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Historical performance

Looking after your money is at the heart of what we do. We have more than a decade's experience of being a peer-to-peer lender. So let's take a look at the numbers: how have our default rates performed against our expectations?

How have returns performed against expectations?

We measure investors' returns performance by comparing expected returns to actual returns.

We monitor lifetime default rates very closely: if it's lower than the expected, we pass on all benefit directly to our investors; likewise, if default rates are higher than expected, then investor returns will be lower than expected.

What happens if default rates differ from our expectations?

We use our expected lifetime default rates for loans to inform the target return for investors. We monitor this lifetime default rate very closely, and if it's lower than expected we pass on all benefit directly to our investors. Likewise, if default rates are higher than expected then investor returns will be lower than expected.

How do you calculate returns?

Investor return is defined as the weighted average investor interest rate of loans (borrower interest rate net of fees, weighted by each loan's amount) minus the annualised actual loss rate on these loans.

Investor return is calculated for all retail-funded loans disbursed in each calendar year. The annualised actual loss rate is calculated as:

This methodology is used to calculate both the estimated and actual investor returns.

Additional considerations

  • In order to be included in the calculation Zopa must have requested the first repayment on a loan
  • All interest received by lenders is calculated net of fees. Pre-6th April 2015 Zopa charged a monthly lender fee. From 6th April 2015, this has been moved to the loan level as a loan servicing fee, which is deducted to calculate advertised rate. For simplicity these fees have been treated in the same way for this calculation
  • Zopa's Rate Promise ran from Jan-2014 to Jan-2015 and offered upfront compensation to lenders where matching failed to achieve the headline rate. This has not been included in the actual investor returns
  • All other Zopa bonuses e.g. early adopter, cash back, tell a friend have been excluded from this calculation as they are not tied to actual loan performance

Returns: Estimated vs. actual of loans originated in their respective year

Last updated 1 April 2019

­* We don't expect further defaults prior to 2014, but there may be further recoveries coming in, which would increase actual returns

  • Estimated annual return
    Weighted average return (taking loan size into account), minus any fees and expected losses.
  • Actual annual return
    Weighted average return (taking loan size into account), minus any fees and actual losses so far.
  • Actual annual return so far
    Loans originated after 2014 are still outstanding and actual lifetime default rates will still evolve

Full dataset

201120122013201420152016201720182019
Amount lent by retail investors£57.6m£87.0m£181.8m£243.7m£268.3m£400.3m£415.6m£467.6m£121.1m
Actual annual return*- (1)5.8%5.5%4.6%4.5%4.8%4.7%4.2%4.9%7.9%
Expected return*- (2)5.2%5.1%4.5%4.5%4.8%4.9%4.6%4.6%5.1%
Principal repaid (3)100%100%100%99%93%83%64%29%5%
Actual annual return* (4)5.8%5.5%4.6%4.5%4.8%4.7%4.2%4.9%7.9%
Safeguard fund usage (5)N/AN/A45%78%97%99%85%N/AN/A
Borrower APR (6)8.9%8.5%7.0%7.4%7.8%9.9%10.3%9.5%10.4%

­* Excludes rate promise bonus

  • (1): Weighted average return (taking loan size into account) of loans originated that year, minus any fees and actual net losses (so far)
  • (2): Weighted average return (taking loan size into account) of loans originated that year, minus any fees and expected net losses at origination
  • (3): Percentage of principal repaid by borrowers (so far) on loans originated that year (excluding defaulted loans)
  • (4): Weighted average return (taking loan size into account) of loans originated that year, minus any fees. Includes Safeguard fund compensation for actual losses (so far)
  • (5): Amount paid out by Safeguard fund to cover defaults for loans originated that year, divided by the contributions made into the fund for those loans
  • (6): Weighted average APR of loans originated that year (taking loan size into account)

How have default rates performed against expectations?

In order to meet expected returns for our investors, we're dependent on how accurately we can predict defaults. A borrower is considered in default after missing four months' worth of repayments. We set an expected default rate at the start of each loan and update it as the loan performs ('revised projected defaults').

Defaults: Expected vs. actual

Last updated 1 April 2019 ­* We don't expect further defaults prior to 2014, but there may be further recoveries coming in, which would increase actual returns

  • Default expectations at loan origination
    Amount of defaults we expect over the lifetime of loans when we originated them.
  • Revised default expectations
    Updated amount of defaults we expect over the lifetime of loans. Revised periodically.
  • Actual defaults
    Total defaulted loan amounts, as a percentage of amount lent in the calendar year.
  • Actual defaults so far
    Loans originated after 2014 are still outstanding and actual returns will still evolve.

Full dataset

Expected defaults at originationActual defaults so far% of loans repaid to dateRevised projected defaultsActual arrears (>45 days)Risk markets available to retail investors
20193.77%0.00%5%3.77%0.04%A*–E
20183.56%1.05%29%3.56%0.60%A*–E
20174.52%4.10%64%5.08%0.55%A*–E
20164.14%4.57%83%4.63%0.31%A*–E
20152.88%3.14%93%2.90%0.08%A*–C
20142.06%1.72%99%1.72%0.02%A*–C
20131.30%0.57%100%A*–C
20121.26%0.56%100%A*–C
20111.72%0.58%100%A*–C
20102.31%1.35%100%A*–C
20092.43%1.18%100%A*–C
20083.58%4.04%100%A*–C
20072.74%0.33%100%A*–C
20061.28%0.13%100%A*–C
20051.01%0.00%100%A–B

How defaults can affect returns - scenario analysis

We've put together a few scenarios exploring what could happen under various circumstances.

Scenario analysis

Important information

Before you go any further, remember past performance is not a reliable indicator of future results. And forecasts are not a reliable indicator of future performance.

Read more about Risk information

Zopa's public loan book showing historical performance is available for download.

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