I Started a Zlty Melon Test Portfolio

A few weeks ago I decided to start a small test portfolio investing in p2p loans at Zlty Melon. Zlty Melon is a p2p lending marketplace in Bratislava, Slovakia (see earlier articles about the Slovakian market). The marketplace lists loans to borrowers in Slovakia in Euro currency and to Czech borrowers in CZK. On the investor side Zlty Melon is open to residents of the European Economic Area. The website is available in English, Czech and Slovak languages.

I deposited 400 Euro via SEPA transfer. If you need currency conversion during a deposit, it might be cheaper to use Transferwise or Currencyfair than to do a direct bank transfer. Zlty Melon offers a range of loan types from unsecured consumer loans to ‘cashfree housing loans’ which the site describes as follows: ‘Loan to finance a new housing purchase. This loan is provided in cooperation with a well-known developer and is used to cover part of the purchase price of the property bought by the applicant. The real estate is being under construction.’.

I set up an autoinvest (called ‘Investment Manager’) to automatically bid 25 Euro on each new cashfree housing loans, as these seem the most secure loans and so far according to Zlty Melon’s statistics for this loan type there have not been any defaults. I set it up to invest in Slovak loans only as I didn’t want any currency risk. Maturity periods range from 1 to 5 years. For this loan type the interest rate is 5.9% p.a. and Zlty melon charges investors a fee of 0.33% on all installment payments. EDIT: Currently Zlty Melon runs a promotion for investors – if a large amount is invested in a single cashfree loan then investors can earn up to 1.1% bonus interest, making the total interest rate up to 7.0%. For unsecured consumer loans (which are graded AA to D- & HR) interest rates are much higher – up to 30-40% for HR loans – and the fee is 1%. Investors there engage in auction bidding against each other.


Screenshot: Excerpt of my Zltymelon dashboard

As I started only a few weeks ago, I don’t have that much experiences to share, only that the website is easy to use and offers a lot of information. With my selection criteria there is quite a bit of cash drag, as there are not that many new loans that match my filters. The total new loan volume (all loan types) that Zlty Melon originates each month is about 0.2 million EUR. Zlty Melon has a good comprehensive statistic page.

Zlty Melon does have a secondary market, but I have not used it.

While the interest rates on the loans I invest in are rather low, I like that the possibility to invest into Euro based p2p loans in a marketplace outside the Baltic area for diversification. I will see how my test portfolio develops and report on it periodically. Continue reading

Interview – Finbee the First Year

P2P-Banking.com Interview with Laimonas Noreika, CEO of Finbee

You launched Finbee a year ago. Can you sum up the major developments since?

More than 3,000 investors have issued 2M EUR worth of loans via FinBee and none of them lost any money due to a default and our compensation scheme. We are very proud for this result.  We have a reliable and highly skilled team that has built a company that is constantly growing. We are in full legal compliance with existing regulation and are constantly working on developing new products and features for our investors and borrowers.

What were the biggest challenges in this first year?

P2P lending is a relatively new concept in Lithuanian lending market, so raising awareness and overcoming scepticism was one the biggest challenges that we’ve faced from day one. Also, when we started to expand, building a team that can deliver results while maintaining highest standards was also time consuming. From technical perspective, learning the dynamics of supply and demand in FinBee auction was also something that we put a lot of effort to.

finbee-team

In your opinion, which 3 most important skills does a CEO need to successfully lead a fintech startup?

In my personal opinion, a key feature that a CEO has to be experienced in is team building. Even the most outstanding CEO will not be able to achieve much without a great team. A great manager has to have a diverse experience in corporate governance, finance, legal matters, marketing and IT. Also, I would like to emphasise, that simple and transparent communication is vital for a CEO.

Are collection and default figures in line with the expectations & projections you had a year ago?

