Mintos Adds First Loan Originator From the UK

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P2P lending marketplace Mintos has added 1pm as new loan originator on the platform. 1pm is an FCA accredited non-bank finance provider which is publicly listed on the AIM market on the London Stock Exchange. The company provides various loan types to SMEs in Britain. On Mintos 1pm offers business loans for investment in GBP, with an interest rate of up to 11%.

1pm was founded in 2000 and listed on the London Stock Exchange in 2006. The company is dedicated to helping the United Kingdom’s economy grow by providing finance to businesses. It offers many finance solutions to SMEs within the United Kingdom including asset and vehicle finance, hire purchase, commercial loans and invoice financing.

1pm currently operates from eight sites across the United Kingdom. The company employs 170 people and has more than 16,000 small businesses as clients.

“An important part of our strategic growth plan is to harness the benefits of financial technology. By joining the Mintos marketplace, we will now be able to accelerate the amount of loans that are originated by our business and to access retail global investors efficiently, a funding source that would be unavailable to us without this digital capability,” says CEO of 1pm plc Ian Smith.

1pm business loans from the United Kingdom on Mintos range from GBP 3 000 to 50 000. The repayment period is from 3 months to 5 years. .

1pm has a total lease, loan and invoice finance portfolio of GBP 130 million. The interim financial results for the six-month period that ended on 30 November 2017 for 1pm plc showed the group’s revenue increased by 74% to GBP 13.9 million. Profit before tax for the group increased by 77% to GBP 3.6 million.

“The United Kingdom has one of the largest alternative finance markets in the world. We are very excited to have expanded Mintos into this geography by launching 1pm on the marketplace. The company is a great addition and offers investors on Mintos a new geography and further opportunities in GBP investments. We look forward to this partnership with 1pm and to seeing further partnerships arise in this market,” says Martins Sulte, CEO and Co-founder of Mintos.

ING Diba Buys Lendico

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Bank ING Diba acquires p2p lending marketplace Lendico. According to Finanz-Szene.de the transaction was reported to the German Federal Cartel Authority last week. The bank has confirmed the acquisition.

Lendico went through hard times. It had to cut back on international activities, never really took off on German home turf and realigned from consumer lending to SME lending. Last year the majority stake was sold from Rocket Internet to Arrowgrass.

Speculation is that the bank acquired Lendico in a make or buy decision to save development time for an own platform, which could have taken over a year. While the price of the acquisition was not disclosed, I suspect Lendico could have come cheap, considering the lingering of the business in the past years.

Ratesetter Launches IFISA Offer

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Ratesetter announced it will launch the IFISA product offer tomorrow. The Ratesetter ISA will initially be available to existing customers, then to new customers on 1 March and to inward transfers from other ISAs in April.

Key features of the Ratesetter ISA:

  • Average interest rates are 3% to 6% p.a. depending on level of access.
  • Ratesetter says it takes less than five minutes to open a Ratesetter account online.
  • All investors are automatically covered by Ratesetter’s Provision Fund which manages and diversifies risk, meaning investors do not need to choose specific loans. The Provision Fund has ensured that, to date, every individual Ratesetter investor has received their capital and interest in full. Lending on Ratesetter is an investment and capital is at risk.
  • The Ratesetter ISA is a flexible ISA. Investors can withdraw money and replace it later in the same tax year without losing their tax-free allowance.

Ratesetter’s CEO and founder, Rhydian Lewis OBE, told P2P-Banking:

‘RateSetter’s purpose is to give people the opportunity to earn more on their money. Our ISA makes that opportunity even more compelling because investing is now tax-free.

 Cash ISA savers are frustrated with low interest rates, while inflation is always nibbling away at their money. Stocks & Shares ISA investors have enjoyed good returns recently but may be nervous of market falls, as demonstrated in the last few days. Lending is a third asset class in the middle, offering the potential for higher returns than cash without the volatility of shares.

 With RateSetter’s excellent track record and our focus on the retail investor, we believe our ISA will become an attractive home for people looking to put their money to work.’

For more Innovative Finance ISA products see the large P2P-Banking IFISA comparison table.

Banco BNI Europe Starts to Lend on Multiple P2P Lending Platforms

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Banco BNI Europa was launched in July 2014 as a digital-only bank in Portugal. Banco BNI Europa says it aims to challenge the traditional banking sector through strategic partnerships with fast-moving fintech businesses to launch new products allowing the use of the most advanced technology in terms of risk analysis, consumer experience and rapid entry into the market.

