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Post by marthaskirta on Jul 26, 2016 14:30:25 GMT
No longer relevant.
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yacop
Posts: 68 
Likes: 42
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Writeoffs
Jul 26, 2016 14:57:09 GMT
via mobile
Post by yacop on Jul 26, 2016 14:57:09 GMT
Oh... When I read this " Due diligence done for Slovakian borrowers was at times even more comprehensive than for other countries. In addition to all other checks which we were doing in all countries, Slovakian borrowers needed to send us additional documents (for example extracts from the credit bureaus etc). Therefore the whole process of accepting the SVK loan in to the market took a long time. Since it took so long and we asked borrowers to send us additional document, which was not convenient for them, there wasn't that much demand from the borrowers side, which was also one of the reason for closing the SVK market. Other reason was that due to the changes in legislation it was not possible for us to operate as a cross-border lender in SVK market. There are defaults in SVK and we are working on collecting them. We have a local lawyers representing us at courts and local DCA-s. Recovery, unfortunately, as in any other country takes time. " I would say this is in clear words stated by Bondora that they were not ready, not prepared, not analyzed enough market in Slovakia before going there. They have not done work and put investors to bad situations Dear Andrej, this is <redacted> misrepresentation of my words. Please read again what I wrote. E [br Martha, what a hipocrisy. hHow is it then possible that the majority of the loan volume in Slovakia defaulted although Bondora claims to be well prepared? waiting for your answer. I'VE EDITED THIS POST AS IT WAS NOT POLITE AND CONSTRUCTIVE, IF I HAVE TO KEEP EDITING POSTS IN THIS THREAD I WILL LOCK IT.
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Post by gmaxkenny on Jul 26, 2016 14:59:45 GMT
Oh... When I read this " Due diligence done for Slovakian borrowers was at times even more comprehensive than for other countries. In addition to all other checks which we were doing in all countries, Slovakian borrowers needed to send us additional documents (for example extracts from the credit bureaus etc). Therefore the whole process of accepting the SVK loan in to the market took a long time. Since it took so long and we asked borrowers to send us additional document, which was not convenient for them, there wasn't that much demand from the borrowers side, which was also one of the reason for closing the SVK market. Other reason was that due to the changes in legislation it was not possible for us to operate as a cross-border lender in SVK market. There are defaults in SVK and we are working on collecting them. We have a local lawyers representing us at courts and local DCA-s. Recovery, unfortunately, as in any other country takes time. " I would say this is in clear words stated by Bondora that they were not ready, not prepared, not analyzed enough market in Slovakia before going there. They have not done work and put investors to bad situations Dear Andrej, this is <redacted> misrepresentation of my words. Please read again what I wrote. What Andrej says is quite correct and he could have added Spain as well. As for a representative of Bondora to accuse someone of "misrepresentation" is laughable. This from a company with the dodgiest accounting methods since Bernie Madoff who have stretched the meaning of "account value" to its limits and beyond.
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ders
Posts: 15
Likes: 5
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Post by ders on Jul 26, 2016 16:21:11 GMT
ok, I wrote and removed my comment, may be too much time I spend on trying to make Bonroda more moral. stop, ders  |
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Post by Ton ⓉⓞⓃ on Jul 26, 2016 17:22:49 GMT
ALL POSTS HAVE TO BE POLITE & CONSTRUCTIVE, THIS RULE HAS BEEN BROKEN SEVERAL TIMES IN THIS THREAD. IF THAT CONTINUES WE WILL LOCK IT. SO THINK AND DOUBLE CHECK YOUR POST BEFORE YOU HIT SEND.
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carlos
I'm short Bondora and long p2p.
Posts: 104
Likes: 21
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Post by carlos on Jul 26, 2016 18:38:40 GMT
Carlos, I'm sorry for not expressing myself clearly - we have been investing in every loan (except when investors purchase full loans) starting from March 2016. So there is nothing else to disclose - we invest in every loan regardless of the rating or duration or country. Thanks for clarification! Then its completely different story... Consider my comment obsolete...
