Last month we started our monthly portfolio performance article series. The monthly series provides an overview of historic returns across Bondora as well as per country and grade where applicable.
KEY TAKEAWAYS
- Net returns across Bondora have steadily been in high teens for the past 7 years.
- Country-level performance has been positive across all countries since January 2015.
- Returns on Estonian originations have been stable with a slight downward trends as overestimated risk buffers have been reduced in pricing.
- Returns on Finnish and Spanish loans have been increasing through a combination of higher interest rates and improved risk models.
- Risk-grade level returns across countries is converging as risk and pricing models mature.
- Future country-level returns are expected to better reflect differences in customer profiles in specific countries. Estonian loans are expected to deliver lowest yields whilst Spanish ones highest.
ACTUAL AND TARGETED BONDORA NET RETURNS BY GRADE AND COUNTRY
ESTONIA:
- In Estonia the average net return since Bondora Rating was introduced has been steady in high teens and low twenties but is expected to drop for new originations.
- All annual vintages are profitable although early years initially saw similar developments as in Spain and Finland.
- As most loans in Estonia are fully funded then a strategy focused on Estonian loans will very largely limit the amounts that can be deployed.
 Estonia |
AA | A | B | C | D | E | F | HR | ALL | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2015 Q1 |
Actual | 14,93% | 14,93% | 17,17% | 20,40% | 24,89% | 28,97% | 31,12% | 26,51% | 21,53% |
| Target | 12,98% | 13,82% | 14,30% | 15,74% | 18,51% | 20,34% | 23,14% | 23,46% | 16,88% | |
| 2015 Q2 |
Actual | 15,16% | 10,07% | 16,54% | 18,53% | 25,95% | 24,41% | 37,00% | 28,80% | 20,86% |
| Target | 13,11% | 13,83% | 14,26% | 15,96% | 18,47% | 20,49% | 23,06% | 23,62% | 16,81% | |
| 2015 Q3 |
Actual | 14,90% | 15,71% | 17,09% | 20,98% | 22,77% | 31,12% | 36,02% | 37,16% | 22,98% |
| Target | 13,09% | 13,84% | 14,27% | 15,85% | 18,39% | 20,32% | 23,15% | 23,85% | 17,21% | |
| 2015 Q4 |
Actual | 13,87% | 14,74% | 16,38% | 20,22% | 24,07% | 23,33% | 31,57% | 42,54% | 22,42% |
| Target | 12,20% | 13,17% | 13,81% | 15,50% | 17,59% | 18,41% | 21,29% | 20,83% | 16,65% | |
| 2016 Q1 |
Actual | 11,43% | 9,76% | 14,32% | 18,92% | 23,89% | 28,49% | 30,73% | 36,35% | 22,52% |
| Target | 10,62% | 11,32% | 12,09% | 14,38% | 16,18% | 17,51% | 18,28% | 17,96% | 15,48% | |
FINLAND:
- Finnish loan book has been relatively stable since the launch of the market, delivering returns in mid-teens.
- Net returns have been steadily increasing by a few percentage points per annum however future growth will depend on the exact risk grade mix as in other countries.
- Bondora Rating updates in Finland have focused on improving the model performance within grades and converging the expected returns with ones in Estonia.
