It’s official: The first Mintos Rating update

04.03.2019

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In August 2018, Mintos introduced risk ratings for loan originators offering their loans on the Mintos marketplace. The Mintos Rating is meant to be a gauge for each loan originator’s financial and operational stability. At Mintos, we emphasize the loan originator’s ability to service and originate loans as being the most important when assessing loan originators.

Mintos constantly monitors the loan originator’s performance by reviewing their financials and the loan portfolio quality. In addition, information from client meetings, news, industry research, and peer insights contribute to the data used for the reassessment for all Mintos Rating factors.

The Mintos Rating has been updated for six loan originators on the Mintos marketplace: Aforti Finance, Capital Service, AASA Sweden, Hipocredit Latvia, Hipocredit Lithuania, ID Finance Georgia and Lendo based on 2018 third-quarter results and industry insights. The Mintos Rating is based on information obtained during the initial due diligence process and data from ongoing monitoring. This includes the primary information from loan originators like management interviews, site visits, audited and interim financial statements, corporate presentations, credit policy, and risk control documents.

Aforti

Aforti Finance, a non-bank lender that offers loans to small and medium-size businesses in Poland, is a part of Aforti Holding, which is listed on the Warsaw Stock Exchange.

What has changed?

It’s been downgraded. Aforti’s rating on Mintos has changed from B to C+.

Why?

Our decision was mainly driven by the adverse changes in the mood on the Polish securitization and bond market which makes it difficult for many companies to refinance their debts. Our decision was also influenced by insights into changes in the company’s internal arrangements.

Capital Service

Capital Service S.A. is one of the leading non-bank financial institutions in Poland. Together with its four subsidiaries, CS creates a Capital Service Group that provides its lending activities in Poland and offers unsecured payday loans and installment loans for individual customers.

What has changed?

The rating has improved. Capital Service’s rating has changed from C+ to B-.

Why?

Capital Service has significantly improved its profitability and shown a stable financial performance for the past year after the large increase in non-performing loans ratio in the third quarter of 2017. The loan originator has turned its net loss of EUR 1,259,207 in 2017 to profit of EUR 659,207 (152% increase YOY) in the third quarter of 2018.

Aasa Credit Svenska AB

Aasa Credit Svenska AB is supported by Aasa Group, its parent company with a share capital over EUR 50 million. Aasa’s mission is to provide fast and convenient access to financial products and services based on transparency, promptness, simplicity and safety. Aasa provides mid-size consumer loans priced similar to banks and credit specialists.

What has changed?

It’s been downgraded. Aasa Credit Svenska AB rating has changed from A- to B.

Why?

According to Mintos insights, one of the largest companies in the group, AASA Oy (Finland), has seen a large increase in non-performing loan rates in 2018. As a result, this has negatively affected profitability on a Group level. On the positive side, in October 2018 the Group had an increase in Aasa Credit Swenska AS equity by EUR 4 million.

Hipocredit LV and Hipocredit LT 

Hipocredit issues mortgage loans to both private individuals and companies all across Latvia and Lithuania. Hipocredit has issued more than 500 mortgage loans for EUR 5.5 million.

What has changed?

The ratings have improved. The ratings for both Hipocredit Latvia and Hipocredit Lithuania have changed from C+ to B-.

Why?

The company has improved its overall performance and profitability by increasing the scale of its operations by subordinating its shareholders’ loans. Both companies have shown stable performance and profitability in 2018. Moreover, they have increased their portfolio on a consolidated basis to EUR 9 million.

Lendo

Lendo is a non-bank loan originator from Georgia that offers short-term, unsecured consumer loans.

What has changed?

It’s been downgraded. Lendo’s rating has changed from B- to C+.

Why?

The change with Lendo has happened due to significant changes in the regulation of the responsible lending industry in Georgia. In 2018, the National Bank of Georgia’s Financial Stability Committee introduced changes that have adversely influenced the lending business operations in the country. The maximum limit on the effective interest rate on loans in Georgia is set at 50%. Additionally, financial institutions are required to issue loans based on the assessment of clients’ debt repayment ability. Also, payment-to-income and loan-to-value ratios should not exceed corresponding maximum norms, that will be differentiated by domestic and foreign currency denominated loans.

ID Finance Georgia 

ID Finance Georgia (operating under Solva brand) is a non-bank loan originator from Georgia that offers unsecured consumer loans.

What has changed?

It’s been downgraded. Rating of ID Finance Georgia has changed from B to B-.

Why?

The change with Lendo and ID Finance Georgia have happened due to significant changes in the regulation of the responsible lending industry in Georgia. In 2018, the National Bank of Georgia’s Financial Stability Committee introduced changes that have adversely influenced the lending business operations in the country. The maximum limit on the effective interest rate on loans in Georgia is set at 50%. Additionally, financial institutions are required to issue loans based on the assessment of clients’ debt repayment ability. Also, payment-to-income and loan-to-value ratios should not exceed corresponding maximum norms, that will be differentiated by domestic and foreign currency denominated loans.

The custodian function

Ieva Grigalune, Risk Manager

Ieva Grigalune from the Mintos Risk Management team says that they feel confident about the Mintos Rating methodology. The daily efforts of the risk team to evaluate the loan originator’s offering on Mintos benefits the reliability of the Mintos marketplace and provides investors with information needed for future investment decisions.

“The Mintos Risk Management team constantly monitors loan originators and changes in their operations and regulatory environments in order to present investors with an objective, fair and credible opinion based on the Mintos Rating methodology. This is the first time we have made changes to the Mintos Rating, and we are sure this will contribute towards our established position in the perception of Mintos investors and the existing and future loan originators on the marketplace”, says Ieva Grigalune.

If you want to learn more about how the Mintos Ratings process works and what it is about, read more here.

Important: Please keep in mind that if you use Auto Invest to invest in any of the loans listed above and these changes will affect your investment preferences, please update your Auto Invest settings accordingly.

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