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james
Posts: 2,205
Likes: 955
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Post by james on Jul 27, 2016 1:40:26 GMT
"I think it is the last chance for Bondora to stop inventing confusing and contradictory terminology for its recovery process, as well as outright lying to investors. When will Bondora take responsibility for its failure to manage investor's money with the due diligence in loan issuance in Slovakia and in 2014 - early 2015 in Spain?" Due diligence done for Slovakian borrowers was at times even more comprehensive than for other countries. In addition to all other checks which we were doing in all countries, Slovakian borrowers needed to send us additional documents (for example extracts from the credit bureaus etc). While I can understand why you might dislike the question, the first part was from a lender who appears to have the opinion that Bondora failed to manage investor's money with an appropriate level of due diligence. Hopefully you can understand that this might cause the investor to be upset and use words that you may dislike. Naturally Bondora will wish to disagree with that opinion. It seems that the best way to resolve this is simply to look at the loan performance. The loan performance will naturally be a great way to illustrate how effective the due diligence was. Please: 1. give the amount of capital lent in the first year of lending to Spain and the amount of capital from those loans that six months after the end of that year was in defaulted loans. 2. give the amount of capital lent in the first year of lending to Slovakia and the amount of capital from those loans that six months after the end of that year was in defaulted loans. 3. confirm that Bondora modified its systems so that lenders using the automatic bidding process were no longer able to choose which countries to invest in, barring them from using that system if they wished to avoid the risk of these markets. 4. say how many loans and how much money over how long a trial period was lent to borrowers in Spain and in Slovakia before money from consumer lenders was used to lend to those markets. For example, if lending to a country started on 2012-01-01 and there was €100,000 lent do borrowers between 2012-01-01 and 2012-12-31, how much was lent and how much capital was in loans that on 2013-06-30 were in state defaulted? If that was say €70,000 capital still owed in defaulted loans it would be 70% of lent capital in defaulted loans. As you know it takes time for loans to default and the purpose of the six months delay is to give time for both those defaults to happen and for some recovery work on the earlier loans. I assume that those numbers will demonstrate how effective or not the level of test sales and due diligence were.
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Post by kissmyjazz on Jul 27, 2016 7:35:50 GMT
To Bondora's credit the company does not hide the negative returns on early Spanish and Slovakian loans. See their latest blog post for example hereTwo things bother me greatly though: 1. Despite the obvious fact that such poor loan portfolio performance means that many loans were given to individuals that were not eligible borrowers under the normal loan issuance standards (ie loans were given without the proper risk assessment and background check procedures in place that were rectified later, as loan portfolio performance has improved significantly, at least in Spain), Bondora treats the situation as some kind of bad luck outside of their control and says that collection will rectify everything (which is obviously bollocks). I want for Bondora to admit and analyze what went wrong and why such situation will not be repeated in the future in case they would want to expand to some other market. 2. Most of the changes that Bondora implements, be they in the loan issuance, collection, communication with investors or website upgrades, etc. go live pretty much immediately full scale for all users. How about the concept of beta testing and pilot studies? Constantly throwing some half-baked innovations out there and looking at what will stick later damages greatly the Bondora's reputation and wears thin any investors' goodwill toward the company. Sometimes Bondora's decision making looks downright stupid, as recent examples of closing down its own active forum and then starting to post here, or claiming that DCAs will improve the net loan repayments and already backing out of the DCA route for Finland indicate. |
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carlos
I'm short Bondora and long p2p.