 Finland |
AA | A | B | C | D | E | F | HR | ALL | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2015 Q1 |
Actual | 11,96% | 10,93% | 13,83% | 17,78% | 25,23% | 41,38% | 15,10% | ||
| Target | 12,88% | 13,33% | 14,41% | 16,58% | 17,98% | 20,90% | 14,86% | |||
| 2015 Q2 |
Actual | 8,05% | 14,43% | 15,90% | 14,29% | 11,90% | 18,55% | 14,39% | ||
| Target | 12,88% | 13,31% | 14,70% | 16,62% | 18,04% | 21,04% | 15,41% | |||
| 2015 Q3 |
Actual | 11,74% | 13,57% | 17,60% | 19,29% | 13,25% | 27,72% | 17,28% | ||
| Target | 12,90% | 13,28% | 14,71% | 16,49% | 18,54% | 20,81% | 15,62% | |||
| 2015 Q4 |
Actual | 2,93% | 11,99% | 19,46% | 18,11% | 13,81% | 23,52% | 16,93% | ||
| Target | 12,89% | 12,80% | 14,49% | 16,02% | 16,86% | 18,11% | 15,23% | |||
| 2016 Q1 |
Actual | 13,99% | 16,30% | 20,56% | 25,53% | 26,00% | 16,64% | 22,42% | ||
| Target | 9,87% | 11,22% | 12,56% | 13,44% | 14,24% | 14,40% | 13,21% | |||
SPAIN:
- The net returns in Spain, under Bondora Rating, have been in low to mid- teens.
- 2013 and 2014 originations in Spain were unprofitable similarly to the initial performance in Estonia however subsequent underwriting and recovery improvements reversed the trend in 2015.
- Spanish originations were most affected by Bondora Rating updates. The changes in pricing shall reflect performance partly for 2016 Q1 originations but mostly for from 2016 Q2 and beyond.
 Spain |
AA | A | B | C | D | E | F | HR | ALL | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2015 Q1 |
Actual | 0,83% | -5,26% | -3,70% | 11,26% | 18,91% | 18,44% | 13,36% | ||
| Target | 12,61% | 12,85% | 14,39% | 16,17% | 18,32% | 20,33% | 17,69% | |||
| 2015 Q2 |
Actual | -9,38% | -5,97% | 11,45% | 21,77% | 19,71% | 13,58% | |||
| Target | 12,80% | 12,80% | 14,36% | 16,29% | 18,32% | 20,31% | 17,56% | |||
| 2015 Q3 |
Actual | 17,84% | -9,12% | 14,87% | 21,79% | 15,35% | 14,43% | |||
| Target | 13,01% | 14,74% | 16,20% | 18,32% | 20,31% | 17,56% | ||||
| 2015 Q4 |
Actual | 21,65% | -7,11% | 14,16% | 23,52% | 19,01% | 16,27% | |||
| Target | 13,41% | 14,93% | 16,22% | 17,85% | 18,06% | 17,07% | ||||
| 2016 Q1 |
Actual | 30,52% | 30,34% | 28,77% | 29,42% | |||||
| Target | 14,61% | 14,58% | 13,93% | 14,05% | ||||||
ACTUAL AND TARGETED BONDORA NET RETURNS ACROSS PORTFOLIO PER QUARTER
The returns are largely in-line with expectations and no substantial changes are expected on the total portfolio level.
| 2015-Q1 | 2015-Q2 | 2015-Q3 | 2015-Q4 | 2016-Q1 | |
|---|---|---|---|---|---|
| Actual | 17.51% | 16.80% | 18.83% | 19.57% | 23.47% |
| Target | 16.34% | 16.31% | 16.63% | 16.28% | 14.66% |
ACTUAL AND TARGETED BONDORA NET RETURNS ACROSS PREVIOUS 7 YEARS
Over the past 7 years the peer-to-peer lending investments on Bondora have in each year beat the rest of the market even when performance was lower than expectations.
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | ||
|---|---|---|---|---|---|---|---|---|
| Country | Actual | Actual | Actual | Actual | Actual | Actual | Actual | Target |
| EE | 16.38% | 29.15% | 23.72% | 23.04% | 22.69% | 23.24% | 21.72% | 16.88% |
| ES | -5.13% | 0.70% | 14.06% | 17.50% | ||||
| FI | 12.70% | 13.40% | 15.61% | 15.30% | ||||
| SK | -4.23% | |||||||
| ALL | 16.38% | 29.15% | 23.72% | 23.04% | 20.44% | 14.74% | 17.89% | 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.
