Studies of Life

Learning by doing.

Bondora: P2P Lending Information right from the Source

24 August 2014 by Jim

Gathering information through data analysed in Excel is a great way to improve the annual return of your P2P portfolio. But Bondora‘s own statistical analyses are arguably more sophisticated than my own, so it’s always good to listen to what they themselves say.

Bondora’s own comments on their Facebook page are one of the places that can be very illuminating.

According to those comments, most loans default in the first 6 to 9 months. After that, the probability of default drastically falls. How is this useful? I’ve already explained how you can sell loans that you have for a premium to improve your return rate. You can also sell overdue (but not defaulted, i.e. +60 days overdue) loans. Knowing that most loans default in the first 6 to 9 months, we can use this to our advantage when looking for overdue loans to sell by focusing on those purchased in the last 9 months. Alternatively, if you want to buy loan parts from other lenders to quickly increase your portfolio, you may want to focus on loans that are older than 9 months and still current / not overdue to reduce the likelihood of default.

As for defaulting loans, the recovery rate after 2 years for loans that have defaulted is almost 80%. So four fifths of all defaulted loans eventually get paid. The current NPL rate (= non-performing loans, i.e. loans that are never recovered) is at 6%, which is less than I would have expected.

If you want to read a bit more, head over to the Bondora Blog. This question and answer article with answers from CEO Pärtel Tomberg is a great place to start.


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