Last month, we launched a review of Estateguru's outstanding portfolio composition based on days loans are in delay.
You can view the November 2022 review here.
This month we are looking at the portfolio performance as of December and how it has changed month-on-month.
General Overview of the Loan Book
In mid-December (latest available data), Estateguru’s portfolio consisted of 2,064 loans across 7 countries amounting to 289.2 mEUR in outstanding principal (*unfortunately Estateguru does not share the amount of outstanding interest, thus, we cannot show the total unpaid balance).
Most significant proportion of outstanding principal remains in Estonia (72.5 mEUR) and in Germany (85.2 mEUR).
If we look at the overall portfolio composition, we see deterioration in portfolio quality compared to November.
The Current proportion of portfolio has shrunk from 61.6% to 37.7%, however, proportion that is 0-30 days late still constitutes quite a big part of the portfolio (64.9% compared to previous 76.6%).
If we compare both pie charts, we see that almost all late buckets have increased in size. A very concerning increase would be for loans being late on payment 30-90 days as the outcome is more unpredictable here than for very late loans (90+ days) or barely late loans (0-30 days). On the one hand, more and more projects are starting to have significant issues repaying their debts and it could be an early indication that the loan will continue rolling over to the next late buckets. On the other hand, the project could still recover and return to the Current bucket. It is very hard to say what is the more likely outcome.
Note that we analyze the portfolio composition based on payment delay rather than the status assigned by Estateguru. Even though some loans in the higher risk groups (90+ delay days) might still have the status ‘Late’, in our opinion, the likelihood to receive normal repayment of the loan is negatively correlated with the payment delay days. Hence, very late loans are unlikely to be repaid without going into default.
*The loan data was retrieved on 18th of December, 2022, and may very slightly differ from current situation as the issuances and repayments of loans continue.
**Historic trend: Currently we do not have enough data to make observations about portfolio movements from month to month, however, in a few months we’ll be including an overview of historic movements.
Country Portfolio Overview
Estonia retains quite good portfolio quality: ~91% of loans are late on payment <30 days compared to previous ~94%. However, the 360+ days bucket has increased from being <1% of outstanding portfolio to 3.5% of outstanding portfolio.
Latvia continues to exhibit very good portfolio quality with a bit less than 90% of the portfolio being <30 days late. In comparison to the other Baltic countries – Estonia and Lithuania – Latvia has worse portfolio quality as 7.3% of the outstanding principal are situated at the non-performing loan bucket with late payments 360+ days.
Amongst the Baltic countries, Lithuania experienced the most significant portfolio quality deterioration – the proportion of loans being up to 30 days late on payments decreased from ~94% to ~82%. However, only ~0.3% of outstanding portfolio is 360+ days late which is much lower than for its Baltic peers.
Here we see no major changes – a bit more than half of outstanding principal remains <30 days late, and ~30% of the portfolio is 90+ days late. Compared to the other Estateguru countries, Finland continues to be one of a bit worse performing countries.
Germany exhibits worse portfolio quality than in November. The proportion of loans being <30 days late has decreased by half from ~ 60% to 30%, and the proportion of loans being 90+ days late on payments has increased from 29.2% to 38.7%. The portfolio worsening is quite concerning.
Portugal exhibits the most exceptional portfolio quality amongst the other countries – all of the loans are almost right on schedule with the payments (up to 30 days late). Although, compared to the last month, 40.13% of outstanding portfolio has moved to being 16-30 days late, since the active portfolio consists only of 11 loans, any movement seems to be larger than it actually is.
Spain continues to have the worst outstanding portfolio amongst the countries – approximately 60.5% of the portfolio remains 360+ days late. Fortunately, due to low issuance count, Spain compromises only ~1.0% of the total Estateguru’s outstanding portfolio.
See you in January '23 review!