Posts: 104
Likes: 21
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Post by carlos on Jul 27, 2016 9:35:53 GMT
To Bondora's credit the company does not hide the negative returns on early Spanish and Slovakian loans. See their latest blog post for example hereIts hard to tell what methodology they are using when calculating "net profit" but there is interesting change in what they reported in January 2016 and now in July 2016... Losses for "problematic" years and countries have doubled. ES loans originated in 2013 Actual net return: -2.17% in January is now -5.13% SK loans originated in 2014 Actual net return: -1.5% now -4.23% So yes they are reporting something.. but the numbers are not definitive.. Their methodology probably uses something similar to what they use on the website (not discounting for whole defaults, but for "missed payments") so I doubt that these numbers are real and final. And we also do know that if one invested in whole portfolio and counted received interest against (accounting) write-off of defaulted loans he would be in net loss! We can all remember that day when Bondora removed this information from their webpage because we noticed and started to track this net loss in the forums.
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Post by kissmyjazz on Jul 27, 2016 9:51:10 GMT
I think as principal's share in the scheduled loan repayment increases with the loan maturity, the loss becomes bigger. Which is quite stupid methodology to account for the missing cashflow, as no investor invests simply to get the loan principal back. Scheduled and accrued loan interests are equally part of the investor's expected cashflow.
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carlos
I'm short Bondora and long p2p.
Posts: 104
Likes: 21
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Post by carlos on Jul 27, 2016 10:11:09 GMT
In other words how to take simple thing as default and make it so complicated that nobody can't understand it. Reminds me The Big Short book... |
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Post by rahafoorum on Jul 27, 2016 10:45:06 GMT
To Bondora's credit the company does not hide the negative returns on early Spanish and Slovakian loans. See their latest blog post for example hereIts hard to tell what methodology they are using when calculating "net profit" but there is interesting change in what they reported in January 2016 and now in July 2016... Losses for "problematic" years and countries have doubled. ES loans originated in 2013 Actual net return: -2.17% in January is now -5.13% SK loans originated in 2014 Actual net return: -1.5% now -4.23% So yes they are reporting something.. but the numbers are not definitive.. Their methodology probably uses something similar to what they use on the website (not discounting for whole defaults, but for "missed payments") so I doubt that these numbers are real and final. And we also do know that if one invested in whole portfolio and counted received interest against (accounting) write-off of defaulted loans he would be in net loss! We can all remember that day when Bondora removed this information from their webpage because we noticed and started to track this net loss in the forums. They use same logic as on the website for the XIRR, where only principal based on the dates of original schedule is deducted as overdue/loss in the calculation. You can see that almost all segments (except for some very old EST and very fresh loan segments) have dropped in their return compared to month ago (their previous post). This is natural, because recovery has been slow and defaulted principal early on is very small in their annuity schedule. The loss is only beginning to be accounted for as the schedules start reaching the end part of the cycle where principal starts accounting for more and more of each monthly scheduled payment and "write-offs" within the calculations grow bigger. While I disagree with a XIRR methodology that starts up overly optimistic and then starts adjusting towards reality in the long run (a lot more practical way for investor is to start out with a pessimistic view and in case of recovery have it increase), it's what they've been using for years. Weirdly enough, I believe they're the only place using this type of methodology and that's part of why their comparisons of returns with other platforms are usually inherently flawed and misleading. However, the idea of comparing XIRR (Actual in their post) with Expected Return (Target in their post) is even more flawed. My comments on this and suggestion for them to consult their own credit scoring team for some insights if necessary, received a sort of an indirect legal threat instead in the lines of "We have forwarded your documentation and comments to our attorneys and should they have any additional questions they will contact you directly.", which can only mean that they're aware of this and have decided to go ahead with misleading investors anyway. The XIRR will move slowly towards the Expected Return and below it for several segments, but unfortunately that will take another 3-4+ years to ultimately happen. Until then Bondora can keep claiming how everything is performing above expectations and has been improving, although the comparison is with apples and bananas. The XIRR, simply by it's mathematical structure, WILL be higher than ER for a long time even if performance is WAY below expectations. The XIRR will also be higher for fresher loans compared to more mature segment if everything else is equal. I've explained the difference between XIRR and ER here back in the day already so no point rewriting it all: rahafoorum.ee/en/bondora-rating-has-outperformed-expectations/
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Post by kissmyjazz on Jul 27, 2016 11:14:49 GMT
Rahafoorum, in light of the newly introduced "write-offs" that are preferentially taken out of the "interest and late fees" portion of the loan, do you think it is also done primarily with the aim to boost the immediate XIRR, as principal repayments are counted "in full" now, whereas the "write-offs" are pushed into the future of the cashflow? Do I understand the situation correctly?
