mv
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Post by mv on May 5, 2015 9:06:29 GMT
There are lots of factors to consider when choosing platforms to lend to/via and platform stability is an important one.
Do any forum members have any knowledge on the the current profitability of the various P2P/B platforms (especially the newer ones)?
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Post by tybalt on May 5, 2015 13:00:32 GMT
ThinCats has claimed to be profitable since it started.
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Post by ranjeb on May 5, 2015 13:45:22 GMT
My view is that if a platform is profitable they will let you know about it  |
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oldgrumpy
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Post by oldgrumpy on May 5, 2015 13:50:28 GMT
Even AC makes me wonder, for all its hype. Many well qualified employees taken on in the last 18 months, a high profile main team, and not a huge flow of loans to provide the fees to pay them. There must be other deals/business to help out. How FK manages, goodness knows.
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bugs4me
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Post by bugs4me on May 5, 2015 14:14:21 GMT
Even AC makes me wonder, for all its hype. Many well qualified employees taken on in the last 18 months, a high profile main team, and not a huge flow of loans to provide the fees to pay them. There must be other deals/business to help out. How FK manages, goodness knows.
- good thing but as you correctly state that doesn't automatically generate deal flow and in many cases can act as an entrepreneurial disincentive. AC cannot be profitable IMO with it's current deal flow assuming everything is hitting the market and not being fed to the institutions direct but that's just a maybe guess on my part. I expect that with the increased costs in FCA compliance, there will be more than a couple of P2P's that throw the towel in or just wither on the vine over the next few months - another assumption on my part.
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am
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Post by am on May 5, 2015 14:59:55 GMT
A distinction may be made between platforms where the underlying business is profitable, and those that make profits as intermediaries.
Some P2P sites are lenders that use P2P to lay off parts of some loans, allowing them to be involved in a greater number of loans, and therefore derisking their business to some degree. Such sites don't have to be profitable as intermediaries - they just have avoid losing too much. Other sites are solely intermediaries. In the long run they have to make a profit from acting as intermediaries.
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Post by norfolkblue on May 5, 2015 15:58:31 GMT
Apparently FC are losing money (courtesy of Westonkev, of Ratesetter).
It's definitely something to bear in mind, although I suspect one will need to give them time before looking at it too harshly. In the case of FC, the fees are paid throughout the life the of the loan , yet most of the work (cost to them) takes place up to drawdown. If , say, 75% of their loan book was written in the past year, I guess it'd be fair to expect their costs to higher than when they are stable.
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am
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Post by am on May 5, 2015 16:57:31 GMT
Apparently FC are losing money (courtesy of Westonkev, of Ratesetter). It's definitely something to bear in mind, although I suspect one will need to give them time before looking at it too harshly. In the case of FC, the fees are paid throughout the life the of the loan , yet most of the work (cost to them) takes place up to drawdown. If , say, 75% of their loan book was written in the past year, I guess it'd be fair to expect their costs to higher than when they are stable. In the case of FC lenders' fees are paid over the life of the loan. However, if I understand correctly, borrowers' fees are the greater part of FC's income (except when used to pay cashback) and are paid upfront.
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locutus
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Post by locutus on May 5, 2015 18:00:34 GMT
According to westonkev (emphasis mine):
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blender
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Post by blender on May 5, 2015 18:15:50 GMT
Apparently FC are losing money (courtesy of Westonkev, of Ratesetter). It's definitely something to bear in mind, although I suspect one will need to give them time before looking at it too harshly. In the case of FC, the fees are paid throughout the life the of the loan , yet most of the work (cost to them) takes place up to drawdown. If , say, 75% of their loan book was written in the past year, I guess it'd be fair to expect their costs to higher than when they are stable. In the case of FC lenders' fees are paid over the life of the loan. However, if I understand correctly, borrowers' fees are the greater part of FC's income (except when used to pay cashback) and are paid upfront. That is correct. However, as the loan book grows the 1% becomes a greater part of revenue. Say 1% of £400m is £4m. Then if sales are say £200m pa, then 3% of that is £6m. So gross revenue only of the order of £10m last year. Quite a way to go even to sustain a basic £1bn (outstanding) loan book. That would need sales of around £330m pa and the gross revenue about £20m. Not a lot, really - no bankers' bonuses. Maybe when the ISA is settled they will do some serious marketing to lenders. BTW - I think the 1% fee will not be reduced. Edit: Missed locutus post. Thanks for info.
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JamesFrance
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Post by JamesFrance on May 6, 2015 8:59:14 GMT
There seem to be several P2P lenders following the Amazon route of go for growth at any cost and worry about being profitable later. The interest of those lending the money may be a very low priority in this scenario, when the ambition of the entrepreneurs runs ahead of their experience.
As there does not seem to be much evidence of the FCA actually reigning in some dubious claims, I would not be too surprised to see a spectacular failure occurring at some point. Hopefully some more soundly based business will take over any company in that position so as to add volume to their own solidly built platform. If lenders are lucky their loans will continue to be managed until completion.
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bugs4me
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Post by bugs4me on May 6, 2015 10:37:33 GMT
There seem to be several P2P lenders following the Amazon route of go for growth at any cost and worry about being profitable later. The interest of those lending the money may be a very low priority in this scenario, when the ambition of the entrepreneurs runs ahead of their experience. As there does not seem to be much evidence of the FCA actually reigning in some dubious claims, I would not be too surprised to see a spectacular failure occurring at some point. Hopefully some more soundly based business will take over any company in that position so as to add volume to their own solidly built platform. If lenders are lucky their loans will continue to be managed until completion. Agreed but from the occasional media report here and there it appears that more than the odd investor in Amazon is beginning to question the strategy of the flamboyant Amazon CEO. Provided FCA regulations have been thoroughly adhered to then P2P platforms should have in place, in the event of their failure, contingency arrangements to run-off the loan book in an orderly manner. My question would be are all the P2P's actually following the FCA requirements.
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mikes1531
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Post by mikes1531 on May 6, 2015 18:39:28 GMT
There seem to be several P2P lenders following the Amazon route of go for growth at any cost and worry about being profitable later. The interest of those lending the money may be a very low priority in this scenario, when the ambition of the entrepreneurs runs ahead of their experience. Agreed but from the occasional media report here and there it appears that more than the odd investor in Amazon is beginning to question the strategy of the flamboyant Amazon CEO. A start-up company can get away with this strategy for a few years, but it will get old eventually. Amazon's been doing it for about 20 years, so I'm not surprised that some shareholders are getting tired of that policy.
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dme
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Post by dme on May 7, 2015 7:34:13 GMT
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bugs4me
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Post by bugs4me on May 7, 2015 11:31:39 GMT
Normal IPO hype but I doubt if any institutions that act as lenders and are maybe shareholders are bothered too much.
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