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Risk performance

Risk analytics are at the heart of what we do. You trust us with your money, and we don’t take that responsibility lightly. Over the last decade and more, our risk analyses have proved robust, consistently performing according to plan.

How have Zopa’s default rates performed against expectations over the last 10 years?

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”).

View risk data in more detail

Expected defaults compared to actual defaults 2005-2015

Expected defaults:
The amount of defaults we expect over lifetime of loans when we originated them.
Actual defaults:
Total defaulted loan amounts, as a percentage of amount lent in the calendar year.

A large proportion of loans originated after 2013 are still outstanding therefore comparison of expected and actual lifetime default rates is less meaningful at this stage.

How have Zopa’s returns for investors performed against expectations over the last 12 years?

We measure our returns performance partly, but critically, by comparing expected returns to actual returns. This contributes to our track record of delivering consistent returns, and also holds us to account on how returns actually perform, compared to what we expected.

Over 11 years, we have collected a wealth of information that allows us to make informed default rate predictions. This information has helped us get better at meeting our expected default rate.

Expected returns compared to actual returns 2006-2015

What happens if default rates differ from our expectations?

We use our expected lifetime default rates for loans to inform the headline rate of returns 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 investors returns will be lower than expected.

The graph below uses Plus as example of how changing default rates affect interest rates.

Zopa Plus response to increased default rates

Last updated: September 2016

  • The current expected lifetime default rate for loans in Plus is 6.5%
  • If default rates are lower than expected, returns will be higher than expected
  • Losses to capital are not expected to occur unless the default rate is more than 16.5%

This graph demonstrates what would happen to interest rates for Plus loans if default rates increased.

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.

Our risk statement has all the details.

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

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