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Post by propman on Sept 11, 2019 15:52:36 GMT
LW had a £2.1m loss for 2018. Although they are expecting to be profitable soon, this begs the question how much they will lose before then. They had £700k of cash at the end of 2018 while trade creditors of >£300k suggests that they may have delayed payments over the year end so will have had significantly less shortly afterwards. They have confirmed that they believe that they have sufficient resources until the beginning of July 2020 2 months ago, but we have no way of knowing how close they expect to run. Also as a small company tey do not provide an income statement and so we cannot know where the losses came from.
What do others feel?
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trium
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Post by trium on Sept 12, 2019 15:48:17 GMT
No income statement as you say, but revenues were £6.2m and they're targeting £10m this year with profitability to be achieved "within the next few months" link
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Post by propman on Sept 12, 2019 19:25:00 GMT
That requires 50% net profit on the new business unless their were one off costs in 2018.
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Post by funktabulous on Oct 13, 2019 7:00:34 GMT
Anyone with further insights on this currently? Evaluating using them.
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r00lish67
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Post by r00lish67 on Oct 13, 2019 8:16:40 GMT
Anyone with further insights on this currently? Evaluating using them. Just to add that their provision fund has dropped substantially in recent months. This is relevant as LW pay all investors their nominal rate rather then let investors take the hit (in normal market conditions). It has so deteriorated that IMHO they will need to either top it up or no longer have enough PF cash-in-hand in the very near term (next 3-4 months). This has been driven by a very poorly performing loanbook. For 2018 loans, they initially expected a 4.9% bad debt rate and now forecast 7.2%. For 2017 loans, they expected 3.4% and also now forecast 7.2%. So in 2017's case, comfortably over twice as much bad debt as originally forecast. Finally, (from the same page), I cannot satisfy myself that for 2019 loans a blended borrower APR of 14.3% p.a. is going to deliver their forecast bad debt rate of just 5.0%, when a borrower rate of just 9.7% (in 2017) is currently forecast to hit 7.2% bad debt. Any further underperformance will again hit their bottom line and would require further financial injections to continue with a PF. How patient their backers are with all of this, I have no idea. They are far from the only platform not running a profit. Edit: Despite me always feeling bad writing this stuff as I like the platforms simplicity, transparency and engagement with the forum, I'm not going to feel too bad given that another LW thread here is full of people complaining about waiting for their investments to be matched! 
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Post by martinde21 on Oct 13, 2019 18:34:53 GMT
Hi folks
Interesting points here and thanks for posting. This forum is extremely useful for personal investors like me who want to manage return and risk, say with a medium profile. I've invested in LW since 2017 and have been very happy with their ISA product. Tax savings have been pleasing if you are working.
I notice however the queue lag is long. That does impact your projected return. Existing investors are however prioritised.
LW is a FinTech and like most others in peer2peer lending are loss making at present. This is not unusual but is something to watch. Their plan to profitability is encouraging.
If I was the bossman running LW I would seriously look at reducing my rates. 6.5% for us investors is jolly nice but 1.5% above RateSetter on the 5 year product. It would help them with profitability and their cash reserves, if it would make me poorer so perhaps I should shut up and not say 0.5% haircut.
What do others think?
