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Post by Ace on Nov 16, 2018 18:23:11 GMT
RateSetter the information that you give on your statistics page, and above, is incorrect and therefore misleading. Your statement on the interest coverage ratio: " This means credit losses would need to be 1.26x worse than expected over the full lifetime of the loans before investor returns would be reduced." Should be; " This means credit losses would need to be 0.26x worse than expected over the full lifetime of the loans before investor returns would be reduced." There is a similar error in the capital coverage ratio. Your misleading statements grossly overstated the true position. I reported this to yourselves via customer support on 20 Sep 2018. You said that you would investigate. I realize that I am a bit of a pedant, but it really should not take this long for a finance company to understand and correct basic mathematics! , thank you for your comment. We are looking at how we can make the presentation of this information as clear as possible. To say that I am disappointed by your response would be an understatement (no pun intended). You have already had 8 weeks since the overstatement of your figures was pointed out to you. During that time you have merely re-worded the offending sentences, which has had absolutely no effect on the misleading overstatements. Making the mistake once is embarrassing, but making it twice!!! How can we trust the rest of your figures? Perhaps you should remove the offending overstatements until you have had sufficient time to work out how to correct them. Hint; subtracting 1 from the quoted numbers would do it.
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Post by propman on Nov 19, 2018 13:48:40 GMT
Thank you for your reply. While I am reassured that you do not apply a rigid approach to provisioning where there is evidence that this is basing estimates on info that is no longer appropriate. AQpologies for not picking up on this.
Re recent performance, I believe that you have consistently projected significant surplus's in year since these numbers have been announced, with many of these turning out to be over optimistic. While yiou are still showing a small surplus for 2017, this is much smaller than the deficitfor earlier years which you were aware of when setting the PF contributions so are effectively an inadequacy and much worse than was expected at the time.
Thanks for clarifying on the use of capital it is reassuring that this has now been more clearly defined than in earlier years.
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Post by RateSetter on Feb 1, 2019 17:19:28 GMT
We have completed the latest quarterly update and below is a copy of the RateSetter Notice that can be found by logging into your account. Quarterly Coverage Ratio update
The Coverage Ratios provide the latest snapshot of the buffer that protects RateSetter investors’ interest and capital. They are a snapshot because they assume that RateSetter does not introduce additional measures to manage credit risk. In fact, unlike other investments which can rise and fall quickly and unpredictably (such as equities), the performance of loans can take months and years to play out. This provides time for RateSetter to identify emerging issues at an early stage and respond with action, such as: - Changing the mix of loan types in the portfolio as new loans are written - Refining loan decisioning, underwriting and approval processes - Improving collections and recoveries - Using risk-based pricing (part of a loan’s APR) to add more funds to the Provision Fund Within this, we aim to ensure that the snapshot provided by the Coverage Ratios is as objective and accurate as possible. Therefore, every quarter we review the RateSetter loan portfolio and a range of data including: - Our latest detailed analysis on how loans are performing and how we can expect them to perform in future - Changes to the mix of loan types in the portfolio and our analysis of what this means for current and future performance - Refinements in our loan decisioning, underwriting and approvals processes - Trends and updates in collections and recoveries We use this analysis to update the figures that underpin the Coverage Ratios, namely expected future losses, expected future Provision Fund inflows and future investor interest. Following our latest quarterly review: - The Interest Coverage Ratio has increased to 121% - The Capital Coverage Ratio has increased to 239% This means that actual credit losses on active loans would need to be 2.39 times expected losses for a sustained period of 19 months - the average remaining term of active RateSetter loans - before investors would lose any capital (it also assumes that during this time RateSetter does not take any additional risk-management action). As a point of reference, Bank of England data on the last recession indicates that losses on consumer loans (which are approximately 80% of RateSetter’s expected credit losses) increased by two times for a six-month period in 2009 before stabilising. The commentary below provides more detail and context on the main points from the quarterly update. We hope that you find this information useful. Coverage ratio movements
The coverage ratios measure how much losses would need to increase before investors’ returns are reduced or any capital is lost.
| The Interest Coverage Ratio has increased by two percentage points to 121%.
