August 2020 – Net Return Performance Update

Understanding the platform average net return and the general health of the full loan book helps you to appreciate’s performance in the context of other P2P lending platforms and other forms of investment. The average figure is also a useful point of reference to evaluate your individual net return figure, which is visible on your lender dashboard.

During August 2020 we funded 1 new public loan; this raises the total number of public loans made via since its inception to 271 and the total amount loaned to SMEs to £15,393,880.

We had 2 new defaults and 2 new refactors in August 2020; lenders affected have been contacted about these loans.

The total capital still out on all loans totals £2,473,998 – only 5.3% of this is currently in default.

During the month of August, we received £112,221 in capital repayments and £43,510 in interest payments on public loans.

The net recoveries position was £1,145 recovered from default.

This led to an overall loss of £27,587 for lenders or an annualised loss rate of 13.38%;

August was a significantly poor month in terms of lender profit and platform net return when compared with the average.

We keep a rolling 12-month return figure to track profits over the last year; this month’s performance brings that down from 6.34% to 3.37%.

We also track the net return rate for the lifetime of the company; as you can imagine this figure remains fairly consistent and currently sits at 6.47% net return per year.

Covid-19 has resulted in cashflow difficulties for some of our borrowers, and this month we classified two loans as ‘defaults’ which led to an overall loss for the month. These two loans have lapsed into 90 days past due, at which point our net return analysis classifies them as being in default and makes an immediate bad debt declaration (to simulate the likely impact). In this case, however, borrowers from both loans are still in communication with us and are working with us to try and regain the ability to maintain monthly repayments. The current prognosis is that these loans will resume regular repayments sooner than the average default.

These loss making months do happen, but they are infrequent enough that lenders’ profits in other months keep them in an overall profitable return position. Due to the Covid-19 crisis, we anticipate a slightly lower platform annual net return than we have seen over the past few years; we still expect 2020 to be a profit-making year with a good net return figure, and will be better able to predict year-end figures in October.

As a team we are working hard to keep in contact with our existing borrowers, establish how their businesses are being affected by the current economic impact and where possible offer assistance. This assistance is being offered in the form of short repayment holidays or interest-only repayments. Amendments such as these to existing repayment schedules are only being granted where a borrower has specifically requested assistance and complied with a number of our requirements. We’ve also been actively assisting businesses to gain access to the numerous government initiatives to support UK businesses.

As a platform we are continuing to lend, but have significantly amended our credit risk processes to account for the current risks affecting businesses.

Find out more about how we’re working to help protect your investments during this period.

Notes on the methodology:

This data is generated from algorithms that look at a set of standard rules to classify payments as interest, capital, or recoveries as well as loans as performing, defaulting, or bad debt. This is subject to change, so it may not always match our manual changes to loan status or repayments. This helps to keep the data impartial and consistent, unaffected by human bias or expectation. This data refers to platform average data; individual user data and investment performance may differ according to varying lending strategies and behaviour.

We treat all the users as one ‘Superuser’ that all transactions from public loans are applied to; we exclude private loans and treat refactored loans as a single loan.

More information about how we calculate Net Returns is available in our Lender Education section.

Please also note:

This material contains certain data and analysis that has been prepared by Ltd. The information provided is correct at the time of publication or the date shown on the graphs, and may be subject to updates and revision, and may change materially without notice. Subject to applicable regulations, no person is under any obligation to update or revise the information; our stats page is updated on a daily basis.

Past performance is not indicative of future performance. Capital at risk. Find out more about the risks of lending.

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