Bondora portfolio loans continue to report solid earnings across the board. Economic news across Europe provides an interesting overview of the present and future status of the markets Bondora operates in.
As always, performance charts by country are broken down by number of loan issuances over the given period, with Orange representing <50 loans, Blue 51-200, and White >200.
Yearly performance
Returns for Bondora loans generated in 2018 are continuing to outpace their target return rate. As of May, returns for these loans are at 21.7%, well above the 13.4% target mark. This is led by 36.8% returns in Spanish loans, and 25.3% returns in loans generated in Finland.
Quarterly performance
All returns for loans generated in the past 8-quarters exceed 8%. As expected, loans generated in the most recent quarters have the highest return rates overall. It is expected that these quarterly returns will decrease over time with an increase in missed and late payments.
Finland
Returns for A-rated loans continue to balance out toward positive figures. At the same time, a shift toward lower rated categories has increased overall returns for Finnish loans.
Estonia
Returns for all 2018 issued loans in Estonia remain above their target across all rating categories. Interestingly, B and C rated loans are quite similar, with B rated loans providing higher returns in some historical quarters.
Spain
Returns from Spanish-issued loans remain high for 2018 loans, well above their targets. Going back to historical numbers, returns in Spanish loans have traditionally been more volatile due to their smaller sample size.
Important Note
We have updated the way we display aggregate returns by country level, across ratings. Previously it was the average of the rating level returns; however, now it’s calculated directly from aggregated cash flows. This change does not affect calculations on ratings level or within the product as these were already calculated directly from cash flows.
Economic News
There is even more uncertainty in the UK after British Prime Minister Theresa May announced she would step down in the coming month. While US President Donald Trump suggested that Britain should walk away from the EU negotiating table with no-deal, many believe that will cause a cascade of negative repercussions. One executive who represents 20,000 British manufacturers sees a no-deal Brexit as a terrible strategic endeavor, citing it’s, “the height of economic lunacy to take the UK out of the EU with no deal in place.” Meanwhile, a slew of candidates, such as Boris Johnson and Andrea Leadsom, are beginning their quest to succeed May and finally close this chapter of British history.
After winning the most seats in Finland’s recent election, the Social Democrat party has reached an agreement for a joint government with four other parties. It is reported the country’s next Prime Minister will be Antti Rinne, but that is still unconfirmed at this time. The government turnover comes amidst a slowing Finnish economy, which, over the first quarter of 2019 grew slower than expected. GDP in Finland grew 1.2% year-over-year, lower than the 2.0% projection. This caused the country’s forecasted growth for 2019 to be reduced to 1.7%.
Unlike Finland, Estonia saw economic growth increase more than expected over the year’s first quarter. The country’s GDP grew by 4.5% in the first quarter of 2019, far surpassing the 3-3.5% expectation of analysts. Growth was driven by a strong manufacturing sector, while many other industries, like fishing, transportation, and agriculture, also grew.
The European Parliament elections were big for Spain, as the country’s Prime Minister Pedro Sanchez won the country’s EU elections in May. Sanchez sees his role as more prominent in EU decision making, especially in creating a sustainable budget for its members, enacting climate measures, and supporting an unemployment fund. Sanchez feels a sense of pride in digging his country out of the hole it has faced since the financial crisis. ““The responsibility to build a progressive, left-wing social democratic alternative to many of the policies that unfortunately the Spanish people have suffered during the economic and financial crisis,” he said.
