One of the interesting things about a loan portfolio is that you never truly know the quality of your work until your outstanding loans have been fully paid back. For MYC4, it means that we’ve had to remain cautiously optimistic over the last 2 years while following the significant improvements in our young (often referred to as “new”) portfolio.
The performance of the 2010 portfolio suggests that we can start to separate the two words and be cautious and optimistic instead of cautiously optimistic: Of the 1.8 million euro disbursed that year, more than 93 % has now been paid back to the investors, 4% is still paying back, and 3 % has been defaulted. See the chart below for a visual overview of the portfolio performance of MYC4’s current providers (click to enlarge).
In the last portfolio performance update we reported that while loans disbursed in the last two and a half years by our current providers continue to return more in interest than what is lost in defaults, currency losses were still affecting investors’ returns significantly. The net return before currency was then 3.5 % while the return after currency was -3.4 %. This picture has changed over the last quarter: the net return on the portfolio disbursed after Q2 2009 by our current providers is now 3.7 % before currency, and -0.6 % after currency. The chart below shows the profit and loss for each quarter (click to enlarge).
It should be noted that a large portion of the currency gains come from the loan portfolio disbursed in the last two quarters of 2011 of which two thirds are still outstanding. It is therefore impossible to know at this point how the portfolio ultimately performs as it depends on the development of the African currencies relative to the euro. In terms of defaults, there are only 392 euro in net defaults from the 2011 portfolio so far (while 1.13 million euro has already been repaid).
The final graph includes the historical perspective by showing the performance of the entire MYC4 portfolio since the beginning. The performance of the 2008/2009 portfolio has been analysed in detail in the previous portfolio performance posts, particularly in the one focusing on 2010.
Finally, as we have been reporting in the last couple of performance updates, our key focus in 2011 was to reduce the portfolio at risk (PAR), i.e. the part of the outstanding portfolio that is more than 30 days late, from 15 % in the beginning of the year to below 5 % by the end of Q4. While the target was not quite reached, our Providers made a real effort throughout the year and ended with a PAR of 8.81% . We will continue our focus on risk in 2012.