Monthly origination summary for August 2017

Loans issued in August 2017 came in at €2,926,457. The figure is well above the running average for the year. August was the third strongest month for originations in 2017 outpaced by only January and March. As a new and younger demographic enters the workforce more are turning to the convenience, speed and affordability of marketplace lending. This global growth may explain the latest surge of originations at Bondora. Meanwhile, more investors are engaging lenders as our interest rates remain strong and rates on comparable investments remain low as a result of historical quantitative easing globally.

Loan origination by country

As usual Estonia was the leader on loans issued amounts. However, the total share of the country was slightly lower than many previous months. The country represented less than 60% of the total share reaching 59.91%. Meanwhile, Spain came in at 17.57% and Finland represented nearly a quarter of the total with 22.51%. August was the first month of 2017 to see Estonia drop below 60%. In fact, in many months this year the country represented portions reaching as high as 77%. The change occurred after Spain and Finland started producing more loans with lower risk ratings – AA-B rated loans in Finland and C-E rated loans in Spain. This more equitable distribution is mostly the result of improved scoring and pricing models released in spring/early summer.

Share by country – August 2017
Country Interest Amount Share
ESTONIA 20.96% 1753306 59.91%
SPAIN 131.65% 514293 17.57%
FINLAND 50.79% 658858 22.51%

Loan origination by rating

Nearly half of the originations focused in the “B,” “C,” and “D” rated loans (47% total) as investors continue to reach for growth with a mild exposure to risk. “AA,” and “A” rated loans represent the lowest share at around 6% each. “HR” rated loans had the largest share of any group at 19%.

  • “C” rated loans led the group representing 20.13% of the total. These loans represented 18.11% of all Estonia’s originations, meaning that Estonia was a big driver of “C” rated loans for the month. Additionally, interest rates within this rating were strong in both Estonia and Finland commanding 21.13% and 20.47% respectively.
  • As usual, “AA” rated loans represented the smallest portion at just 5.41% and available only in Estonia and Finland. “A” rated loans were similar at 6.27%. It should be marked that the total share of AA and A loans is more than doubled since spring.
  • Riskier “E” and “F” rated loans across all markets represented 11.82% and 10.80% respectively.
  • Investors were not afraid to reach for a higher return with their investment strategies with the riskiest “HR” loans which were the second largest portion of the total at 18.59% with triple-digit returns in the Spanish market.
  • “B” and “D” rated loans were nearly identical at 13.67% and 13.32% respectively, representing a continued preference for risk mitigating while seeking higher returns.
Share by country and rating – August 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 9.97% 150009 5.13% 9.52% 8196 0.28%
A 11.76% 151764 5.19% 12.14% 31616 1.08%
B 15.13% 388597 13.28% 15.26% 11484 0.39%
C 21.13% 530042 18.11% 22.02% 530 0.02% 20.47% 58447 2.00%
D 28.70% 336356 11.49% 29.25% 19078 0.65% 29.35% 34253 1.17%
E 34.32% 196008 6.70% 37.39% 36255 1.24% 37.74% 113583 3.88%
F 35.73% 530 0.02% 53.81% 65764 2.25% 50.98% 249800 8.54%
HR 158.51% 392666 13.42% 89.83% 151479 5.18%

Bondora portfolio performance – July 2017

Key takeaways

  • In Spain, the last three quarters have brought in significant realized return figures.
  • Estonian loans have shown the most stable returns for investors – the average net returns are aligned or outperforming their targets.
  • Finland’s lower risk ratings appear to be quite volatile in relation to their target figures.

Actual and targeted bondora net returns by grade and country

Estonia

  • In Estonia’s portfolio, Q2 of 2015 was the only period where average realized net return across ratings was lower than the target return (by 0.06%).
  • From 2015 to Q1 of 2017, only rating “A” has performed under its target return (by 0.09%).
  • Loans with higher risk ratings (D, E, F, HR) have proven to be quite rewarding for investors. Realized returns for the aforementioned ratings have been more than 5 percentage points higher on average than their targets.

Estonia-portfolio-returns-july-2017

Finland

  • First quarter of 2017 has continued to deliver over 20% returns in Finland, outpacing its target by more than 5 percentage points.
  • Q1 of 2016 is the only other period for Finland where average actual returns outperformed its target figure.
  • B rating loans were the worst performing loans across the previous two years.

Finland-portfolio-returns-july-2017

Spain

  • Loans from all quarters of 2015 are still significantly underperforming compared to their targets.
  • With the exception of Q2 of 2016, all ratings from 2016 to Q1 of 2017 have generated remarkable average realized net returns.
  • The average net return over last three quarters for E, F and HR ratings were 29%, 28% and 21% respectively.

