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Post by Deleted on May 12, 2015 17:40:01 GMT
Thinking about lending on Saving Stream, but not convinced as others have pointed out that you are lending to Lendy and not the borrower.
Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making.
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j
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Post by j on May 12, 2015 18:01:34 GMT
Thinking about lending using Saving Stream, but not convinced, as others have pointed that you are lending to Lendy and not the borrower. Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making. A quick non detailed check shows a net worth of £2k which is neither here nor there. It depends whether they are making any 'decent' profir at this stage of their p2p business life. Not too sure if they are obliged to share that info in the public domain with being a ltd co? Would happily accept input on that from those morelearned than me.
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webwiz
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Post by webwiz on May 12, 2015 18:07:22 GMT
Thinking about lending using Saving Stream, but not convinced, as others have pointed that you are lending to Lendy and not the borrower. Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making. You just have to have faith to invest here. You are not going to get 12% interest if you want 100% security. IMHO SS/Lendy are not likely to be the problem in themselves. The crunch will come if and when a large loan defaults and it is found that the valuation of the asset cannot be achieved for some reason eg Planning, site contamination, insurance or of course fraud by the borrower, amongst many others. Sadly we do not even know for sure if the pain will be shared across all lenders or just the lenders of the loan in question.
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bugs4me
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Post by bugs4me on May 12, 2015 19:46:41 GMT
Thinking about lending using Saving Stream, but not convinced, as others have pointed that you are lending to Lendy and not the borrower. Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making. You just have to have faith to invest here. You are not going to get 12% interest if you want 100% security. IMHO SS/Lendy are not likely to be the problem in themselves. The crunch will come if and when a large loan defaults and it is found that the valuation of the asset cannot be achieved for some reason eg Planning, site contamination, insurance or of course fraud by the borrower, amongst many others. Sadly we do not even know for sure if the pain will be shared across all lenders or just the lenders of the loan in question. Hence IIRC there was a suggestion a while back that each loan should be ringfenced. But as it's all going into the same 'pot' I guess that's still for the future.
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Post by meledor on May 12, 2015 20:29:46 GMT
Thinking about lending using Saving Stream, but not convinced, as others have pointed out that you are lending to Lendy and not the borrower. Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making.
I'm not convinced either. Although Saving Stream has security on its loan to the borrower, my lending to Saving Stream is unsecured (unlike Ablrate or Assetz for instance). Lendy Ltd signed off its 2013 accounts in February 2014. I am waiting for the 2014 accounts to be filed and I am surprised they are not out already but then at the moment Saving Stream seem not to have any problem at all in getting people to lend to them without any due diligence - loans are put up without any advanced disclosure of the particulars yet are sold out in minutes.
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bugs4me
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Post by bugs4me on May 12, 2015 22:15:40 GMT
Thinking about lending using Saving Stream, but not convinced, as others have pointed out that you are lending to Lendy and not the borrower. Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making. If you're not comfortable about investing then you shouldn't although that probably applies to all platforms. Obviously some platforms offer more security to the lender than others but only the individual can decide what their comfort level is. As far as the P&L being published it will in any event no doubt only contain the required statutory information although a full set must be lodged with the FCA. Whether they check them adequately or not I have no idea. Probably more relevant is the provision fund being discussed on this thread - p2pindependentforum.com/thread/2637/pbl033-live?page=2
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Post by meledor on May 13, 2015 10:21:16 GMT
As far as the P&L being published it will in any event no doubt only contain the required statutory information although a full set must be lodged with the FCA. Whether they check them adequately or not I have no idea. Probably more relevant is the provision fund being discussed on this thread - p2pindependentforum.com/thread/2637/pbl033-live?page=2
Surely the key to any unsecured lending is having decent information on the company so one can assess the risk. At the date of the last accounts (31 December 2013) the loan book was under £1m. It is now £26m and clearly the company has grown substantially, but how has that impacted the risks? I for one need more up to date financial information to assess these.
The provision fund is useful but remember it is discretionary and is kept at 2% of loan book (therefore decreases when loans are repaid). It could prove useful if there is a bit of a shortfall against the indicated LTV on default for a couple of the loans but isn't going to be much use if there are wider problems.
To develop my previous post, can one expect 12% net of losses across the cycle? Can one expect this for unsecured lending without doing any due diligence on the company the money is being lent to? Sounds too good to be true if that is indeed the case.
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mikes1531
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Post by mikes1531 on May 13, 2015 12:54:29 GMT
To develop my previous post, can one expect 12% net of losses across the cycle? Since 12% is the maximum possible return with SS, to achieve a 12% return net of losses would require there to be no losses at all. IMHO that's going to be rather difficult to manage, so my answer to meledor's question would be 'No'.
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Post by meledor on May 13, 2015 13:22:26 GMT
To develop my previous post, can one expect 12% net of losses across the cycle? Since 12% is the maximum possible return with SS, to achieve a 12% return net of losses would require there to be no losses at all. IMHO that's going to be rather difficult to manage, so my answer to meledor's question would be 'No'.
