Twino Review 2023: Struggling Flagship Platform?

With a history of 7+ years and a financed loan volume of €1+ B, Twino is one of the absolute heavyweights among the European P2P platforms. However, the development of the platform has been anything but straightforward since its foundation.

Financially, the platform had to recover from the failed expansion for a long time. After having returned to calm waters by 2021, however, problems began to accumulate again in 2022.

In this Twino review you will get a bettter understanding about the current risk-reward profile of the platform and in which circumstances Viainvest might be a good addition to your P2P portfolio. 

All the information that are covered in this Twino review are based on my own personal experiences with the platform for the past 4+ years. Please make sure to do your own due diligence before investing on any platform. More information can be found in the Disclaimer.

Further analyses of other platforms can be found on my P2P Platform Review page.

Last Update: May 2023

Twino Overview

Before we get started, here is a quick summary with the most important information about Twino.

About Twino

Twino is a Latvian P2P platform, launched in August 2015, where investors can invest in a variety of international and short-term consumer loans, earning a return of up to 11%.

The P2P platform is backed by the SIA TWINO parent group, founded in 2009, which is one of the largest non-bank lenders in continental Europe. In October 2019, the group reached the milestone of €1 billion in funded loans. In May 2022, this funding threshold was also broken on the Twino P2P platform.

Due to its long history and the size of the company, Twino is among the biggest flagship platforms within the European P2P environment.

Who owns Twino?

SIA Twino was founded in 2009 by the Latvian businessman Armands Broks. He still owns 100% of the company shares today.

Operationally, he also served as CEO of the P2P platform for a decade before handing over this position to Anastasija Oleinika in July 2019.

In the P2P environment, Armands is considered a well-connected businessman, entrepreneuer and fintech enthusiast.

Management

Latvian Helvijs Henšelis has been CEO of TWINO Investments AS (legal name of the P2P platform) since November 2022. He already worked for the platform as Group Tax Manager between January 2018 and April 2021. Here is a conversation that we had for my podcast in May 2023:

Business Model & Finances

Throughout the process of due diligence, investors should also have a look at the business model of a P2P platform as well as the overall financial situation. How does the company earn money? Does the platform operate profitably? And how well is the company positioned financially? In the following paragraphs of this Twino review, you can follow-up on those questions.

How does Twino earn money?

Twino earns most of its revenue from interest income. This refers to the difference (the spread) between the interest rate charged to borrowers and the interest rate offered to investors to finance the loan.

In addition, Twino also earns money from various fees, commission income and operating income. This includes, for example, credit default swaps.

Is Twino profitable?

The P2P platform, which is represented by TWINO Investments AS, generated a consolidated profit of €178,488 in 2022. The annual report was audited by BDO and prepared in accordance with IFRS standards.

The company experienced its negative peak in 2017, after the expansion course of the previous two years thoroughly failed. The group had negative equity of €6.5 M and nine out of eleven subsidiaries had to write off the financial year with heavy losses.

However, consolidation and restructuring have had positive effects in recent years.

• The equity position has been continuously strengthened (€1.95 M at the end of 2022)
• Liabilities from outstanding bonds were settled in 2019
• In 2020, a large part of the shareholder capital was used to pay off the accumulated losses of the parent company

Sign Up and Bonus

To invest on Twino, investors must meet two requirements:

• A minimum age of 18 years
• Citizenship and residence in the European Economic Area.

If these requirements are met, registration on Twino can be completed in just a few steps.

• Registration: Enter name, email, date of birth, password, etc.
• Provide financial information: Planned investment amount, state citizenship, country of residence, tax residence, etc.
• Upload documents: Copy of identity card, proof of residence

Also legal entities have the opportunity to sign-up on Twino, but only if the business is located in Latvia.

Bonus for New Investors

If you sign-up on Twino via this Link, you will receive a starting bonus of €20. To get the bonus, you must also invest at least €500 in the first 30 days after registration.

Investing on Twino

How does Twino work and what should investors know and consider when investing on the plaform? In the following sections of my Twino review you will find all the necessary information that you need.

Loan Offering on Twino

Twino has been a regulated P2P platform, controlled by the Latvian financial regulator FCMC, since 2022. Since this change happened, investors no longer invest in assignment contracts (claim rights), but in asset-backed-securities (“notes”).

These are financial instruments that are composed of a bundle of different loans. These can be short-term consumer loans to private individuals as well as real estate and business loans.

There is a fixed interest rate for the asset-backed-securities. This is amortised over the entire term when the underlying loans are repaid. Currently, there is a uniform interest rate of 12% on the platform.

For the borrower markets, investors can choose between Polish, Latvian and Vietnamese loans.

Costs and Fees

TWINO does not charge any fees. Neither for investing in securities nor for buying or selling on the secondary market. The withdrawal of funds is also free of charge.

Expected Returns on Twino

According to the P2P platform, investors can achieve a return of up to 12% on Twino. This is a reasonable return in relation to the risk involved.

My personal Twino return, since I started investing in December 2020, is 10.33%.

Twino Auto Invest

Investors have three options to invest in asset-backed securities on Twino:

• Manual selection via primary market
• Manual selection via secondary market
• Automated investment strategy

Twino Auto Invest is a functionality where certain investment criteria can be set-up in advance. Later, the returns are automatically reinvested in those preselected criteria. The following settings can be configured:

• Interest rate: Up to 16
• Borrower countries: Latvia, Poland, Vietnam
• Term: Up to 12 months, up to 36 months or up to 60 months
• Reinvest repayments

The minimum investment amount on Twino is €1.

Secondary Market

Since the beginning of 2021, Twino is also offering a secondary market. Here, investors can trade asset-backed securities and either buy or sell them prior maturity of the term.

