Loan portfolio performance
Portfolio performance is how a portfolio does over time. For a lender, loan portfolio performance is repayment and losses across the loan book, including losses measured against the interest it earns.
Example
For illustration, a lender originates 1,000 loans in January and finds that 50 are at least 30 days past due after three months on book. The lender follows that vintage over later months and compares its net charge-offs with the interest those loans earn.
Measures lenders track and how they are calculated
A delinquency rate divides the balance or count of loans in a days-past-due bucket by the balance or count of the book. Buckets commonly separate loans 1 to 29, 30 to 59, 60 to 89, and 90 or more days past due. A default rate tracks loans that meet the lender’s stated default definition. State the definition and measurement basis alongside the rate.
A roll rate is the share of balances in one bucket this month that move to the next worse bucket next month. A net charge-off rate subtracts recoveries from charge-offs, divides by average outstanding balance, and is usually annualised. A vintage curve follows loans originated in one month and plots a measure, such as the share 30 or more days past due, against months on book.
Read portfolio measures together and compare like with like
Compare vintage curves at the same months on book, so each group of loans is assessed at the same age. A fast-growing book can show a lower delinquency rate because newer loans have had less time to become past due. Vintage curves and rates at the same loan age help separate that effect from a real change in performance.
Separate results by product. Then examine channel and risk band as distinct cuts. These views can show whether a change in the overall rate appears across the book or is concentrated in a particular segment.
Questions we get asked
What does months on book mean?
Months on book is the time elapsed since a loan was originated. A vintage curve compares loans from the same origination month at the same months on book.
Should delinquency be measured by loan count or balance?
Either basis can be used. A count rate gives each loan equal weight, while a balance rate reflects the share of the book’s outstanding balance in the bucket.
How do I calculate a 30 or more days-past-due rate?
Add the loans 30 to 59, 60 to 89, and 90 or more days past due, using either their count or their balance. Divide that total by the corresponding count or balance for the book.
Decisimo’s free vintage curve calculator draws curves for 30 or 90 days past due by months on book from a loan-list CSV, and the file stays in your browser.
