- Today’s main news: New P2p lending record month in September in the UK; LendInvest sees 50% boost from Brexit.
- Today’s main analysis : Lending Club’s loan mix and availability; Marketplace real-estate securitization is coming.
- Today’s thought-provoking articles: Marketplace real-estate is growing and its risks.
- Good analysis of Lending Club’s volume by grade. Thesis : there is less competition for E F And G these days and investors should focus on them for better returns.
- Moody’s is pointing out marketplace real-estate (MRE) is growing fast and should receive attention.
- Followed by an article claiming the 1st marketplace real-estate (MRE) securitization are coming in early 2017.
- A reminder that the US Comptroller of the Currency mentioned the possibility of creating a federal charter for marketplace lenders.
- September volumes in the UK in p2p make a new record month overall. From the data we have the extra volume, despite Brexit, comes mostly from individuals.
- And confirming the info : LendInvest saw a 133% y-o-y increase and continue to be profitable. Apparently, Brexit gave it a 50% boost in platform investment.
- And the second article about LendInvest’s outstanding performance.
- An update from Viventor, 1 year after launch, volumes, data and numbers.
- United States
- LendingClub’s Late Loan Mix And Availability – Potential Boon For Income Investors, (Seeking Alpha), Rated: AAA
- Marketplace lenders small but growing in US commercial real estate finance, (Moody’s), Rated: AAA
- First CRE MPL securitization could surface in 2017, (Global Capital), Rated: A
- US Comptroller of the Currency Discusses Marketplace Lending, (JDSupra), Rated: A
- United Kingdom
- Sharp Increase in Originations Across UK Platforms in September, (Lend Academy), Rated: AAA
- Online mortgage marketplace LendInvest shrugs off Brexit with 50% jump in investment, (Business Insider), Rated: AAA
- Alternative mortgage lender LendInvest posts a 133 percent rise in revenue as profit flattens out, (City A.M.), Rated: A
- Viventor: One LendIt and 6 Million Later, (Business Wire), Rated: A
- South Africa
- Lulalend Raises New Round of Funding to Support Credit Access for Small Businesses in South Africa, (PR Newswire), Rated: A
LendingClub’s Late Loan Mix And Availability – Potential Boon For Income Investors, (Seeking Alpha), Rated: AAA
Investors deserted the platform after LendingClub’s scandal. Loan volume, previously growing near triple-digits, actually declined -1% y/y in 2Q’16.
While all loan grades saw slowdowns, the A, B, and C loan tranches still experienced y/y growth. Investors apparently still had appetite for the platform’s credit-worthy customers:
The sub-prime loan categories, however, showed dramatically diminished investor sentiment:
Tranch E’s -40% y/y growth nearly doubled to the downside Tranch A’s +22% growth. D and F/G loans also performed very poorly, decreasing by nearly a fifth year over year. Loan funding in 2Q decreased almost correspondingly with loan grade.
As a result, the availability of lower-grade loans may actually be increasing. Assuming demand is constant, less funding for lower-grade loans would indicate higher loan availability.
If high-quality and large-scale platform supporters such as Jefferies and Goldman Sachs (NYSE:GS) do not return in force to the platform, individual investors, particularly those looking for income and yield, could stand to benefit from higher loan availability.
Marketplace lenders small but growing in US commercial real estate finance, (Moody’s), Rated: AAA
Marketplace lenders in the CRE space received a boost from a 2013 federal law that allowed businesses to publicly solicit investments from accredited investors, Philipp says in “CRE Marketplace Lending Taps New Capital Sources but Credit Quality Largely Untested.” Today they address the full spectrum of debt investments, though the bulk of CRE debt is still originated by portfolio lenders. In time, though, CRE marketplace lenders could drive banks and other portfolio lenders to shift more of their origination process online to improve standardization, efficiency and speed of execution, especially for smaller loans.
The sweet spot for CRE marketplace lenders is currently loans of less than $5 million, which to some extent overlaps with CMBS loan originations, as well as originations from portfolio lenders. At the very least, therefore, Moody’s expects CRE marketplace lenders to prompt other lenders to raise their game in terms of sourcing and processing loan originations.
Nonetheless, as CRE enters the late stages of the credit cycle, when construction is more feasible, the growth and evolution of CRE marketplace lending bears watching, Moody’s says. CRE marketplace lenders have a short loan performance track record, with most of it during an economic recovery. An element of negative selection could also be in play, with marketplace lenders in some cases making loans that balance-sheet lenders would not.
First CRE MPL securitization could surface in 2017, (Global Capital), Rated: A
Warning: content behind paywall.
The commercial real estate (CRE) segment of the marketplace lending industry is on track to bring a debut securitization to market in 2017, source say, as investors grow comfortable with online lending and key players aggregate sufficient volume to securitize.
Jason Friton, co-founder of Path of Land, noted that CRE marketplace lending has ballooned in the last three years, with the possibility of 2017 being the year key players generate enough volume for securitization.
US Comptroller of the Currency Discusses Marketplace Lending, (JDSupra), Rated: A
Comment: these piece of news is a little old as well but worth attention.
As part of the inaugural Marketplace Lending Policy Summit 2016, US Comptroller of the Currency Thomas J. Curry discussed marketplace lending’s risks and associated policy questions. Of note, Comptroller Curry addressed the OCC’s work around responsible innovation and feedback it has received to date on potentially granting federal banking charters to fintech firms. Curry noted that if the OCC does decide to grant limited-purpose charters in this area, the institutions who receive the charters will be held to the same strict standards of safety, soundness and fairness that other federally chartered institutions must meet.
