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Past Performance

We provide our loan book data in a number of ways. Our ‘live’ loan book statistics are shown on the home page of our website and on the MoneyThing platform ‘live loans’ page. We also provide daily statistics to Brismo for their industry comparisons.

The statistics on this page use historical data and are updated on a quarterly basis.

Figures shown below are correct as of June 2019.

*Loans are no longer renewed as part of revised model.

In Thousands

(£000)

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
Cumulative lending 51,595 65,410 71,270 80,662 84,175 86,118 86,810 88,651 91,415 92,054
Current loan book 26,443 34,105 28,037 29,271 30,692 29,450 28,189 23,724 24,452 23,337
New lending in quarter 10,566 13,814 5,860 9,392 3,513 1,943 6,920 1,842 2,764 639
Capital repaid in quarter 1,682 2,995 6,091 7,960 9,379 3,185 1,953 6,307 2,036 1,754
Total Renewed in quarter 4,777 3,156 5,088 5,091 591 428 0* 0* 0* 0*
Interest earned during the quarter 728 911 1,031 886 664 628 566  476 339 269

Actual and Expected Defaults and Losses

2015 2016 2017 2018 2019
Expected Defaults 3% 4% 6% 8% 8%
Actual Defaults 0% 0%  7.7% 6.9%
Actual Losses 0% 0%  0%* 0%*

*Please note that while no losses were incurred in 2017 or 2018, as described below, losses could be incurred on these loans in 2019.

Our approach to defaults and losses

Our approach is to firstly prevent defaults and losses from occurring. We do this by only accepting secured loans and applying an appropriate loan-to-value ratio and also by spending time understanding our borrowers and their ability to service the interest and repay the capital at the end of the term.

That said, tangible assets are subject to changes in value and it is possible that during a loan term an asset’s value may decline. This is an inevitable risk of lending, however, with a prudent and diversified portfolio a lender can seek to mitigate potential losses.

We manage our loan book closely and we have processes in place ready to deal with arrears and defaults should they occur. If borrowers’ circumstances change and they are unable meet the terms of the loan agreement, we place the loan into default and pass it to our solicitors to recover the funds.

Actual Defaults and Losses

MoneyThing experienced its first defaults in 2017 after a track record of two and a half years with no defaults or losses.

Now that we have two years of actuals, we have revised our expectations 2019 in line with our experience, considering the status of our current live loan book and the expected changes in market conditions.

To put this into perspective, we have had eleven loans in total go into default to the end of 2018. Two were recovered in full within two weeks. The remaining loans in default are in the recovery process. Note that while recoveries are ongoing to date we have recovered 40% of the capital in default across the loan book representing £4.4m (accurate at Feb 19). No capital losses have been recorded . This could change as we move through the recovery process and we will ensure we keep lenders informed.

Expected Defaults

At MoneyThing we finance an array of loan types, providing our lenders with the opportunity for a varied and diverse portfolio. We assess each loan deal on a case-by-case basis, taking into consideration several factors including historical business performance, forecasts and current financing obligations of our borrowers. Calculating a predicted blanket default rate across the portfolio is therefore difficult given this variability.

A defaulted loan does not necessarily mean losses will be incurred. Please refer below for loss predictions.

Expected Losses

All of our loans are asset-backed. We assess every loan on an individual basis with regards to future performance and risk of default. For example, we typically offer up to 70% loan-to-value (“LTV”) on property-backed loans whereas more exotic items such as paintings or jewellery will tend to be at a lower LTV – typically no higher than 65%.

If a loan defaults, we have legal entitlement to seize the underlying asset supporting the loan. Provided that the asset has not fallen in value by more than the LTV applied to the loan, lenders will not suffer any capital loss.

In the event that the underlying asset value has decreased during the loan term by an amount greater than the LTV applied, capital losses will be incurred.

As stated, a typical MoneyThing loan will be at 70% LTV or less. This therefore provides a substantial 30% buffer regarding the underlying asset value. Let’s consider how this would work, however, in an atypical scenario whereby we have granted a loan at 85% LTV.

Loan: £850,000

Asset: £1,000,000

A 30% reduction in asset value would result in a realisable value of £700,000, giving rise to a loss of £150,000. If we assume this happens on 6 of every 100 loans and for this example we assume all loans are the same, then we would see losses as follows:

Predicted losses:

£150,000 x 6 = £900,000

Gross loan book:

£850,000 x 100 = £85,000,000

The potential loss as a percentage of the loan book in this example would therefore be 1.06%.

The impact of such any loss to a lender is reduced by diversifying their investments across loans. For example if you had invested £1,000 into a single loan that went into default, using the same example above:

Amount lent:             £1,000

Recovery:                  £0.70 for every £0.85 lent

Capital returned:      £823.53

This would be a capital loss of £176.47 or a default rate of 17.7%.

If you had split that same £1,000 across two loans, assuming only one loan went into default, your capital loss would be half that shown above at just over £88. The risk keeps decreasing as you continue to diversify that £1,000 across a higher number of loans. We would therefore strongly encourage you to consider the best way to diversify your investments and seek independent financial advice where possible.

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