Peer-to-peer lending market Mintos shared his platform Updating the risk score – which is based on the monitoring and evaluation of data for the last quarter of 2020. On the Mintos Risk Score updates, you’ll find key information regarding any changes to Mintos risk scores and sub-scores for different loans, and you can get a spreadsheet that keeps track of all quarterly changes.
While sharing the overview of changes in Mintos risk scores and sub-scores (based on Q4 2020), the company noted:
“The assessment of data based on the fourth quarter of 2020 has given us a clear perspective on how companies have managed their portfolios, volumes and debt collection, and how they have managed their lending activities in general over the course of of the year of the pandemic. We found that most of the companies that managed to stabilize their operations by the third quarter of 2020 did not see any significant changes in the last quarter of the year.
The Mintos the team added that “due to [their] Assessment, the Mintos risk score is improved for loans issued by 5 of the 90 entities included in this update. Mintos further noted that the score is “downgraded for loans issued by 1 loan company”. The score is “withdrawn (SW) for loans in three cases: in 2 cases the companies left Mintos due to a new source of funding (Capitalia and Mogo Kazakhstan), and in 1 case there is no no ongoing investment in loans from a loan company (Stik Kredit, Bulgaria).
The Mintos team also mentioned in their update that DanaRupiah, the Indonesian credit firm that joined Mintos just before the start of the COVID epidemic, is now “active in the market with a new Mintos risk score. “.
Mintos added that the loan portfolio performance sub-score is “uplifted for loans issued by 7 loan companies, and no downgrade is being made.” The company also noted that stabilizing issue volume volatility is “one of the main reasons for upgrades to this sub-score, in addition to showing stable non-performing loan rates over the two. last quarters “.
Mintos’ report continued:
“The Loan Servicer Efficiency sub-score is improved for loans issued by 2 credit companies and downgraded in 1 case. The upgrades are the result of continuous improvements in risk controls and internal processes, such as stricter rating rules in response to market dynamics in 2020. ”
The report further notes that the Redemption force the sub-score is “raised for loans offered by 2 loan companies, while for loans from 4 companies, the sub-score is lowered”. The end of the year “gave a better idea of the overall financial stability that companies managed to maintain during the year, but also of the level of their equity and their overall profitability”, added the Mintos team.
The Cooperation structure The sub-score “remained unchanged for all loans assessed,” Mintos confirmed.
While commenting on the schedule for Mintos risk score updates, the company noted that the regular schedule for Mintos risk score updates is “quarterly”. However, exceptions can be made in certain cases when there is a “material improvement or deterioration for specific loans in the market, in which case modifications are introduced as necessary”.
Mintos also mentioned that if you “want to adjust your investment preferences based on the latest Mintos Risk Score updates, please do so as soon as possible.”
The Mintos risk score is an aggregate or a combination of 4 different sub-scores that are “assigned to four different aspects of particular loans as investment opportunities,” the company explained. He also noted that these sub-scores assess the following:
- Loan portfolio performance (the health of the portfolio and the historical performance of the loan portfolio), the efficiency of the loan manager (the capacities of the loan manager “in relation to the collection of payments from borrowers”),
- Redemption force (the “ability of the repurchase debtor to meet its contractual obligations, meet liquidity needs and capital adequacy”), and
- Cooperation structure (the legal arrangement “between the credit issuing company and Mintos”).
According to “the importance that we see in each sub-score, the weights of the sub-scores are the performance of the loan portfolio 40%, the efficiency of the loan service 25%, the repurchase force 25% and the legal structure 10%, “Mintos added.
The company further noted:
“The Mintos risk score and sub-scores are expressed on a numerical scale of 10 to 1, where 10 is low risk and 1 is high risk. The score can also be displayed as “Score withdrawn”, with a value of 0, when one or more sub-scores are not available, or simply when there are no loans available for investment by a company. specific loan issuing company. “
(Note: For more details on these updates, see here.)