p2pmaster
investment is life.
Posts: 128 
Likes: 54
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Post by p2pmaster on Dec 29, 2017 14:38:05 GMT
I appreciate the effort of independent research, but this one could be seriously improved. Let's dig deeper into methodology and criteria:
1. Profit (= total assets * profit margin)
2. Capital (= total equity)
3. Size (= total assets)
4. Disclosure quality - (independent valuation)
5. Track record (= years established)
Three out of five criteria are highly correlated. The larger portfolio, the more equity you will have (even given 10-20% equity-to-asset ratio), and the more profit you will generate (even given moderate risk management). One could say that track record is also correlated with the abovementioned, as the longer you operate in the market, the more assets you accumulate.
Absolute amounts in finance do not always guarantee the best risk-adjusted investments. Home Capital was also the largest alternative lender in Canada, but almost went out of business due to the urge to growth and lower underwriting standards.
If you do Eurocent analysis with the criteria above, you would get a score of around 58-60, which puts Eurocent is in Top 10 of all loan originators.
1. Profit = 0.2 m EUR this year and 1.2 m EUR last year, putting more weight on recent year (=9, similar to BIG @ 0.3, Mozipo @ 0.5)
2. Capital = 3.2 m EUR (=13, similar to BIG @ 3.2, Lendo @ 3.0)
3. Size = 6.5 m EUR (=7, similar to Mozipo @ 6.4, IFN @ 7)
4. Disclosure quality = presentation is rich with data and info, financial report looks audited, rich with information in local language (= 12)
5. Track record = established in 2004 (=18 points, similar to CreditStart @ 2006, Capital Service @ 1999)
How could analysis be improved:
+ take into account equity-to-asset ratio
+ delinquency ratio
+ mintos performance (current vs overdue)
+ profit margins
+ relative valuation vs absolute
- remove correlated criteria
~ adjust weightings
~ adjust by loan products
~ countries' size
Keep up the good work!
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Post by explorep2p on Feb 3, 2018 11:59:08 GMT
Hello Forum Just to note that we have updated our Mintos lender ratings to include all new lenders including Kredit24 and Invipay. Kredit24 is a very small payday style lender operating in Kazakhstan with extremely high interest rates (1.75-2% per day) and defaults, but is overall profitable. Invipay is a Fintech invoice financing business. The latest financial information provided by Invipay is at Dec 2016, when it made a small loss and had around €140k of equity. We are a little concerned that Mintos has introduced many lenders recently with almost zero lending history, no disclosures around capitalisation or shareholders, and operating in higher risk countries such as Kenya, Moldova, and Kazakhstan. We have also updated the ratings and financial information to reflect the recent announcement by MyBucks, which disclosed a very large loss in the year to June 2017 (€13.8m), and is suffering from a declining share price. Mintos lender results and ratings |
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toffeeboy
Member of DD Central
Posts: 538
Likes: 385
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Post by toffeeboy on Apr 26, 2018 16:59:45 GMT
Admin, mrclondon, GSV3MIaC
Would one of you be so kind as to pin this to the top of Mintos as I think it is worth making sure this remains at the top of the pile for the information it provides.
Cheers
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Post by southseacompany on Apr 27, 2018 3:44:33 GMT
Would one of you be so kind as to pin this to the top of Mintos as I think it is worth making sure this remains at the top of the pile for the information it provides. I would suggest otherwise. Many people have discussed the financial health of originators and diversification strategies in this forum. Pinning these ratings, compiled by one person according to their subjectively weighted criteria, might give an impression of endorsement, or that it is the definitive resource. Participants, especially newcomers, would be better server by reading the forum archive in general rather than focusing on just one viewpoint, even a comprehensive one.
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Post by tomas on Apr 27, 2018 4:34:35 GMT
I think that the list of evaluation criteria of each originator is quite good and is worth spreading. The subjective opinion there is the weight of each criteria.
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fric
Member of DD Central
Posts: 200
Likes: 80
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Post by fric on Apr 27, 2018 6:15:19 GMT
Would one of you be so kind as to pin this to the top of Mintos as I think it is worth making sure this remains at the top of the pile for the information it provides. I would suggest otherwise. Many people have discussed the financial health of originators and diversification strategies in this forum. Pinning these ratings, compiled by one person according to their subjectively weighted criteria, might give an impression of endorsement, or that it is the definitive resource. Participants, especially newcomers, would be better server by reading the forum archive in general rather than focusing on just one viewpoint, even a comprehensive one. Its the best we have here at the moment, feel free to give your suggestions, I'm sure explorep2p will make it more complex and in-depth if there are good suggestions and people would help him out with it.
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p2pmaster
investment is life.
Posts: 128
Likes: 54
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Post by p2pmaster on Apr 27, 2018 7:38:01 GMT
I totally disagree with your suggestion to pin these flawed "ratings".
I have provided detailed comments to the methodology (open for discussion) and have not received any comments from the author.
Just to remind everyone, based on his methodology, Eurocent, now defunct loan originator, scored 58-60 at the time of trading.
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Post by captainconfident on Apr 27, 2018 9:41:49 GMT
I don't think it is a good idea to pin this. It looks like a moderator's endorsement of statistics that they have probably not checked by themselves and secondly, it is information likely to lead less sophisticated investors into taking overweight positions in specific companies' loans which may not be well advised versus full diversification across the whole Mintos platform.
