Mintos – Lender Ratings

There are almost 70 Loan Originators listed on Mintos at any one time. Each of these are rated by Mintos on a sliding scale of A+ (representing low risk) to D (Default). Rating lenders is not straightforward – there are a number of factors that can go into each rating and the weighting of each factor is a matter of opinion and debate.

Current ratings on Mintos are based on assessments of company operations, management, financials, risk appetite, portfolio performance and regulatory environment. Each of these factors are subject to interpretation, estimation and potentially bias. Unfortunately, Mintos do not always get it right.

Case: Eurocent

Who is Eurocent? Eurocent was a loan originator that joined Mintos in March 2017, providing loans from the Polish market. Within 3 months of listing, Mintos suspended Eurocent loans and in 2018 Eurcoent ceased operations and declared itself bankrupt. Investors that had loans with Eurocent are facing loses, even those with a “buyback guarantee” since the loan originator was providing that guarantee.

Mintos are arguably the most transparent P2P platform at the minute, and they regularly publish financial data on each of these loan originators. With this data available, we are free to perform our own assessments on Loan Originators listed. Our aim is to provide an independent assessment on each Loan Originator – this way we can hopefully avoid falling victim to the next Eurocent.

Our Ratings

Last Updated: November 2019

Our rating are out of 100 – We suggest avoiding Loan Originators that score less than 50 points.