Our target range for the Interest Coverage Ratio is 125%-150%. We are using the tools referenced above to bring the Interest Coverage Ratio back into the target range.
There has been a reduction in expected future Provision Fund inflows – the result of an increase in early repayments from borrowers. While more early repayments are a positive sign for credit risk, they also reduce future inflows destined for the Provision Fund. This reduces the Interest Coverage Ratio by 3 percentage points.
Fully offsetting this is an improvement in expected future losses of the active loan portfolio. Loans written between 2014 and 2017 are performing better than previously projected and loans written in 2018 are expected to perform slightly worse. The overall result is a that expected future losses have decreased from £33.1m to £31.8m. This increases the Interest Coverage Ratio by 4.8 percentage points.
The Capital Coverage Ratio has increased to 239%. The key driver is lower expected future losses, partially offset by the increase in early repayments which reduces expected future Provision Fund inflows and expected future interest.
| Expected future losses
Expected future losses on active loans covered by the Provision Fund. | Expected future losses in the loan portfolio have decreased from £33.1m to £31.8m following this quarterly update.
There has been an improvement in the projected performance of loans written between 2014 and 2017 as the portfolio matures and our collections activity progresses. This is offset by slightly higher expected future losses on 2018 loans, which are the result of a controlled change in portfolio mix, as referenced in the previous quarterly update.
We continue to ensure that loans are priced appropriately according to risk and that the Provision Fund is adequately covered.
| Capital buffer
The Provision Fund buffer, plus expected future investor interest. This provides an estimate of the buffer that protects investors’ capital against expected future losses.
| The capital buffer now stands at £76.1m, which comprises Provision Fund cash, expected future Provision Fund inflows and expected future investor interest. This is how much is available as a buffer to cover expected future losses.
There is currently £13.8m of cash available in the Provision Fund to cover borrower missed payments and bad debt. This compares to £13.2m at the last quarterly update on 15 November 2018. |
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Post by Ace on Feb 1, 2019 18:55:10 GMT
We have completed the latest quarterly update and below is a copy of the RateSetter Notice that can be found by logging into your account. ... - The Interest Coverage Ratio has increased to 121% - The Capital Coverage Ratio has increased to 239% This means that credit losses on active loans would need to be 2.39 times worse than expected for a sustained period of 19 months - the average remaining term of active RateSetter loans - before investors would lose any capital (it also assumes that during this time RateSetter does not take any additional risk-management action). As a point of reference, Bank of England data on the last recession indicates that losses on consumer loans (which are approximately 80% of RateSetter’s expected credit losses) increased by two times for a six-month period in 2009 before stabilising. ... No it doesn't. It means that losses would need to be 1.39 times worse than expected.
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Post by RateSetter on Feb 1, 2019 19:25:55 GMT
Thank you Ace, this has now been updated. We have completed the latest quarterly update and below is a copy of the RateSetter Notice that can be found by logging into your account. ... - The Interest Coverage Ratio has increased to 121% - The Capital Coverage Ratio has increased to 239% This means that credit losses on active loans would need to be 2.39 times worse than expected for a sustained period of 19 months - the average remaining term of active RateSetter loans - before investors would lose any capital (it also assumes that during this time RateSetter does not take any additional risk-management action). As a point of reference, Bank of England data on the last recession indicates that losses on consumer loans (which are approximately 80% of RateSetter’s expected credit losses) increased by two times for a six-month period in 2009 before stabilising. ... No it doesn't. It means that losses would need to be 1.39 times worse than expected. |
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aju
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Post by aju on Feb 2, 2019 10:47:40 GMT
I'm a little confused about the numbers here, When I read on this site that the figures were updated quarterly I took a snapshot of the Data Hub stats on 30/1/2019. On that day the figures were ICR 120% CCR 227% so in the analysis description above I'm struggling a little with the figures and their change amounts. Perhaps the datahub stats are fluid and this makes it difficult to compare easily or perhaps RateSetter is comparing this with the previous snapshot 3 months ago. I wonder also if the most recent recessions 5 qtrs had a different bank losses experience over the 5 qtrs than just comparing 2 qtrs. Not sure if this wiki is correct but it quotes ... Just wondering if there were relevant stats for the credit losses in 2008's 3 qtrs as well .... Not that I fully understand all this info anyway I just like to be sure that we are not selectively comparing.  |