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Post by southseacompany on Apr 27, 2018 13:08:32 GMT
Its the best we have here at the moment, feel free to give your suggestions If an originator borrows a lot of money and quickly lends it out (whether to customers with high credit quality or to a bunch of insolvent hobos), its capital rating would decrease but the effect would be cancelled out by an increase in the size rating. In short, increasing leverage does not significantly change the rating. This should be enough to tell you that the ratings are only incidentally related to the originators' risk levels. The major problem is excessive emphasis on size and other factors that are proxies of size. The post by p2pmaster contains good suggestions, although it looks to me like the capital rating is already a relative measure and not just a stand-in for equity in absolute terms.
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Post by explorep2p on May 7, 2018 11:38:25 GMT
I appreciate the effort of independent research, but this one could be seriously improved. Let's dig deeper into methodology and criteria: 1. Profit (= total assets * profit margin) 2. Capital (= total equity) 3. Size (= total assets) 4. Disclosure quality - (independent valuation) 5. Track record (= years established) Three out of five criteria are highly correlated. The larger portfolio, the more equity you will have (even given 10-20% equity-to-asset ratio), and the more profit you will generate (even given moderate risk management). One could say that track record is also correlated with the abovementioned, as the longer you operate in the market, the more assets you accumulate. Absolute amounts in finance do not always guarantee the best risk-adjusted investments. Home Capital was also the largest alternative lender in Canada, but almost went out of business due to the urge to growth and lower underwriting standards. If you do Eurocent analysis with the criteria above, you would get a score of around 58-60, which puts Eurocent is in Top 10 of all loan originators.1. Profit = 0.2 m EUR this year and 1.2 m EUR last year, putting more weight on recent year (=9, similar to BIG @ 0.3, Mozipo @ 0.5) 2. Capital = 3.2 m EUR (=13, similar to BIG @ 3.2, Lendo @ 3.0) 3. Size = 6.5 m EUR (=7, similar to Mozipo @ 6.4, IFN @ 7) 4. Disclosure quality = presentation is rich with data and info, financial report looks audited, rich with information in local language (= 12) 5. Track record = established in 2004 (=18 points, similar to CreditStart @ 2006, Capital Service @ 1999) How could analysis be improved: + take into account equity-to-asset ratio + delinquency ratio + mintos performance (current vs overdue) + profit margins + relative valuation vs absolute - remove correlated criteria ~ adjust weightings ~ adjust by loan products ~ countries' size Keep up the good work! Hi p2pmaster Thanks for taking time to provide this feedback, you make some good suggestions that we also agree with. Regarding the suggestion about adding more metrics - it is very difficult to do this currently because the general quality of reporting by the Mintos lenders is so poor and inconsistent. As a result, we have had to provide a score based on the information available (or not available) for each lender. Metrics such as delinquency ratios are also inherently difficult to compare, because other things need to be taken into consideration such as loan types, gross interest rates, NPL recognition policy, loan restructuring policies and so on. Regarding capitalisation scores, the score is not simply a case of looking at the amount of capital. We do take into account the amount of assets and the equity to asset ratio as you suggest. Similarly for profitability, we do take into account the ROE, margins, bad debts as a percentage of revenues, etc as well as the absolute amount of profit. Going forward, we would really like Mintos to significantly improve the quality, depth and regularity of the information provided by each of the lenders on the site, and then it will be possible to do the more sophisticated comparisons that you suggest. We have been pushing them hard in the background to make these improvements, but the more investors who can express these concerns directly to Mintos, the better.
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Post by nellerdk on May 12, 2018 13:10:01 GMT
At the moment, I prefer just to diversify as much as I can between the different Mintos lenders. Then I am not so concerned about the solvency of each one of them. We will see in the future if this will be a good strategy or not. I already have some losses from when Eurocent blew up.
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Post by explorep2p on May 20, 2018 11:07:31 GMT
Hello Forum Just to let you know that we have published updates to our ratings today. We have also added coverage of new lenders EBV Finance, Dozarplati, and Credilikeme. We continue to be surprised by the quality of some of the lenders that are invited onto the platform. For example, the latest lender, Credilikeme is an extremely small lender, based in Mexico, with an untested, high risk lending model (online app with 'gamification' to encourage repayments). It generated large losses in the last 2 years and had a non-performing loan ratio of 85% as at Dec 2017..... Latest Mintos lender ratings as at May 2018 |
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Post by Ace on May 20, 2018 11:28:04 GMT
Hello Forum Just to let you know that we have published updates to our ratings today. We have also added coverage of new lenders EBV Finance, Dozarplati, and Credilikeme. We continue to be surprised by the quality of some of the lenders that are invited onto the platform. For example, the latest lender, Credilikeme is an extremely small lender, based in Mexico, with an untested, high risk lending model (online app with 'gamification' to encourage repayments). It generated large losses in the last 2 years and had a non-performing loan ratio of 85% as at Dec 2017..... Latest Mintos lender ratings as at May 2018Your link just takes me to another copy of this p2pif page.
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Post by Ace on May 20, 2018 12:39:06 GMT
I appreciate the info provided, so I'm not complaining, but did you realize that the paragraphs following the ratings table have become out out date?
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Post by explorep2p on May 20, 2018 20:33:40 GMT
Hello Forum Just to let you know that we have published updates to our ratings today. We have also added coverage of new lenders EBV Finance, Dozarplati, and Credilikeme. We continue to be surprised by the quality of some of the lenders that are invited onto the platform. For example, the latest lender, Credilikeme is an extremely small lender, based in Mexico, with an untested, high risk lending model (online app with 'gamification' to encourage repayments). It generated large losses in the last 2 years and had a non-performing loan ratio of 85% as at Dec 2017..... Latest Mintos lender ratings as at May 2018Your link just takes me to another copy of this p2pif page. Hi Ace Thanks for letting us know, the link should work now.
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