CompanyTotal out of 100Mintos RatingsLatest Financial StatementsAuditedNet Profit (€M)Group GuaranteeFoundedSizeEmployeesCountryNet Profit MarginCurrent RatioDebt to Asset Ratio
Mogo87A31/12/2018Yes4.6 Yes2012233.60275Several8.541.670.91
1PM84.5A31/05/2018Yes5.6 No2000950.00180United Kingdom18.731.060.70
Banknote82A-31/12/2018Yes4.8 Yes2009141.00305Latvia26.571.550.78
Vizia81A-31/12/2018Yes4.8 Yes200934.90305Latvia114.101.591.00
CreamFinance78.25B31/12/2018Yes1.6 Yes2012401.00360Georgia, Czech Republic, Denmark, Latvia2.641.330.82
Credissimo74A-31/12/2018Yes3.2 No2007154.20130Bulgaria9.015.840.16
Dziesiatka74B-31/12/2018Yes0.6 No200111.20440Poland25.2310.260.56
Lutecredit72.5B+31/12/2018Yes7.3 Yes2008187.00266Several21.891.300.77
ID Finance72.33B31/12/2018YEs12.5 IDFinance Spain, S.L.: No
MFO OnlineKazFinance LLP (Kazakhstan): Yes
IDF CAPITAL, S.A.P.I DE C.V., SOFOM E.N.R.: No
2012688.00400Georgia, Spain, Kazachstan10.571.140.91
BB Finance Group69.5A-31/12/2018Yes-1.1 Yes2006166.0050Finland-25.531.440.72
EBV Finance69A-31/12/2018Yes0.3 No2009105.3051Lithuania6.396.140.89
CashCredit67.5B31/12/2018Yes0.7 No201171.00378Bulgaria17.101.330.39
Credius67B+31/12/2018Yes1.3 No201346.40170Romania10.385.121.00
Everest Finanse67A-31/12/2018Yes-6.6 No2000800.402015Poland-10.533.450.75
AgroCredit66A-31/12/2018Yes0.2 No201144.003Latvia28.535.630.69
Capital Service62.5B+31/12/2018Yes-0.5 No 1999278.40422Poland-0.601.441.00
Akulaku62B+30/12/2018Yes-35.3 Yes2016776.802500Indonesia-28.162.910.35
Creditstar61.5B31/12/2018No2.8 Yes2006100Several11.031.250.79
Watu Credit61.5B31/12/2018Yes1.6 No201537.50320Kenya22.801.180.81
Simbo60.5B-31/12/2018Yes0.8 No201751.3021Denmark10.961.191.02
Varks59.5B+31/12/2018Yes0.0 No2016155.90286Armenia28.341.090.00
Placet Group59B31/12/2018No8.8 No2005311.0081Estonia, Lithuania87.386.310.53
Capitalia 58.5B+31/12/2018No0.0 Capitalia Finance OU: Yes
AS Capital: No
Capitalia Finance UAB: Yes
200760.0016Latvia, Lithuania, Estonia5.222.561.00
ExpressCredit58.5B-31/12/2018Yes0.5 No201536.00243Botswana, Zambia19.770.000.00
Kredit Pintar57B+31/12/2018No6.0 Yes2017221.00600Poland26.492.380.41
EcoFinance56B31/12/2018Yes0.0 No201561.3023Russia0.073.030.56
Acema55A-31/03/2018No2.8 No2001106.5031Czech Republic1.431.541.00
ITF Group55B-31/12/2018Yes0.2 No201223.60200Bulgaria5.203.210.52
Debifo50.5B31/12/2018Yes-0.1 No2015112.0019Lithuania-9.971.011.00
Extra Finance50B31/12/2018Yes0.1 No200932.9038Romania0.200.761.00
Kviku48.5B31/12/2018Yes0.1 No201318.0032Russia6.681.220.82
Novaloans47B+31/03/2019No0.3 No201222.6016UK 27.491.001.00
Lime46.5B31/12/2018Yes0.0 No201396.80175Russia2.091.390.72
Alfakredyt46B31/12/2018No0.3 No201355.5026Poland12.464.020.77
Mikro Capital45.5A-31/12/2018No3.0 No2008 1762Russia100.001.360.73
SOS Credit44C+31/12/2018Yes0.2 Yes201511.7050Ukraine9.255.481.97
Monego43C+31/12/2018Yes-0.6 No201821.30213Kosovo-94.3718.400.92
Dineria42B-31/03/2019No0.1 No20168.2061Mexico12.222.620.37
Stikcredit42B-31/12/2018No0.9 No201314.0071Bulgaria68.843.980.25
Dineo41B-31/12/2018No2.2 No2014200.0037Spain10.674.791.00
DozarPlati40.5B-31/12/2018No0.9 No201132.40361Russia5.531.470.68
Kredit2440C+31/12/2018Yes-0.6 Yes201315.0071Kazakhstan-10.390.861.21
Sebo40B-31/12/2018Yes1.9 No201744.00174Moldova33.100.931.02
Hipocredit39B-31/12/2018No0.1 No201415.009Latvia, Lithuania13.390.970.97
Mozipo39B-31/12/2018No-2.5 Yes2007173.0051Lithuania, Romania, Denmark-104.710.171.94
Aforti38.5C+31/12/2018Yes0.1 Yes200920.0056Poland0.061.481.00
Fireof37B31/03/2019No0.3 No201628.0012Spain66.940.850.66
Tigo37C+31/12/2018Yes-0.8 No20179.6080Republic of Macedonia-98.491.711.27
Credilikeme36C+30/03/2019No0.2 No20125.2023Mexico46.090.190.30
Peachy36B31/12/2018Yes-0.3 No2010118.3056United Kingdom-4.142.011.20
Cashwagon35.5B-30/04/2019No-0.4 Yes2017170.00936Philippines, Indonesia-5.761.280.80
Ecash46C+31/12/2018Yes-0.6 No201714.00140Ukraine37.805.880.17
Kredo Finance30C+31/12/2018Yes-0.8 No20175.6085Albania-67.500.880.97
LFTech30B-31/12/2017No9.2 No2012184.00402Kazakhstan37.805.880.17
Getbucks28B31/12/2018No-9.9 Yes2011230.00800Several-13.310.860.92
Dinero27.5B-31/12/2018Yes-1.5 No201746.30158Ukraine-51.571.490.62
Esto27B-31/07/2019No0.0 No201714.2015Estonia4.220.961.00
Aasa25.5B+30/06/2017No-1.1 AASA Polska S.A – No
AASA Kredit Svenska AB – Yes
2010516.00184Poland, Finland-3.421.410.71
Kuki24.5B-31/12/2018No-1.6 No2017125.1058Poland-3.551.050.94
Lendrock24B-31/12/2018No-0.3 No20153.5018Spain-108.192.520.33
AlexCredit22B-31/03/2019No0.0 No201724.0060Ukraine14.803.540.07
Zenka Finance22C+31/08/2019No0.0 No2018580Kenya15.1525.150.04
RapiCredit21B-31/12/2018No-0.6 No201430.0080Colombia-38.930.840.97
Metrokredit20B-30/06/2019No0.0 No201744.70154Russia0.001.001.00
Lendo18C+31/12/2018Yes-2.1 No2016103.205Georgia-13.230.811.21
Tengo18B-30/09/2018No-0.3 No201753.00296Kazakhstan-6.910.000.00
Rapido10.5D31/12/2018Yes-1.7 No2017130.0040Spain-25.101.441.40
Eurocent8.5D31/12/2017No-1.2 No200442.0078Poland-21.111.010.64
Bino0B-31/12/2017No-2.0 No201741.1024Latvia-126.670.771.27

Latest Updates:

November: Loan Originator Rapido Finance was suspended from the Mintos platform due to the loan originators failure to make payments to investors, combined with management failure to show steps to resolve this failure. Read more about this here.

