The year 2014 will certainly go down as the best year in Prosper‘s history. They built on their success of 2013 and created some amazing momentum this past year. As you can see in the chart above Prosper had a record month in both total volume and volume per business day. Not only that but in the third quarter of this year they made a profit for the first time.
The recent numbers speak for themselves. Prosper issued $205 million in new loans in December bringing their 2014 total to just under $1.6 billion. This compares to $60 million in loans last December and “only” $357 million in total loans issued in 2013. That is a staggering 347% year over year loan growth. In the fourth quarter Prosper issued $540 million in new loans, the first time they have issued more than half a billion in loans in a quarter.
After a successful Lending Club IPO the team at Prosper have got to be feeling pretty good about themselves. I am going to have the Prosper CEO, Aaron Vermut, on the Lend Academy Podcast later this month so we can explore some of the stories behind this growth and their plans for the future.
Below are the some of the stats from the December data that Prosper makes available for download to all investors. One interesting point to note last month is that the percentage of 36-month loans was at an all time high. These loans typically carry lower interest rates than 60-month loans, so this resulted in the lowest monthly average interest rate ever.
Average loan size: $13,369
Average dollars issued per business day: $9.3 million
Percentage 36/60 month loans: 69.0%/31.0%
Average interest rate: 14.1%
Percentage of whole loans: 91.5%
Average FICO score: 697
- 5Shares
An incredible month without a doubt. Prosper’s growth under the current management has been nothing but stellar, and I am more than happy to see them deliver results like this. Along the lines of growth and your upcoming conversation with them, I’d love to hear their answers on the podcast, or elsewhere, to how they manage the institutional versus retail split when offering notes. Based on my research, or a simple check on NSR, it appears that approximately 2,000 less notes were offered to retail investors in 2014 versus 2013. Based on that, it seems that the growth story isn’t really shared by all investors.
As I said in my post about this earlier in the week, I’m not looking to bash them as many do for the availability issue, just want to understand the vast disparity in growth curves in the form of the quantity of notes offered to whole versus fractional investors. Is Prosper putting an emphasis on cheaper dollars (retail cost more than institution), faster scaling, lack of retail demand, or anything else. All speculation right now, but the numbers lead one to ask.
And this also seems to be an ideal time to express some strong gratitude to Prosper for continuing to maintain transparency. A welcome and much appreciated feature.
Adam, You make an excellent point and I linked to your post in my Saturday news roundup because you provide some great analysis. Prosper has become very much focused on institutional investors but I know they want to get back in a better balance with retail.
In some ways this is a chicken and the egg problem. There are not enough retail investors to fund more loans on the fractional platform. But maybe if there were more loans there would be more investors. Suffice it to say, that I think we will see some significant improvement in the balance this year.
“That is a staggering 447% year over year loan growth.”
~$1600 / $357= ~4.47, which means YoY growth was 347%.
I stand corrected. I just used Excel to calculate the percentage without thinking about it. I have edited the article to reflect the correct number.
Hi Peter
I enjoy your articles, especially the ones detailing how you invest with prosper/lendingclub. It has helped alot in terms of selecting my own filters. A couple of questions
1) I was wondering if you purely use the automated features on both lendingclub and prosper or do you use a third party services such as lendingrobot?
2) I was wondering what are your experiences with self directed IRA custodians that you use for Lendingclub/Prosper as I’ve heard some bad experiences.
Hi Danny,
1. I use the automated investing at Lending Club for one of my accounts. But for most of the others I use Nickelsteamroller.com. Prosper’s automated investing tool is not great so I use Nickelsteamroller.com for those accounts as well.
2. I use the SD IRA Services at Lending Club for my IRA and Millennium Trust at Prosper. Both companies have been great in my opinion.
That is very impressive growth. I knew Prosper was aiming towards the institutional investor, but I didn’t realize it was 91.5% whole loans.
Why do you think Prosper keeps the fractional loan business? Seems like it would be more of a distraction to them for such a small portion of their business.
Hi JJ,
I think Prosper maintains the fractional loan business for a couple of reasons:
1. Branding – Serving individual investors is a more interesting story and maintains their P2P lending roots.
2. Diversity of funding sources – Individual investors are more loyal, particularly when it comes to IRA investors.
Also, I think at this stage it would be more work for them to shut down than to keep it chugging along as it is now.