The coronavirus pandemic will test all credit institutions including peer-to-peer lenders, an analyst has claimed.
John Cronin, financial analyst for Goodbody, has warned that he would not be a buyer of credit institutions until things settle with the outbreak, adding that loan impairments and liquidity were his main worries.
“I think it is a testing time for all players in the industry,” Cronin told Peer2Peer Finance News.
“However, I believe the strongest P2P lenders will emerge even stronger after this coronavirus crisis.”
He suggested that business and consumer P2P loans would be most affected.
Cronin added that markets would rally once there are positive developments such as when a vaccine is produced.
“That said, the longer this crisis goes on for the more damage that will be done first – and we would re-emphasise that our view is that we are NOT at the critical inflection point yet,” he added.
It comes after alternative finance-focused investment trust VPC Specialty Lending (VSL) said it was monitoring its portfolio amid the pandemic.
“The direct market and societal impacts of coronavirus are highly uncertain, but all businesses should be prepared to handle the possibility of widespread health issues among employees and/or customers, as well as the possibility of quarantines or other disruptions in day-to-day life and travel,” VSL said.
“We have begun to see the indirect impacts, which will most likely continue to affect the markets, supply chains and other aspects of the global economy for the foreseeable future. Regardless of the severity of the health crisis, the market seemed due for a pause and this was just the catalyst to shift sentiment.”
P2P lenders have been responding differently to the outbreak.
RateSetter has informed its investors that withdrawals are taking longer because of a spike in demand, which it said could be because people want to withdraw their money following stock market losses amid coronavirus uncertainty.
Assetz Capital is now queuing withdrawal requests from its Access accounts.