Monthly origination summary for February 2017

Originations for the month of February dipped since last month as our total reached €2,460,575. However, there was a noticeable increase in the total interest for Finland which came in at 49.99% compared to 45.38% last month. Estonia held steady with a total interest of 20.84% compared to 20.79% last month. Spains interest dropped significantly from 98.01% to 86.34%. The figures for February bring the total interest across all countries to a respectable 34.67%.

Loan origination by country

Estonia’s range of ratings continues to attract investors as the lower risk A, AA, and B rating loans capture 23.51% of the total originations for the month. The popularity of these ratings coupled with the lower total interest rate illustrates investor’s drive for preserving capital. Moreover, a broad use of the “Conservative” Portfolio Manager setting may also explain this trend.

Interestingly, Finland’s share dropped while its total interest grew. It will be interesting to see if the country’s surge from 45.38% last month to 49.99% in February will encourage a greater sharer of the total originations in the future.

Finally, Spain represented the highest level of originations among the E F, and HR ratings. Investors were rewarded for this risk with the high total interest rate of 86.34%.

Share by country – February 2017
Country Interest Amount Share
ESTONIA 20,84% 1728405 70,24%
SPAIN 86,34% 348970 14,18%
FINLAND 49,99% 383200 15,57%

Loan origination by rating

Investors opted for a balance between risk and reward as B and C rated loans represented the two most popular choices as measured by proportion across all countries at 18.97% and 22.23% respectively. Meanwhile higher rated loans carry a smaller portion of the total due to their limited availability.

  • Originations reflected a similar composition to the previous month with most activity concentrated among B through E rated loans which captured 71.06% of the total.
  • F Rated loans continue to be less popular as investors are driven to the decisive action of either a high rating with a lower relative return, or a much lower rating with an aggressive return.
  • HR rated loans continue to represent the third greatest portion of the total at 16.38% across all countries. This activity is centralized in Spain.
Share by country and rating – February 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10,16% 25250 1,03%
A 11,69% 86485 3,51%
B 14,30% 466680 18,97%
C 19,32% 522935 21,25% 18,05% 24025 0,98%
D 25,75% 330975 13,45% 28,48% 29510 1,20%
E 31,50% 254795 10,36% 37,33% 2440 0,10% 33,89% 116965 4,75%
F 34,71% 41285 1,68% 43,34% 59105 2,40% 45,72% 97015 3,94%
HR 95,60% 287425 11,68% 81,98% 115685 4,70%

Bondora portfolio performance – February 2017

Key takeaways

  • The latest performance data marks the fifth consecutive quarter of realised net returns exceeding the targeted figure.
  • Estonia continue to deliver the strongest average realised net return of 19,57% since Q1 of 2015.
  • Q4 of 2016 marks the second highest realised net return for all countries (20,53%) since Q1 of 2015 as Spain’s surging performance of 28,22% marks the single highest return for a country in the last eight consecutive quarters.

Actual and targeted bondora net returns by grade and country

Estonia

  • For all of 2016 every rating has outperformed the targeted figure (excluding “A” in Q2).
  • The strongest returns continue to concentrate around the higher risk ratings of “D”, “E” and “F”.
  • The “C” rated loans in the country have outperformed their targeted figure for each quarter of 2016 offering investors a good mid-level solution to the risk/reward balance.
Estonia AA A B C D E F HR
2015
Q1
Actual 14,63% 14,11% 16,05% 18,92% 21,32% 24,56% 25,80% 24,14%
Target 13,10% 13,84% 14,31% 15,76% 18,47% 20,43% 23,17% 23,51%
2015
Q2
Actual 14,50% 11,32% 15,54% 15,39% 22,73% 18,66% 32,56% 21,23%
Target 13,20% 13,82% 14,29% 15,89% 18,40% 20,46% 23,08% 23,65%
2015
Q3
Actual 15,43% 15,35% 16,26% 17,88% 18,67% 28,28% 30,27% 30,45%
Target 13,18% 13,85% 14,30% 15,79% 18,43% 20,32% 23,19% 23,85%
2015
Q4
Actual 14,13% 15,56% 15,70% 19,38% 20,75% 18,04% 27,96% 31,22%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,71% 13,15% 15,34% 19,64% 24,04% 26,57% 26,37% 34,78%
Target 10,62% 11,32% 12,09% 14,38% 16,17% 17,51% 18,28% 17,96%
2016
Q2
Actual 9,44% 3,01% 14,01% 15,63% 20,04% 23,82% 30,25% 28,27%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%
2016
Q3
Actual 9,58% 11,76% 12,27% 15,05% 20,28% 25,01% 27,19% 29,21%
Target 8,40% 9,77% 11,48% 13,64% 15,22% 16,48% 17,04% 17,10%
2016
Q4
Actual 9,13% 10,95% 11,26% 16,35% 18,42% 26,65% 26,11%
Target 8,23% 8,60% 9,76% 11,31% 12,38% 14,27% 15,13%

