Harmoney

[myles]

They could adjust the institutional mix to 90 or 95% for “business continuity” in the future?

Or 100% if that's what it takes for them to continue. Would that be grounds for any action - quite possibly not.

I have hope that the current situation is a 'growth phase', that at some point will turn back, but it is only a hope.

[alundracloud]

I e-mailed Harmoney regarding retail loan volumes last month. Below is my e-mail, and their response..

Good afternoon,

Looking at the marketplace statistics page on the website, it looks as though the percentage of money being diverted to Institutional investors is now as high as 80% of all money lent through Harmoney.


I'm a big fan of Harmoney, and wish to increase my portfolio of loans over 2019 and beyond. However, I'm finding it incredibly difficult to invest in new loans, and no doubt this is the same story for other retail investors.


I was wondering if you could provide an update, or guidance of when retail investors can expect to see an increased number of loans on the retail marketplace?


Kind regards,
alundracloud

​Hi alundracloud,


Thank you for your email.


Yes, the current allocation is set to ~80% Wholesale and ~20% Retail, however, these percentages are monitored by the Exec Team and changed depending on the overall volume received as well as monthly targets.


The percentage allocation for Retail was around the same for January, however, we had higher volumes in January (~$35m overall). This would be why there would be a noticeable drop in the number of investment opportunities for the month of February as our overall volume for Feb was around $30m.


We tend to see the overall volume increase in March, historically, and do hope to see more investment opportunities available to Retail. This can come about with more volume or a higher percentage allocation. Our Marketing team is working to have the volume increased as much as possible.


To help in deploying your funds, please try checking the Marketplace between 9-11 AM and then again between 2-4 PM. We see favorable volumes of loans during those times.


Hope this helps and have a great weekend.

Read into it what you will, but I struggled to take anything positive from the response.

[Bjauck]

Or 100% if that's what it takes for them to continue. Would that be grounds for any action - quite possibly not.

I have hope that the current situation is a 'growth phase', that at some point will turn back, but it is only a hope.

Is it still peer-to-peer, if institutional “peers” are treated differently from other peers? I think the spirit of peer-to-peer is lost. Also the allocation of loans to different market places for instos and retail is contrary to what I imagined was the concept of P2P. However it may still pass muster as far as the FMA is concerned.

[jallison]

Lack of investment in Harmoney market place may in hindsite be a good thing 180000 principle in Nov2018 now down to 115000 and writeoffs have jumped from under 5000 to just over 8000 in that time although my investment parameters have been the same
Has anybody else experiencing high white off lately

[myles]

Has anybody else experiencing high white off lately

I noticed a bit of a jump early in the new year, but thought that was a processing catch-up (pretty sure a similar jump last year). Overall my charge offs are tracking fairly consistently.

How old is your portfolio? Depending on when you invested the bulk of your $'s there is typically a significant hit of defaults as they work through - typically this is anywhere between 9 months (if you invest quickly) and 14 months (if you ramp up from a slower start).

[jallison]

3 and a half years slow at first but 120000 steadily over last 2 years. don't get me wrong happy with returns 15.4% rear and 70000 interest but thought my greater writoffs may reflect slowing economy

[BJ1]

Jallison: I have experienced an increase in arrears and subsequent write-offs in recent months, some arrears appearing for the first time with more than one instalment unpaid. I'm not convinced that arrears management meets industry standards, nor do I have confidence in the process whereby our investments are onsold to other parties - I've never seen or heard of any external audit around this procedure.

[myles]

The second graph in this post shows my last ~6 months of charge offs (orange) and reducing arrears. If you draw a straight line through the orange graph, that's pretty consistent for me. It's difficult to generalise as all portfolios are different. Just as an example; you may have purchased a lot of loans last Christmas that are now defaulting, where I didn't - so many variables.

[myles]

Integrity aside (please don't read that as me dismissing it), the FMA have given Hamoney a P2P Lending license, at the time, they would have investigated/tested the Harmoney lending model, which has always included the wholesale/retail split and the ability to change it. It would be a difficult task to backtrack on that I would imagine.

Included in that license is the requirement for financial reporting and audits to the FMA (even though some here suggest that this doesn't happen).

Whether I agree or not with the changes Harmoney are making to their business model, I personally can't see that they are acting unfairly or in a non-transparent way. There is no requirement for me to like the changes...I don't of course.

However, I think Harmoney may have lost sight of why P2P is popular - "kiwi's lending to kiwi's"/"kiwi's borrowing from kiwi's". Perhaps Harmoney 'know' that borrowers don't care where the money comes from and that borrowers are only interested in getting the best/easiest loan that they can. To me, this is a very fickle business model, a few social media outcries, or the like, could see borrowers walk away in droves. Where would that business model be then?

[Bjauck]

Integrity aside (please don't read that as me dismissing it), the FMA have given Hamoney a P2P Lending license, at the time, they would have investigated/tested the Harmoney lending model, which has always included the wholesale/retail split and the ability to change it. It would be a difficult task to backtrack on that I would imagine...

I understand that you are not dismissing integrity. We have to deal with what regulations permit and what the FMA accept.

If the FMA accepts the wholesale/retail split and the ability for a P2P to reserve certain loans for certain “classes” of lender peers, then this should be clearly stated by them. On their website in the P2P section of advice for investors, there is no mention of such ability to discriminate. As such discrimination between lender peers is becoming such a material factor in retail lender peers being able to invest their money into loan notes, then at the very least, FMA should mention it on their website.

https://www.fma.govt.nz/investors/wa.../peer-to-peer/
“Lenders may be able to lend the full loan requested, or just a portion of it. The provider may also group up similar loan requests so the lender has the opportunity to invest in a variety of loans at one time”

”3. If you want to re-invest you may have to waitAt a bank you can often roll over your term deposit as soon as it falls due, but with peer-to-peer lending you may need to wait until there are peers who want to borrow it. You may miss out on some interest while you're waiting”