Visualization of Bondora stats

Just a small example for comparison how Bondora and Omaraha use figures in their calculations.

Example with a €100 47 month and 31.6% interest rate investment (Bondora's average loan).

The loan defaults without making any payments whatsoever...EVER.

By day 74+ when the loan defaults, Bondora considers roughly €2.3 as overdue and this is deducted from the return calculation. The rest €97.7 is considered as "Current" and assumed to be recovered as of today by Bondora's return calculation.

It takes roughly 30 months (yes, you read correctly, 2.5 YEARS or 60% of the original loan schedule) for Bondora to write off a mere 50% of the loan. At month 30, they still assume in the return calculation that €50 is recovered as of that date (which, btw, is in most cases still way higher figure than Bondora Rating expects to recover from those loans...).

Yet, Bondora is still falsely claiming that they make no forward-looking assumptions in their calculation (if a loan hasn't made payments for 2.5 years and you still assume the next 17 months to arrive on time, how is this not a forward-looking assumption?).


Let's look at Omaraha now.

By day 31, Omaraha assumes that €50 is lost, which is written off in the return calculation, and that €50 will be recovered on day 91+. In fact, the €50 (or actually €60 or even more today for EST loans) will be recovered around day 100 when the defaulted loan is sold off automatically.

Omaraha then recovers 50%+ on roughly day 100 when the loan is sold off, recovering the amount or more they expected to recover in their calculations.



When Bondora recovers anything, they will reduce the amount that was written off and still assume all future payments to be "current".



At the same time, Bondora Rating roughly assumes a recovery rate of (1 - LGD):

EST - 42%

ESP - 25%

FIN - 32%

SVK (old Rating) - 10%



In other words after 30/47 months of no payments and being in default, the return calculation still assumes a higher level of recovery than Bondora Rating assumes in total. For Spanish loans, a whopping 2x the actual expected recovery. If any recovery comes in, the return calculation becomes even more optimistic, since it doesn't really account for the fact that all of the assumed recovery might already be achieved.


In short, Omaraha writes off in 31 days the amount that Bondora writes off in 2.5 years.

Omaraha shows an average return on their portfolio of around 24.4% and has been bouncing around this +-1% for the past 3+ years.
Bondora shows a return below 15.6% with their optimistic calculation and it has been dropping from more than 22% in mid-2014 and is still going downwards week-on-week.

And yet, Bondora is still claiming to be the highest yielding P2P platform somehow...

I came upon this interesting article the other day.   You may need to register to read it but it is free.

ftalphaville.ft.com/2016/08/25/2173212/fun-with-peer-to-peer-accounting-yes-actual-fun/