Finland

  • The “HR” rated loans boosted their performance to our less risk sensitive investors with a realised net return of 23.09%, the best for the rating since 2015.
  • The “E” rated loans exhibited the best performance in both Finland (25.30%) and as the best performer as measured by average return across all countries (31.38%).
  • The “C” rated loans in the country have outperformed their targeted figure for each quarter of 2016 offering investors a good mid-level solution to the risk/reward balance.
Finland AA A B C D E F HR
2015
Q1
Actual 9,25% 7,41% 8,94% 12,07% 20,02% 43,58%
Target 12,87% 13,33% 14,50% 16,61% 18,15% 20,82%
2015
Q2
Actual 4,96% 10,41% 12,33% 10,21% 6,82% 13,30%
Target 12,88% 13,33% 14,67% 16,67% 18,07% 20,86%
2015
Q3
Actual 1,62% 8,36% 13,11% 15,00% 8,16% 19,27%
Target 12,90% 13,30% 14,70% 16,58% 18,36% 20,81%
2015
Q4
Actual 1,84% 10,56% 16,35% 15,18% 10,36% 26,47%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 14,99% 13,59% 18,73% 26,38% 23,64% 17,71%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 16,57% 17,50% 16,16% 24,54% 21,51% 10,26%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%
2016
Q3
Actual 7,69% 17,55% 16,69% 17,03% 17,60% 2,88%
Target 12,45% 14,34% 16,37% 17,89% 18,91% 19,19%
2016
Q4
Actual 2,47% 16,88% 22,57% 25,30% 17,40% 23,09%
Target 9,90% 11,36% 14,04% 15,53% 21,39% 29,22%

Spain

  • Though the country only offer riskier loans the reward has been proportional; the 42.19% performance for “E” loans surpassed all others.
  • Spain reversed the poor performance of Q2 while delivering the highest return for the country over the last two years.
  • Less risky loans are becoming increasingly scarce for those investing in Spain.
Spain AA A B C D E F HR
2015
Q1
Actual -3,48% -6,87% -6,18% 6,95% 12,33% 10,87%
Target 12,62% 12,90% 14,33% 16,21% 18,32% 20,24%
2015
Q2
Actual -12,37% -8,91% 6,36% 13,08% 14,92%
Target 12,85% 14,33% 16,23% 18,32% 20,22%
2015
Q3
Actual 16,48% -7,04% 8,71% 13,15% 5,53%
Target 13,11% 14,55% 16,18% 18,32% 20,31%
2015
Q4
Actual 19,35% -1,11% 7,58% 18,73% 14,36%
Target 13,41% 14,93% 16,24% 17,85% 18,06%
2016
Q1
Actual 36,87% 27,39% 21,40%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual -5,41% 13,57% 5,36%
Target 19,41% 20,16% 20,36%
2016
Q3
Actual 30,94% 27,39% 17,10%
Target 19,30% 20,24% 20,65%
2016
Q4
Actual 42,19% 24,71% 28,34%
Target 17,61% 17,24% 28,44%

Actual and targeted bondora net returns across portfolio per quarter

Since Q4 of 2015 the total performance of all Bondora loans has surpassed the targeted figure. The combined quarterly vintage performances for all countries continue the trend of realised returns surpassing their target since last quarter of 2015. Across all quarters the actual returns putperformed their targets by 1 percentage point.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4
Actual 13,76% 13,05% 14,18% 16,74% 21,94% 17,63% 18,60% 20,53%
Target 16,56% 16,52% 16,79% 16,28% 14,66% 15,64% 16,38% 15,77%

Actual and targeted bondora net returns across previous 7 years

All countries show the same trends for realised net returns as those reported a month ago. Estonia’s average returns across the years have slightly increased to 21,97% and have been very stable compared to other countries. While performance of earlier yearly vintages for Spain’s is still poor, the past two years has seen healthy improvement, with average returns 8,35% in 2015 and 17,70% in 2016. Finland’s average returns saw a decrease of nearly 3 percentage points due to the steep drop in loan performance for the 2013 vintage.

2009 2010 2011 2012 2013 2014 2015 2016
Country Actual Actual Actual Actual Actual Target Actual Target Actual Target Actual Target
EE 16,45% 29,49% 24,33% 23,14% 21,66% 18,16% 21,52% 18,15% 19,25% 17,00%  20,24%  14,43%
ES -7,99% 19,26% -2,75% 19,37% 8,35% 17,42%  17,70%  19,80%
FI 10,53% 17,53% 9,95% 15,99% 11,51% 15,50%  19,31%  15,97%
SK -7,84% 23,76%
ALL 16,45% 29,49% 24,33% 23,14% 19,05% 18,11% 12,04% 18,11% 14,18% 16,57%  19,64%  15,66%

Monthly origination summary for January 2017

January was a strong month for originations. Bondora issued €3,233,045 in new loans as we came within €105,525 of matching our all-time record high. “C” Rated loans comprised the greatest share at 23,57% of the total. “E” and “HR” rated loans represented the next largest category at 16,55% and 17,09% respectively. As the world of marketplace lending continues to develop, more investors are becoming confident in the technology.

