Summary: Twino actually outdates many other similar European platforms in terms of age but in the past few years it seems to have suffered where others have flourished: total loan origination now ranks well behind that of Mintos and investors are now suffering from a lack of loans and cash drag as the loans with protection have become very popular. If you are happy to invest without a buy-back and can diversify accordingly then Twino may be worth the risk but if not the drought periods may really bite into returns.
Here is a table to show how Twino compares to others:
|Platform||Link||Target Rate (%)||My XIRR (%)||Status||Live Rating|
|Review||Variable||TBC||CLOSED (to UK)||4/5|
DECEMBER 2019: No change.
NOVEMBER 2019: No change.
OCTOBER 2019: Upgraded to 2.5 stars, as availability of loans appears much better.
SEPTEMBER 2019: No change.
AUGUST 2019: Twino continues to take up the slack from the lack of Mintos action.
JULY 2019: Good availability of loans continues, very little cash drag.
JUNE 2019: Some better signs of availability of loans. Perhaps a chance for Twino with Mintos temporarily out of the UK.
MAY 2019: Twino have introduced a promotional 1% cash-back for Latvian loans, however I found no availability.
APRIL 2019: No change. Have re-initiated their auto-buy and will see if that improves the drag.
MARCH 2019: Withdrew a little more (much easier now). Still quite a lot of cash drag for their buy-back loans.
FEBRUARY 2019 – Have downgraded Twino to 2 stars and withdrawn some money.
JANUARY 2019 – Another month of frustration, as the auto-invest bot failed to pick up much.
What is Twino?
Twino, quite rightly, can claim to be one of the pioneers of P2P lending in Europe. Similarly to Mintos, it was founded in Latvia and headquartered in Riga, but it was started much earlier, in 2009, and offering mainly small personal loans which were funded by the crowd. Such a offering was innovative at the time as the availability of credit in Central European countries could be much worse than that elsewhere, and as such this filled a gap in the market.
Unlike other platforms such as Bondora, Twino sought to offer a new feature that made their loans more attractive to investors and offered a buyback guarantee in case loans were late or unpaid. Even after this was offered, this allowed Twino to still offer very high rates, and their profit would depend on the skill of which they chose their loan customers: much akin to standard loan companies.
Despite this, the rate of progress has slowed somewhat, although Twino is still successful in its own right. They source their own loans, unlike Mintos which acts as a platform for other loan companies to fund their loans. That has allowed them to expand rapidly and in to other countries. By contrast, Twino has been slow to expand, adding Poland, Russia, Georgia, Denmark and Spain since it opened.
Here is a table showing Twino’s features:
|Investment Type||Personal Loans|
|Minimum Investment||10 EUR|
|Available in ISA?||No|
|Active on forum?||No|
Are Twino profitable?
Twino reports under the Latvian jurisdiction and does not file accounts with Companies House. Its latest set of accounts shows net profits reaching 3.6m EUR for 2018, which was a large swing on the 12m EUR loss seen the year before. The latest on the company is good with equity of 15m EUR and cash of 8.1m EUR, putting this in a seemingly healthy position and providing a cushion on a downturn in the economy.
Twino Operating Model
To the investor, Twino operates in much the same way as the other platforms, in that loans are originated, divided up by risk and funded by lenders. At present, there are two currencies you can have an account in: either EUR or GBP. Both have their own advantages and disadvantages but the important point is that you cannot change the currency of the account. Loans are simply displayed in your chosen currency (there is no way to hold multiple wallets of currency like there is in Mintos).
Much like other platforms, you can set-up auto-invest portfolios which will automatically place your money with loans with the parameters you supply. This is actually quite simple because information on loans is scant: we get country, loan duration, interest rate, risk grade and amount, and that is it. There is no information on the final borrower themselves, nor what the purpose of the loan is for.
The risk grades are relevant, with there being only three standard grades (A, B and C) and two additional grades which are covered by buy-backs. In the case of the latter two, investors get reimbursed if the loan is late or defaults, whereas for the first three grades you are not. As you may guess, interest rates on protected loans are much lower to offset this.
There is a real mixture of loans on the platform, from small loans lasting a month, to larger loans for several thousands over longer periods. None are secured by assets. Loans are repaid monthly and amortise, meaning you get interest and capital back.
How are funds protected?
Much like Mintos, Twino does not have FCA authorisation, and it does not seem that they will be getting it any time soon. Of course, regulation is by no means any protection of funds, but does imply a certain degree of standard of operation.
Investors funds are protected in loans by virtue of two different buy-back grades, the difference of which seems rather small, as Twino explains on its site: one simply buys back the bad loans, the other keeps on servicing the bad loans.
It should be noted as well that like all supposed protection funds, the protection is only as good as the company that offer it and so is different from the Financial Services Compensation Scheme (which does not cover you for investment losses, but will do on platform failure).
There is no provision for funds in terms of platform failure, neither is it detailed what might happen if the Twino platform ceased to exist. In many cases the administration of the loans would be taken over by another company specifically designed for this event, but with Twino operating in a different territory there is no certainty that this can be the case.
Pros of Twino
Some of the good things about Twino include:
High Interest Rates: Even allowing for the Buyback guarantees, rates are high and 14% or more is seen. So far in my own experience the buyback or payment guarantee has worked well.
Simple Currencies: Operating an account in GBP is very straightforward, as all loan amounts have already been converted, there is no need to make a currency exchange.
Long Track Record: Twino have been in business a long time, and are a mature P2P platform (although mature in P2P terms can mean just a few years). So far in their operation they have been controversy-free.
Cons of Twino
There are also several bad things about Twino:
Bad Cash Drag: Many people operate auto-invest portfolios and this in turn tends to take most of the protected, non-impaired loans off the market. There can be long times where your money is doing nothing if you are reliant on the bot.
Currency Exposure: Loans can be in a different currency to your account, which provides potential for exchange rate loss
Country Concentration: Twino operate in relatively few countries, so your portfolio may become weighted to one or two particular countries.
Regulatory Risk: Governance and regulation is relatively unknown, and it is unsure what would happen if Twino became insolvent.
Transparency: Most figures have been simplified for ease of use, but there is an argument that this has gone too far: there is little data on defaults or if Twino might be financially strong enough to honour buybacks in future.
My Twino Investing Strategy
The lack of regulative regime or transparency has led me to be a bit cautious here, and as such my balance is much smaller than it is at Mintos (although not regulated either, have better statistics). That said, I follow the following principles:
Only invest in protected loans: With no real way to appraise loan grades, the only way to lend is to buy either Payment Guarantee or Trust loans (indicated with PG/T) via auto-invest.
Log in manually often: It is quite often the case that the bot does not pick up any loans because they have been allocated to others. It is possible to use the manual investment button to pick up other suitable loans, but this cannot be done automatically
Check no single country exposure: I try not to let any particular country make up too many of my loans: this actually requires some monitoring as the rate of buy-backs differs all the time.
Do not fear withdrawal: With long cash drag at times, it is better to just take some money out rather than wait. Cash drag is a tax on your returns as it earns nothing while you are waiting.
Twino did have the position to be a major player, but other platforms have outgrown it and offer a far more diverse set of loans. Although not FCA regulated, it has performed well so far, if with some major cash drag issues, and some caution should be taken before investing too much money here.
Disclaimer: This article represents my own opinions and should not be substituted for investment advice. Please research before you invest with any firm. Typically P2P investments are not covered by the Financial Services Compensation Scheme (FSCS) in the way bank deposits are, and there are no guarantees that you will receive the returns advertised (or even a return at all).