Rob McCorquodale

 

4 thoughts on “£14 million was lent to small businesses last week! | Weekly Lending Review

  1. How can the average gross yield on grade E be 19.8% when, according to the loanbook that I downloaded a few days ago, every single E loan so far has sold 100% at 18.2%? Interesting arithmetic that!

    • rr
      I raised the same point with FC recently, as the Statistics page and (as you mention) the loan book shows no risk E bid having been accepted higher than 18.2%. FC have emailed me saying Marketing are looking into it and will get back to me.
      Clive

  2. Hello rr and Clive. Thanks for getting in touch. You’re right E band loans have funded at the minimum bid rate at 18.2%. In the yield graph, above, the nominal annual gross yield (18.2%) has been compounded. This assumes that the interest earned each month is reinvested at the same rate of 18.2% (each month) and therefore after 12 months of repeating this process equates to an equivalent annual rate (with monthly compounding) of 19.8%.

    The formula is:
    Equivalent Annual Gross Yield = (1 + (nominal_annual_gross_yield)/12)^12 – 1
    = (1 + (18.2%)/12)^12 – 1
    = 19.8%

    We are always looking at ways to improve and will look into how we can better display the graphs.

    • Thanks for the explanation. I think you should withdraw the graphs for now as they’re misleading, suggesting lenders have/could achieve these overstated figures. (Especially so now that you’re regulated and I guess the rules are really tight on what figures you display)

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