Loan origination by country

Estonia continues to lead in originations capturing 62,98% of the total. Finland and Spain earned 24,22% and 12,80% respectively. Estonia remains popular with investors due to its diversity among ratings. This is the only country to offer opportunities across nearly all ratings from “A” to “F.” The numbers for January represent an increase in Estonia’s share compared to December of 2016 where the country picked up 50% of originations.

Share by country – January 2017
Country Interest Amount Share
ESTONIA 20,79% 2036225 62,98%
SPAIN 98,01% 413735 12,80%
FINLAND 45,38% 783085 24,22%

Loan origination by rating

The “A” and “AA” rated loans together represent 4,88% of all originations. As we discussed in a recent post, many conservative investors have asked why more of their investments have not gone to these lower risk borrowers. The figures for January show that the popularity of higher rated loans means there are fewer opportunities to share among investors.

  • The higher risk “HR” loans continue to deliver outsized interest in return for the higher chance of default or missed payments. Spain and Finland’s “HR” loans offered strong returns of 105% and 73% respectively. The next highest opportunity for earning power was Finland’s “F” rated loan at 48%.
  • The weighted average return across the “A” through “B” rated loans in Estonia was 13,71%. This is slightly lower than the same measurement in December of 2016 where the return reached 13,85%. January’s figure still represents a respectable return for lower risk.
  • The interest of 25,80% on Estonia’s “D” rated loans crept up over the 25,40% investors earned for the same segment of the market in December of 2016.
Share by country and rating – January 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10,62% 38000 1,18%
A 11,40% 119625 3,70%
B 14,33% 444280 13,74%  21,87%  850  0,03%
C 18,99% 716145 22,15% 19,97% 46060 1,42%
D 25,80% 371775 11,50% 29,07% 126640 3,92%
E 31,33% 308765 9,55% 33,83% 8775 0,27% 35,19% 226310 7,00%
F 35,38% 37635 1,16% 41,54% 37595 1,16% 48,19% 198080 6,13%
HR 105,32% 367365 11,36% 73,12% 185145 5,73%

Bondora portfolio performance – January 2017

Key takeaways

  • The total average realised net returns across all countries was 17,02%, exceeding the targeted figure by 98 basis points.
  • This outperformance relative to the targeted figure marks an ongoing trend which started in Q4 of 2015.
  • The realised net returns in Q3 of 2016 mark the second best period in nearly two years. The realised net returns for Q3 of 2016 across all countries exceeded the targeted figure by 258 basis points, bringing in 18.96%.
  • Since Q1 of 2015, the average realised net returns for Estonia is 20%, for Finland 15,40% and for Spain 12,54%.

Actual and targeted bondora net returns by grade and country

Estonia

  • The realised net returns for the lower rated “F” and “HR” loans delivered the best performance, 27.15% and 29.05% respectively, across the same ratings in the other countries. This return illustrates the strong risk/reward payoff in the country.
  • The HR loans had the strongest outperformance of 1195 percentage points above the goal.
  • The average performance across all the ratings was 18.66% which is between Spain and Finland.
Estonia AA A B C D E F HR
2015
Q1
Actual 14,59% 14,20% 16,21% 19,31% 21,82% 25,17% 26,42% 24,54%
Target 12,98% 13,82% 14,30% 15,74% 18,51% 20,34% 23,14% 23,46%
2015
Q2
Actual 14,45% 11,08% 15,75% 15,69% 23,08% 19,22% 33,34% 22,13%
Target 13,11% 13,83% 14,26% 15,96% 18,47% 20,49% 23,06% 23,62%
2015
Q3
Actual 15,47% 15,47% 16,40% 19,23% 18,74% 28,58% 31,21% 31,08%
Target 13,09% 13,84% 14,27% 15,85% 18,39% 20,32% 23,15% 23,85%
2015
Q4
Actual 13,77% 15,44% 15,48% 19,53% 20,74% 21,61% 28,04% 32,59%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,74% 13,36% 15,30% 19,58% 24,16% 27,14% 26,41% 35,37%
Target 10,62% 11,32% 12,09% 14,38% 16,18% 17,51% 18,28% 17,96%
2016
Q2
Actual 9,26% 3,31% 13,97% 15,52% 20,01% 24,03% 31,30% 29,30%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%
2016
Q3
Actual 8,84% 11,70% 12,18% 14,96% 20,16% 25,21% 27,15% 29,05%
Target 8,39% 9,74% 11,46% 13,61% 15,27% 16,52% 17,05% 17,10%