Spain-portfolio-returns-july-2017

Actual and targeted bondora net returns across portfolio per quarter

Compared to previous performance report, the most notable changes have been decreased realized returns for Q2 and Q3 of 2016 loans. Still, the 2016 average returns of nearly 16% remain higher than the average target figure. 2017 first quarter realized net returns are still going strong by surpassing the target by 4.6 percentage points (18.51% over 13.91%). While 2016 and 2017 are showing strong performance, loans across portfolio in 2015 are continually performing under the target figures with average returns of 13%.

portfolio-net-returns-per-quarter-july-2017

Actual and targeted bondora net returns across previous 8 years

The big picture has remained the same as in previous reports – last three years are showing growing trend for realized net returns with more than 15% average across all countries. Across all 8 years, Estonia still leads the pack with average of more than 21%, Finland with nearly 15%, Spain and Slovakia trailing with 7% and 3% total averages respectively.

net-returns-8years.july-2017

Monthly origination summary for July 2017

Originations for July 2017 were strong, reaching a total of €2,851,766 which is just over of the average monthly origination for 2017 of €2,846,160. The month outperformed the totals for May, June and February. “HR” rated loans represented the largest share at almost 19% of the total. Investors continue to seek a measured approach to risk as the “C” and “D” rated loans each represented nearly 17% of the total followed by “B” rated loans at around 15%.

Loan origination by country

Estonia was the leader in originations again, claiming 61.16% of the total. Finland captured 21.68% followed by Spain at 17.16%. The high concentration of originations within Estonia is impressive given that there are no “F” or “HR” loans offered and these higher risk loans carry an attractive return. The distribution or originations across the countries is slightly more even than last month. This may signal that Estonia’s dominance is finding a long-term resting place in the low 60% range.

Share by country – July 2017
Country Interest Amount Share
ESTONIA 20.93% 1744228 61.16%
SPAIN 109.49% 489314 17.16%
FINLAND 50.45% 618224 21.68%

Loan origination by rating

Nearly half of the originations focused in the “B,” “C,” and “D” rated loans (48% total) as investors continue to reach for growth with a mild exposure to risk. “AA,” and “A” rated loans represent the lowest share at 6% each. This smaller share might represent investor’s reluctance to go for a lower return amid a surging equities market. “HR” rated loans had the largest share of any group at 19%.

  • For finnish borrowers, investors displayed a clear preference for risk and larger returns as the portion of originations grew with each level of increasing risk.
  • Spain originations represent a similar composition to Finland as investors became aggressive in their pursuit of risk.
  • Generally investors are concentrated in the bottom half of the scale. That is, the “D” through “HR” loans represent 56% of the total origination. Meanwhile, the “AA” through “C” loans represent about 44% of the total.
Share by country and rating – July 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10.00% 165704 5.81% 9.26% 16145 0.57%
A 11.92% 158881 5.57% 11.79% 9875 0.35%
B 15.00% 388719 13.63% 14.55% 33251 1.17%
C 20.65% 449078 15.75% 24.37% 1590 0.06% 22.54% 28727 1.01%
D 28.85% 386610 13.56% 27.34% 18457 0.65% 29.17% 72096 2.53%
E 34.29% 195236 6.85% 38.47% 33551 1.18% 37.74% 101949 3.57%
F 55.03% 82027 2.88% 48.85% 173413 6.08%
HR 133.53% 353689 12.40% 83.14% 182768 6.41%

Monthly origination summary for June 2017

June’s originations came in at €2,778,332, outpacing the months of February and May, although the total was below the monthly average for 2017 of €2,845,226. Just over half of this total came from loans rated in the “B,” “C,” and “D” range. However, there was something of a polarizing effect with regard to risk. The second highest portion of the months total originations came from “HR” loans, exhibiting the greatest risk. “C” rated loans took the greatest share at 21.14% of the total.

Loan origination by country

As expected Estonia carries the largest portion of the total at 67.56%. However, this is a definitive drop from last month when the country took in 77.44% of the total. Spain was second with an 18.57% share of June’s originations followed by Finland at 13.88%. Both figures are clear increases over May. This may be the start of an equalizing trend where originations are more evenly distributed across regions.

Share by country – June 2017
Country Interest Amount Share
ESTONIA 20.74% 1876925 67.56%
SPAIN 95.81% 515814 18.57%
FINLAND 50.24% 385593 13.88%

Loan origination by rating

There was little or no consistency among loans by rating. There were only three common ratings among the originations in each country, “D,” “E,” and “F” which, among this group, dominated in Estonia, Finland and Spain respectively. Originations seem to be driven more by what’s available rather than pure investor risk tolerance.

  • “AA,” and “A” rated loans were the two lowest groups stemming, likely, from lower availability.
  • Both Spain and Finland saw loan originations also from less risky ratings than usual – “D” and “E” rated loans for Spain, “AA,” “A,” and “B” rated loans from Finland.
  • Interestingly, “HR” loans in Finland represent the highest portion despite a wide range of options. This metric may signal a more flexible approach to risk by investors.
  • “AA,” “A,” and “B” loans together represent 25.94% of originations whereas “HR” and “F” loans together hold 26.34% of the total. Again, it seem investor’s drive towards return is more influential than their concern with the risk of a higher default.
Share by country and rating – June 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10.20% 77799 2.80% 8.47% 2650 0.10%
A 11.66% 149217 5.37% 11.27% 5840 0.21%
B 14.57% 468695 16.87% 16.60% 16590 0.60%
C 20.13% 545595 19.64% 22.12% 41642 1.50%
D 26.25% 372867 13.42% 29.40% 7872 0.28% 25.12% 41327 1.49%
E 33.09% 219303 7.89% 38.48% 21920 0.79% 35.25% 75155 2.71%
F 35.17% 43449 1.56% 48.79% 67300 2.42% 48.91% 62458 2.25%
HR 107.62% 418722 15.07% 80.89% 139931 5.04%

