p2p lending marketplace Twino today announced plans to shield UK investors using the platform from currency risks. So far all investments on the platform are conducted in Euro. Twino already takes the currency risk of Polish Zloty, Danish Krone or Georgian Lari versus the Euro. Now it plans to make the platform more attractive for investors holding their assets in GBP. The announcement reads:
One of TWINO promises is that we protect investors from currency risk. Thus, while investing on TWINO you don’t need to worry about Polish Zloty, Danish Krone or Georgian Lari appreciating against euro, as every transaction on the platform is performed in EUR.
However, investors from the UK still face the risk of EUR appreciating against GBP, which might lower their returns. Therefore, next week we are planning to launch a major upgrade that will remove the currency risk for investors, who hold their investable assets in British Pounds, equalizing the benefits of investing on TWINO with Eurozone investors.
The functionality will allow investors to choose the currency that they want to invest in (either EUR or GBP), and every transaction on TWINO will be processed in the chosen currency (including deposits, withdrawals, investments, repayments, etc.).
We will provide a further notice when the new functionality launches, and will be reaching out to existing investors, asking if they want to convert their TWINO accounts to GBP.
We are glad to be the first platform in Continental Europe to provide such functionality and hope some of you will benefit from it!
The Twino CEO Jevgenijs Kazanins indicated that Twino is hedging the currency risk, an action that is possible for a platform with volume but not available or viable for individual retail investors, would they strive to do it on their own.