Finland

  • In Q3 of 2016, the country saw poor performance in the riskier HR loans which brought in only 3,14% returns.
  • The “C” rated loans saw a realised net return of 17.66% in Q3 of 2016, striking a good balance between risk and reward while outperforming the same rating in Estonia.
  • Since Q1 of 2016, realised returns for all ratings except HR have outperformed their targets.
Finland AA A B C D E F HR
2015
Q1
Actual 9,52% 7,79% 9,46% 13,77% 20,92% 44,68%
Target 12,88% 13,33% 14,41% 16,58% 17,98% 20,90%
2015
Q2
Actual 5,22% 11,09% 12,96% 10,90% 7,38% 13,76%
Target 12,88% 13,31% 14,70% 16,62% 18,04% 21,04%
2015
Q3
Actual 1,58% 8,82% 13,82% 15,66% 8,47% 20,09%
Target 12,90% 13,28% 14,71% 16,49% 18,54% 20,81%
2015
Q4
Actual 2,47% 10,73% 16,81% 15,40% 10,93% 26,54%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 15,01% 14,01% 19,09% 26,98% 24,17% 18,30%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 16,53% 18,07% 16,79% 24,73% 21,69% 11,29%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%
2016
Q3
Actual 7,39% 17,66% 17,85% 18,27% 18,19% 3,14%
Target 12,45% 14,33% 16,41% 17,92% 18,89% 19,19%

Spain

  • Spain had remarkable performance in Q3 of 2016 with an average return of 24,13% which exceeds all other countries. This has been a substantial contribution to the 2016 total realised net return of all countries which was 19,96%, the highest of any previous year.
  • HR loans fell below their target in Q3 of 2016 by 191 basis points but still delivered a strong return of 18,74%.
  • Spain had the best average performance among “F” rated loans, being the only rating in Spain that exceeded its target in the period since Q1 of 2015.
Spain AA A B C D E F HR
2015
Q1
Actual -3,15% -6,84% -6,27% 7,55% 13,26% 11,79%
Target 12,61% 12,85% 14,39% 16,17% 18,32% 20,33%
2015
Q2
Actual -12,39% -8,70% 6,63% 14,04% 15,95%
Target 12,80% 14,36% 16,29% 18,32% 20,31%
2015
Q3
Actual 17,19% -7,31% 9,47% 14,08% 6,37%
Target 13,01% 14,74% 16,20% 18,32% 20,31%
2015
Q4
Actual 19,38% -1,31% 7,98% 18,80% 14,69%
Target 13,41% 14,93% 16,22% 17,85% 18,06%
2016
Q1
Actual 36,52% 28,25% 22,26%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual -1,77% 15,83% 6,60%
Target 19,41% 20,16% 20,36%
2016
Q3
Actual 27,28% 26,37% 18,74%
Target 19,30% 20,24% 20,65%

Actual and targeted bondora net returns across portfolio per quarter

Since Q4 of 2015 the total performance of all Bondora loans has surpassed the targeted figure.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3
Actual 14,38% 13,56% 14.82% 17,14% 22,27% 17,98% 18,96%
Target 16,34% 16,31% 16,63% 16,28% 14,66% 15,64% 16,29%

Actual and targeted bondora net returns across previous 7 years

Estonia remains the leader with an average realised net return of 20,85% in total year performance since 2013. Spanish segment of the portfolio has struggled earning an average of only 4.21% for the same period. Finland has shown continued performance improvement since 2014. The country’s best annual performance saw a significant jump upwards in 2016, averaging 19,86% compared to 12,12% net return for 2015.

2009 2010 2011 2012 2013 2014 2015 2016
Country Actual Actual Actual Actual Actual Target Actual Target Actual Target Actual Target
EE 16,49% 29,45% 24,28% 23,12% 21,66% 18,16% 21,61% 18,12% 19,67% 16,88%  20,47%  14,74%
ES -7,63% 19,26% -2,53% 19,42% 8,97% 17,50%  18,04%  18,89%
FI 19,81% 17,53% 10,24% 16,02% 12,12% 15,30%  19,86%  15,73%
SK -7,48% 23,74%
ALL 16,46% 29,45% 24,28% 23,12% 19,21% 18,12% 12,33% 18,10% 14,73% 16,40%  19,96%  15,65%

Loan funding per channel for December 2016

In December, the most used investment channel by far was the Portfolio Manager which represented 94.36% of funding. The API channel represented just 5.64% of funding for the month. This illustrates a greater use of the automatic investment tool compared to last month (92.7%).

Loan funding per investment channel December 2016

This data illustrates a popular preference for an automated solution. In contrast, the API channel is more appropriate for investors interested in funding loans through a more analytic and customized approach. Unlike other marketplace lenders we offer complete transparency and the API channel is an example of this characteristic. Users can examine more loan attributes to better gauge the risk/reward profile of a given investment.