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Post by WestonKevTMP on Oct 13, 2019 19:26:36 GMT
Hi folks Interesting points here and thanks for posting. This forum is extremely useful for personal investors like me who want to manage return and risk, say with a medium profile. I've invested in LW since 2017 and have been very happy with their ISA product. Tax savings have been pleasing if you are working. I notice however the queue lag is long. That does impact your projected return. Existing investors are however prioritised. LW is a FinTech and like most others in peer2peer lending are loss making at present. This is not unusual but is something to watch. Their plan to profitability is encouraging. If I was the bossman running LW I would seriously look at reducing my rates. 6.5% for us investors is jolly nice but 1.5% above RateSetter on the 5 year product. It would help them with profitability and their cash reserves, if it would make me poorer so perhaps I should shut up and not say 0.5% haircut. What do others think? One reason I loved RateSetter more than any other P2P platform was the markets. It was just so democratic and disavowed meddling. For all other platforms, what AER to offer lenders is really interesting. There's a strong element of reverse psychology at play. It seems obvious to offer a higher return to entice lenders, and this has certainly worked for those pesky 12%er platforms (don't say I didn't warn you, " the drunks have joined the party"!). However, many lenders take the AER as a simple short hand for the level of platform risk. Where Zopa and RateSetter can get away with 5%, that makes them the safest? Lending Works in my opinion used to be a low risk platform, and I was happy with 5%. Yes offering 6.5% might seem enticing and attract lenders, however I think the reverse actually happens and it puts seeds of platform risk doubt in lenders minds, thus reducing inflows. And you also have the problem of having to make those returns generally through higher APRs and increased borrower risk. Which is not an easy segment to move into when your background is prime homeowner low risk. So personally I was more comfortable earning a fair 5-5.5% low to medium risk return. At TMP we are currently delivering 11% in a high risk lending segment, but in reality I expect and hope this to reduce as the platform grows. I've no particular insight at LW, I'm sure those clever LW folks have done their analysis and forecasts. Kevin.
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Post by carol167 on Oct 14, 2019 7:09:59 GMT
You make a valid point about returns v risk expectation...
I have invested on many platforms over the years from very high risk to very low and have good personal stats to know what I'm happy with. I average about 5% on LendInvest (property loans). They seem stable, have had no defaults, and is the only platform I am actively increasing my total on. Most of the rest I have either pulled out of or am currently slowly reducing.
I could only dream of having made 5% on the 12% platforms.
LW's 6.5% is nice but you do have to wonder in the current climate and market competition...
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Post by funktabulous on Oct 14, 2019 7:12:32 GMT
Thanks all for the comments.
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trium
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Post by trium on Oct 14, 2019 15:24:06 GMT
I notice however the queue lag is long. That does impact your projected return. Existing investors are however prioritised. AFAIK that isn't true. As on many platforms, reinvested repayments are prioritised (which of course come from existing lenders) but new money is queued without regard for the length of membership.
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zlb
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Post by zlb on Oct 24, 2019 20:24:21 GMT
Has the new director been discussed? Why have they taken since August to make this public on CH? Appointment of Mr Ishaan Chilkoti as a director on 15 August 2019
Termination of appointment of Charlie Pidgeon as a director on 15 August 2019
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jlend
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Post by jlend on Oct 25, 2019 7:28:35 GMT
Has the new director been discussed? Why have they taken since August to make this public on CH? Appointment of Mr Ishaan Chilkoti as a director on 15 August 2019 Termination of appointment of Charlie Pidgeon as a director on 15 August 2019 Not unusual for appointments to take time to update. They are both Directors of NVM. NVM is one of the backers of Lending Works nvm.co.uk/our-companies/lending-works/May just be a swap of responsibility in NVM.
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Post by Financial Thing on Nov 27, 2019 15:21:35 GMT
Some thoughts...
Firstly, Lending Works seems to have very good borrower feedback on Trustpilot which is comforting presuming the reviews are authentic.
P2p borrower screening seems to be a big issue, brought more to light thanks to the Lendy & FS debacles. One very smart p2p CEO and I had a discussion about how p2p companies are under immense pressure to find new loan borrowers to keep revenue flowing and how this is a problem. Some p2p companies have very high overheads (staff, London digs etc.) so one has to wonder how much bending of underwriting guidelines occurs in order to write new loans to generate revenue.
We as investors put trust into the p2p companies ability to underwrite loans to worthy borrowers but we aren't privy to what goes on behind the p2p companies doors.
I've used Lending Works for some time and I am concerned that the borrower weighted APR% has doubled from 2014 (7.7%) to 2019 (14.8%). I also know that APR%'s do not always correlate to risk but they do play a part.
