2022 Q2: Loan Portfolio Performing Well

Market & Pricing

June marked the end of Q2, so in this blog post, we can have the first look at the new quarter’s performance. Overall, it looks positive, with stability and growth for most markets. Although the yearly return rate decreased slightly, it is still far performing well ahead of its target rates. The last 10 quarters are all outperforming their target rates. Read more:

2022 Q2: The loan portfolio is performing well.
2022 Q2: The loan portfolio is performing well.

Yearly performance

It should be noted that some rates were recalculated at the end of Q2, so some target figures will differ from what you would have seen in previous months.

Despite declining by 0.2% from May, the actual yearly portfolio performance for 2022 is still outperforming well. This is the first month that the 2022 actual rate decreased. But, with the newly calculated targets, it’s 5.2% above the target rate of 9.2% (formerly 9.7%). All three country markets decreased for the first time in 2022, but they are still firmly ahead of their targets. Spain exceeds its target by 2.7%, Estonia by 4.2%, and Finland by 5.9%.

As we saw in May’s data, 2020 and 2021 originations continue to decline, In June by 0.3% and 0.2%, respectively. Both years still exceeded their targets by 2.7%. In 2020, Estonia is still the only market to perform ahead of its target, with Spain and Finland underperforming due to the origination pause we had put in place for those two markets during the pandemic. They are below target by 10.9% and 8.6%, respectively.

2021’s yearly return rate in June looks good, exceeding the target by 5.3%, which is 0.2% lower than in May. All three markets exceed their target rates, but Estonia remains the most substantial market, carrying the portfolio with a 7.1% lead over its target.

Yearly performance – June 2022
Yearly performance – June 2022

Quarterly performance

This month, we can celebrate that for the past 10 quarters, we’ve met and exceeded each target. The performance across these 10 quarters is primarily consistent with previous months, indicating a strong sense of stability. 2019 Q4 is the first quarter to come in below target.

It’s also the first month we can look at the Q2 data from 2022. It starts well with an actual rate of 13.3% compared to a target rate of 11.2%. 2022 Q1 continues on its growth trajectory, increasing from 15.4% to 15.9%. 2020 Q3 remained the quarter with the highest rating of the past couple of years and declined with just 0.2% from May into June. It has a target rate of 12.5% but outperforms it by more than double, with an actual rate of 26.8%.

Quarterly performance – June 2022
Quarterly performance – June 2022

Finland Loan Portfolio

The actual rates of the last 6 quarters of the Finnish portfolio exceed targets. 2022 Q2 starts the new quarter on a high note, with all three risk-rating categories well ahead of their target rates. C-rated loans have the highest actual rate (11.7%), competing with a target rate of 7.3%.

All three risk categories from 2022 Q1 increased once again. D-rated loans continue to outperform their target the best (12.7% compared to a target of 6.9%). Looking at the most recent quarters, 2021 Q4’s C-rated loans have the highest overall performance with 16.4% (up 0.1% from last month).

Finland portfolio performance – June 2022
Finland portfolio performance – June 2022

Estonia Loan Portfolio

Generally speaking, the Estonian portfolio is performing well, but in the most recent Q2 quarter, only 3 of the 5 rating categories are performing above target. Rating categories A and B are underperforming by 0.3% and 0.2%, respectively.

But, 2022 Q1 continues on May’s momentum, as all 6 risk-rating categories exceed their targets. Once again, the E-rating category is the best performer, exceeding its target by 11.5% (up from 10.7% in May).

And as has become the norm, the HR-rating category for 2021 Q4 continues to grow and still holds the highest performance rate in recent years. It has an actual rate of 42.0% compared to a target rate of 5.0%.

Estonia portfolio performance – June 2022
Estonia portfolio performance – June 2022

Spain Loan Portfolio

The Spanish market continues to perform well and grow steadily at the beginning of 2022 Q2. Things are looking good, as the C-rated loan category performs well ahead of its target (11.2% actual vs. 9.2% target). Q1 shares the same target and performs slightly better with an actual rate of 12.4% (0.1% less than in May).

2021 Q3 and Q4 also have the same target of 9.2%, creating a exceed their target rates. Q3 remained stable at 12.8%, while Q4 declined by 0.9%.

Other recent performances, especially from 2020 and 2021, are below target because of the pandemic and because we weren’t originating loans in the Spanish market for most of 2021.

Spain portfolio performance – June 2022
Spain portfolio performance – June 2022

Conclusion

All three markets are performing well, despite slight underperforming categories coming from Estonia’s most recent quarter. Spain and Finland are both exceeding most of their recent targets. The last 10 quarters are all outperforming their target rates, and they indicate consistency across our markets. And although the yearly return rate decreased slightly, it is still far performing well ahead of its target rates.