Current default figures are better that we expected and projected. We expected to operate with 8 to 10 percent of non-performing loans. Currently we have 2.25 percent (it worth noting that we consider a loan to be non-performing when two monthly instalments are missed, that is when loan is 60+ days late). We also project 40 percent recovery of non-performing loans. So we expect 4.8 – 6 percent losses after recovery. Having in mind that investors now invest on 26 percent interest rate on average, they can expect 20 percent returns even without our compensation fund.

We achieve this by minimizing the chance of default with wide range of measures. For example, we check every single borrower using more criteria than is required by regulation. Also, we meet each and every one of them personally. We confirm only 7 percent of loan requests and only then pass them to the investors. Continue reading

Impressions from the P2P Investing Day in Prague

Today I am in Prague at the P2P Investing Day organized by Symfonie Capital. There are several Central and Eastern European marketplaces present like Bondora, Finbee, Estateguru, Zlty Melon, Symcredit and Zonky, but also Lendinvest and Ablrate from the UK. The content of the panels and presentations was not as basic as in last year’s conference. I’d estimate about 150-200 attendees.

One interesting discussion centered on the differences between a bank loan and a p2p loan for a SME loan borrower that has problems to make the payments. One argument was that the advantage of a p2p lending marketplace is that it can be more flexible in finding a solution, e.g. by prolonging the loan term – having power of attorney granted by investors it is free to find a solution it deems right for the situation. The counterargument was that the platform should adhere to a rather strict set of rules since it owes its investors predicitability. Personally I understand both views but as an investor I prefer platforms to stick to a predefined process, because only that will make collections and defaults rates predictable. If there is too much flexibility and on the spot decisions it will be very hard to statistically evaluate platform performance and development for troubled loans over time.

One interesting anecdote was mentioned by Lucie Tvaruzkova, CEO of Zonky, a consumer loan marketplace in the Czech Republic, launched several month ago. She said that at the moment there is a waiting list of 7,000 investors wanting to use the platform but to scale it properly in line with loan demand, she lets those in only bit by bit. So far 5,000 investors are already active on the platform.

Symvest 2016 p2p lending conference
Panel on consumer focused platforms with representatives of Savelend, Bondora, Finbee and moderator Michael Sonenshine

David Bradley-Ward, CEO of Ablrate, told me that he expects to put more airplane loans on the platform in 2016 than in the previous year, but has to be selective in which loans fit the investor appetite. He also says the situation gets easier as he now has institutional investment in place that can pick up loan parts that would otherwise go unfunded by institutional investors.

I liked the panel that had 3 SMEs, that borrowerd through a p2p loan, on stage, as this gave an interesting change of perspective. Continue reading

Mintos Raises 2M from Skillion Ventures

Mintos LogoLatvian p2p lending marketplace Mintos has raised 2M EUR from VC Skillion Ventures in Riga. The p2p lending service was launched a year ago and lists loans from several loan originators. The loan types include mortgage loans, secured car loans, business loans, personal loans and invoices finance. The majority of the retail investors resides in Latvia, Germany and UK.The investors financed a cumulative loan volume of over 16M EUR since launch.

The loans are currently to borrowers in Latvia, Estonia, Lithuania and Georgia. Mintos CEO Martins Sulte plans to add loans in the markets of the Czech Republic and Poland next. Continue reading

Slovak P2P Lending Marketplace Zlty Melon is Preparing for Next Growth Phase by Capital Increase

Zlty Melon logoŽltý melón, the first p2p2 lending service in Slovakia, has successfully completed a Series A investment round and raised its capital to strengthen further development and implementation of strategic plans.

According to information P2P-Banking.com obtained from the Žltý melón management, the first tranche was little below 1M EUR, with the agreement for additional capital in range of 2M EUR after several milestones will be achieved.

Žltý melón acquired investments from EU-investment fund program JEREMIE, which is managed by Limerock Fund Manager, FTK Invest, an investment company, and Mr. Hendrik Bremer, a long-time business partner of financial services in Central and Eastern Europe at PwC and Roland Berger, strategy consulting companies. Mr. Bremer has also joined the company’s management and thus supports its existing team.

