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Returns performance

The table outlines Zopa's historical returns for retail investors over the last 5 years:

2011 2012 2013 2014 2015 2016 2017
Amount lent by retail investors (£) 57.6m 87.1m 181.8m 243.7m 268.3m 400.3m 280.9m
Actual annual return to date of loans in origination year (after fees and bad debts)* 5.9% 5.7% 4.8% 4.6% 4.9% 4.8% 5.8%
Estimated annual return (capital weighted average loan interest rate minus expected principal loss and any fees) at origination* 5.2% 5.2% 4.5% 4.4% 4.8% 4.9% 4.7%
Realised % (principal repaid excluding bad debts) 100% 100% 98% 91% 75% 53% 17%
Actual annual investor return to date (after fees and bad debt fund compensation)* 5.9% 5.7% 4.8% 4.6% 4.9% 4.8% 5.8%
Bad debt fund usage (bad debts in year as a % of funds raised in year) N/A N/A 49% 89% 100% 79% 24%
Borrower APR (capital weighted by year of origination) 8.9% 8.5% 7.0% 7.4% 7.8% 9.9% 10.3%

*Excludes rate promise bonus

Show methodology for calculating returns

Methodology for calculating Lender Returns

We use Net Annualised Return (NAR) as the measure of the actual rate of return on the amount which is invested in a given loan. NAR is based on the actual interest received by lenders each month from borrower repayments after fees.

If Borrower payments are not received, the interest paid to a lender in that period will be zero. If a loan becomes defaulted then we subtract the entire outstanding capital. This figure is then divided by the outstanding capital remaining in the loan for that monthly period.

The calculation is repeated for each monthly period, taking into account all interest received relative to the outstanding capital in each monthly period. This ensures that the calculation takes account for performance on investments that begin in different periods and have different payment dates. The final step in the calculation involves annualising the result. To do this we take the sum of (1 + the weighted average performance for all monthly periods), to the 12th power, and subtract 1. This result is NAR, which is expressed as a percentage.

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 lender 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

Estimated annual return at origination

The estimated annual return has been calculated based on the capital weighted individual loan rates available to retail lenders in the origination year after fees and expected default rate.

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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