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P2P Lending In Japan – The Current Situation

October 15th, 2014 by Guest

This is a guest post by Tomoyuki Sugiyama, Representative Director of Crowdcredit, Inc (full bio at the end of the article).

Advent of P2P lending in Japan

maneo, Inc. and Exchange Corporation KK were the first P2P lending platform operators in Japan. In 2007, maneo, Inc. was established and it started the registration processes with Japanese authorities which were necessary to run the platform. And it launched the platforms – maneo – in 2008. Exchange Corporation launched its P2P lending platform AQUSH in 2009. Also SBI group established a subsidiary to run P2P lending platform – SBI Social Lending Co., Ltd. – in 2008 and launched the platform in 2011.

maneo at first focused on consumer loans, but soon changed its focus to SMEs loans. AQUSH focused on consumer loans and widened its line-ups to real-estate collateralized loans, overseas consumer loans (investments are made in the loans originated by LendingClub) and loans of which borrowers are solar energy power plant operators in early 2013. SBI Social Lending focuses on securities collateralized consumer loans.

From regulatory perspective, any legal entity (person or company) which lends money in Japan must make registration under Money Lending Business Act, which prevents the P2P lending platform operators to offer a platform which personal investors lend money directly to the borrowers. Hence in Japan, personal investors effectively lend their money to the borrowers through investing in the P2P lending platforms’ businesses which they lend money to the borrowers as the operators of investment funds (Anonymous Partnership Agreements under Japanese commercial law).

Recent trend in Japan

Compared to the growth of P2P lending markets in the UK or in USA, Japanese P2P lending market grew moderately – currently the amount of outstanding loans managed by the largest P2P lending platform, maneo, is estimated to be around 60 million dollars. This is assumed due to over-banking in Japan – in Japan, national average loan to deposit ratio of traditional banks is below 70% and the banks lend quite aggressively, which is quite different from the situation in the UK or in USA where the banks are lending less and less in de-leverage process of their balance sheet in post Lehman crisis period. Borrowers in Japan can much more easily access to traditional financial system compared to the borrowers in the UK or in USA and national average lending interest rate of the banks in Japan is currently 0.887%.

As a result, no operator entered into P2P lending market in Japan after SBI Social Lending and there were only three P2P lending platforms in Japan until 2013.

In late 2012, Crowd Securities Japan Co. Ltd. (previously Midori Securities) announced to launch the fourth P2P lending platform in Japan – Crowd Bank – in 2013 and they launched it in late December in 2013. Crowd Bank offers SMEs loans, real-estate collateralized loans and also overseas microfinance loans which the platform lends to MFIs in Asian region.

Also in early 2013, Crowdcredit, Inc. announced to launch the fifth P2P lending platform in Japan and it was launched in June 2014. Crowdcredit became the first P2P lending platform in Japan which focuses only on cross-border P2P lending. Crowdcredit, as the operator of the platform, has invested in credit market in Peru in Latin America as a start. Read the rest of this entry »

New Figures on Lendico and Zencap

October 3rd, 2014 by wiseclerk

Lendico and Zencap are German p2p lending services. They are separate companies, but both are founded/backed by Rocket Internet.

Lendico

Lendico is a p2p lending service with consumers as borrowers and has been rolled out in 6 national markets so far. See my previous articles on Lendico for more details. Lendico management did not give any official figures on loan origination amounts in the past. That’s the reason that Lendico is not included in my monthly loan volume stats tables. But in the context of the Rocket Internet IPO some figures and estimates became available.
An estimate says that Lendico Germany originated 1 million EUR loan volume in the first 6 months of 2014. The following are hard (official) figures:

  • Lendico loan volume stats for month ending Jan, 31st 2014: 2,343 loan applications received, 23 loans issued, 112K EUR loan volume originated
  • Lendico loan volume stats for month ending June, 30st 2014: 5,675 loan applications received, 65 loans issued, 376K EUR loan volume originated
  • Lendico number of unique visitors in month ending Jan, 31st 2014: 46K
  • Lendico number of unique visitors in month ending Jun, 30st 2014: 143K
  • Lendico net loss in 2013 was 3.2 million EUR. Note that Lendico launched in Dec. 2013
  • Rocket Internet states Lendico valuation to be 120 million EUR in July 2014

Based on non-representative lender postings on the Lendico forum at P2P-Kredite.com it seems that no Lendico (Germany) loans have defaulted yet and only very few have gone temporarily overdue. Read the rest of this entry »

International P2P Lending Services – Loan Volumes September 2014

October 1st, 2014 by wiseclerk

September was a very good month for most p2p lending services. The major UK p2p lending services grew strongly with Ratesetter surpassing 30 million GBP originated. I added the new UK service Ablrate which originated the first two loans.  I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.


Table: P2P Lending Volumes in September 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

Two Years Into P2P Lending Investment at Bondora – My Portfolio Review

September 26th, 2014 by wiseclerk

In October 2012 I started p2p lending at Bondora. Since then I periodically wrote on my experiences – you can read my last blog article here. Since the start I did deposit 14,000 Euro (approx. 17,800 US$). My portfolio is very much diversified. Most loan parts I hold are for loan terms between 36 and 60 months. Together the loans add up to 17,924 Euro outstanding principal. Loans in the value of 2,084 Euro are overdue, meaning they (partly) missed one or two repayments. 1,327 Euro principal is stuck in loans that are more than 60 days late. I already received 7,608 Euro in repaid principal back (which I reinvested).


Chart 1: Screenshot of loan status

At the moment I have 430 Euro in bids in open market listings and 394 Euro cash available. Read the rest of this entry »

High Fluctuation of Discounts and Markups on the Secondary Market of Bondora

September 17th, 2014 by wiseclerk

One advantage of Bondora is that this p2p lending market makes a lot of data available for download to investors. Recently Bondora added data on ‘Secondary market transaction history‘. In this article I will

  • analyse the data
  • use some examples to show how volatile the prices of traded loan parts can be
  • discuss some of the potential reasons for the inefficiency of the market
  • conclude with my opinion.

The basics of the Bondora secondary market

Bondora (at that time Isepankur) launched the secondary market in March 2013.

Sellers can list any current and overdue loan parts for sale as long they are not 60+ days overdue. Loan parts stay listed until they are sold or cancelled by seller for a maximum of 30 days. Loan parts are traded at principal value. Any unpaid accrued interest, overdue interest, overdue principal and unpaid late charges are disregarded for the sales prices and will – provided the borrower pays up anytime after the transaction – cause a windfall profit for the buyer. The seller can impose a discount or markup on the principal. The discount ca go as low as -99% whereas the possible markup was limited to 5% until July 24th, 2014 and increased to a maximum of 40% thereafter.

If a transaction occurs Bondora charges the seller and the buyer a 1.5% transaction fee each.

Using the data download

The download file I used had 159.7K data lines. This includes 66K cancelled listings and 35K failed listings. For the further analysis I used the 59.4K successful transactions.

On first look the market seems efficient: 8.3% of loan parts sold within 15 minutes. 20% sell within the first hour. But I felt the aggregate data might not tell the full story and I started to look how pricing (discount and markups) developed on individual loans.

First example is a 10,000 Euro A900 loan originated to an Estonian borrower on May 2013. This loan defaulted in October 2013 which ended the possibility to trade loan parts. In this short timespan 62 loan parts with a principal value of 1,748 Euro were traded (that’s out of 356 that were listed).

I took the transactions and spread them out over time on the x-axis and graphed the discount rate (blue line, left y-axis).


Chart 1: Example loan 1 (see larger image).