Read an earlier guest post by CEO Roman Feranec about the P2P lending market in Slovakia.
The company plans to expand further into the Czech Republic and other countries in Central and Eastern Europe.

“After being on the Slovak market for two and a half years, we launched our Series A Investment Round in order to raise capital to accelerate growth and further implementation of our strategic plans, particularly in the areas of product portfolio, services for our clients and territorial expansion. We do see the investment as a confirmation of trust in the innovative business model and our company; it also shows that ​​peer-to-peer lending is perceived positively not only globally, but also in Slovakia. We really appreciate that Mr. Bremer has joined our team. His extensive experience in the development of financial services throughout our region will greatly assist in our future development,” says Roman Feranec, CEO of Žltý melón. Continue reading

Report from the Symvest Conference in Prague

Last Thursday I attended the Symvest conference ‘P2P Lending – the New Frontier in Finance‘ in Prague, which was organised by Michael Sonenshine of Symfonie Capital in cooperation with the university of Economics, Prague. Speakers and panelists were mainly from Eastern Europe, though some made the trip from UK, Austria and Italy. The audience consisted predominantly of representatives of Czech finance (banks, investment companies) and students. A main motivation for the conference was to create awareness for p2p lending in general, which is a new phenomenon in the Czech Republic. Sonenshine announced his plans to launch SymCredit, a p2p lending marketplace catering to SMEs in Poland and the Czech Republic.

Matching the audiences experiences some of the content presented was introductory, like ‘What is p2p lending?‘, ‘What are the risks?‘ and a recap of what happened abroad in the past years of development in p2p lending. Regulation was also discussed. Sam Ridler of the P2PFA gave an overview on the UK situation and Danica Sebestová of Squire Patton Boggs did a very informative presentation on what the applicable legal environment is in the Czech Republic. Actually the hurdles for launching a p2p lending marketplace there are rather low – there is no specific regulation for p2p lending. While some applicable laws are to be obeyed, summed up it amounts to registering to start trading – at least as long as the loan volume originated is lower than 3 million Euro in the last 12 month.

Speakers pointed out that a hurdle to establish p2p lending is that Czechs are very conservative investors. Backing it up with figures, they explained that Czechs prefer to deposit their money in short term deposits at banks yielding only about 0.15% interest or invest into real estate rather than to look for higher yield investments.

The best part of attending conferences for me is the ability to network with so many people working in p2p lending in one place. I had lunch with Jevgenijs Kazanins, Chief Marketing Officer of Bondora. He wouldn’t disclose which markets Bondora will be entering next. Discussing investor wishes around the new portfolio manager, which does limit selection choices, he said that in Bondora’s view the new API will address this, as it will allow many parameters for selection. He would not disclose when the new API will be available.

I also had a long talk with Siim Maivel, CEO of Investly. He has interesting plans for new offerings. As soon as those are launched, I will write about them here in the blog. With David Bradley-Ward, CEO of Ablrate, I chatted about the scondary market and the loan pipeline. The secondary market will be completely overhauled and the new version launched in April. A small anecdote: He mentioned that it is not uncommon that 200,000 pounds would be spend on legal costs and due diligence of one of the aircraft loans on the platform. He therefore thinks it is porbably safe to call it the most extensive vetting of all p2p lending platforms.

With Martins Sulte I catched up on the last happenings around Mintos. He assured me that he does not expect the talks with the consumer protection body to have any impact on operations. I asked him for the reason for the high interest rates of the Mintos loans, after all these are secured loans. He explained that the Latvian banks are not interested in small loans (<50,000 Euro) backed by real estate, as for them the costs associated with the process are too high. Mintos is receiving many loan applications and so far approve only 3 to 5% of them. Sulte has expansion plans, both in product offering (moving into other secured loan types) and geographically (moving into more markets with Estonia being the next).