If you accept you are not going to get 12% net of losses then wouldn't it be a good idea to estimate your expected loss which is a reduction from, in the case of Saving Stream, the 12% rate offered? This expected loss will largely be driven by the probability of default for the company (Lendy Ltd) and any likely problems with security on the loans. The first factor - probability of default - I am suggesting can only be assessed if you have the information. Hence why I am talking about wanting to see the accounts.
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mv
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Post by mv on May 13, 2015 14:32:54 GMT
Thinking about lending on Saving Stream, but not convinced as others have pointed out that you are lending to Lendy and not the borrower. Has Lendy published any P&L or Balance Sheet data ? Would like to know that the Company does not have substantial debts or is loss making. I shared these concerns and I contacted SS to ask them about profitability and this was their reply: I am happy to confirm Lendy Ltd has always been profitable from day one and the reasons for this are as follows. 1) We keep Lendy Ltd lean and outsource everything where we can. (Marketing/Legals/Advice/Valuations/Professional services) 2) We have no expensive London offices nor large employee work force meaning our overheads are minimised. 3) Our investment platform was developed in house, so no exorbitant IT platform licensing costs. 4) Lendy Ltd profits from every loan on day one. Here is a financial breakdown of a standard £1M gross loan for 12 months. Gross Loan to borrower: £1M Deducted from this loan on day one are the following: Interest @ 1.5% * 12 = 18% = £180,000 Arrangement fees @ 4% = £40,000 Total deductions = £220,000 Net loan to borrower = £780,000 Revenue to Lendy Ltd = £220,000 Less following costs: Saving Stream finance costs @ 12% = £120,000 Broker costs @ 2% = £20,000 Total costs = £140,000 Lendy Ltd day one profit = £80,000 + 2% exit fee payable on repayment of the loan. I hope this helps in understanding Lendy Ltd's profitability. Kind regards, Tim
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webwiz
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Post by webwiz on May 13, 2015 16:16:48 GMT
So a borrower pays 18% + 4% + 2% = 24%. It seems likely that anyone with a good credit history and a sound asset for security should be able to borrow more cheaply than that from traditional sources, so I guess we are lending to relatively high risk borrowers.
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ramblin rose
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Post by ramblin rose on May 13, 2015 16:21:35 GMT
So a borrower pays 18% + 4% + 2% = 24%. It seems likely that anyone with a good credit history and a sound asset for security should be able to borrow more cheaply than that from traditional sources, so I guess we are lending to relatively high risk borrowers. This point is made when discussing most of the platforms and what they charge, but the fact is, that is relatively cheap for bridging finance, which is not like normal mortgaging at all. It's designed to be very short term precisely because the rates are so high, and that's why the loans are generally 6 months to a year. When I looked into it briefly a few years back, rates of 30% - 40% didn't seem to be unusual for example.
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mikes1531
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Post by mikes1531 on May 13, 2015 19:51:20 GMT
Since 12% is the maximum possible return with SS, to achieve a 12% return net of losses would require there to be no losses at all. IMHO that's going to be rather difficult to manage, so my answer to meledor's question would be 'No'. If you accept you are not going to get 12% net of losses then wouldn't it be a good idea to estimate your expected loss which is a reduction from, in the case of Saving Stream, the 12% rate offered?
Yes, it would. But I haven't a clue how to assess such risks other than pulling numbers out of the air or consulting a crystal ball.  So I'm not going to be able to provide any help, though I'm more than willing to listen to anyone else's assessment.
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Post by mrclondon on May 13, 2015 21:41:14 GMT
Since 12% is the maximum possible return with SS, to achieve a 12% return net of losses would require there to be no losses at all. IMHO that's going to be rather difficult to manage, so my answer to meledor's question would be 'No'.
If you accept you are not going to get 12% net of losses then wouldn't it be a good idea to estimate your expected loss which is a reduction from, in the case of Saving Stream, the 12% rate offered?
A useful starting point is to assume you'll lose half of all interest earrned over a complete economic cycle if lending at 10-13% pa, so net of defaults somewhere around 5-7%. Supporting this estimate is FC's long run net of default return of just over 6%, and RS, Zopa & W&Co all with large provison funds returning 5 to 6% pa. You might do a bit better than 6%, but to assume you'll significantly beat the average return from p2p over the last ten years is probably rather foolhardy.
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Post by meledor on May 14, 2015 7:52:45 GMT
If you accept you are not going to get 12% net of losses then wouldn't it be a good idea to estimate your expected loss which is a reduction from, in the case of Saving Stream, the 12% rate offered?
A useful starting point is to assume you'll lose half of all interest earrned over a complete economic cycle if lending at 10-13% pa, so net of defaults somewhere around 5-7%. Supporting this estimate is FC's long run net of default return of just over 6%, and RS, Zopa & W&Co all with large provison funds returning 5 to 6% pa. You might do a bit better than 6%, but to assume you'll significantly beat the average return from p2p over the last ten years is probably rather foolhardy.
Interesting. Are you talking secured or unsecured? With due dilgence or merely taking all loans offered and building up a 200 loan portfolio in an effort to minimise losses (as some platforms advise)? But were you to be correct then the implication is significant losses ahead for Saving Stream lenders.
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