Peer-to-peer lending marketplace Mintos has shared its platform Risk Score update – which is based on monitoring and evaluating data from the last quarter of 2020. On the Mintos Risk Score updates page, you’ll find key information regarding any changes made to Mintos Risk Scores and subscores for different loans, and you may obtain a spreadsheet that keeps track of all quarterly changes.
While sharing the overview of changes in the Mintos Risk Scores and subscores (based on Q4 2020), the company noted:
“Evaluation of data based on the fourth quarter of 2020 gave us a clear perspective on how companies managed their portfolios, volumes, and debt collection, and how they ran their lending business in general in the year of the pandemic. We found that most companies that managed to stabilize their operations by Q3 2020 didn’t see significant changes in the last quarter of the year.”
The Mintos team added that “as a result of [their] evaluation, the Mintos Risk Score is upgraded for loans issued by 5 out of 90 entities included in this update.” Mintos further noted that the score is “downgraded for loans issued by 1 lending company.” The score is “withdrawn (SW) for loans in three cases: In 2 cases the companies exited Mintos due to a new funding source (Capitalia and Mogo Kazakhstan), and in 1 case there are no outstanding investments in loans from a lending company (Stik Kredit, Bulgaria).”
The Mintos team also mentioned in their update that DanaRupiah, the lending firm from Indonesia that joined Mintos right before the start of the COVID outbreak, is now “active on the marketplace with a newly assigned Mintos Risk Score.”
Mintos added that the Loan Portfolio Performance subscore is “upgraded for loans issued by 7 lending companies, and no downgrades are made.” The company also noted that stabilization of issuance volume volatility is “one of the main reasons for upgrades in this subscore, in addition to showing stable non-performing loan rates for the past two quarters.”
Mintos’ report continued:
“The Loan Servicer Efficiency subscore is upgraded for loans issued by 2 lending companies and downgraded in 1 case. Upgrades came from continued improvements in risk controls and internal processes, such as tightened scoring rules as a response to market dynamics in 2020.”
The report further noted that the Buyback Strength subscore is “upgraded for loans offered by 2 lending companies, while for loans from 4 companies the subscore is downgraded.” The end of the year “provided a better view of the overall financial stability the companies managed to keep over the year, but also on the level of their equity and overall profitability,” the Mintos team added.
The Cooperation Structure subscore “remained unchanged for all evaluated loans,” Mintos confirmed.
While commenting on the Mintos Risk Score updates schedule, the company noted that the regular schedule for the Mintos Risk Score updates is “quarterly.” However, exceptions can be made in certain cases when there’s a “significant material improvement or deterioration for specific loans on the marketplace, in which case the changes are introduced as necessary.”
Mintos also mentioned that if you “want to adjust your investment preferences based on the most recent Mintos Risk Score updates, please do so as soon as possible.”
The Mintos Risk Score is an aggregate or combination of 4 different subscores that are “assigned to four different aspects of particular loans as investment opportunities,” the company explained. It also noted that these subscores rate the following:
- Loan portfolio performance (the portfolio health and historical performance of the loan book), Loan servicer efficiency (the capabilities of the loan servicer “when it comes to the collection of borrowers’ payments”),
- Buyback strength (the buyback obligor’s “ability to fulfill contractual obligations, meet liquidity needs, and capital sufficiency”), and
- Cooperation structure (the legal setup “between the loan issuing company and Mintos”).
According to “the significance we see in each subscore, the weights of the subscores are loan portfolio performance 40%, loan servicer efficiency 25%, buyback strength 25%, and legal structure 10%,” Mintos added.
The company further noted:
“The Mintos Risk Score and subscores are expressed on a numerical scale from 10 to 1, where 10 represents a low risk and 1 represents a high risk. The score can also be shown as “Score Withdrawn”, with a value of 0, when one or more subscores are not available, or simply when there are no loans available for investment by a specific loan issuing company.”
(Note: for more details on these updates, check here.)