Laplanche: Lending Club takes no balance sheet risk on loans
Renaud Laplanche · Renaud Laplanche, Lending Club // Data Driven #27 // May 2014 (Hosted by FirstMark Capital) · May 29, 2014 · at 0:55
Renaud Laplanche, CEO of Lending Club, explains how marketplace lending differs from traditional bank balance sheets at Data Driven NYC.
0:00 / 0:05exact quote · 5.2s
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“We don't take a balance sheet risk. The, all the capital comes from the from the investors.”
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More from Renaud Laplanche
Laplanche: Low fintech costs and cheap bank capital reduce credit costs
“It's really the best of both worlds where platforms like us, like ours, have a low cost of operation, and the banks have a low cost of capital, and when you put these two together, you can really drive down the cost of credit for consumers and businesses.”
Laplanche: Lending Club's expense ratio is under 2% vs banks' 5-7%
“That ratio for most banks is between five and seven percent, so it's really all operating costs divided by total loans outstanding, that's between five and seven percent. The same metric at Lending Club is less than two percent, and it's coming down quarter af…”
Laplanche: Lending Club averages 12.5% borrower rates and 8% investor returns
“So LendingClub, in contrast, as an average interest rate just over 12 and a half percent and on, on the so that's the value to borrowers and as return on average close to eight percent net return after fees and after credit losses to investors.”
Laplanche: Lending Club is not sensitive to rising interest rates
“So yeah, as far as we're concerned then, we don't think we're rate sensitive at all.”
Laplanche: US credit cards average 17% while savings yields near 0%
“The cost of the average cost of a credit card in the US, so the credit, average credit card interest rate is just shy of 17%. So that's really the value delivered to borrowers. On the flip side if you sort of go and deposit money on high yield savings account …”
Laplanche: Lending Club caps annual growth at 150% to manage risk
“So we've been controlling growth to a place where it's in between hundred and 150%. We could be growing faster based on supply and demand available to us but we've chosen to Sort of grow at the current pace as a matter of sort of controlling risk and especiall…”