As you can see the price fluctuates widely from -10% discount to 5% markup, while the basic condition – the loan was overdue since begin of August did not change. I also added the orange line that shows how many days the loan was overdue when the seller listed it (DebtDaysAtStart) and the red line that shows how many days the loan was overdue when the transaction actually took place (DebtDaysAtEnd). At those times where the loan was overdue the distance between the two lines shows how long it took for a listed loan part before it sold (see green mark as example). Read the rest of this entry »

P2P Lending Service Lendico Launches in Dutch Market

September 15th, 2014 by wiseclerk

Lendico entered its 6th national market and launched Lendico.nl  in the Netherlands today. Lendico CEO Dominik Steinkühler commented: ‘Especially in countries with a well developed banking system Lendico is successful. The Lendico users include those who are dissatisfied with banks and do not understand why they should pay for bankers’ bonuses, glass towers, business class flights and more benefits to bankers. Our target audience is looking for alternatives, that offer them better returns or cheaper loans.’

(Source press release; own translation from German)

International P2P Lending Services – Loan Volumes August 2014

September 12th, 2014 by wiseclerk

In August Prosper, Bondora and Thincats showed big growth of newly originated loan volume. For most other services it was a slow month. I added one more new service to the table.  I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.

Table: P2P Lending Volumes in August 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

Lending Club IPO Filing Published Today

August 27th, 2014 by wiseclerk

P2P Lending Service Lending Club Filed a preliminary prospectus today with the SEC to prepare the IPO. Lending Club aims to raise 500 million US$ in the public offering. The document does not set a share price or a company valuation, which will happen later on in the process. The underwriters are Goldman, Morgan Stanley, Citi, Stifel, BMO, Allen & Co., William Blair, and Wells Fargo. In the first half oof 2014 Lending Club had a revenue of 87.3 million US$ and a net loss of 16.5 million US$. S. The company had 2.33 billion US$ in p2p loans on its balance sheet as of June 30.

This is a huge boost for p2p lending and will raise lots of awareness in the US and internationally for the innovative industry.


Rapid growth of Lending Club’s loan volume since launch in 2007

(Sources: press release and prospectus)

Graphic: How Fintech Attracts Fast Growing VC Investments

August 18th, 2014 by wiseclerk

The following graphic from Crunchbase illustrates that Fintech startup investments were the fastest growing sector for VC investments in July.

P2P Lending Service Investly Launched Today

August 14th, 2014 by wiseclerk

P2P lending service Investly launched today offering business loans to companies financed by both private and institutional investors. All investment opportunities offered have undergone a thorough pre-screening process including business plan validation, financial analysis as well as credit evaluation.

Once the requested loan amount is filled Investly uses an reverse auction with investors underbidding each other and lowering the interest rate for the business until the auction ends.

The first investment opportunity Investly has live is the chance to lend to Sepapaja OÜ, a blacksmith who is planning to use the investment to scale up up their business by purchasing a larger pneumatic hammer, lathe and various other tools. According to Stig Paju, the manager of Sepapaja OÜ, they decided to use the service because: ‘by using Investly we are able to enhance our production, widen our product portfolio and serve more clients. As a positive by-product, our investors will help us to spread the word and gain even more customers.’. The interest rate offered is 15% p.a., but may sink if investor demand is higher than the loan amount. The loan is rated credit grade A by Investly.

Investly is open to international investors from the European Union and Switzerland. I was able to test-drive the platform during the just ended closed alpha. Transfering money in via a SEPA transfer and bidding was fast and easy.

To accelerate the development of the service, Investly will be participating in the BusinessTech accelerator run by Startup Wise Guys – a technology accelerator with a global reach based in Tallinn, Estonia. Investly was chosen from among 150 applicants to part-take in the program alongside 10 other teams from all over the world. Over the next 3 months, they will go through an intensive mentoring, service development and marketing process; ending with investor days both in Tallinn, Estonia and London.

Siim Maivel, CEO of Investly told P2P-Banking.com:  ‘Building on the launch in Estonia, we have ambitious expansion plans with preparations under way to enter new markets, with the UK to follow later in the year.’.