The securities can be bought at a premium (red symbol), at a discount (green symbol) or at par (grey symbol). Trading is free of charge for both sides.

The introduction of the secondary market was a necessary requirement for Twino to obtain the highest brokerage firm investment licence in Latvia.

Twino Forum

If you have questions about Twino, other platforms or different p2p-related topics, you can join the re:think P2P Community on Facebook and engage in discussions with more than 1,000 other private retail investors.

Twino Taxes

In general, interest income earned through loan financing is considered investment income and thus must be declared as such in the tax declaration. In addition, since 2022, after obtaining the investment brokerage licence, Twino is legally obliged to withhold taxes on interest income collected through regulated financial instruments.

The applied tax rate depends on the country of tax residence and on the tax information and certificates submitted.

• 20% for private investors from Latvia
• 20% for private investors from outside the EU or EEA
• 5% for private investors resident in the EU or EEA (except Latvia)
• 0% for private investors from Lithuania (tax certificate required)
• 0% for legal entities

As a rule, the withholding taxes withheld can be deducted from the total amount when paying tax in the country of residence. This means that the effective tax rate is the same as for the previous investment in claim rights. The relevant double taxation agreement between Latvia and the country of residence is decisive for the creditability.

Twino Risks

Investors should look very carefully at the potential risk factors when evaluating a P2P platform. What is it that investors need to be aware of when it comes to Twino? Where are the underlying risks and how are they assessed?

Corona Crisis / Covid-19 Pandemic

Twino, similar to other P2P platforms, struggled with a strong outflow of liquidity in the months of March and April. The annual report of SIA Twino showed that investors withdrew about 30% of the repayments (€4.2 M) during this period. In May and June the situation increasingly stabilised (€0.2 M) and in July / August this trend continued (€1.2 M).

The liquidity risk would only have led to adjustments in disbursement measures at Twino if moratoria had been introduced in the affected borrower countries. However, this did not happen. Twino therefore kept its agreements promised in advance and respected the contractual terms with their investors.

Twino und der Krieg in der Ukraine

The war in Ukraine certainly had an impact on Twino as the platform has always been very active in the Russian credit market. Due to the sanctions against Russia, the decline of the Russian currency and the weak economic outlook, Twino is definitely affected by these developments. Historically, Twino has always had a large share of its loan portfolio in Russia. Recently, however, this share has been significantly reduced.

Measures taken by Twino included:

• No new offering of Russian loans on the primary market.
• Temporary discontinuation of the “currency influence” option
• The purchase and sale of Russian loans is possible via the secondary market
• Action plan to increase investments in Europe, Asia and real estate projects
• Increased communication with the Latvian supervisory authority to better understand the significance of the sanctions against Russia

Due to restrictions on payments outside of Russia, there are still approximately €5.6 M of investor funds in the process of being recovered from Russia.

Is Twino a Safe P2P Platform?

Overall, Twino can be considered a safe P2P platform, although the usual risks of the lending business can have an impact on the investors’ expected returns.

Positives to highlight:

• Regulated brokerage firm
• A track record of 7+ years as a P2P platform
• Strongly improved financials of the parent company
• Segregation of investor and company funds

However, due to the lack of deposit protection, a total loss of the investment can theoretically occur. Investors should take this into account in their assessment.

Pros & Cons

In this section I have listed the biggest advantages and disadvantages of Twino.

Advantages

• Track Record: The Twino Group is one of the oldest and most established non-bank lenders in continental Europe with €1+ billion in financed loans.
• Regulation: Since September 2021, the group is supervised and controlled by the Latvian financial regulator FCMC.
• Transparency: The group has been publishing its consolidated and audited annual reports for many years.
• Financial Stability: While the company had to deal with a great deal of financial instability in the recent past due to its expansion plans, Twino is now in a much better and healthier financial position.

Disadvantages

• Russian Loan Portfolio: In the past, Twino was very dependent on the Russian credit market. Due to the war in Ukraine, about €6 M of investors’ money are now stuck in Russia.
• Exchange Rate Risk: Not only credit regulations in Russia, but also the devaluation of the Russian rouble weighs on Twino’s balance sheet. Although the losses are not realised on the FX market, the dependence on the Russian market creates a certain risk.

Twino Alternatives

The closest Twino alternative is Viainvest. The origin story, the track record and the business model of both P2P platforms are very similar. Not without a reason, both platforms have even founded a joint venture with VAMO for lending operations in Vietnam.

Other Twino alternatives are Bondora, Esketit or Robocash.

You can find other Twino alternatives on the P2P Platform Comparison page.

TWINO Community Feedback

Twino is rated by many investors as an average-popular P2P platform. At least, if the results of the community voting are used as a reference. In 2021, Twino managed to score 3.47 points, in 2022 it was 2.86 points and in 2023 i was 3.03 points.

The most popular platforms in 2023 included Esketit, Robocash, PeerBerry, LANDE and Income Marketplace.

Summary Twino Review 2023

Twino has been one of the largest and most established platforms in the European P2P environment for many years. The mark of 1 billion euros in financed loans, which was reached in May 2022, can only be surpassed by a few competitors. On top of that, Twino is the second largest continental European P2P platform, where loans are acquired by its own subsidiaries and where there are no external lenders that can help to faster scale the origination volume.

However, the greater control does not come without associated risk. In particular, the concentration from the Russian credit market has led to about €6 M of investors funds nowing being stuck. Even worse, there doesn’t seem to be a real plan to remedy this situation in the interest of its investors. One reason might be the management vacuum that has arisen in the course of 2022.

Normally, Twino should be a fixed component on any P2P portfolio. Investors who want to invest in regulated and profitable platforms that already have a certain market maturity should definitely consider Twino as an alternative for their own P2P portfolio.

FAQ Twino Review