Interestingly I downloaded the loan book which shows the Max Gross Rate as 6.5%.
If LW lenders are being paid 6.5% max and borrowers are paying an avg. of 14% in 2019 (I presume some borrowers are paying much higher APR's and some lower), the spread indicates that the lender might be taking considerable risk for a 5% or 6.5% return. Some p2p companies, are working on very thin interest spread margins of about 2%.
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r00lish67
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Post by r00lish67 on Nov 27, 2019 15:29:39 GMT
Some thoughts... Firstly, Lending Works seems to have very good borrower feedback on Trustpilot which is comforting presuming the reviews are authentic. P2p borrower screening seems to be a big issue, brought more to light thanks to the Lendy & FS debacles. One very smart p2p CEO and I had a discussion about how p2p companies are under immense pressure to find new loan borrowers to keep revenue flowing and how this is a problem. Some p2p companies have very high overheads (staff, London digs etc.) so one has to wonder how much bending of underwriting guidelines occurs in order to write new loans to generate revenue. We as investors put trust into the p2p companies ability to underwrite loans to worthy borrowers but we aren't privy to what goes on behind the p2p companies doors. I've used Lending Works for some time and I am concerned that the borrower weighted APR% has doubled from 2014 (7.7%) to 2019 (14.8%). I also know that APR%'s do not always correlate to risk but they do play a part. If LW lenders are being paid 6.5% max and borrowers are paying an avg. of 14% in 2019 (I presume some borrowers are paying much higher APR's and some lower), the spread indicates that the lender might be taking considerable risk for a 5% or 6.5% return. Some p2p companies, are working on very thin interest spread margins of about 2%. Why would good borrower feedback be comforting? They're going to give good feedback principally because they can easily extract cash from the lender, which isn't necessarily in our interests. Some Funding Secure borrowers were delighted on trustpilot. Share your concern about escalating borrower APR. Recent stats are somewhat alarming IMV, as highlighted a number of times (PF cash has gone down by 2/3 this year alone). LW have advised of an update on various things at the end of this month, and the next set of stats will be out tomorrow too. Suspect it might be worth reserving judgement until we see what these updates bring.
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Post by Financial Thing on Nov 27, 2019 15:39:43 GMT
Some thoughts... Firstly, Lending Works seems to have very good borrower feedback on Trustpilot which is comforting presuming the reviews are authentic. P2p borrower screening seems to be a big issue, brought more to light thanks to the Lendy & FS debacles. One very smart p2p CEO and I had a discussion about how p2p companies are under immense pressure to find new loan borrowers to keep revenue flowing and how this is a problem. Some p2p companies have very high overheads (staff, London digs etc.) so one has to wonder how much bending of underwriting guidelines occurs in order to write new loans to generate revenue. We as investors put trust into the p2p companies ability to underwrite loans to worthy borrowers but we aren't privy to what goes on behind the p2p companies doors. I've used Lending Works for some time and I am concerned that the borrower weighted APR% has doubled from 2014 (7.7%) to 2019 (14.8%). I also know that APR%'s do not always correlate to risk but they do play a part. If LW lenders are being paid 6.5% max and borrowers are paying an avg. of 14% in 2019 (I presume some borrowers are paying much higher APR's and some lower), the spread indicates that the lender might be taking considerable risk for a 5% or 6.5% return. Some p2p companies, are working on very thin interest spread margins of about 2%. Why would good borrower feedback be comforting? They're going to give good feedback principally because they can easily extract cash from the lender, which isn't necessarily in our interests. Some Funding Secure borrowers were delighted on trustpilot. Share your concern about escalating borrower APR. Recent stats are somewhat alarming IMV, as highlighted a number of times (PF cash has gone down by 2/3 this year alone). LW have advised of an update on various things at the end of this month, and the next set of stats will be out tomorrow too. Suspect it might be worth reserving judgement until we see what these updates bring. For me it's a good thing because it appears that LW are taking good care of their customers who are half the lifeblood of their business. It goes without saying that the stats are important too.
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