• Subscribe
  • Contact Us
  • About LendIt Fintech News
  • Home
  • Menu Item
  • Menu Item
  • Menu Item
  • Menu Item

Lend Academy

LendIt Fintech News: Daily Coverage of Fintech & Online Lending


  • Editorial
  • Daily News
  • Podcast
  • Investor Forum
  • Events

New LendingClub Account Performance – Q1 2019

We share the fourth update on a LendingClub account which was opened in 2018.

May 14, 2019 By Ryan Lichtenwald 4 Comments

Views: 1,816

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

  • How to Open Up a New LendingClub Account in 2018
  • Setting Up LendingClub’s Automated Investing Tool
  • New LendingClub Account Performance – Q2 2018
  • New LendingClub Account Performance – Q3 2018
  • New LendingClub Account Performance – Q4 2018

No More E-Grade Loans at LendingClub

Before we get into the performance of the account I’d like to discuss a few changes that LendingClub has made since our last update. Probably the most significant news was that as of May 7, 2019 LendingClub stopped offering new grade E notes except those corresponding to certain previously qualified or approved loans. Beginning July 1, 2019 no grade E Notes will be available to investors. Long time readers will remember the days when E grade loans produced high returns, often over 10% annualized for investors. This changed in recent years as defaults increased, particularly around the higher grade loans. Most investors saw their returns begin to fall in mid-2016 or even before that.

Last year, LendingClub decided to stop offering F & G grade loans to investors so it is no surprise that they continue to focus on more prime consumers, especially when you consider that banks make up a majority of their investor base. LendingClub also included this statement in a recent blog post:

We view this change as a natural evolution of our dynamic platform that seeks to match consumer demand with investor risk appetite. Grade E loans have historically accounted for a small percentage of volume on the platform.

What’s also interesting is that last week during LendingClub’s Q1 2019 earnings call which we covered here, CEO Scott Sanborn discussed the possibility of partnering with institutional investors on expanding the credit box to riskier borrowers. The way this might work is that LendingClub would host an alternative credit model instead of their own, for instance a model targeting thin file borrowers. Then investors could invest in loans originated by this third party with LendingClub only facilitating these transactions. But that is probably some time away from happening.

In LendingClub’s Q1 2019 platform update published to their blog, they discussed that lenders as a group continue to tighten credit. They also shared news about new tools they are testing such as the ability to detect borrowers who are more likely to default earlier in the loan cycle. LendingClub made no interest rate changes in the quarter, but are continuing to selectively tighten certain higher risk segments, while simultaneously growing lower risk segments.

Update on New LendingClub Account

Digging into the account’s performance it is worth reiterating that investors don’t have a clear picture of returns until the account is seasoned, which is about 18 months weighted average age. This is demonstrated in the image below as stated returns continue to decrease with age and stabilize around the 18 month mark.

The capital in my account had not been fully deployed at the end of the first quarter of 2018. In our next quarterly report we will share returns using XIRR which will start to give us an idea of where returns will fall.

As of May 14, 2019

When I first created this account I used LendingClub’s Automated Investing which suggested the allocation below. You’ll note the small allocation to E grade loans which will eventually fall to 0% as loans start getting paid off.

As of May 14, 2019

Conclusion

It will be interesting to see where the returns on this account end up falling. With little changes to interest rates recently, LendingClub is still an attractive investment in my opinion with returns around 6-7%. For comparison, interest rates on 5 year CDs are now around 3%. One thing that surely attracted investors who found LendingClub before 2015 was the potential to earn 10%. With the removal of E, F and G grade loans this is something that would be nearly impossible to achieve today. Clearly LendingClub has made it clear the types of borrowers they want to focus on.

Filed Under: Peer to Peer Lending Tagged With: account, lendingclub, Performance, Returns

Views: 1,816

Comments

  1. Sean says

    May 14, 2019 at 9:20 pm

    Lending Club “gave” you $5,000 to invest and write about the returns???

    Reply
    • Peter Renton says

      May 16, 2019 at 3:20 pm

      Yes Sean. In 2018 LendingClub gave some select bloggers $5,000 to invest and report on their experience. We disclose this every time we write about it. We have no obligation to report on this, it was done on the honor system. Ryan can stop investing and withdraw the money whenever he wants.

      Reply
  2. Jen says

    May 20, 2019 at 7:21 pm

    I hear the words honor system in the same sentence with lending club and it reminds me of all the SEC fines, FTC fines, fake loans and the founder being banned by the SEC. Doesn’t surprise me that they pay bloggers to write about them.

    Reply
  3. Ron says

    May 23, 2019 at 12:16 pm

    It is interesting to see your account in the very high end of the bunch. My experience has been about 2% return. It was worse than that, I was flat and even losing money until I dropped all the riskier loans. I am now in the slow long process of getting out of this.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Investor Intelligence

Peter Renton's Returns

Investor Forum

Lending Club Review

Prosper Review

Investor Resources

Most Popular Editorials

The Pure Marketplace Lending Model is Dead, the Hybrid Takes its Place

The 2018 Lending Club and Prosper Tax Guide

My Returns at Lending Club and Prosper

Map of Available States for Lending Club and Prosper Investors

Banks and Marketplace Lending Platforms: Ideal Partners?

Subscribe to the Podcast

Subscribe to the Lend Academy Podcast on iTunes
Subscribe to the Lend Academy Podcast
List of Podcast Episodes

Archives

Follow @LendAcademy Follow @LendIt

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

Recent Editorials

  • PitchIt Podcast Episode 2: Billie Simmons of Daylight
  • LendIt Fintech USA is Just Two Weeks Away
  • Top 10 Fintech News Stories for the Week Ending April 10, 2021
  • Podcast 293: Atif Siddiqi of Branch
  • Caring Consumer Collections Policies Gain Traction

Copyright © 2021 · Metro Pro Theme on Genesis Framework · WordPress · Log in