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Post by rahafoorum on Mar 13, 2016 19:12:55 GMT
I've put together a few charts about default curves for Bondora loans showing the differences from year to year, between countries and Ratings. You can find the charts here: rahafoorum.ee/en/bondora-default-curves/Feel free to share any thoughts and insights you might receive from intensely staring at those for a while  |
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Post by swift on Mar 14, 2016 6:22:35 GMT
Disturbing figures.
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Post by rahafoorum on Mar 14, 2016 6:38:52 GMT
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Post by Butch Cassidy on Mar 14, 2016 8:07:09 GMT
Defaults are par for the course in high risk unsecured personal loan lending but can be mitigated by recovery, which Bondora used to boast about 100%+ rates (Q3/4 2013) - What is genuinely disturbing is the recovery performance since Q4 2014, which barely registers on the scale, it is obvious that Bondora just gave up bothering & have subsequently passed the responsibility to outside agencies & the cost onto lenders - with no sign of improvement. Given this coincided with the disastrous expansion into both Spain & Slovakia it provides a toxic legacy for lenders that Bondora management should be ashamed of & have still to apologise for IMHO. The kind of firm that treats its customers in such a way is not to be trusted IMO.
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JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,317 
Likes: 893
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Post by JamesFrance on Mar 14, 2016 8:17:32 GMT
They certainly show up the poor quality of the loans issued in 2014 during the mad dash for growth. The curves do seem to level off earlier now for every quarter, so maybe the rating system is working. I am far more interested in my recovery rate which is particularly poor for the same period in 2014.
Issuing fewer loans in Spain has probably helped the recent default levels and I would have liked them to withdraw from Spain when they terminated the Slovakian disaster.
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Post by swift on Mar 14, 2016 10:56:26 GMT
Let's focus on Spanish and Finnish...absolutely terrible. I am much more happy with the new platforms that offer buybacks on 12% loans, because at Bondora I still run a serious risk of coming out plainly negative after all the defaults have been taken into account (which they haven't now). Bondora is actually in a nice position (technology, customer base, org) to start offering buybacks, if only they did.
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Post by rahafoorum on Mar 14, 2016 11:02:26 GMT
They certainly show up the poor quality of the loans issued in 2014 during the mad dash for growth. The curves do seem to level off earlier now for every quarter, so maybe the rating system is working. I am far more interested in my recovery rate which is particularly poor for the same period in 2014. Issuing fewer loans in Spain has probably helped the recent default levels and I would have liked them to withdraw from Spain when they terminated the Slovakian disaster. I don't think they've started issuing less Spanish loans. I'm prettty sure it's more because investors stopped funding those that much. The new PM fixes that issue though, if some people actually use it and find a compelling reason to activate it somehow without knowing anything about the potential risk and return of their selection.
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Post by rahafoorum on Mar 14, 2016 11:05:46 GMT
Let's focus on Spanish and Finnish...absolutely terrible. I am much more happy with the new platforms that offer buybacks on 12% loans, because at Bondora I still run a serious risk of coming out plainly negative after all the defaults have been taken into account (which they haven't now). Bondora is actually in a nice position (technology, customer base, org) to start offering buybacks, if only they did. Thankfully those loans are not part of my portfolio. Bondora can't really offer buyback with today's rates. There's just no room for it to be competitive with Expected Return of roughly 15% for HR loans even without any buybacks. They'd have to push the interest rates way up high, which is impossible due to legal limits in some countries and probably get a totally new type of customer (unless the current B-D guys are willing to pay HR interest rates) or offer a return that's not very competitive with the 12%+ buyback offers from other competitors.
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Post by rahafoorum on Mar 14, 2016 11:17:21 GMT
They certainly show up the poor quality of the loans issued in 2014 during the mad dash for growth. The curves do seem to level off earlier now for every quarter, so maybe the rating system is working. Your comment actually made me realize that perhaps I should have skipped the last column of numbers for March 2016 because it's not even half a month so it is by definition lower growth in default rate than any other month. So it's possible that this leveling off is partly due to my logic mistake here. Not sure whether to delete it or not... Edit: Tested and it did have a pretty decent effect to how the graphs look so removed them. Thanks for pointing my attention to it  Another aspect you should probably consider, is that since sometime in 2015, when B Secure was introduced, it has been easier for borrowers in trouble to reschedule their loans. So this might also have an effect of having lower default rates in general, or them coming in later on.
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JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,317
Likes: 893
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Post by JamesFrance on Mar 14, 2016 11:50:57 GMT
Yes quite a different picture now, so not much sign of improvement in loan quality in spite of the lower interest rates and low proportion of applications actually funded. Not sure their latest blog post does them any favors.
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Post by rahafoorum on Mar 14, 2016 22:43:57 GMT
One more addition since Tauri requested for a graph where they're all starting at the same point to make it easier to compare. Added the first graph with this modification as well now. rahafoorum.ee/en/bondora-default-curves/ |
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yacop
Posts: 68
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Post by yacop on Mar 25, 2016 10:22:17 GMT
One more addition since Tauri requested for a graph where they're all starting at the same point to make it easier to compare. Added the first graph with this modification as well now. rahafoorum.ee/en/bondora-default-curves/Your graphs inly show half of the truth..ähm...I mean mess.Please show the net effect: ead1-recovery= current loss rate.
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Post by rahafoorum on Mar 25, 2016 10:51:10 GMT
Your graphs inly show half of the truth..ähm...I mean mess.Please show the net effect: ead1-recovery= current loss rate. Bondora unfortunately doesn't show the recovery info in a format that could be used for these graphs. You can get this data with some data manipulation if you get the default rate from loan dataset and then recovery payments for each loan from their historic payments report here: www.bondora.ee/en/invest/statistics/data_exportThis would require some knowledge of programming or some other more scalable methods of reorganizing and merging the data that I don't really have. And doing it manually with excel for every loan is not an option I'm inclined to entertain. I do have some life outside of this as well  However, for default curves it doesn't matter much if you simply want to see if defaults have changed over time. You may also add a separate graph of recoveries if you do the aggregate the abovementioned data to see if recoveries have changed over time and then a third graph by combining both.
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