The new year is now in full swing and we have put together our first overview of the problematic loan portfolio in 2020 for you. In addition to the statistics for the fourth quarter, it also contains some important updates from the current month. So far, crowdfunding funding has flourished under the good conditions of economic growth and no major crisis has yet occurred. However, the first platforms in Europe are now in bankruptcy, some investor funds have been lost and fraudulent activities have been uncovered in recent weeks. It is now all the most important to be aware of all associated risks when investing and to exercise special caution.
Carefully pre-analyzing the platforms and projects that you are considering for a potential investment.
As the market leader, we have an additional responsibility to work closely with regulators in all countries in which we operate and to ensure that the industry is healthy and fit for the future. Europe-wide rules for crowdfunding should come into force at the latest in 2021, according to which all countries of the Union will find the same conditions for the registration and operation of crowdfunding platforms. Until then, the sector in Estonia is self-regulated through the “crowdfunding best practice”, which corresponds to the European regulatory principles. The purpose of the crowdfunding best practice initiative is to support market players in effective self-regulation and to strengthen trust and transparency in the industry. Astro Finance was also awarded the FinanceEstonia Best Practice Label.
Astro Finance loan portfolio
Since 2014 and to date, Astro Finance has financed 1,246 loans, the amount of which exceeds $ 180 million. Of these, 560 loans with a total of $ 87 million have already been successfully repaid to our investors.
There are currently 21 individual projects and 42 delinquent loans (in various loan levels) worth $ 6.4 million in the Astro Finance portfolio. There are no significant changes in the portfolio structure by country – Estonia continues to be responsible for most of our loan defaults (since this country’s overall portfolio is the largest), followed by Latvia. In other countries in which we operate, no loans are currently outstanding.
There were no capital losses for our investors in the fourth quarter of 2019 or January 2020. The current current average loan return is a solid 10.9%. Our recovery speed is exceptionally high and from the time the credit default was declared, we got investors’ money back on average in five months
In the fourth quarter of 2019 and in the first month of 2020, the number of loans we received almost doubled (from 11 loans to 17 loans). The total amount of the loans collected reached USD 3.2 million. Loans worth USD 0.6 million were recovered in January 2020 alone.
In addition, we learned from the bailiffs that until January 31, 20, the collateral for four offending loans had been sold at auctions in Estonia and Latvia. We are now busy with the official process, in which the amounts paid are transferred to the security officer and from his account to the accounts of our investors. There was no loss of capital on these four failed loans and the exact rate of return is now calculated after deducting the costs associated with the process and other related costs.
However, this success does not allow us to sleep peacefully – the work continues. For example, our entire risk team is actively looking for buyers to secure our non-performing loans. We have also signed cooperation agreements with debt collection agencies and law firms in all of our countries of operation and are in the process of concluding more. As we are more than just a service company, we have also improved our communication (including updating credit) regarding failed and late loans. Investors should expect an update on a failed loan on our platform at least every 35 days.