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cobi
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Post by cobi on Feb 5, 2019 14:34:16 GMT
I'm a little confused about the numbers here, When I read on this site that the figures were updated quarterly I took a snapshot of the Data Hub stats on 30/1/2019. On that day the figures were No need to take snapshots over a years history is here. goo.gl/YRBRzf
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cobi
Member of DD Central
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Post by cobi on Feb 5, 2019 14:36:39 GMT
I'm a little confused about the numbers here, When I read on this site that the figures were updated quarterly I took a snapshot of the Data Hub stats on 30/1/2019. On that day the figures were ICR 120% CCR 227% so in the analysis description above I'm struggling a little with the figures and their change amounts. Perhaps the datahub stats are fluid and this makes it difficult to compare easily or perhaps RateSetter is comparing this with the previous snapshot 3 months ago. I wonder also if the most recent recessions 5 qtrs had a different bank losses experience over the 5 qtrs than just comparing 2 qtrs. Not sure if this wiki is correct but it quotes ... Just wondering if there were relevant stats for the credit losses in 2008's 3 qtrs as well .... Not that I fully understand all this info anyway I just like to be sure that we are not selectively comparing. No need to take snapshots, over a years history is here goo.gl/YRBRzf
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aju
Member of DD Central
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Post by aju on Feb 5, 2019 15:13:24 GMT
I'm a little confused about the numbers here, When I read on this site that the figures were updated quarterly I took a snapshot of the Data Hub stats on 30/1/2019. On that day the figures were No need to take snapshots over a years history is here. goo.gl/YRBRzfwow cobi thx, did you create that or is that available online? did you get this from RS if so where is the link. I still think my main questions are valid though regarding the 3 qtrs in 2008 and RS stats.
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cobi
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Post by cobi on Feb 6, 2019 11:03:26 GMT
aju this whole thread started with this spreadsheet being created. Look at the first posts to see how it developed. It is nothing to do with Ratesetter but gets info from their site and is live all the time.
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Post by gravitykillz on Feb 6, 2019 11:31:38 GMT
Shocking how ratesetter could make such an important error in their msg to this board. Well done ace. I think rs should employ him.
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aju
Member of DD Central
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Post by aju on Feb 6, 2019 15:39:52 GMT
aju this whole thread started with this spreadsheet being created. Look at the first posts to see how it developed. It is nothing to do with Ratesetter but gets info from their site and is live all the time. Oops, I think I may need to go to the doctors and get tested for dementia, apologies for not remembering - I did start at the beginning quite a while back but didn't make the connection when I saw it again. thx
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ashtondav
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Post by ashtondav on Mar 30, 2019 18:04:38 GMT
What a shame RS no longer provide the data. I can't think why they would do that. Oh, probably because the PF is up at its 150% upper target so no need to report anymore  |
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aju
Member of DD Central
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Post by aju on Mar 31, 2019 0:19:08 GMT
They do its here and here but sadly they are not providing the details and the numbers are in graphics rather than as raw values that can be easily scraped. I do agree with you though I wonder why they don;t want people mapping this. The cynic in me would think they don't really want people to be able map it out. |
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Post by RateSetter on Apr 1, 2019 15:17:42 GMT
Good afternoon everyone.
Today we have posted a RateSetter Notice regarding the Provision Fund Interest Coverage Ratio target. The Notice can be viewed by logging into your account and the text is copied below for reference:
Target Interest Coverage Ratio
Today we have updated our target for the Interest Coverage Ratio of the Provision Fund from a range to a single number of 125%. This follows a decision by the RateSetter Board to move to a single number target and, after careful consideration, a decision that 125% was an appropriate level in order to maintain a robust coverage whilst continuing to deliver competitive returns for investors. As a reminder, 125% represents the target coverage over the full lifetime Expected Losses of the loan portfolio.
Thank you.
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