Bondora portfolio performance – June 2017

Key takeaways

  • To date, the realised return across all countries is on track to continue a trend of three consecutive years of improved performance moving from 12.70% to 18.25% to 19.78% for 2015, 2016 and 2017 respectively.
  • Spain and Finland have each exhibited three consecutive years of improved realised net returns. At this point, their 2017 performance suggests this trend is ongoing, though it’s still early in the year.
  • If 2017 figures hold steady the total realised net return will be the highest seen since 2012.
  • The variance between the realised net return for each country is growing as Spain begins to deliver greater performance.

Actual and targeted bondora net returns by grade and country

Estonia

  • “D” rated loans are beginning to strengthen their returns. Their Q1, 2017 performance exceeds the performance seen in the last three quarters.
  • The average realised net return has dropped to 16.62% which is slightly lower than the same measurement over each quarter for the last two years.
  • The lower risk loans (“AA,” “A” and “B”) have been delivering lower realised net returns in recent quarters than in 2015.
Estonia AA A B C D E F HR
2015
Q1
Actual 14,60% 13,75% 15,45% 18,31% 20,37% 24,10% 24,57% 23,02%
Target 13,10% 13,84% 14,31% 15,76% 18,47% 20,43% 23,17% 23,51%
2015
Q2
Actual 14,19% 11,39% 14,96% 14,33% 21.56% 16,97% 31,19% 19,48%
Target 13,20% 13,82% 14,29% 15,89% 18,40% 20,46% 23,08% 23,65%
2015
Q3
Actual 15,41% 15,20% 16,02% 17,60% 18,07% 26,74% 27,87% 27,25%
Target 13,18% 13,85% 14,30% 15,79% 18,43% 20,32% 23,19% 23,85%
2015
Q4
Actual 14,03% 15,42% 15,05% 19,01% 19,93% 14,51% 23,36% 27,04%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,88% 13,68% 15,01% 19,03% 23,72% 25,85% 23,45% 34,70%
Target 10,62% 11,32% 12,09% 14,38% 16,17% 17,51% 18,28% 17,96%
2016
Q2
Actual 9,74% 1,51% 13,89% 15,78% 17,99% 20,82% 28,51% 26,28%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%
2016
Q3
Actual 9,93% 12,11% 11,77% 14,42% 17,94% 22,80% 24,72% 27,29%
Target 8,40% 9,77% 11,48% 13,64% 15,22% 16,48% 17,04% 17,10%
2016
Q4
Actual 9,25% 10,46% 11,84% 15,80% 18,02% 25,51% 30,22%
Target 8,21% 8,61% 9,61% 11,10% 12,47% 14,09% 14,94%
2017
Q1
Actual 9,46% 8,97% 12,33% 14,97% 19,69% 23,91% 26,99%
Target 8,29% 8,61% 9,44% 10,84% 12,68% 13,99% 14,63%

Finland

  • Finland has had an excellent Q1 this year delivering an average realised net return of 24.79%.
  • The riskier “HR” rated loans are performing again after two consecutive quarters of low returns. “HR” loans returned 30.09% in Q4 of 2016 and 23.07% in this years first quarter relative to the return of -4.08% and 4.40% seen in Q3 and Q2 of 2016 respectively.
Finland AA A B C D E F HR
2015
Q1
Actual 7,77% 6,44% 6,87% 10,03% 18,60% 41,17%
Target 12,87% 13,33% 14,50% 16,61% 18,15% 20,82%
2015
Q2
Actual 3,49% 9,93% 10,69% 7,73% 4,59% 11,19%
Target 12,88% 13,33% 14,67% 16,67% 18,07% 20,86%
2015
Q3
Actual 1,58% 8,07% 10,69% 13,60% 6,62% 16,52%
Target 12,90% 13,30% 14,70% 16,58% 18,36% 20,81%
2015
Q4
Actual 0,99% 10,56% 15,01% 14,58% 8,02% 23,85%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 15,14% 12,16% 16,82% 24,64% 21,22% 14,83%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 17,50% 16,07% 13,41% 20,83% 18,73% 4,40%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%
2016
Q3
Actual 7,74% 18,02% 14,48% 12,48% 12,53% -4,08%
Target 12,45% 14,34% 16,37% 17,89% 18,91% 19,19%
2016
Q4
Actual -19,31% 17,90% 23,84% 22,28% 29,67% 30,09%
Target 9,90% 11,87% 14,32% 16,37% 20,66% 27,53%
2017
Q1
Actual 18,09% 11,38% 19,02% 22,99% 35,05% 23,07%
Target 11,86% 11,20% 13,81% 15,47% 18,70% 23,57%