October: Mintos downgraded two loan originators: Aasa Poland has been downgraded from A- to B+ and Rapido Finance from B- to C. Check out their post here to see the reason why.

Lenders to Avoid

Mintos has recently experienced some difficulties with collecting payments from Loan Originators, highlighting the need to invest in high quality loan originators in order to protect investments. Below we’ve listed 2 loan originators with a massive red flag that you should avoid.

One of the first things we look for with lenders is an audited set of financial statements. This provides a level of assurance that the data you are looking at has been verified by an independent third party. With Peachy, we noted that the auditors have highlighted a few points that we would like to bring to your attention:

  • The company incurred a loss for the year of 259k
  • Total liabilities exceed total assets by 1.2m
  • Company directors note that there are material uncertainties exist that cast doubt on the company ability to continue as a going concern. (i.e. Good chance of going out of business!)

Put simply, the company is in trouble and is not showing signs of improving. We suggest avoiding this LO.

It took until October 2019 for Lendo to release their financial data for 2018, an immediate red flag. Similarly to Peachy, the auditors have highlighted a few points that we will reiterate:

  • The Group incurred a net loss of GEL6,433,992
  • The Group had a negative equity of GE18,452,609.
  • Company directors note that there are material uncertainties exist that cast doubt on the company ability to continue as a going concern.

Generally, when a company releases their financial statements late, it is a sign that they are in dispute with their auditors (over something that they would prefer not to put in!). In this case, it appears Lendo did not want to disclose the negative results to investors. Additionally, the company was fined almost 1.5m by the Revenue Service, which management are disputing.

Our Rating Criteria

We rate lenders using 12 different criteria covering 4 different categories. Don’t agree with our ratings? Great! Let us know in the comments. We update company ratings each month and would love to hear your feedback on how we can improve.

Financial Performance (25%)

A. Net Profit: A profitable company is better to invest in than a non – profitable company. Simple, right?

B. Current Ratio: This is a simple financial metric that shows us a company’s ability to pay short term and long term obligations. A healthy ratio is about a 2:1 – this is what we are looking for here.

C. Net Profit Margin: This shows us management ability to transform revenue into a profit. The higher, the better.

D. Debt to Asset Ratio: Debt is risky – High interest repayments on debt can be the downfall of a company if not managed properly. The debt to asset ratio measures the total amount of assets financed by creditors rather than investors. A healthy ratio is about 40% (or 0.4) – the average across all lenders is 0.78!

Transparency (20%)

Audited Financial Statements: This is a big one for us – If the company does not provide audited financial statements how can we trust the data presented? While a new company does not have the time or money to invest in performing audits (nor should it), unaudited financial statements can provide misleading information to investors and are inherently more risky. 20 points for providing audited FS, 0 for not.

Intrinsic Advantages/Company Strategy (35%)

A. Country – Based on the country where the Loan Originators primary operations are performed. We averaged country ratings between the main rating agencies (Moody’s, S&P and Fitch) in order to reflect the risk of investing in these countries. High grade countries such as the US receive 10 points, highly speculative countries such as Cuba can receive -10.

B. Founded – Based on the “recession factor”. The truth is that we don’t really know how the P2P industry will perform in a recession or how many Loan Originators will survive. What we do know is that a Loan Originators that survived the last recession is less risky then a company that has only originated in the last few years. 10 points for companies created before 2008, 0 points for those created after.

C. Size – Larger companies are less risky than smaller companies, right?

D. Employees – More employees means more knowledge and know-how on how to deal with tricky situations.

E. Group Guarantee – A loan originator is structured so that they have separate and distinct legal entities, operating as subsidiaries in different jurisdictions, each reporting to the “Group” entity. If an under-performing performing entity declares itself bankrupt, your money could go down with it. However, if the company has a Group Guarantee, this is essentially a guarantee from the Group that they will support all of their subsidiaries, underperforming or not.