Previously we have discussed how and why higher risk loans can appear in a “conservative” Portfolio Manager setting. Reaching a target return occasionally requires supplementing a portfolio with higher risk and thus higher return loans. Investors wishing to exert more control over this possibility may want to choose the Bondora API. However, this option requires more time and oversight on the part of the investor.

Monthly origination summary for December 2016

December was a strong month at Bondora for loan originations. We reached a total of €3,236,780 which is just shy of our record hit in the previous month. Holiday events may have limited what could have been another record-breaking total. Below we have outlined the origination totals by country and rating.

Loan origination by country

Estonia continues to lead the group capturing 50.08% of the total originations. The diversity of opportunities across all ratings makes the country an attractive option for many of our investors who wish to diversify across various risk levels. Finland brought in 30.57% of the total and finally, Spain represents 19.35%. These proportions are roughly similar to November.

Share by country – December 2016
Country Interest Amount Share
ESTONIA 21,90% 1621120 50,08%
SPAIN 107,20% 626270 19,35%
FINLAND 46,23% 989390 30,57%

Loan origination by rating

The mid-level risk ratings of “C” and “D” continue to bring in the greatest portion of originations. Because Estonia is the only country to offer “AA” “A” and “B” rated loans, these originations total share was just 13.36%. Finally, “E” and “F” rated loans brought in 28% with HR close behind at nearly 23%.

  • Investors seem attracted to a more aggressive approach to risk. The average interest rate across the “C-F” rated loans among all three countries is 33.57%. HR loans offer a far greater average interest of 98.06% among the Spain and Finland market. These are the riskiest loans offered on Bondora.
  • Ratings “AA-B” brought an average return of 12.10% thereby offering a balance between low risk and lower relative return. These are good loans for more risk averse lenders seeking double digit returns.
  • Among our HR originations the higher interest rate of 111.95% in Spain has attracted considerably more originations than the HR loans in Finland offering a 84.17% interest rate. Originations at this rating is Spain were €583,150 versus €151,285 in Finland.
Share by country and rating – December 2016
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10,17% 26760 0,83%
A 11,52% 68165 2,11%
B 14,61% 337120 10,42%
C 19,55% 498340 15,40% 22,95% 52580 1,62%
D 25,40% 393890 12,17% 30,07% 215155 6,65%
E 31,84% 209950 6,49% 35,74% 5840 0,18% 37,76% 318835 9,85%
F 35,49% 86895 2,68% 44,09% 37280 1,15% 52,85% 251535 7,77%
HR 111,95% 583150 18,02% 84,17% 151285 4,67%

Bondora portfolio performance – December 2016

Key takeaways

  • The latest (Q3) total across all countries shows a realised performance of 20,64% which is 435 basis points above the targeted figure for the period.
  • Bondora exceeded the target figure for total loan performance for last four consecutive quarters.
  • First two quarters of 2016 have delivered performance that exceeds any given individual quarter of 2015. Loans originated in third quarter of 2016 are expected to follow the same trend.
  • While the actual returns against targeted returns for 2015 were lower by 88 basis points on average, the trend for 2016 shows improvement – on average, the actual returns are 517 basis points higher than the average targeted returns to date.

Actual and targeted bondora net returns by grade and country

Estonia

  • The country saw strong performance for the period with every risk rating delivering a return above the targeted goal.
  • As one travels down the rating scale to riskier loans the realized return increases incrementally with the exception of the HR rating (27.55%) which was slightly less than the F rating (28.89%). This reflects a risk/return payoff.
  • The average return across all ratings is 19.34% which is between Spain (26.23%) and Finland (14.74%).
Estonia AA A B C D E F HR
2015
Q1
Actual 14,85% 14,47% 16,46% 19,57% 22,26% 25,71% 27,63% 24,88%
Target 12,98% 13,82% 14,30% 15,74% 18,51% 20,34% 23,14% 23,46%
2015
Q2
Actual 14,73% 11,19% 15,94% 16,64% 23,95% 20,13% 34,03% 22,69%
Target 13,11% 13,83% 14,26% 15,96% 18,47% 20,49% 23,06% 23,62%
2015
Q3
Actual 15,48% 15,44% 16,58% 19,50% 18,64% 28,83% 32,18% 31,95%
Target 13,09% 13,84% 14,27% 15,85% 18,39% 20,32% 23,15% 23,85%
2015
Q4
Actual 14,15% 15,74% 15,64% 20,23% 20,97% 22,04% 28,24% 33,91%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,76% 13,24% 15,53% 19,98% 24,34% 27,56% 27,31% 36,27%
Target 10,62% 11,32% 12,09% 14,38% 16,18% 17,51% 18,28% 17,96%
2016
Q2
Actual 9,38% 3,93% 14,01% 15,67% 21,00% 24,91% 32,19% 30,31%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%
2016
Q3
Actual 9,34% 11,55% 13,33% 16,47% 20,92% 26,67% 28,89% 27,55%
Target 8,39% 9,74% 11,46% 13,61% 15,27% 16,52% 17,05% 17,10%

