Loan portfolio overview (December 2020)

December loan portfolio

We closed 2020 with strong results over December where our investors financed a total of €18,3M worth of loans. The biggest contributions came from Estonia (€8,5M), Germany and Finland (combined total €6,9M). All together our platform facilitated €120,2M worth of loans in 2020 which is a 50% increase compared to 2019 (€80,3M).

During the last quarter of 2020, our borrowers repaid 133 loans (€30,4M) with an average return of nearly 11%. Due to the second wave of coronavirus, we have seen a slight increase in delays of repayments, but in general the loan portfolio is healthy and we don’t expect any significant negative change in borrower payment behavior.

In December 2020, two recoveries occurred – one in Estonia (€0,25M) and one in Latvia (€0,16M). In 2020 the risk department recovered a total of €5,2M worth of loans. As we forecasted, the default rate decreased to near 5% by the end of last year. At the end of 2019, the default rate was 6,9%.

Strong results in debt management have been positively affected by restructuring of the risk department (a new credit risk team with a more target-oriented approach) and active sales of problematic collaterals. Also, at the end of 2019, we improved our credit policy (with a more robust view to borrower and collateral analysis) which resulted in fewer problematic loans in 2020. We are proud that our external debt collection partner in Latvia recovered the first defaulted loans for us and that we have now signed the default lawyer partnerships in every country where we operate.

During 2020 we learned that patience in dealing with late loans is one of the most important factors if we want to recover loans without principal capital loss to investors. Although the late loan portfolio increased significantly during the first wave of Covid, we didn’t rush to enforcement in most of the cases and gave more time to borrowers for repayment. This resulted in more voluntary sales of collaterals and recoveries with higher returns.

In 2021 we will focus on maintaining the same recovery pace and concentrate more on long-term defaulted cases. Our customer support and debt collection specialists are working on improving the loan updates to investors. In general, we don’t see any significant negative changes in the loan portfolio during the upcoming year.

We will keep you informed about the credit portfolio quality on a monthly basis.