Other (20%)

A. Skin In the Game – All loan originators that place loans on the marketplace are required to keep a certain percentage of each loan, which is their stake in the loan. This helps to align investor interests with Loan Originator interests. For us, the higher the better.

B. Mintos Ratings – Yes, we admit it – Mintos have access to information that we do not! Not all data is published, Mintos communicated regularly with their LO’s and they have a team of staff that review current loan performance and other data. Rather than fight this, we have decided to build this into our own ratings. An A+ LO receives 15 points, and there is a sliding scale for those with lower ratings.

C. Discretionary – Our final rating criteria allows us to take a maximum of 20 points off the total scores of lenders. As not everything is captured by the data provided in the Financial Statements, this metric allows us to downgrade lenders for various reasons. In the table above, several lenders have been downgraded for the late release of Financial Statements (there is no reason why we should not have access to 2018 data by now!) and in the case of Aforti, the lender has been downgraded due to recent funding/IT difficulties experienced by the company.

Other factors that may result in a downgrade include recent poor loan performance, negative announcements about the companies or anything really! The idea is to use this metric as a means to downgrade lenders before they release negative Financial Statements, in order to get ahead of the rush to sell.

Click HERE to set up an account with Mintos, and receive a bonus on investments made in the first 3 months!

Pros and Cons of P2P Industry

It is fair to say that P2P investing (also known as crowdlending/crowdfunding) is gaining popularity worldwide. As the banking industry continue to provide low to negative interest rates for people putting their money into saving accounts, and with many predicting a bear market for stocks and recession in the near future, people are starting to look for alternative ways to invest. P2P investing has emerged as a viable alternative for those with just a little spare cash and others with millions to invest and want to diversify their portfolios. We have listed below some of the pros and cons of investing in the P2P industry:

Pros

  1. High Returns

The number one draw for the asset class is the high returns it offers. Most platforms average around 13% p/a, and it is possible to invest in individual projects that are a lot higher. We have even seen investment opportunities offering returns up to 26%! With the magic of compound interest and rates this high, it would take just 3 years to double your investment. A note of caution however – Investment returns this high are simply not sustainable in the long term and come with a high degree of risk – see points listed in our risk section below.

You might ask yourself why would a business or person taking out a loan pay interest rates this high? The answer is usually a combination of various reasons surrounding ease, time and other. P2P platforms offer a number of advantages over traditional banks, such as:

  • Same day credit decisions
  • Less paperwork involved
  • Short term loans (bridging finance)
  • Marketing opportunities

This provides opportunities for investors to make significant returns by cutting out the traditional middle man (i.e the bank) and businesses can take out loans with short notice – A win win for the investor and businesses.

  1. Passive Income

Many platforms have an auto invest feature – a very effective tool that allows you to set up your investment strategy to automatically invest for you based on specific criteria that suit your investment style. Depending on the platform this could be a very sophisticated strategy where investments are made only after a number of criteria are met, or else a simple strategy where you just select the interest rate you want. Either way, this feature is extremely powerful as it allows you to earn returns with little time needed to evaluate loans individually. Once you have the tool set up, you can sit back and watch the money come in, checking in every once and a while.

  1. Investing local

Most P2P platforms source their investments from their local market. So when you invest in the platform, it is likely that you are helping the local market grow or are supporting a local person that needs a loan for a new car, house, etc. This works well for businesses aswel – by listing themselves on the platform they can have thousands of investors feeling part of a new business project or initiative and investors will be more likely to spend money on this business.

Some of our favourite investments have been investing in an Irish whiskey company and providing a loan to a 72 year old Romanian woman to buy a new car. What other asset classes provide these kind of opportunities??

  1. Liquidity of Investments

Some (and we stress only some!) platforms provide an opportunity for investors to sell their loans back to the platform through a secondary market or selling directly to the platform itself, with a fee. Other platforms provide invest and access features where you can access the money invested almost immediately with the click of a button.

Investors with a short term investment horizon or those that feel they may need immediate access to their funds in the near future should concentrate their investments on platforms with these features. However, they usually come with a cost – investment returns are (generally) lower.

  1. Invest in secured assets

Investing in business loans can sometimes come with an additional layer of security – the loans can be secured against collateral provided by the borrower. This means that in the event the borrower cannot repay the loan for whatever reason and they default, the lender can take the asset and sell it in order to recover the debts. Not an ideal scenario – but it does provide an additional layer of protection for investors.