Spain

  • Spain has seen the second best average realised net return since the start of 2015. First quarter of 2017 for the country returned an average of 30.50%.
  • The country’s limited offering of riskier loans (“E,” “F,” and “HR”) have helped boost the total average return as higher interest rates offset the higher likelihood of default.
  • These three loan ratings are currently outperforming their targeted figures by an average of almost 7 percentage points.
Spain AA A B C D E F HR
2015
Q1
Actual -6,68% -8,83% -7,13% 5,17% 9,81% 8,43%
Target 12,62% 12,90% 14,33% 16,21% 18,32% 20,24%
2015
Q2
Actual -13,98% -10,57% 3,93% 10,26% 12,51%
Target 12,85% 14,33% 16,23% 18,32% 20,22%
2015
Q3
Actual 15,29% -6,88% 5,44% 10,58% 2,39%
Target 13,11% 14,55% 16,18% 18,32% 20,31%
2015
Q4
Actual 17,76% -0,99% 6,48% 15,65% 11,45%
Target 13,41% 14,93% 16,24% 17,85% 18,06%
2016
Q1
Actual 37,26% 24,35% 17,95%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual -17,43% 4,21% 0,39%
Target 19,41% 20,16% 20,36%
2016
Q3
Actual 28,38% 25,66% 8,74%
Target 19,30% 20,24% 20,65%
2016
Q4
Actual 37,38% 23,93% 29,24%
Target 16,44% 17,15% 27,79%
2017
Q1
Actual 22,23% 37,13% 29,69%
Target 15,12% 17,17% 29,14%

Actual and targeted bondora net returns across portfolio per quarter

Just as last month, the average realized returns for 2016 vastly outperformed 2015 quarterly returns. Average for 2016 came to 18.34%, exceeding 2015 aversages by more than five percentage points. 2017 has also started strong, with Q1 average realized returns of 19.80%, which is 5.01 percentage points higher its target return (14.78%). Overall, the total average quarterly returns since 2015 is exceeding the target by 0.84%.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q1
Actual 12,61% 11,77% 12,98% 15,48% 20,89% 16,07% 16,19% 22,54% 20,86%
Target 16,56% 16,52% 16,79% 16,28% 14,66% 15,64% 16,38% 16,41% 14,84%

Actual and targeted bondora net returns across previous 8 years

The early Q1 indicators for this year suggest we’re on track to deliver a fourth consecutive year of improved total realised net returns. The current realised return of 19.78% is less than that of years like 2010, 2011 and 2012, however, today we offer far more loan investments across more countries.

2009 2010 2011 2012 2013 2014 2015 2016 2017
Country Actual Actual Actual Actual Actual Actual Actual Target Actual Target Actual Target
EE 16,65% 29,59% 24,44% 23,25% 20,99% 20,70% 18,29% 17,00% 18,90% 13,86% 16,30% 11,23%
ES -10,82% -4,40% 6,00% 17,42% 15,54% 21,48% 30,49% 27,41%
FI 9,24% 8,42% 9,87% 15,50% 18,39% 16,85% 24,75% 18,00%
SK -9,75%
ALL 16,65% 29,59% 24,44% 23,25% 18,35%  10,95% 12,70% 16,57% 18,25% 15,89% 19,78% 14,78%

Monthly origination summary for May 2017

Originations for May 2017 were lower compared to last month. The total of €2,710,450 was also lower than the average monthly origination of €2,858,604. More than half of this month’s total is comprised of “B” through “D” rated loans from the Estonian market. Investors continue to balance mid-level risk with a reach for higher interests ranging from approximately 14% to 25%. The average interest across all countries came to 30.99%.

Loan origination by country

Estonia continues to hold the majority of originations at just over two-thirds of the total (77.44%). Spain carried 13.59% with Finland following at 8.97%. However, recent research released by the Fund for Peace cited Finland as the most stable country in the world. This strong signal of political, economic and social strength may, in time, boost originations in the country as investors seek stability.

Share by country – May 2017
Country Interest Amount Share
ESTONIA 19.89% 2098983 77.44%
SPAIN 85.12% 368360 13.59%
FINLAND 44.79% 243107 8.97%

Loan origination by rating

“C” Rated loans represented the largest portion of new loan originations with 26.40% total share, nearly all of it within the Estonia region. The greater availability of these loans in Estonia has been a contributing factor for the country’s dominance in total originations.

