mikes1531
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Post by mikes1531 on Apr 18, 2016 1:42:24 GMT
What's that as a percentage? Lets see 92PBL (incl SY but excl DFl as continuations), 5 never drewdown, 1 rolled into another, but one had second tranche so that gives us 87 with 1 default = 1.15% Boats est 25 (at least 20 but few before my time), 2 defaults = 8% Overall est. 112 loans, 3 defaults = 2.68% very low in my p2p book  IMHO these statistics are unreasonably optimistic -- because they include many loans made recently that clearly can't have defaulted yet. AFAIK, a proper track record analysis would consider only completed loans. There are 34 PBLs on SS's list of Repaid loans, but some of those never drew down or were 'repaid' via replacement SS loans, so they probably ought not be considered as 'completed' loans. On one hand, SS's bad debt performance to date is exemplary. OTOH their track record isn't very long and they've not been through a recession, so the performance so far may not be indicative of their long-term performance. Have SS ever explained why they set the PF at 2% of the loan book? Was that based on bad debt estimates? (Have they made any?) Or was the 2% simply pulled out of the air because it seems a reasonable amount?
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Post by Deleted on Apr 18, 2016 6:37:27 GMT
Lets see 92PBL (incl SY but excl DFl as continuations), 5 never drewdown, 1 rolled into another, but one had second tranche so that gives us 87 with 1 default = 1.15% Boats est 25 (at least 20 but few before my time), 2 defaults = 8% Overall est. 112 loans, 3 defaults = 2.68% very low in my p2p book IMHO these statistics are unreasonably optimistic -- because they include many loans made recently that clearly can't have defaulted yet. AFAIK, a proper track record analysis would consider only completed loans. There are 34 PBLs on SS's list of Repaid loans, but some of those never drew down or were 'repaid' via replacement SS loans, so they probably ought not be considered as 'completed' loans. On one hand, SS's bad debt performance to date is exemplary. OTOH their track record isn't very long and they've not been through a recession, so the performance so far may not be indicative of their long-term performance. Have SS ever explained why they set the PF at 2% of the loan book? Was that based on bad debt estimates? (Have they made any?) Or was the 2% simply pulled out of the air because it seems a reasonable amount? While I understand your concerns, the P2P Association methodology uses the full portfolio of loans (including the live and not completed loans) for their members reporting and for comparisons. While SS is not part of it, the standard was set to be able to compare and track the problem across industry and I think it is valid. The real problem is that SS gives borrowers many 'extensions' or change of terms while on the go (more money, re-evaluations etc). That could easily skew data showing them more positive than they might have been with more stringent portfolio management. Of course I think the SS strategy is perfectly reasonable and most deals seem very good to me, but purist of numbers might not find it so easy to digest.
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sam i am
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Post by sam i am on Apr 18, 2016 7:33:17 GMT
Lets see 92PBL (incl SY but excl DFl as continuations), 5 never drewdown, 1 rolled into another, but one had second tranche so that gives us 87 with 1 default = 1.15% Boats est 25 (at least 20 but few before my time), 2 defaults = 8% Overall est. 112 loans, 3 defaults = 2.68% very low in my p2p book IMHO these statistics are unreasonably optimistic -- because they include many loans made recently that clearly can't have defaulted yet. AFAIK, a proper track record analysis would consider only completed loans. There are 34 PBLs on SS's list of Repaid loans, but some of those never drew down or were 'repaid' via replacement SS loans, so they probably ought not be considered as 'completed' loans. On one hand, SS's bad debt performance to date is exemplary. OTOH their track record isn't very long and they've not been through a recession, so the performance so far may not be indicative of their long-term performance. Have SS ever explained why they set the PF at 2% of the loan book? Was that based on bad debt estimates? (Have they made any?) Or was the 2% simply pulled out of the air because it seems a reasonable amount? It took a bit of hunting down but I eventually found the post that was lurking at the back of my mind hereWellesley happened to have a 2% provision fund at the time that SS was implementing theirs. Whether SS just followed this or whether they had other reasons and the 2% was coincidence I can't say.
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Jeepers
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Post by Jeepers on Apr 18, 2016 7:46:50 GMT
Isn't the 2% PF an FCA requirement?
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Post by Deleted on Apr 18, 2016 9:19:57 GMT
Isn't the 2% PF an FCA requirement? no
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Liz
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Post by Liz on Apr 18, 2016 10:16:19 GMT
It's still an impressive record from SS, no they haven't been through a recession, but neither has anyone else, bar zopa, and they have far higher defaults, and some have left members with substantial losses.