Finland

  • The country has underperformed relative to Spain and Estonia especially within the HR rated loans which have a return of only 1.22%.
  • The D, E and F rated loans contributed the greatest amount to the performance, pushing the average total return above the total for 2013 and 2014 and 2015.
  • Although the finnish segment across ratings has performed lower than the target in 2015, the returns for 2016 are so far exceeding their targets with few exceptions (B in Q3 of 2016, HR in Q2, Q3 of 2016).
Finland AA A B C D E F HR
2015
Q1
Actual 10,02% 8,35% 10,11% 14,50% 21,73% 44,36%
Target 12,88% 13,33% 14,41% 16,58% 17,98% 20,90%
2015
Q2
Actual 5,73% 11,68% 13,47% 11,48% 7,99% 14,69%
Target 12,88% 13,31% 14,70% 16,62% 18,04% 21,04%
2015
Q3
Actual 1,58% 9,15% 14,58% 16,14% 8,99% 21,05%
Target 12,90% 13,28% 14,71% 16,49% 18,54% 20,81%
2015
Q4
Actual 2,94% 10,99% 17,49% 15,75% 11,67% 27,57%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 15,04% 14,27% 19,64% 26,02% 24,82% 18,52%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 16,47% 18,49% 17,38% 25,92% 22,91% 13,27%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%
2016
Q3
Actual 7,91% 17,38% 19,33% 21,77% 20,83% 1,22%
Target 12,45% 14,33% 16,41% 17,92% 18,89% 19,19%

Spain

  • Though starting from 2016, only E, F and HR loans have been originated, the country offered the highest average return of 22,08% for 2016 loans.
  • As with Finland, loans from 2015 have been performing well below their target but the trend for 2016 is showing considerable improvement.
Spain AA A B C D E F HR
2015
Q1
Actual -1,99% -7,71% -5,94% 8,06% 14,17% 12,69%
Target 12,61% 12,85% 14,39% 16,17% 18,32% 20,33%
2015
Q2
Actual -11,85% -8,27% 7,06% 14,47% 16,78%
Target 12,80% 14,36% 16,29% 18,32% 20,31%
2015
Q3
Actual 17,32% -7,34% 10,46% 15,08% 7,69%
Target 13,01% 14,74% 16,20% 18,32% 20,31%
2015
Q4
Actual 20,02% -1,67% 8,65% 19,60% 15,29%
Target 13,41% 14,93% 16,22% 17,85% 18,06%
2016
Q1
Actual 36,18% 29,41% 23,30%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual 2,63% 20,13% 8,36%
Target 19,41% 20,16% 20,36%
2016
Q3
Actual 27,71% 27,69% 23,28%
Target 19,30% 20,25% 20,64%

Actual and targeted bondora net returns across portfolio per quarter

With the exception of Q1 of 2015, all the other quarters from the reported period are performing above the target.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3
Actual 14,90% 18,92% 20,98% 20,86% 22,62% 19,68% 20,64%
Target 16,34% 16,33% 16,63% 16,28% 14,66% 15,64% 16,29%

Actual and targeted bondora net returns across previous 7 years

For the past three full years from 2013-2015, Estonian and Finnish segments of the portfolio have been showing relatively stable performance, with Estonia hovering between 20-22% overall returns and Finland between 10-13% returns. Performance for the Spanish segment has been poor in the first years (2013, 2014) in Bondora but has been showing yearly improvement and is expected to reach it’s target levels for 2016 loans.

2009 2010 2011 2012 2013 2014 2015
Country Actual Actual Actual Actual Actual Target Actual Target Actual Target
EE 16,40% 29,42% 24,22% 23,11% 21,79% 18,16% 21,86% 18,12% 20,08% 16,88%
ES -7,06% 19,26% -2,04% 19,42% 9,65% 17,50%
FI 11,17% 17,53% 10,65% 16,02% 12,67% 15,30%
SK -6,92% 23,74%
ALL 16,40% 29,42% 24,22% 23,11% 19,39% 18,12% 12,68% 18,10% 15,24% 16,40%

Loan funding per channel for November 2016

November is the first month in which the manual investing feature was not available to users. The Portfolio Manager continues to be the most popular option for investors given its ease of use and automation.

In November the Portfolio Manager represented 92.7% of investment inflows. The API interface ended at 7.3% of inflows. This is a slight increase over last month when API represented just 6% of the total.