  • “B” and “C” rated loans both exhibit higher proportions of total originations this month versus last month. This may indicate a gradual progression towards lower risk loans.
  • Across Estonia, Spain and Finland, 11 of the 14 different ratings have seen increases in their interests over last month.
  • HR loans continue to offer outsized interest in reward for their higher risk. Spain’s HR loans generated 92.66% while Finland’s same rating offered 76.91%.
Share by country and rating – May 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10.34% 45409 1.68%
A 11.48% 113799 4.20%
B 14.42% 594904 21.95%
C 19.22% 696733 25.71% 21.81% 18905 0.70%
D 25.18% 392097 14.47% 26.05% 36996 1.36%
E 31.63% 243772 8.99% 37.07% 54205 2.00%
F 35.21% 12269 0.45% 85.12% 56163 2.07% 45.65% 87174 3.22%
HR 92.66% 312197 11.52% 76.91% 45827 1.69%

Bondora portfolio performance – May 2017

Key takeaways

  • All countries have generated double digit realized net returns for the last three consecutive quarters. Though some of the Q1 2017 figures may decrease over time they’re all very likely to remain well into the double digits.
  • As we move from 2015 to the present Estonia, Spain and Finland are all generating returns to a more equal degree. Previously the performance across countries was less balanced.
  • The realized net return in each quarter of 2016 was significantly higher than the same quarter in the previous year by a minimum of 321 basis points.

Actual and targeted bondora net returns by grade and country

Estonia

  • “AA,” “B” and “F” rated loans have all outperformed their target every quarter since Q1 of 2015 offering investors an excellent range of returns across various risk levels.
  • For each of the previous nine quarters more loan ratings have outperformed their target than those that have not.
  • Loan ratings “B” through “F” have all returned double digits since Q1 of 2015.
Estonia AA A B C D E F HR
2015
Q1
Actual 14,59% 13,86% 15,60% 18,44% 20,30% 23,27% 24,57% 23,38%
Target 13,10% 13,84% 14,31% 15,76% 18,47% 20,43% 23,17% 23,51%
2015
Q2
Actual 14,28% 11,39% 15,09% 14,38% 21.90% 17,63% 31,44% 19,88%
Target 13,20% 13,82% 14,29% 15,89% 18,40% 20,46% 23,08% 23,65%
2015
Q3
Actual 15,50% 15,14% 16,11% 17,70% 18,34% 26,84% 28,25% 28,17%
Target 13,18% 13,85% 14,30% 15,79% 18,43% 20,32% 23,19% 23,85%
2015
Q4
Actual 13,99% 15,27% 15,10% 19,23% 20,13% 14,52% 23,76% 27,76%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,85% 13,61% 15,14% 19,17% 23,91% 26,09% 24,10% 35,39%
Target 10,62% 11,32% 12,09% 14,38% 16,17% 17,51% 18,28% 17,96%
2016
Q2
Actual 9,64% 1,07% 13,98% 15,89% 18,46% 21,62% 29,03% 27,21%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%
2016
Q3
Actual 9,82% 12,19% 11,88% 14,51% 18,54% 22,94% 25,08% 28,11%
Target 8,40% 9,77% 11,48% 13,64% 15,22% 16,48% 17,04% 17,10%
2016
Q4
Actual 9,27% 10,37% 12,20% 15,77% 18,75% 26,46% 30,35%
Target 8,21% 8,61% 9,61% 11,10% 12,47% 14,09% 14,94%
2017
Q1
Actual 8,64% 8,41% 12,23% 13,94% 21,40% 24,95% 32,06%
Target 8,35% 8,61% 9,61% 10,79% 12,70% 13,99% 14,71%

Finland

  • “C” rated loans in Finland have outperformed the same rating in all other countries for the last four consecutive quarters.
  • Also, “C” rated loans are offering a nice risk/reward balance as this mid-level rating has delivered performance above its targeted figure for the last five quarters.
Finland AA A B C D E F HR
2015
Q1
Actual 8,09% 6,35% 7,27% 10,52% 18,87% 41,80%
Target 12,87% 13,33% 14,50% 16,61% 18,15% 20,82%
2015
Q2
Actual 3,95% 8,88% 11,15% 8,22% 5,14% 11,78%
Target 12,88% 13,33% 14,67% 16,67% 18,07% 20,86%
2015
Q3
Actual 1,55% 8,46% 11,18% 14,00% 6,55% 17,20%
Target 12,90% 13,30% 14,70% 16,58% 18,36% 20,81%
2015
Q4
Actual 0,96% 10,86% 15,36% 14,23% 8,68% 24,81%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 15,10% 12,59% 17,40% 25,26% 21,73% 15,51%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 16,92% 16,65% 14,03% 21,85% 19,41% 6,11%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%
2016
Q3
Actual 8,21% 17,46% 15,40% 13,32% 13,79% -2,08%
Target 12,45% 14,34% 16,37% 17,89% 18,91% 19,19%
2016
Q4
Actual -15,40% 18,30% 23,98% 23,85% 30,85% 32,06%
Target 9,90% 11,87% 14,32% 16,37% 20,66% 27,53%
2017
Q1
Actual 18,09% 18,99% 19,46% 22,65% 35,21% 25,97%
Target 11,86% 11,20% 13,81% 15,47% 18,70% 23,57%

