Peer to peer lending platform Bondora notes in an update post on December 17, 2020 that the normal trend for portfolio returns is to decline over a period of time as more origination payments are missed slightly.
But in November 2020, Bondora portfolio returns were actually higher “across the board” when compared to October 2020, the company claims. This was reportedly led by significant increases in Spanish originations’ return rates, “even as Estonian originations saw their returns decline.”
The Bondora team confirmed that the overall 2020 returns increased from 17.5% to 17.9% in November 2020, which is now over 5% greater than the 12.8% target rate. The P2P platform also mentioned that returns going back for the last 5 years were also considerably higher. They revealed that the annual return rate that “saw the most significant increase was 2019, which came in at 19.2%, which is 3.1% higher than in October.”
As previously reported, Bondora claims that over 145,000 individuals have invested more than €395M and earned €50M via its platform. The P2P platform’s developers acknowledge that bank accounts might be convenient to open, and easy to deposit funds into, and also fairly simple to withdraw your money whenever you need it.
However, the Bondora team claims that the downside of maintaining a bank savings account is the relatively low-interest rates. At present, we might get lucky if we get a return rate of over 1.5% (now most banks are offering 0% or no returns on deposits following the COVID-19 outbreak and resulting economic uncertainty).
The Bondora team further noted:
“Gains for 2020 can be attributed mostly to Spain’s originations, where the return was 25.5% this month compared to 20.8% a month ago. Finnish returns also grew by 1.1% to 13.1%. In contrast, the yearly return for Estonian originations decreased by 1.3% to 18.6% in November 2020.”
They also mentioned that for Q1 and Q2 2020, the platform offered a return rate of 17.9%. The Bondora team revealed that this “represents a 7.6% drop in returns for Q2 and a 1.2% increase for Q1.” They added that quarterly return rates were “above their target estimates for every quarter dating back to, and including, 2018 Q3.” They pointed out that Q2 2019 had “the best return rate with 23%—a whopping 8.1% above target.”
While sharing updates for the Finland market, the Bondora team confirmed:
“Returns for E-rated Finnish loans in Q1 2020 grew to 14.1%, putting them slightly higher than their target rate. The same can be said for similar originations in 2019 Q3, which had a 14.5% return rate. Returns for C-rated originations also were higher, up to 5.5%, but still below their 9.5% target rate. C-rated originations had a higher return rate for the past six consecutive quarters, the highest rate of which was 13.8% in Q3 2019.”
Meanwhile, for the Estonian market, the results were as follows (on Bondora):
“2020 Q2 return rates for Estonian originations were lower across the board for Q2 2020. Still, only A-rated originations returned lower than their target rate. F-rated originations’ returns were the highest above their target at 28.7%. For Q1, A-rated originations (9.5%) and F-rated originations (21.9%) were higher than in October. The remaining origination categories, however, were lower than the previous month.”
For Bondora’s Spain market:
“The last originated loans from Spain remain from Q1 2020. And yet, returns for those most recent originations were higher in every rating category. F-rated loans were 14.9% higher than their target rate, and HR-rated loans were 15.0% higher than their target rate for Q1 2020. The only previous negative rate of return in the last three years — E-rated originations in 2019 Q1 — turned positive, going from -2.0% to 0.6% in November.”
The Bondora team confirmed that annual returns for the last 5 years were higher in November 2020. Meanwhile, quarterly return rates for the most recent 2 quarters were both 17.9%. Spanish returns had “the most significant change, with a 25.5% return rate for 2020.” Estonian loans, however, remained the lowest across the board, the Bondora team noted.