Lending Works – 12 Month Results

12 Month Results

The first full year of lending through the Lending Works platform are as follows –

Expected ROI 6.00%
Actual ROI 5.36%

The ‘Expected ROI’ for Lending Works is taken from the stated return for a 5 year deposit, which has remained at 6.00% for this period. The ‘Actual ROI’ for these results has seen a slight upward revision, from 5.24% ROI to 5.36% ROI. This upward trend was expected as the 5 year rate was increased in month 4 as discussed in the previous results. Even so i would have expected the ‘Actual ROI’ to be a little closer to the ‘Expected ROI’ after this period. So it leads me to believe that were probably late payments or even defaults on the loans i’m assigned to. Of course Lending Works being an entirely ‘Black Box’ platform there is no way of knowing this as you are given no specifics on where your money is actually lent, other than UK loans.

Total loans on the Lending Works platform have increased in the 12 months by 53% from £85 million to £130 million, making it a substantial player in the P2P personal loan type sector. This year is shaping up to be Lending Works lowest bad debt rate since its inception which is impressive for a company of this type and scale. Rate currently 0.1% however we are only 9 months in to this year so this figure might rise when more defaults are written off by the end of the year. Interestingly the borrower APR has increased in 2018 by 2.00% to 11.2% meaning borrowing is more expensive, although it doesn’t seem to have slowed demand.

 

Conclusion

I am perfectly happy with the Lending Works platform at this time and the rate of return I am reviving. I do not intend to withdraw any funds in the short term, in fact quite the opposite, I will continue to grow my deposit over the next 6 months.

Lending Works – 6 Month Results

6 Month Results

The results for the first 6 months of investing through Lending Works are as follows –

Expected ROI 5.75%
Actual ROI 5.24%

For the first 3 of the 6 months the 5 year rate was set at 5.5%, which then increased to 6% (3 year rate currently 4.5%, March 2018) , so the 5.75% ‘Expected ROI’ is the average over the 6 months. This is a unique feature of Lending Works, both the 3 and 5 year rates are reviewed on a weekly basis and can go up or down the for following week. The discrepancy with the ‘Actual ROI’ can largely be put down account roll up (deposits/invested funds not falling on complete months), this is something you need to consider with most of these P2P platforms. In an ideal world you want a deposit to clear and start earning interest on the 1st of the month so you get a nice full maximum return for the month, in reality this generally dose not work. A lot of platforms still only offer deposit via bank transfer (Lending Works do offer Debit Card deposits) which typically take 2-3 days to clear, and then it can take anywhere from 1 to 10 working days for the funds to be assigned an investment opportunity and start earning interest. Hence why you should generally expect a slightly lower ‘Actual ROI’ to ‘Expected ROI’. This deficit should reduce tough the longer you are in a fund, providing the platform is delivering what they claim to be offering.

Lending Works also has a reason to shout about, in October 2017 it became the first P2PFA member to be granted full FCA authorisation. This is no small feat, as the P2P sector develops in to a maturing market, a number of platforms have fallen foul of the FCA and consequently shut up shop. Lending Works was also able to launch its own ISA in February 2018, meaning investors now have a tax free (up to £20’000) offering. Lending Work’s is also set to break the £100 million in loans mark in April 2018, just four years after opening its doors.

There is simply no reason for me to consider dropping Lending Works from my portfolio at this time. The returns are healthy and pretty much as expected, the company appears to be in good health the the future looks promising. That being said it’s still very early days for the platform and it’s place in my portfolio, so i will cautiously grow my exposure to Lending Works over the coming months and optimistically wait to see what the future brings.

Lending Works – An introduction

Introduction

Lending Works is on online P2P platform. They offer unsecured personal loans at competitive rates, financed by individual lenders (consumer 87.3%, institutional 12.7% as of December 2017). Lending Works launched in 2014 operating out of an office in London and their total loans now amount £85’000’000 to date.

Funds can be deposited either by debit card (1 day clearance) or bank transfer (2-3 days). There are two rates of return on the Lending Works platform, either 4% for 3 years or 5.5% up to 5 years (correct as of December 2017). The projected rates can change with a weeks notice at the desecration of Lending Works.

The minimum you can deposit at any one time is £10. Interest earned on your ‘On Loan’ balance is paid out on the last day of the month. This balance will either go in to the ‘Classic Wallet’ for withdrawal or ‘Offers’ for re-lending as per your instruction.

You will notice there is a residual balance in the ‘Classic Wallet’, in this case £0.09. This is because unlike some platforms you can not manually choose which individual loans to invest in, Lending Works dose it for you. So the loans are broken down in to micro loan parts ( in the region of £0.85 ) so you are usually left with a few pennies waiting for further funds before being loaned out. One advantage of this is risk can be spread very wide, even with a relatively small balance. This insulates from most bad debts of defaults.

Lending Works also operates a provision fund that it calls the ‘Barrier’ to further insulate a lender from bad debts or defaults. This platform also operates a withdraw charge (on quick withdraws) of £20 or 0.6% of the balance, which ever is higher, designed to enforce stability of funds, this charge puts Lending Works straight in to the mid term investment prospect (2 – 5 years) before realising a profit. The only way to avoid this charge is to use the option to auto-withdraw monthly returns (for which there is no charge), this however means sacrificing compound growth.

The Lending Works dashboard

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The Lending Works dashboard

The dashboard for Lending Works is very simple to understand –

Classic Wallet – is the balance in your account unassigned to loans (this amount is available for withdrawal at any time).

Offers – is any balance you have instructed to lend out but has not yet been assigned to a loan. Loan assignments can take 5 to 10 working days depending on availability, and you do not earn interest on the offer balance.

On Loan – is the balance you have successfully lent out to borrowers. This balance is where the interest is earned.

Withdrawn – details all your withdrawals made from your account to date.

My repayments – shows the instruction you have given Lending Works regarding what to do with your repayments. You can either return them to your classic wallet for withdrawal or auto invest to maximise returns.