Spain

  • The average excess return above the targeted figure in Spain for the last five quarters was 3.74% which is in between the same measurement for Estonia (5.32%) and Finland (1.84%).
  • The “E,” “F,” and “HR” loans all outperformed their targeted figure in the last two consecutive quarters.
  • Each loan rating segment in the last three quarters has outperformed the same rating in the previous year’s quarter with the exception of “E” in 2017.” For example, “E” of Q4, 2016 generated a realized net return of 38.66% compared to Q4 of 2015 where this segmented returned only 6.20%. This outperformance is likely to hold even in the coming months.
  • “E” and “F” rated loans all outperformed their targeted figure in the last three consecutive quarters.
Spain AA A B C D E F HR
2015
Q1
Actual -6,00% -8,33% -6,83% 5,53% 10,48% 8,96%
Target 12,62% 12,90% 14,33% 16,21% 18,32% 20,24%
2015
Q2
Actual -13,72% -10,31% 4,44% 10,84% 13,13%
Target 12,85% 14,33% 16,23% 18,32% 20,22%
2015
Q3
Actual 15,64% -6,92% 6,13% 11,31% 3,06%
Target 13,11% 14,55% 16,18% 18,32% 20,31%
2015
Q4
Actual 17,91% -1,11% 6,20% 16,33% 12,20%
Target 13,41% 14,93% 16,24% 17,85% 18,06%
2016
Q1
Actual 37,26% 24,79% 18,72%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual -14,26% 5,03% 1,22%
Target 19,41% 20,16% 20,36%
2016
Q3
Actual 30,01% 26,62% 10,39%
Target 19,30% 20,24% 20,65%
2016
Q4
Actual 38,66% 24,41% 31,02%
Target 16,44% 17,15% 27,79%

Actual and targeted bondora net returns across portfolio per quarter

The realized net returns in 2016 average 18.92% per quarter compared to a quarterly average of just 13.21% for 2015. Additionally, this increase has occurred without any significant reduction in the variety of loan ratings across each country. In other words, the increase in average quarterly performance does not appear to come at the cost of investors taking on more risk.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q1
Actual 12,61% 11,77% 12,98% 15,48% 20,89% 16,07% 16,19% 22,54% 20,86%
Target 16,56% 16,52% 16,79% 16,28% 14,66% 15,64% 16,38% 16,41% 14,84%

Actual and targeted bondora net returns across previous 8 years

We’re pleased to see an increase in performance relative to a slowdown in total realized net returns in 2013, 2014, and 2015. This downshift came as we increased our exposure to countries beyond Estonia in those same years. A positive trend is building as the total realized net return has increased each consecutive year since 2015. With three more strong quarters in 2017 we should be able to continue the momentum.

2009 2010 2011 2012 2013 2014 2015 2016 2017
Country Actual Actual Actual Actual Actual Actual Actual Target Actual Target Actual Target
EE 16,54% 29,55% 24,43% 23,25% 21,13% 20,86% 18,45% 17,00% 11,22% 13,86% 16,42% 11,22%
ES -9,62% -4,06% 6,50% 17,42% 16,59% 21,48% 35,49% 27,25%
FI 9,56% 8,74% 10,19% 15,50% 19,15% 16,85% 25,98% 17,68%
SK -9,31%
ALL 16,54% 29,55% 24,43% 23,25% 18,54%  11,19% 12,99% 16,57% 18,81% 15,89%  20,92%  14,84%

Monthly origination summary for April 2017

April’s loan origination total of €2,871,397 was slightly less than last month but is mostly in line with the average of the last three months. The concentration of originations is found in the “B” through “D” rated loans. This section of the loans offered total interest rates ranging from 14% to 25% as higher risk ratings generated increasingly aggressive returns.

Loan origination by country

As usual, Estonia continues to lead the group with 74.00% of the total share of originations. Spain and Finland followed at 14.84% and 11.16% respectively. This disproportionate share comes largely from the fact that Estonia has an offering of loans with “AA” through “B” that are nonexistent in the other two countries. Interestingly, Estonia leads by a wide margin even among the “D” rated loans also offered by Finland despite comparable interest rates. Again, part of this difference is likely due to simple supply and demand.

Share by country – April 2017
Country Interest Amount Share
ESTONIA 21.09% 2124762 74,00%
SPAIN 66.89% 426163 14,84%
FINLAND 43.41% 320472 11,16%

Loan origination by rating

Investors continue to seek a balance between risk and reward. For this reason, the “C” rated loans continue to be the most popular at a total share of 25.30%. These origination numbers also represent the development of the average borrower profile.

As marketplace lending grows in popularity there appear to be fewer borrowers with credit profiles exhibiting the strength necessary to earn an “AA” or “A” rating. In other words, lenders can only support the loans that are made available and fewer borrowers exhibit the responsibility of a high-rated loan. This relationship may also explain why the total share of “HR” loans is relatively high at 15.86% making it the fourth largest portion of the total originations.

