Do you consider industry when choosing who you lend to? And do you think that e.g. the default risk is the same on every industry? Allow me to add another dimension to your lending decisions and give you a peek into some more statistics.
First of all let me underline that the data within this blog post sets other factors as equal, and simply compare the registered primary industry with the risk of default seen retrospective (for 2010 in this example). In other words: this is very simple comparative statistics and therefore should not be used for substantial conclusions, but rather as a limited indication.
With that said, I want to present an overview of industries divided on statuses on the platform for 2010, as seen below:
As you can see, the industry of ‘Consumer Goods’ accounts for more than half of the number of loans (54 %), Durable Goods for around 15 %, and both ‘Farming & Fishing’ as well as ‘Catering & Food’ each around 5 %. As you have probably noticed by now, the defaulted number of loans within the different industries does vary. I’ll leave it to you to conclude whether this should affect your current lending considerations, and how.
I myself think that it’s interesting that ‘Transportation’ and ‘Personal Care’, two industries with more or less the same amount of loans and repaid loans vary from 0.00% to 13.16 % in defaulted as percentage of all loans. And also the two categories with around 50 total loans, ‘Catering and Food’ (1.89 % defaulted) compared to ‘Farming & Fishing’ (12.50 % defaulted) seems interesting.
You can study the table more thoroughly if you want to make your lending more industry-based. But please keep in mind, that even though it seems that e.g. ‘Finance’ has a high default rate, this number is based on a tiny number of loans, and is therefore inconclusive in every way.
I have chosen to look at 2010 due to the fact that it was a quite stable year, thus making it more reliable to compare the two factors alone. I’m leaving out 2011 simply because too many loans are still active (16 % repaid by the end of the year), which makes it a bit more inconclusive to say how many will eventually default. As you can see above, two thirds of the loans from 2010 have been repaid by now.
Please also note that the table includes the number of loans, not the total amounts, thus making it incomparable to the total defaulted percentage calculated on the amounts that you see on the quarterly reports.
I’m looking forward to see how these industry statistics look when all the 2010-loans are finished. Though I can’t stop wondering:
– How would these figures compare to businesses in developed economies?.. That could be interesting to compare.
ADDED 23rd March 2012:
We have received a few requests regarding number of defaults divided on industries for loans created between 1st Jan 2011 and to date. So here you go. Please still keep in mind that the table reflects:
- number of loans, not amounts, and
- the defaults for loans by disbursement date, meaning that a loan created in 2010 for instance, that defaults in 2011/12, is not reflected in this table, but in the previous.