9 Mintos lenders we would avoid right now

Just to confirm one thing, you did look at all 25 before creating this list or are you still looking at some of them?

Thanks for the analysis.

My suggestion: take into account current and 60+ days overdue levels to evaluate loan performance, which is the key indicator in lending business.

I made a split between business and consumer side loans to make it more comparable.

Business loans and Invoice financing:



Mortgages and Consumer loans:

Attachment Deleted

Legend: AL - Agricultural loans, BL - business loans, IF - Invoice financing, MO - mortgages, PL - Personal loans, PB - Pawnbroking, CL - Car loans, ST - Short-term loans.

From the above analysis, I would add to "not touch right now" list:
- Capitalia with 9.5% default rate for business loans and 28% for invoices.
- Creditstar with 39%/48% current loan book in short-term and personal loans categories.

Loan performance analysis also confirms your listings of:
- Kredito garantas - 3% current and 12.9% 60 days overdue.
- Nord lizings with 39% current loan book.

Pangmaobao and Mano unija is inactive at the moment (0 outstanding loans).

Nice work, thanks. You focus on profitability and size, which makes sense but is not the whole story.

I think the problem is that profitability is fickle; Eurocent was supposedly profitable when it joined Mintos. One should also look at the balance sheet to see how the company can cope when profitability unexpectedly dips. For example ITF is tiny and not very profitable, but if you look at its equity compared to total assets (back in 2015), it has more of a buffer than many of the other originators such as Banknote and Creamfinance's Georgian arm.

Size is often a good proxy for company risk, but I wouldn't apply it indiscriminately in all cases. Specifically, most (or all?) Debifo loans are without a buyback guarantee, so you are not exposed to credit risk of the originator (which isn't even that high since they have a decent equity buffer). As I understand it, the company's business idea is to run a very lean operation with minimal overhead, allowing them to operate efficiently even with low volumes. That in turn allows them to pick and choose who they work with. Clearly that is working for them: just compare their risk management track record to invoice financing peer Capitalia. Between these, I would definitely choose Debifo every time even if it is the smaller of the two.

I mostly agree on the others, and I think it is laughable that Mintos cannot provide up to date financials on all their originators.

Hello,
it's my first post here, but I just wanted to add something to the discussion regarding ITF. I got curious when I read it's Bulgarian, since I'm Bulgarian too. A quick search shows that they own two brands, and the one I found charges 49.6-7% interest for one-month or one-year loans of up to 250 EUR and 750 EUR respectively. A court document from an overturned claim against ITF shows that at least one contract had 210.34% interest. The legal upper limit here is 50%.
Recently there was a lot of media coverage about problems with the numerous payday loan companies where borrowers ended up owing several times what they borrowed. The main reasons are the fine print in the contracts and legal loopholes. Even the ombudsman spoke on air about loans of <2,000 EUR turning into 20,000k EUR debt. In January, 9 companies were sued to return overcharged interest (I don't have a list, though). Legislation and supervision have a lot of catching up to do and at least in Bulgaria this isn't something that happens quickly (or at all, in many cases).
To be clear, I'm not saying ITF is doing anything illegal. I'm just sharing what I found about them and how that kind of business is looked at in Bulgaria - no one who reads a contract before signing takes out a payday loan.

Nice brief survey by Oscar. Equity value is one of the key components to assess overall risk level of an asset originator. As your readers might already know the Mintos marketplace has a BB (BuyBack) option option for some of the offered loans. We have already said in our articles at P2Port.com that this option is only valid only if its gaurantors can fulfill their liabilities. In other words, this is a quasi corporate bond on each company (you are buying a corporate bond backed by originated loans). So basically a Mintos investor ideally needs to follow overall financial situation of a loan originator whose loans were financed by his investments. You might be interested in our review of Mintos P2P marketplace performance in July 2017 p2port.com/en/blog/42-the-mintos-marketplace-loan-performance-july-2017.html to better understand investment risks and opportunities there.

I found this summary very useful, will there be a 2018 edition?