Sharp Increase in Originations Across UK Platforms in September, (Lend Academy), Rated: AAA
According to the Liberum AltFi Volume Index, September 2016 originations for online lenders hit £364m in the UK. September was a record month, beating out the previous record set in March, 2016 by £18.5m. Over the summer originations were stagnant across the industry as seen in AltFi’s chart below of originations since 2010. They have highlighted the September months to show seasonality as September has historically been a good month for originations.
UK Originations – Source: AltFi Data
If history is an indicator, we may see originations drop again in October but it’s important to note that even in this challenging year for the online lending industry, UK originators have still managed to grow.
Not surprisingly leading platforms Funding Circle, Zopa and RateSetter all had record months. According to AltFi Funding Circle, RateSetter and Zopa originations were £75.2m, £74.3m and £67.8m respectively. Funding Circle officially crossed the £1.5bn mark in cumulative volume. The below chart shows cumulative lending across the three leaders and p2p lenders as a whole.
In their article today AltFi said the reason for the increase in lending is not due to more institutional investor activity. Seems like this is a more retail investor driven boost. They provide these data points:
- 46% of Funding Circle’s September origination came from whole loans, which are favored by institutions, but this is lower than the high of 60% in March 2016.
- Similarly, 50% of Zopa’s origination was not covered by Safeguard (favored by institutions), down from a high of 60% in February 2016.
- 98.5% of RateSetter’s origination was covered by its Provision Fund, indicating that institutional money still makes up a small portion of its overall lending
Online mortgage marketplace LendInvest shrugs off Brexit with 50% jump in investment, (Business Insider), Rated: AAA
Online marketplace mortgage financer LendInvest grew revenues by 133% in 2016 and turned a profit of £3.4 million, accounts show.
LendInvest lent £320 million over its platform in the year to March 2016 end, compared to £174 million in the proceeding 12 months.
Incoming platform investment grew by 50% in the wake of the Brexit vote, but the slowdown in the property market means the number of mortgages underwritten grew by only 29%. Does this mean some investors are left disappointed, with cash sitting in their account?
The London fintech company put out results on Friday showing revenues jumped to £32 million in the year to 31 March 2016, up from £14 million a year earlier.
Profit was largely flat on 2015’s haul of £3.3 million.
All loans are secured against the property being bought and the platform offers returns of over 5% per year to the investors who finance the loans.
CEO and cofounder Christian Faes told Business Insider: “It’s an interesting time for us. The last couple of year’s we’ve shown we can be profitable. We’re also keen to show we can grow the business, which we have done quite a lot in the last year. Profits haven’t accelerated but they’ve stayed steady. If we had fewer people we’d certainly have substantially more profits.”
Faes says: “We’re excited that we’ve shown the business can be profitable and shown it for 3 consecutive years. It’s proving there’s a sound financially viable business that we’re building and in the context of fintech I think it makes us a bit of an outlier. We’re managing to expand and not burn cash to do that.”
Alternative mortgage lender LendInvest posts a 133 percent rise in revenue as profit flattens out, (City A.M.), Rated: A
Revenue leapt to £32m, up from £14m in the year before.
Profits for the lender – which is targeting the funding gap left by the retreat of high street banks from the sector – remained flat however, coming in at £3.4m, up from £3.3m for the year before.
Flatter profits were put down to an increase in employee headcount – to 90 full time staff, from 34 previously – and investment in new technology.
Viventor: One LendIt and 6 Million Later, (Business Wire), Rated: A
Viventor is a peer-to-peer loan marketplace that offers direct investments in a range of loans across Europe. The platform allows investors to open an account with as little as EUR 50.
Viventor, a peer-to-peer lending platform, marks its first year of operations with 60%+ average monthly growth in the investments made through its marketplace.
The development of Viventor’s product and the company’s subsequent rapid expansion has been buttressed by its partnership with Finstar Financial Group, a private equity fund.
Aided by this partnership, Viventor in February 2016 launched new features and loan types that catalyzed growth, allowing it to expand its investments from EUR 100,000 to over EUR 6 million.
Viventor has now attracted close to 2,000 investors from over 30 countries, generating annual returns as high as 12%. All loans listed on the platform are 100% pre-funded and secured by a Buyback Guarantee: listed loans are bought back by the loan originator after 60 days of delinquency. The loan marketplace has not lost a single cent of investors’ money to date.
Viventor is open to any European citizen with as little as EUR 50 to invest.
Lulalend Raises New Round of Funding to Support Credit Access for Small Businesses in South Africa, (PR Newswire), Rated: A
According to a 2011 International Finance Corporation report, the funding “gap” for SMEs in Sub-Saharan Africa is estimated to be $70-90 billion, and in South Africa alone, fundable, formal businesses account for a $2.5 billion funding gap.
The round was led by Accion Venture Lab, the early-stage investment vehicle of the financial inclusion leader Accion, with participation from Newid Capital and Hallmann Holding International Investment GmbH.
“Lulalend was founded in 2014 to provide quick, transparent online credit to small businesses in South Africa, and we’re excited to receive this new round of funding that validates our approach and our impact,”