Review of My Bondora Loan Portfolio After Q4/2014

wiseclerk 8 Comments

In October 2012 I started p2p lending at Bondora. Since then I periodically wrote on my experiences – you can read my last report here. Since the start I did deposit 14,000 Euro (approx. 17,000 US$). My portfolio is very diversified. Most loan parts I hold are for loan terms between 36 and 60 months. Together the loans add up to 19,528 Euro outstanding principal. Loans in the value of 2,158 Euro are overdue, meaning they (partly) missed one or two repayments. 1,853 Euro principal is stuck in loans that are more than 60 days late. I already received 10,316 Euro in repaid principal back – this figures includes loans Bondora cancelled before payout. I reinvested all repayments.


Chart 1: Screenshot of loan status

At the moment I have 280 Euro in bids in open market listings and 3 Euro cash available.


Chart 2: Screenshot of account balance

Return on Invest

Currently Isepankur shows my ROI to be over 27.56%. 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 25.0%. Continue reading →

Bitcoin P2P Lending – a Primer in 8 Steps

Guest

This is a guest post by Radoslav Albrecht who is the Co-founder and CEO of Bitbond – a global Bitcoin peer-to-peer lending platform based in Berlin

When Zopa went live in 2005 it was the first online peer-to-peer lending platform. At the beginning many people thought it wasn’t the best idea to lend money to individuals. The majority felt better by bringing their savings to a bank. Critics didn’t realize that banks were handing out the money to individuals and businesses in quite the same manner – only that through P2P lending this happens at lower operating costs and better customer convenience.

Since early 2009 another new financial innovation came up – the digital currency bitcoin. Entire books have already been written about bitcoin. We will only scratch its surface here. Bitcoin can be looked at from at least two perspectives, the technology perspective and the application perspective. We won’t dive into the technology here. When discussing bitcoin P2P lending, the application of bitcoin as a currency is the relevant perspective.

1. Bitcoin as a currency

As a currency bitcoin offers a number of significant advantages. You can send bitcoins to any location in the world and they will be transacted in a few seconds. It’s very similar to sending an email. Therefore the best analogy between bitcoin and a wire transfer is that between email and a letter. The letter can take up to a couple of days depending on where you’re sending it. The email gets to the receiver instantaneously, and so does bitcoin. Continue reading →

Bondora Ratings Create a Single Eurozone Lending Marketplace

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This is a guest post by Pärtel Tomberg, CEO of Bondora.

This month we started the roll-out of Bondora Ratings, a loan application rating system based on the proprietary credit scoring model, with the aim to bring better predictability and consistency of the returns for investors active on Bondora platform.

Our initial aim for developing a credit scoring model was to bring the best banking practices to peer lending. Banks might have failed at providing people with affordable credits, but they have done a few things right, such as developing strong credit scoring models, that have helped them generate premium returns for their investors. With Bondora Ratings we are bringing credit scoring model to individual investors so they could maximize their returns in the same way banks do.

Being a platform that facilitates the exchange between lenders and borrowers, we believe it is our responsibility to bring the best practices, such as credit scoring, to peer lending; thus, making it an effective, efficient and mutually beneficial process for both parties. Eventually, Bondora Ratings will allow credible borrowers get a better rate for a loan, while investors will receive a predictable return level.

On top of bringing banking practices to peer lending, we saw a need for a simple, transparent and unified way to represent the risks and potential returns associated with a particular loan. Until recently, our investors used their own sophisticated models to evaluate the risks and plan their investments at Bondora. We have supported the initiative by offering a wide range of filters and providing extensive data export sets, and we will continue to support those investors in the future by providing a Trading API.

However, as the platform grows, we see an increasing inflow of investors that do not have a need or desire to engage into extensive number crunching. The historic performance of peer lending platforms, and Bondora in particular, indicates that peer lending provides premium returns compared to other assets classes and investors want a simple and easy way to earn those premium returns. Continue reading →

News Coverage of the Lending Club IPO

wiseclerk

Yesterday was a very exciting day for Lending Club and p2p lending as a whole. I must say I was awed when I saw the opening price of around 25 US$ as that put the company valuation around 9 billion US$. Looking through the coverage the excitement is certainly shared:

The venture capital companies that backed Lending Club will be excited too (see graphic).

Decision Trees – Using The Available Data to Identify Lending Opportunities on Bondora – Part 3

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This is part 3 of a guest post by British Bondora investor ‘ParisinGOC’.

Read part 1 and part 2 first.

Investments Decisions using the Tree(s)

Using the Data

Using the output is as simple as looking at the visualisation to see how the Decision Tree splits down from the Root Node and comparing this with a Bondora loan application that I see as a potential target for investment. (Illustration 2 and Illustration 3) At the end of the set of branches that I follow dependant upon the data in the loan application, I end up at a “leaf node”- the end of the tree. (Illustration 4)  This node simply states how many previous loans match the one I am looking at, showing how many of the previous loans defaulted and how many have not.

I treat the Decision Tree as the first step in choosing whether to invest. If the performance record of previous loans like the one I am now considering suggest a default rate of 5% or less, I look further into the loan application. Continue reading →

Decision Trees – Using The Available Data to Identify Lending Opportunities on Bondora – Part 2

Guest

This is part 2 of a guest post by British Bondora investor ‘ParisinGOC’.

Read part 1 first.

Data Mining the Bondora data.

The initial process.

To help understand the specific data cleansing that the Bondora Data Set needed, I first made use of the RapidMiner metadata view – a summary of all the attributes presented to the software – showing Attribute name, type, statistics (dependant on type, includes the least occurring and most occurring values, the modal value and the average value), Range (min, max, quantity of each value for polynominal and text attributes) and, most critically, “Missings” and “Role”.

“Role” is the name given by RapidMiner to the special attributes that are needed to allow certain operations. In my case, the Decision Tree module needed to know which Attribute was the “Target”, that is the attribute that is the focus of the analysis and to which the Decision Tree has to relate the other attributes in its processing.  My “Target” was the “Default” attribute – a “Binominal” (called as such by RapidMiner and meaning an attribute with just 2 values) attribute – 1 if the loan had defaulted, 0 if not.

“Missings” is easy – this is the number of times this attribute has no valid value. For example, my import of the raw Bondora input data has 150 attributes.  Only half of these attributes have no missing values.  The remainder have between 13 and 19132 rows with missing values from a data set of 20767 rows.

To know whether these “missings” would impact my analysis, I needed to get to know the data in more detail.

I knew that Bondora had started to offer loans in Finland in summer 2013 with Spain following in October of that year and Slovakia in the first half of 2014.

I therefore decided not to bother with any loan issued prior to 2013. Continue reading →