Loan funding November 2016

Users can choose from a variety of risk tolerances when using the Portfolio Manager. However, in a recent post we discussed the importance of monitoring your portfolio even after making this selection. Taking an active approach is important because some high risk loans (HR) can appear even in a “conservative” portfolio selection. Additionally, an investor should not choose a more aggressive risk profile unless they are comfortable with higher expected loss rates. These riskier loans carry higher interest rates but at a higher chance of default.

Monthly origination summary for November 2016

The loan origination totals for November were excellent at Bondora. Originations marked a new record for us with € 3,338,570 of loans originated. The previous record was €2,782,475 in August of 2016. In comparison to October 2016 our originations have increased by 36%. Below we’ve listed the detail of originations by country and rating for the entirety of November 2016.

Loan origination by country

Estonia leads with just over half of the total originations at 51.06%. Spain and Finland catty 17.76% and 31.18% respectively. This marks a shift from last month where Estonia represented 63%. This month Estonia’s originations decreased while Finland increased. Spain remains largely unchanged since last month.

Share by country – November 2016
Country Interest Amount Share
ESTONIA 22,32% 1704825 51,06%
SPAIN 105,56% 592795 17,76%
FINLAND 46,46% 1040950 31,18%

Loan origination by rating

While each country experienced an increase in originations over October Finland saw the most dramatic change. Finland’s October origination was €499,185 while November totaled €1,040,950 representing a 108% increase in just one month.

  • The single largest origination share was the HR rated loans in the Spanish market at 14.97%. Only E, F and HR ratings are available in this market. Therefore, the higher concentration in HR originations might represent a bigger draw to high-interest loans given that there is a significant risk profile among all three ratings. 84% of the originations occurring in Spain this month were concentrated in the HR rating.
  • Estonia continues to draw the heavy originations at the C, D and E level all of which offer higher interest rates. Interestingly, these same three ratings each offer even higher interest rates in the Finnish market. However, in Finland C, D and E rated loans only total 14.09% of the total originations. This is less than half the total of C, D and E originations in Estonia.
  • The stronger ratings of AA, A and B available only in Estonia, still do not attract many originations. Though these ratings are not seen in either the Spain or Finland market our investors continue to be attracted to lower rated (higher interest) loans in all three countries.
Share by country and rating – November 2016
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 10,25% 31200 0,93%
A 11,54% 101745 3,05%
B 14,83% 312905 9,37%
C 19,70% 468220 14,02% 22,79% 62990 1,89%
D 25,07% 373665 11,19% 31,41% 178705 5,35%
E 30.08% 336545 10,08% 37,33% 13600 0,41% 38,55% 228645 6,85%
F 36,49% 80545 2,41% 41,53% 79550 2,38% 53,59% 318175 9,53%
HR 117,61% 499645 14,97% 85,49% 252435 7,56%

Bondora portfolio performance – November 2016

KEY TAKEAWAYS

  • Our realized net returns for Q2 exceeded four of the five previous quarters.
  • Spain and Finland each also had Q2 realized net returns which exceeded four of the five previous quarters.
  • Estonia and Finland outperformed their targets by 519 basis points and 376 basis points respectively.
  • Spain fell below the targeted goal while Finland earned a greater realized net return than any quarter in 2015 or 2016 to date.
  • The “F” rated loans delivered the highest realized net return for Estonia, Spain and Finland in Q2.

ACTUAL AND TARGETED BONDORA NET RETURNS BY GRADE AND COUNTRY

ESTONIA:

  • While the “E” and “F” rated loans generated higher realized net returns than they did in Q1 the other ratings all fell below the previous quarter returns.
  • Estonia continues to be the only country where “AA” and “A” rated loans are available.
  • The “AA” rated loans outperformed their target by 79 basis points.
  • Across all ratings the median return was 18.33% and the average was very similar at 18.79%
Estonia AA A B C D E F HR
2015
Q1
Actual 14,91% 14,48% 16,65% 19,72% 22,81% 26,62% 28,80% 25,28%
Target 12,98% 13,82% 14,30% 15,74% 18,51% 20,34% 23,14% 23,46%
2015
Q2
Actual 14,68% 10,78% 16,04% 17,78% 24,53% 21,03% 34,84% 24,15%
Target 13,11% 13,83% 14,26% 15,96% 18,47% 20,49% 23,06% 23,62%
2015
Q3
Actual 15,32% 15,61% 16,71% 21,85% 21,85% 28,96% 33,20% 33,08%
Target 13,09% 13,84% 14,27% 15,85% 18,39% 20,32% 23,15% 23,85%
2015
Q4
Actual 13,95% 15,60% 15,78% 20,34% 23,73% 22,26% 29,16% 36,43%
Target 12,20% 13,17% 13,81% 15,50% 17,59% 18,41% 21,29% 20,83%
2016
Q1
Actual 11,63% 12,75% 15,19% 19,73% 24,40% 28,07% 29,95% 36,78%
Target 10,62% 11,32% 12,09% 14,38% 16,18% 17,51% 18,28% 17,96%
2016
Q2
Actual 8,94% 3,06% 13,21% 15,52% 21,13% 25,10% 32,08% 31,28%
Target 8,15% 9,74% 11,46% 13,62% 15,22% 16,47% 17,05% 17,10%