  • The average “HR” interest rate of 91.01% in Spain and 88.84% in Finland illustrate the higher return investors command for heavier risk.
  • Interest rates among identical loan ratings in different countries are largely similar which illustrates that the country of the borrower doesn’t impact the risk measurement.
  • The total average interest rate among all countries and all ratings is 35.61%.
Share by country and rating – April 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10,41% 31090 1,08%
A 11,44% 92067 3,21%
B 14,35% 541811 18,87%
C 18,90% 710744 24,75% 21,58% 15825 0,55%
D 25,14% 466010 16,23% 25,52% 84109 2,93%
E 32,23% 239738 8,35% 35,33% 90741 3,16%
F 35,17% 43302 1,51% 42,76% 46900 1,63% 45,80% 53554 1,87%
HR 91,01% 379263 13,21% 88,84% 76243 2,66%

Bondora portfolio performance – April 2017

Key takeaways

  • Generally, the quarterly realised net return from 2015 to 2016 is on an significant uptrend compared to previous years.
  • Slovakia and Spain underperformed in 2014 with a realised net return of -8.84% and -3.66% respectively.
  • Despite strong performance in 2015 and 2016, the total realised net return for Spain across all periods is low at just 2.93% due to a slow start in 2013 and 2014.
  • In recent years Spain and Finland have experienced continued improvement.
  • Estonia is continuing its stable performance across years while also exceeding target returns each year. Realised returns for 2016 are showing biggest difference yet, exceeding the target by nearly 6 percentage points.

Actual and targeted bondora net returns by grade and country

Estonia

  • Every loan rating has outperformed its target in each quarter of 2016 except the “A” rated loans in Q2.
  • The highest outperformance relative to targeted net return has been seen in the “F” and “HR” rated loans in each quarter of 2016.
  • Loans rated “B” through “HR” have earned double digit net returns for every quarter since 2015.
Estonia AA A B C D E F HR
2015
Q1
Actual 14,61% 13,99% 15,76% 18,67% 20,92% 23,71% 24,99% 23,74%
Target 13,10% 13,84% 14,31% 15,76% 18,47% 20,43% 23,17% 23,51%
2015
Q2
Actual 14,30% 11,40% 15,25% 14,49% 22,17% 17,99% 31,74% 20,66%
Target 13,20% 13,82% 14,29% 15,89% 18,40% 20,46% 23,08% 23,65%
2015
Q3
Actual 15,50% 15,25% 16,19% 17,79% 18,53% 27,50% 28,89% 28,97%
Target 13,18% 13,85% 14,30% 15,79% 18,43% 20,32% 23,19% 23,85%
2015
Q4
Actual 14,03% 15,39% 15,30% 19,41% 20,42% 15,61% 23,87% 29,23%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,81% 13,43% 15,20% 19,33% 24,15% 26,34% 24,49% 35,93%
Target 10,62% 11,32% 12,09% 14,38% 16,17% 17,51% 18,28% 17,96%
2016
Q2
Actual 9,45% 1,42% 14,10% 15,82% 18,90% 22,66% 29,63% 27,54%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%
2016
Q3
Actual 9,66% 11,98% 11,86% 14,79% 19,04% 23,77% 27,71% 29,29%
Target 8,40% 9,77% 11,48% 13,64% 15,22% 16,48% 17,04% 17,10%
2016
Q4
Actual 9,14% 10,47% 12,15% 15,95% 18,88% 26,81% 30,13%
Target 8,21% 8,61% 9,61% 11,10% 12,47% 14,09% 14,94%

Finland

  • The performance of the realised net return compared to the targeted figure has fluctuated since 2015, however, three out of the four quarters in 2016 outperformed their target.
  • Realised net returns have reached the double digits in 7 of the last 8 quarters.
  • “E” and “F” rated loans frequently outperform their targeted figure by the widest margin.
Finland AA A B C D E F HR
2015
Q1
Actual 8,50% 6,59% 7,71% 11,03% 19,64% 42,58%
Target 12,87% 13,33% 14,50% 16,61% 18,15% 20,82%
2015
Q2
Actual 4,27% 9,22% 11,48% 8,62% 5,69% 12,27%
Target 12,88% 13,33% 14,67% 16,67% 18,07% 20,86%
2015
Q3
Actual 1,49% 8,08% 11,66% 14,17% 7,13% 18,02%
Target 12,90% 13,30% 14,70% 16,58% 18,36% 20,81%
2015
Q4
Actual 1,08% 11,39% 15,69% 14,55% 9,16% 25,20%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 15,10% 12,77% 17,86% 25,75% 22,47% 15,22%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 16,86% 16,90% 14,97% 22,62% 19,82% 7,47%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%
2016
Q3
Actual 7,82% 17,30% 15,63% 14,39% 15,10% -1,23%
Target 12,45% 14,34% 16,37% 17,89% 18,91% 19,19%
2016
Q4
Actual -10,93% 18,34% 23,97% 24,96% 30,94% 32,77%
Target 9,90% 11,87% 14,32% 16,37% 20,66% 27,53%

