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Matthew Clannachan – Bondora – Q&A May 2020

In this post we have compiled the answers of Matthew Clannachan (Head of Investments @ Bondora) to the questions we have received from our community via email and social media in these past two weeks in regards to a wide range of topics, but mainly focused on the effect of Covid-19 crisis. Thanks very much to Matt for taking the time to answer ALL our questions without exception!

ES – Spanish: Esta es la versión original en inglés, pero pulsa AQUÍ si prefieres leerla traducida automáticamente en español 😉

—–Section A – First some general questions—-

1 – Due to the coronavirus crisis, In April 2020 we have seen a gigantic 80% drop (aprox.) in the volumen invested in Bondora compared to March 2020… how is this affecting Bondora as a company and which measures have been put in place to ensure the continuity of the business?

(MC – Bondora) Bondora’s business model does not require huge growth every month to remain sustainable. When needed, we’re able to rapidly scale down our costs – without having to lay off any staff. So despite the change in monthly investments, it’s business as usual. That’s why we’ve been a profitable company since 2017, and we expect to end 2020 with a profit too.

2 – Recently we have seen quite a few loan originators lose their licence to operate in some countries, is there any chance Bondora licence / permission to operate could be revoked in any of the countries you work with?

(MC – Bondora) We have been working closely with regulators for more than a decade, so we have no concerns here.

3 – In the current situation, we are seeing a trend of quite a few P2P lending companies initiating crowdfunding rounds to raise capital via Seedrs (Estateguru, Lendahand…) or internally (Crowdestor). Any of plans of Bondora starting a crowdfunding round? Do you feel comfortable with the capital you have at the moment to safely drive your business?

(MC – Bondora) We are well capitalized and have no plans for this.

—–Section B – Questions focused on Bondora Go & Grow—–

4 – Some investors are worried about the liquidity of their investments. When can we expect Bondora Go & Grow go back to normal (i.e. complete all pending withdrawals and enable fast liquidity like before crisis)?.

(MC – Bondora) It’s important to remember that while we’ve experienced higher withdrawals, a lot of people haven’t made any withdrawals at all. So we have to protect the net return for our investors. That’s why partial payouts were designed into Go & Grow from day 1. It’s impossible for us to give a specific date when partial payouts will end. However, withdrawals have already normalized to pre-crisis levels, and investments are increasing too.

5 – What are the real chances of NOT getting 6,75% p.a. due to the coronavirus crisis?

(MC – Bondora) The expected return of the Go & Grow portfolio is currently around 14%, which is more than double the target return of 6.75%. This means there is over a 100% risk buffer organically built into Go & Grow. Today, the absolute level of the risk buffer is more than the total amount of return accrued to date since the inception of Go & Grow – and it continues to grow daily. Regardless, it’s important for investors to remember this rate is not guaranteed.

—–Section C – Questions regarding Portfolio PRO / Portfolio Manager—–

6 – Since the beginning of the crisis, have you noticed a particular loan class (i.e. a specific Bondora Rating class or country) whose risk / reward ratio has deteriorated more than others?

(MC – Bondora) We haven’t seen any changes in the underlying portfolio. As we’ve scaled down our originations, we’ve also scaled down our paid marketing and decided to focus only on loan originations in Estonia. This ensures our costs are not spread across different marketing activities, and our costs are lower as a result.

7 – Taking a look at the actual return of the Bondora portfolios, what is the reason behind the much lower return in the 2014 – 2017 period? and -as the loans mature- can we expect the same trend for 2018 and 2019? 

(MC – Bondora) The product and portfolio size in 2014 – 2017 was substantially different to the following period, so it was more susceptible to volatility and manual calibration by investors. Investors can now invest directly into loans via automated services (e.g. Portfolio Pro) or take a passive approach by using Go & Grow. In addition, we now have a much lower distribution of HR loans in the portfolio.

Today, the historic net return for Bondora stands at 10.4%.

—–Section D – More personal questions—–

8 – What is your personal view about the Covid-19 crisis?, how long is it going to take to recover the pre-crisis investment levels?

(MC – Bondora) I think it’s a great opportunity for Bondora. Over the past few years, I’ve regularly been asked how Bondora would handle a global crisis. Now I can point back to a specific period of time, and reference our performance to investors. Regarding how long before investments return to pre-crisis levels, it’s hard to say. Although we’re certainly optimistic for the future.

9 – What are your feelings about the series of alleged frauds uncovered this year affecting several P2P lending companies, do you think the general loss of trust can affect and hurt Bondora?

(MC – Bondora) Despite the failed platforms being significantly different to Bondora (in terms of the underlying business model), I think it’s still common for some investors to associate them with us and other P2P platforms. So it damages the trust in the overall P2P industry, and naturally so if you’ve lost money with them. I feel the only solution to this is a European-wide regulation which would hold all existing and new companies to a set of objective standards.

As we value investor trust, we’ve taken several measures to give investors confidence in the longevity of Bondora. Namely, we’re financially audited by KPMG and internally audited by PwC. And all data is made publicly available for investors to review themselves, but we publish summaries of this on our blog every month. Before COVID-19, we regularly welcomed investors to our office in Tallinn to give them a tour and to meet the team in person. I think it’s a great way to build a relationship with our investor community and to get to know them better.

10 – Does Matt invest his own money in Bondora? if so, which products (Go&Grow, Portfolio Pro…)?, how does his investment portfolio look outside Bondora (stocks, crypto?)?

(MC – Bondora) I have been investing with Bondora for the past 3 years, and exclusively with Go & Grow for the past 2 years. I use Go & Grow because I love the stability. And you don’t need to do anything other than make a couple of clicks. It’s what I recommend to all my friends and family who are looking for a simple way to invest their money. I also invest in stocks and physical real estate.

*Capital at risk. Investments made with Bondora are not guaranteed, nor is the preservation of value invested guaranteed. Please note that the yield achieved in past periods does not guarantee the rate of return in future periods. The yield of Go & Grow is up to 6.75% p.a. Before deciding to invest, please review our risk statement and consult with a financial advisor if necessary.


Thanks Matt!, and to all our readers… if you are not yet part of the Bondora investor community join today using our exclusive link and you will get 5 euros as soon as you sign up.

On top of that, remember that if you are already an investor and increase your position in the platform before May 31st, you will take part in the Invest&Drive promotion, where you can win a BMW 330i (RRP 75.000€)