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Post by rahafoorum on Jul 27, 2016 11:32:24 GMT
I don't think the write-offs have any effect on XIRR as those are usually taken from payments for past due months (in other words, payments that were already deducted from the calculation). Also, I'm pretty sure that write-offs aren't included in incoming funds in the XIRR calculation (at least they shouldn't).
I'm not sure whether the write-off part is also discounted from future cashflow though in cases where defaulted borrower is paying up more principal than initial schedule anticipated. You'd need to ask Bondora whether they've updated the XIRR formula to account for this or not.
For example:
Loan A is overdue with 4 payments, totalling principal overdue of €50. The whole defaulted loan has €8000 outstanding principal left. In XIRR calculation the €50 is deducted from cashflow and €7950 is included in the future balance. If a borrower now makes a payment of €500, then the XIRR calculation should consider future cashflow as €7450, even if DCAs take €100 of this €500 as fees. In other words, future balance should be deducted by €500, cashflow accounted for XIRR should be €400.
You need to ask Bondora whether they actually deduct these fees paid to DCAs from future cashflow as well or not.
Edit: Since the last changes, there doesn't seem to be any value for outstanding principal in the global datasets nor is there any value for write-off amounts so investors essentially have no way to calculate or check these figures either. Hopefully it was only removed for a short period to fix it to account for the write-offs.
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james
Posts: 2,205
Likes: 955
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Post by james on Jul 27, 2016 15:22:44 GMT
Their methodology probably uses something similar to what they use on the website (not discounting for whole defaults, but for "missed payments") That's why I was explicit about which numbers I wanted, the ones more normally used to describe defaulted loan balances. For 2014 Slovakia the numbers went something like this, as of June 2016: €751,000 Sum lent €605,000 Amount in loans that defaulted (but this is later, more than six months from end of 2014) €35,000 amount recovered from defaulted loans Since those have allowed more time for recovery and defaults they aren't the six months after the year numbers that I asked about but they do give some idea of the picture using more normal measures than the ones Bondora normally uses. Spain started quite late in 2013 so I'll use year 2014 numbers as of 2016 here to get a year's worth since I don't have convenient numbers. €4,691,000 Sum lent €2,291,000 Amount in loans that defaulted (but this is later, more than six months from end of 2014) €344,700,000 amount recovered from defaulted loans So at the moment the defaulted loan capital values for Slovakia and Spain for 2014 after recoveries appear to be about 81% and about 49% of capital lent. Of course this is not the whole story because the interest rates should be producing income from the non-defaulted loans that will compensate for the losses on the loans that default. Even two and a half years after 2014 there has not really been enough time to get the full picture of how effective that will be. For a high interest rate, high default rate combination the interest rates on other loans and the recovery from defaulted loans are what will determine if the portfolio is a success or failure. Nothing unusual in that, even for low rate loans this is often going to be the situation. But it does make the high default rate case look worse than the low default rate one. The cash flow approach used by Bondora has some use in showing this effect but it will make an assumption about recoveries - 100% - that is too positive except when the loan book has reached the point that all loans have reached the end of term. Still, it is probably clear from 81% and 49% of capital lent being in defaulted loans why some lenders have a very poor view of the performance of those two markets in their first year and why some lenders made it a key part of their investing strategy not to lend to those countries in the early years.
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