FINLAND:

  • Every rating except “HR” outperformed the targeted realized net return.
  • The “B” and “C” level ratings offered better realized net returns than those same ratings in Finland for the previous five quarters.
  • “B” and “C” ratings outperformed the same ratings in Estonia.
  • The median return across all ratings for Finland was 18.38%
Finland AA A B C D E F HR
2015
Q1
Actual 10,69% 9,15% 11,21% 15,59% 23,04% 44,95%
Target 12,88% 13,33% 14,41% 16,58% 17,98% 20,90%
2015
Q2
Actual 6,44% 12,58% 14,32% 12,54% 9,18% 16,12%
Target 12,88% 13,31% 14,70% 16,62% 18,04% 21,04%
2015
Q3
Actual 10,05% 11,61% 15,77% 17,12% 9,48% 22,61%
Target 12,90% 13,28% 14,71% 16,49% 18,54% 20,81%
2015
Q4
Actual 1,75% 11,04% 19,38% 16,26% 11,94% 26,00%
Target 12,89% 12,80% 14,49% 16,02% 16,86% 18,11%
2016
Q1
Actual 14,60% 14,84% 20,42% 26,08% 25,17% 18,47%
Target 9,87% 11,22% 12,56% 13,44% 14,24% 14,40%
2016
Q2
Actual 15,42% 18,91% 17,84% 23,94% 24,04% 12,51%
Target 12,07% 14,05% 16,17% 17,55% 18,27% 19,19%

SPAIN:

  • The “E” rating experienced a significant drop in performance compared to Q1 2016.
  • The median performance in Spain for Q1 2016 (13.15%) was higher than the total realized net return for the country in 2015 (10.80%).
  • The “F” rating outperformed the same rating in each quarter of 2015 for Spain.
  • At the moment the eventual total realized net return for Spain appears to be on track to outperform 2013 through 2015. We’ll watch to see how this develops.
Spain AA A B C D E F HR
2015
Q1
Actual -1,10% -6,81% -5,39% 8,77% 17,17% 14,17%
Target 12,61% 12,85% 14,39% 16,17% 18,32% 20,33%
2015
Q2
Actual -10,81% -7,60% 8,43% 15,76% 17,43%
Target 12,80% 12,80% 14,36% 16,29% 18,32% 20,31%
2015
Q3
Actual 17,42% -8,26% 11,02% 16,71% 8,96%
Target 13,01% 14,74% 16,20% 18,32% 20,31%
2015
Q4
Actual 18,14% -2,31% 9,98% 20,80% 16,66%
Target 13,41% 14,93% 16,22% 17,85% 18,06%
2016
Q1
Actual 34,72% 30,94% 25,56%
Target 14,61% 14,58% 13,93%
2016
Q2
Actual 9,18% 24,91% 13,15%
Target 19,41% 20,16% 20,36%

ACTUAL AND TARGETED BONDORA NET RETURNS ACROSS PORTFOLIO PER QUARTER

Since Q4 of 2015 the actual realized net return has exceeded the targeted figure.

2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2
Actual 15,71% 15,04% 16,58% 18,50% 23,18% 19,17%
Target 16,34% 16,33% 16,63% 16,28% 14,66% 15,64%

ACTUAL AND TARGETED BONDORA NET RETURNS ACROSS PREVIOUS 7 YEARS

Spain and Finland each have a three-year trend of progressively outperforming the previous year. While Estonia saw a drop in performance from 2014 to 2015 the country has still delivered the highest realized net return of any other country for the past three years.

2009 2010 2011 2012 2013 2014 2015
Country Actual Actual Actual Actual Actual Actual Actual Target
EE 16,40% 29,34% 24,12% 23,04% 22,01% 22,14% 20,74% 16,88%
ES -5,86% -1,33% 10,80% 17,50%
FI 11,65% 11,41% 13,79% 15,30%
SK -6,12%
ALL 16,40% 29,34% 24,12% 23,04% 19,68% 13,19% 16,17% 16,40%

DISCLAIMER

Please note that past performance does not guarantee future results as economic environment, competition, performance of risk models, loan pricing and recovery processes can improve or deteriorate over time.

We do not recommend to set unrealistic expectations although 84.2% of investors on Bondora peer-to-peer lending marketplace have earned more than 10% annually (investors who have invested more than 1,000 euro over a period of 12+ months). Investing on Bondora is not suitable in case you expect to invest less than 1,000 euro as proper risk diversification shall not be achieved and returns can be highly volatile.

PS! In case you are looking for technical details on the net return calculation then please read an earlier article on the subject here.