‘Peers’ Continue Retreat from Lending Club

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escapeThe peer aspect of peer-to-peer lending continued to erode last year, according to Lending Club’s year-end earnings presentation. Self-managed individuals, those still making their own investment decisions, only made up $263 million of their 4th quarter’s origination volume, reaching the lowest level in two years. That’s nearly 38% lower from the peak of $419 million in Q1 of 2016.

Overall monthly originations haven’t really moved, hovering at around $2 billion per quarter over the last 3 quarters, down from the peak of 2016’s Q1 when they hit $2.75 billion. There’s money coming from somewhere though, of course. A chart in the presentation revealed that 74% of Lending Club’s Q4 originations came from banks and managed accounts. The managed accounts category is comprised primarily of asset managers who invest mainly in marketplace lending.

A glance at Lending Club’s self-managed individual originations as a percentage of total originations per quarter is below:

Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
27% 27% 23% 25% 19% 19% 15% 15% 13% 15% 17% 14% 13%

Retail investors were largely skimmed over during the Q4 earnings call, with CEO Scott Sanborn and CFO Tom Casey choosing to focus their attention on bank participation. “As you know, banks returning to the platform has been a priority for us and acts as an endorsement of our strength and compliance and controls,” Casey said.

Using the Seeking Alpha transcript as a guide, the word bank was said on the call 32 times while retail investor was only mentioned once.

To that end, Lending Club’s announcement highlighted its bank funding achievement.

bank funding

Meanwhile, the word retail doesn’t exist anywhere in the announcement unless you count the necessary Safe Harbor Statement.

RIP the retail investor.

Last modified: February 18, 2017
Sean Murray

Category: Marketplace Lending, p2p lending

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