Review of the January Numbers for Lending Club and Prosper

It is probably an understatement to say January was a good month for p2p lending in this country. We had Lending Club setting an all time record in loan originations at just under $15 million for the month, and Prosper set a record for loans issued since they emerged from their quiet period.

Let’s dig a bit deeper into these numbers. First, we’ll start with Lending Club. Their previous monthly record, set just in December, was $13.4 million. They well and truly beat that with $14.8 million in new loans. What is even more impressive with these numbers is that they were achieved with very little in the way of new promotional incentives for borrowers or investors.

The chart below shows Lending Club loan origination numbers since January 2010. Last month was slightly more than double the loan volume from a year earlier. The line you see in the chart below is the three month moving average and apart from a little blip in November it has trended almost straight up.

Lending Club loans Jan 2010 to Jan 2011

Now let’s look at Prosper. Not quite as impressive, but an improvement nonetheless. Since their change in December it looks like things have been going well for the number two p2p lender. Loan volume is up and loans are being funded quickly. The chart below is not as pretty as Lending Club’s but it does show improvement the last couple of months, with the three month moving average increasing sharply.

If you dig into the numbers behind this chart there are a couple of points of concern right now for Prosper. The first is that since Prosper’s change the percentage of funded loans has gone up considerably. For most of last year the percentage of loans posted on Prosper that received funding hovered between 18% and 25%. In December that number jumped to 36%, and in January it looks like being well over 60% (as of this writing some loans were still pending). To be fair, Prosper has definitely improved their underwriting standards but we still don’t know what impact this higher percentage will have on the long term performance of these loans.

The second concern for Prosper is the number of loans on their platform for investors. While the number of loans to invest in improved as the month wore on, getting to over 70 at one stage, it remained for most of the month somewhere in the 30-50 loan range. Lending Club on the other hand had well over 300 loans on their platform most days last month. Prosper needs to work on getting that loan number higher so investors will have more choice when selecting loans.

I have no idea how Prosper’s management feels about these numbers (I have requested an interview with senior management there but it hasn’t been forthcoming as of yet) but I can imagine Lending Club is very pleased with their performance. With February being a short month, I expect we will see a slight dip from both companies, but I hope we continue a strong upward trend after that.

  • Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.