Today Banco BNI Europe announced it will start lending on Fellow Finance.

‘Modern banks expand and grow by partnerships. Fellow Finance enables and offers an easy access to invest and lend in Nordic and Central European consumer and SME loans through its platform. Through their investment account at Fellow Finance, Banco BNI Europa is able to diversify their balance sheet investment into Finnish and German loans easily and cost-effectively. This is an example that banks don’t need to set up their own expensive operations on ground but can effectively enter markets through marketplace lending platforms. It is also an example how banks can also utilize the presence of FinTech among their core business’ says Jouni Hintikka, the CEO of Fellow Finance.

‘Investing via Fellow Finance in consumer and SME loans offers us a great opportunity to easily expand our operations and we are very satisfied with the analytical and professional approach of Fellow Finance in credit intermediation’ echoes Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa.

Last week BNI Europe announced it will fund German SME loans through Funding Circle. According to Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa, ‘an investment in German SME – the staple of European economic stability – is a highly attractive asset class. And Funding Circle is the professional partner that convinced us with their risk assessment and credit analysis. …’.

To date Banco BNI Europa has struck fourteen fintech partnerships with European fintech leaders across the continent. The bank had 141 per cent growth by the end of 2017 taking its total assets above €500m, and cited its focus on ‘innovative products’ as an explanation for the improved performance.

International P2P Lending Volumes January 2018

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The table lists the loan originations of p2p lending marketplaces for last month. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 564 million Euro. 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.

This month I added Linked Finance.

Zopa crossed the milestone of 3 billion GBP originated since launch.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

P2P Lending Volume 01/2018
Table: P2P Lending Volumes in January 2018. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading →

Investing on the Mintos Secondary Market – Hint 2 – Buying overdue loans at discount

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On the p2p lending marketplace Mintos there is a very large and active secondary market. In my previous article I described that the YTM calculation shown on the secondary market is based on the assumption that the buyer holds the loan part till regular end of term and the buyer will achieve a higher yield, if he buys at discount and the loan is repaid prematurily.

In the article I will look into a possible strategy on the Mintos secondary market: buying overdue loans at discount.

In a first step I sort/filter the buyback loans to only have those at discount that are very late (31-60 days overdue).

Mintos Screenshot
Click on image for larger view

I get a result of 349 loans with various discounts and an YTM of up to 14%. Not surprising for me, many of the loans listed at the top are Mogo loans. These are less attractive for buyers with this strategy. Why? Because they actually have a lower probability of defaulting. The paradox of this strategy is that the buying investor actually wants a high probability that the loans he buys default because that will boost his yield.

So in the next step I sort/filter to exclude Mogo loans. I also exclude loans that have a low YTM. This, because there is a chance that they do payup and then the buyer might be stuck with the loans for longer than 30 days.

Mintos Secondary Market
Click for larger view

Finally let’s change the filter to require a minimum discount of 0.3% and there are 21 results:

Mintos Secondary Market Strategy
Click for larger image

What would a buyer get?

If these loans do pay up and then run till regular maturity date, then he recieves a yield of 12.4% to 13.8%. Decent, but not very high compared to other Mintos loans.

However there is a chance of at least 50% that these loans will default and are bought back within the next 30 days. If that happens to a loan, that a buyer bought at 0.3% discount, it will boost his yield very roughly by more 3.6% (0.3% for 30 days multiplied by 12 to get annual effect). Likely it is more because the next payment date will be less than 30 days away. But even taking 3.6% the yield will be around 17%.

Looking at it, it is obvious that discounts as high as possible are preferable. The loan with the 0.6% discount would mean a boost of very rougly 7.2% yield on top (0.6*12). So that could lead to about 20% yield.

I have taken the screenshots for this article just at a random point in time. Higher discounts do happen and discounts of around 1% are not a rarity.

This is certainly not a strategy for a beginner at Mintos and it requires time and monitoring, but it is a frequently used strategy when investing on the Mintos secondary market.

Not yet investing on Mintos? Get cashback!

Mintos is offering 1% cashback on all investments made in the first 90 days after registration if you use this link to signup: Mintos registration. Currently there is an additional cashback offer for new and existing investors of 4-5% cashback on Mogo loans with loan durations of 48 month or more. Need to enroll once (click banner in dashboard after you finished registration). Expires Feb. 16th. The 4-5% roughly equals 1% increased yield.

More cashback offers are listed on the P2P-Banking p2p lending cashback list.