Spain

  • Spain had poor performance in Q2 of 2016 but the other three quarters generated realised net returns in the double digits.
  • “F” loans have outperformed their targeted figures for 3 quarters in 2016.
  • Spain has seen its realised return grow from -9.15% to 17.41% over 4 years of uninterrupted improvement.
Spain AA A B C D E F HR
2015
Q1
Actual -5,13% -7,73% -6,80% 5,97% 10,83% 9,49%
Target 12,62% 12,90% 14,33% 16,21% 18,32% 20,24%
2015
Q2
Actual -13,32% -9,91% 5,04% 11,50% 13,70%
Target 12,85% 14,33% 16,23% 18,32% 20,22%
2015
Q3
Actual 16,04% -6,99% 7,30% 11,78% 3,89%
Target 13,11% 14,55% 16,18% 18,32% 20,31%
2015
Q4
Actual 18,31% -1,07% 6,64% 17,03% 12,94%
Target 13,41% 14,93% 16,24% 17,85% 18,06%
2016
Q1
Actual 37,26% 25,33% 19,60%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual -11,55% 7,66% 2,34%
Target 19,41% 20,16% 20,36%
2016
Q3
Actual 31,14% 26,79% 11,97%
Target 19,30% 20,24% 20,65%
2016
Q4
Actual 37,32% 23,02% 32,28%
Target 16,44% 17,15% 27,79%

Actual and targeted bondora net returns across portfolio per quarter

In each quarter of 2016 we’ve seen the total realised net return outperform the targeted figure. Improvements across all countries have led to realised returns in 2016 that exceed figures for the same periods in 2015. On average, the performance of the realised return was on par with the targeted figure, slightly surpassing it by 0.35 percentage points. However, in 2016 the realised return average across quarters exceeded the average targeted figure by 3.66 percentage points.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4
Actual 13,00% 12,10% 13,36% 15,88% 21,24% 16,60% 16,99% 22,89%
Target 16,56% 16,52% 16,79% 16,28% 14,66% 15,64% 16,38% 16,41%

Actual and targeted bondora net returns across previous 8 years

Estonia remains a top performer with each year’s realised return exceeding the targeted figure. Spain had a slow start but we’ve seen continued improvement from one year to the next and are pleased with the general trajectory. This year Finland has outperformed it’s target for the first time. Finally, Slovakia remains a poor performer, however our investors are still benefitting from plenty of good options with the other countries.

2009 2010 2011 2012 2013 2014 2015 2016
Country Actual Actual Actual Actual Actual Target Actual Target Actual Target Actual Target
EE 16,50% 29,53% 24,41% 23,22% 21,31% 18,15% 21,05% 18,16% 18,72% 17,00%  19,60%  13,86%
ES -9,15% 19,26% -3,66% 19,37% 7,10% 17,42%  17,41%  21,48%
FI 9,91% 17,53% 9,14% 15,99% 10,55% 15,50%  19,58%  16,85%
SK -8,84% 23,76%
ALL 16,50% 29,53% 24,41% 23,22% 18,75% 18,11% 11,48% 18,11% 13,35% 16,57%  19,26%  15,89%

Monthly origination summary for March 2017

Loan originations increased over previous month reaching €3,017,555. Much of this month’s originations comes from Estonia which comprises 75.60% of the total. This proportion exceeds the same measurement for January and February of this year. Most of the originations fell on ratings B, C and D which held a combined share of over 60% of all March loan originations.

Loan origination by country

Estonia leads the pack with 75.60% share of the total, followed by Spain at 12.92% and Finland at 11.48%. Part of Estonia’s larger presence comes from “AA” and “A” rated loans which are not offered by Spain or Finland. However, even among “B” through “E” rated loans Estonia is generating more originations. Some of this performance may be the result of a thriving P2P market and greater demand within the country compared to Spain and Finland. March’s figures represent a trend in this regard. Estonia captured 62.98% of the total in January and 70.24% in February.

Share by country – March 2017
Country Interest Amount Share
ESTONIA 20,43% 2281250 75,60%
SPAIN 101,28% 389880 12,92%
FINLAND 51,72% 346425 11,48%

Loan origination by rating

A concentration within “C” rated loans appears to illustrate a drive towards larger returns. This middle ground of risk offers more aggressive returns amid slightly elevated risk. This acceptance of risk steadily drops off moving down the list from “D” to “F” loans. Interestingly, “HR” loans still capture a significant portion of the total (14.70%) as it appears there is a segment committed to seeking outsized returns in exchange for riskier loans.

  • It’s important to remember that investors can only fund the loans that are available. For example, “A” and “AA” rated loans are a much smaller portion relative to “HR” loans. This difference is due, in part, to the characteristics of borrowers in the market.
  • Investors considering “E” “F” and “HR” loans in the Spain and Finland markets appear to choose return over risk.
  • Finland has the most even distribution of originations among ratings. This wide sampling of credit risk represents an equitable distribution of risk and return among investors within the country.
Share by country and rating – March 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10,00% 26745 0,89%
A 11,78% 118370 3,92%
B 14,65% 555785 18,42%  17,05%  3720 0,12%
C 19,19% 770125 25,52% 23,95% 39145 1,30%
D 25,35% 462440 15,32% 27,89% 38140 1,26%
E 31,82% 294255 9,75% 37,33% 4270 0,14% 36,34% 75425 2,50%
F 36,11% 53530 1,77% 41,14% 46460 1,54% 46,63% 85570 2,84%
HR 108,87% 339150 11,24% 87,58% 104425 3,46%