Concluding I would like to express my thanks to the organizers for this free to attend conference. It was well organized – they even had simulteneous interpreters translating every panel from Englisch into Czech language.

 

P2P Lending Sites in Europe

Visualizations are great to show data that would otherwise just be a long list. I decided to create a map of the p2p lending landscape in Europe. It shows active and discontinued p2p lending services in Europe (including p2p microfinance). Not listed are sites that are in pre-launch stage. All of these marketplaces have been featured earlier in the P2P-Banking.com blog. If you want more information about any of them just enter the name in the search box on the top right of this blog.

Notice to other websites: You are free to copy and use this map, provided you agree not to alter or resize the image and you will set a link to this article.

Notice to p2p lending sites: If you want to be included in a future version of this map, contact me to learn how.

My Myelen Loan was Repaid Early

Last year I lent via Myelen.com to an entrepreneur in Mexico.

In the Myelen p2p microfinance concept the lender signs a contract with the MFI and the MFI takes the default risk of the individual borrowers. The lender carries the market risk that the MFI does not repay the loan. Furthermore at Myelen the MFI covers the currency risk – but for most lenders there is still a currency risk because the loan currency at Myelen is Czech Koruna (CZK).

My 5,000 CZK loan was repaid early by the Mexican MFI since it stopped accepting foreign currency loans to change its legal status. I was repaid 5,115 CZK the total amount plus the accrued interest. The initial 187.50 EUR invested brought back 196 EUR on my account after 7 month – not a bad results.

I did invest in this loan mainly to test the service, since Myelen was previously unknown to me. The experience was good – everything went smoothly. I was notified of the early repayment via email and the money arrived automatically in my bank account.

Note that there were no fees at all for me involved – neither banking fees nor any fees my Myelen.

Currently there are several Mexican loan offers listed on the platform. Offered interest rates range from 4 to 7.5 percent (depending on amount).

My First Myelen Microfinance Loan

Myelen.com is a service allowing lenders to loan money to small entrepreneurs in developing countries. The portal is run by the Microfinance, a.s. company in Prague (Czech Republic).

Like at Kiva and MYC4 lenders can read profiles of borrowers. Currently Myelen has partnered with 4 MFIs in Mexico. In the Myelen concept the lender signs a contract with the MFI and the MFI takes the default risk of the individual borrowers.

The microfinance institution takes over the credit risks of individual borrowers and lowers them by geographical and sector diversification.

The lender carries the market risk that the MFI does not repay the loan. Furthermore at Myelen the MFI covers the currency risk – but for most lenders there is still a currency risk because the loan currency at Myelen is Czech Koruna (CZK).

The minimum loan amount is 5,000 CZK (approx. 260 US$). The loans are repaid annually (or quarterly for larger amounts). Lenders earn interst. The interest rate varies depending on the MFI and the amount loaned. Typical interest rates are 4 to6 percent (higher for large amounts).

My experience – my first loan via Myelen

I registered yesterday at Myelen.com. The interface ia available in English and Czech. There is also a button to choose German language but clicking that only changes the navigation elements – the text is not translated to German. The sign up form asks for IBAN and SWIFT routing codes for the repayments. Since IBAN account numbers are currently only in use in Europe this limits Myelen to lenders from Europe.

Signing up went smoothly, but I had to wait a few hours for my validation email. Today I selected my first loan to fund. First I was puzzled how to get to the loan selection. To get there the user needs to click on the “Support” link in the upper right. There I could then use drop down menues or browse the individual profiles (currently about 30). I decided to loan 5,000 CZK to Julia Ramos Palafox who has a fruit and vegetables stand in Mexico. The MFI – CrediComún listed a 5% interest rate. I was given the choice of selecting an annual or quartely repayment. One further option is to give an interest free loan (like at Kiva). The next step is to accept the loan contract. The loan contract is now sent via email to the MFI which signs it. Continue reading