Look at TC for example, where I have lend a lot of money since 2012.
Defaults by year
2012, 14.91%
2013, 7.45%
2014, 4.54%
2015, 0.48%
I expect these figures to improve, as they too have moved away from SME lending, and more towards bridging/development finance, but many members have been left out of pocket, due to low recovery rates on certain loans.
I think that the provision fund is underestimated in benign times, in a recession it will be inadequate, but it will help one day to prevent us from a loss. SS doesn't have to provide this provision fund, and might not one day.
Nobody knows the future of SS but we all die one day, and so do businesses.
Again nobody knows the direction or magnitude of future house price/commercial price movements.
So short term property loans suite me, 12 months max.
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Post by mrclondon on Apr 18, 2016 10:27:56 GMT
Good points Liz but its worth noting that a June 2015 TC loan secured with a 2nd charge against an operating hotel building is looking very likely to formally default in the near future with a probable loss of lenders capital of 30 to 50%. The hotel closed last November, the fixtures and fittings (beds etc) were auctioned off in January and that income has presumable paid Feb & Mar interest payments.
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Post by yorkshireman on Apr 18, 2016 11:22:52 GMT
What? You can never have too much brass!! 
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 18, 2016 11:24:25 GMT
What's that as a percentage? Lets see 92PBL (incl SY but excl DFl as continuations), 5 never drewdown, 2 rolled into another, but one had second tranche so that gives us 86 with 1 default = 1.16% Boats est 25 (at least 20 but few before my time), 2 defaults = 8% Overall est. 111 loans, 3 defaults = 2.7% For completeness 24 completed PBL (excl rollovers/non draws), 1 default = 4.17% Boats completed c 25, 2 defaults = 8% Total c49 loans, 3 defaults = 6.12% [Tweaked original figure up slightly as forgot 3rd incarnation of PBL2] Wouldnt be basing any investment decisions on them.
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Liz
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Post by Liz on Apr 18, 2016 11:44:33 GMT
Lets see 92PBL (incl SY but excl DFl as continuations), 5 never drewdown, 2 rolled into another, but one had second tranche so that gives us 86 with 1 default = 1.16% Boats est 25 (at least 20 but few before my time), 2 defaults = 8% Overall est. 111 loans, 3 defaults = 2.7% For completeness 24 completed PBL (excl rollovers/non draws), 1 default = 4.17% Boats completed c 25, 2 defaults = 8% Total c49 loans, 3 defaults = 6.12% [Tweaked original figure up slightly as forgot 3rd incarnation of PBL2] Wouldnt be basing any investment decisions on them. Hopefully as part of the FCA authorisation process, we could get some official figures from SS , ones which we can easily compare to other platforms too, because frankly I find it almost impossible to make comparisons between sites.
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agent69
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Post by agent69 on Apr 18, 2016 12:21:41 GMT
Good points Liz but its worth noting that a June 2015 TC loan secured with a 2nd charge against an operating hotel building is looking very likely to formally default in the near future.
And lets not forget everyone's favourite airline. Must be a few in that one that are getting a bit twitchy about the June deadline.
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Liz
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Post by Liz on Apr 18, 2016 12:37:26 GMT
Good points Liz but its worth noting that a June 2015 TC loan secured with a 2nd charge against an operating hotel building is looking very likely to formally default in the near future.
And lets not forget everyone's favourite airline. Must be a few in that one that are getting a bit twitchy about the June deadline. It's a million miles away from an airline; It's a bit of paper The one that actually was an airline, that went into administration, left syndicate members with circa 85% capital loss or circa 20%(outstanding balance) on the repayment part. I am a pessimist on SME lending(leasehold), the risk reward just doesn't seem right me.
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Post by queenvictoria on Apr 18, 2016 13:15:51 GMT
What? You can never have too much brass!! Don't think I agree with you on that, yorkshireman. After all, brass does not come cheap and that's the point.
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Post by yorkshireman on Apr 18, 2016 13:44:07 GMT
What? You can never have too much brass!! Don't think I agree with you on that, yorkshireman. After all, brass does not come cheap and that's the point. That’s an enigmatic comment QV. However, perhaps you don’t know the old saying: "a Yorkshireman is a Scotsman with all the generosity squeezed out of him" therefore my philosophy is work hard and look after your own interests!
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Post by Financial Thing on Apr 20, 2016 1:56:00 GMT
I suspect that people don't quite realise the scale of the risk with SS. Very true. The risk associated with these 12% platforms is quite high. The longer one is invested, the more complacency kicks in. When the stock market goes pop and consumer confidence falls, the real test of p2p sustainability will begin.
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