  1. Diversification

“The only investors who shouldn’t diversify are those who are right 100% of the time.”

P2P is a relatively new asset class that provides investment opportunities outside of the usual stocks, bonds, property, etc investments.  Anyone that follows this blog knows that we know that we will never be right 100% of the time! We aim to diversify our risk by investing in multiple (hopefully uncorrelated) asset classes. This is investing 101 – Spread your risk around by investing in more than one loan originator and more than one asset class. When one is under-performing, hopefully another will help balance things out.

Cons

  1. High Risk

P2P is a new asset class. It is yet unproven to see how it will perform in a recession. Will people and businesses stop paying back their loans or will it result in more people taking out loans and boost returns overall? The lack of a track record makes it hard to forecast the future, only time will tell.

Either way, it is fair to say that there is a very real risk of losing a significant proportion of the money invested, and that investors should employ strategies to reduce their risk exposure. We’ve outlined a few here that could come in handy:

RISKWHAT THIS ISSTRATEGY TO REDUCE RISK
Portfolio RiskEvery P2P platform starts finding itself in trouble– Invest in stocks, gold, bonds, ETF’s, Index funds, etc
Platform RiskOne specific P2P platform finds itself in trouble– Invest in several platforms
– Review financial statements to assess long term viability of company
– Check out Brismo site to gauge investor confidence in the platform
Loan Selection RiskThe loan you’ve selected is not repaid– Only invest in loans that come with a buyback guarantee
– Diversify by investing a max of 10 euro in each loan
Loan originator selection riskThe loan originator listed on the P2P platform goes out of business– Invest in loan originators that score about 50 in our table
– Spread your investments across minimum 20 loan originators
Group Guarantee RiskOne particular entity for the loan originator goes out of business, while the rest of the business carries on as normal– Same as above
– Invest in loan originators that have a group guarantee or stand alone entities with a solid financial performance.
Black Swan EventsAll other eventsBe ready to react. Accept event if you can’t do anything and move on!

  1. Liquidity of investments

Most P2P platforms (particularly business loans) require investors to put their capital away for several months, or even years. In some cases withdrawing capital is not possible, in others it is possible but can come at a fee for investors.

  1. Transparency of data

While some platforms try to be upfront and transparent about Loan Originators listed on their platform (kudos to you, Mintos!) – Others do not provide enough data for investors to really understand the risk of their investments and fully evaluate the opportunities listed.  The industry as a whole is improving thanks to pressure from investors, so hopefully this continues over the next few years. However, at the minute it is fair to say that investors need to take a leap of faith for some opportunities presented to them – not an ideal scenario for those looking to steadily build their wealth.

  1. Cash drag (no investment opportunities)

The more popular platforms are attracting investors quicker than people/businesses seeking investments, and demand is exceeding supply. For some platforms, opportunities are fully invested in within minutes and this leads to cash sitting on the sidelines for some time. Other platforms only have loans listed with a relatively low return as loans with high returns are snapped up immediately. Investors need to be on the lookout for opportunities and ready to invest when the time comes in order to reduce their cash drag and boost returns.

Summary

Well there you have it – the pros and cons of the P2P industry. There are countless more pros and cons that we could have included, but these are the most important for us. Overall we really do like the P2P industry – it is a unique asset class that allows investors with little cash to make some real returns and start their investing journey.

For platform specific guides why not check out some of our other reviews, linked below. You can help support us by using the sign up links below – some of these will also boost your returns:

Platform ReviewAboutAverage ReturnSign Up Bonus!
MintosMintos is the largest P2P platform in Europe and was established in 2015. Company operations based in Riga, Latvia.12.5%1% of average balance for first 90 days
GrupeerGrupeer is a P2P platform that was registered in 2016, launching in February 2017. Company operations are based in Riga Latvia. Grupeer offer two types of loans; loans issued by credit institutions to individuals and loans issued to enterprises. 13.5%No Bonus currently
FlenderFlender is an Irish P2P platform founded in 2015, offering investment opportunities to businesses based in Ireland.10.5%5% of all investments made in first 30 days
CrowdestorCrowdestor is a Latvian based P2P Platform offering high returns for investments in business loans17%<Coming soon>
DegiroDegiro is an online trading platform offering incredibly low rates for stock investingNA20 euro
CurrencyfairCurrencyfair is an online currency exchange platforms offering rates far more favourable than traditional banksNA30 euro once 1,000 euro transferred