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Further Growth in Marketplace Lending to be Expected in 2018

Marketplace lending is a growing investment class

One of the main goals of the Swiss Marketplace Lending Association is to increase the transparency in the Swiss market. Based on our code of conduct, SMLA members must disclose certain figures on volumes, risks and returns of their loans. The SMLA then compiles and publishes the data.

A comprehensive set of new risk/return data for Switzerland will be published the first time for Switzerland in Q1 2019. Some first insights into the volumes are already given in the following.

Since their establishment, the SMLA members had issued a total accumulated loan volume of CHF 360m (end of Q3 2018). The total requested funding volume reached CHF 2.28bn. From January to September 2018, the SMLA members had successfully intermediated loans of CHF 120m. This volume consists of SME loans (CHF 65m), consumer loans (CHF 30m) and mortgage loans (CHF 25m). The total number of loans during the first three quarters of 2018 was 1206.

Towards a common framework for risk/return figures

In order to increase transparency in the Swiss marketplace lending market, the SMLA has worked jointly with the platforms to develop common risk/return definitions. The platforms have agreed to these definitions and the SMLA will start publishing them in Q1 2019. The risk/return figures will consist of the following figures:

  • Annual returns:The returns will be calculated based on the IRR method (internal rate of return). The IRR’s will be adjusted by fees, defaults, recoveries and early repayments. The figure will therefore represent a realistic insight into the returns from an investor’s perspective.
  • Non-performing loans (NPL):The SMLA has defined an NPL based on late payments (interests, principal) of more than 45 days. The NPL are measured against the issued loan volume. Moreover, the SMLA will publish data on arrears (overdue 45<120 days) and defaults (overdue >120 days).

More detailed data will be also published on the number of borrowers and lenders and the maturity of the loans. With that, we hope to contribute to the evolution of marketplace lending as an asset class.