VCREDIT Holdings Limited (“VCREDIT” or the “Group”; stock code: 2003.HK), a leading independent online consumer finance provider in China, is pleased to announce its unaudited interim results for the 6 months ended 30 June 2019 (the “Period”). During the Period, the Group’s total income increased by 46.4% to RMB1,860.2 million year-on-year (1H 2018: RMB1,270.6 million), primarily due to the increase in loan origination volume through its credit-enhanced loan facilitation structure. Non-IFRS Adjusted Net Profit (1) surged 101.6% to RMB192.8 million (1H 2018: RMB95.6 million) due to the continued effort in monitoring its asset quality and improving operating efficiency.
The Group recorded robust growth and completed its transformation into a pure online consumer finance business during the Period. The Group primarily offers two credit products through its pure online loan origination processes: (1) credit cards balance transfer products, and (2) consumption credit products, both of which are installment-based.
In the first half of 2019, the differentiation of online finance industry was intensifying, the number of online loan platforms was down to under 900, and the number of active lenders and active borrowers showed a double downward trend. According to the report of Suning Institute of Finance, the overall scale of the online finance industry is still expanding while the threshold is getting higher. Since the small and medium-sized organizations are becoming unadaptable, as a result, they are leaving the industry. The survival of the fittest is an irreversible trend.
In the stage of industry differentiation, it is also the stage of solidification. VCREDIT continues to adhere to the belief of “the convergence of technology, data analytics and mobile internet”, in order to proactively plans the forward-looking layout. Over the past decade, the Group has grown to become a leading independent player at the forefront of China’s consumer finance industry. The Group’s funding model differs to many of its competitors and is composed of long-standing partnerships with licensed financial institutions (banks, trusts, licensed financial institutions). The significance of reputable funding sources is the key strength to the integrity and sustainability of the Group’s business. The Group has maintained a steady growth momentum under the strict supervision and the new industry regulations which constantly constraining the participants.
During the Period, the Group maintained its cooperative relationships with 30 existing licensed institutional funding partners, and also established mutually beneficial cooperations with 15 new institutional partners, including a strategic agreement with a national joint-stock commercial bank, aimed at expanding its intelligent consumer finance ecosystem and ensure the stability of funding sources. Moreover, the Group has begun to establish strategic cooperation agreements with third-party guarantee institutions which will allow it greater flexibility in working with licensed financial institutions. The Group successfully issued US$100 million 11.0% senior notes due 2021, in June 2019, which further strengthen its capitalization and expand its institutionalized funding sources.
The Group has formed strategic cooperation with all three mobile carriers in China. The cooperation with China Telecom Corporation Limited contributed to its increased loan origination volume of RMB468.2 million for the Period (RMB150.0 million for the whole year of 2018), successfully launched installment loan products to China Telecom’s customers in more than 25 provinces, 228 cities in China.
In June of 2019, the Group signed a strategic investment agreement with Chengdu Financial DreamWorks Investment Management Co., Ltd., and are currently working to establish VCREDIT Jiaozi Digital Technology Co., Ltd. in Chengdu, China. Chengdu Financial DreamWorks Investment Management Co., Ltd. is the first financial technology creation space designed to serve the small and medium sized micro-finance enterprises established with the support of the Chengdu Municipal Party Committee and Government and the Chengdu Branch of the People’s Bank of China. The Group’s fintech product offers an all-in-one solution for data collection, third party data integration, machine learning, business intelligence analytics and model building, which are able to lower customer acquisition costs and improve the operating efficiency of their SME (small and medium enterprises) lending, consumer credit lending and agricultural related lending businesses. New company will jointly build a new ecosystem of financial technology and promote the rapid and quality development of the western China financial center.
The revolutionary, state of the art credit scoring system and technology allows the Group to tailor each user’s experience perfectly with their unique backgrounds and needs, pairing multi-dimensional factors of each profile with those of its licensed institutional funding partners. The Group has also become a SaaS (Software-as-a-Service) provider of risk management systems for several financial institutions. By connecting various engines in the Hummingbird system (scorecard, anti-fraud, etc.) with the clients’ information technology system using API (Application Programming Interface), the Group has empowered these institutions to enhance their risk management and compliance capability, which will be better able to serve customers
As for the asset quality, the Group proactively updates its customer segmentation methodologies in underwriting to include more effective risk-based pricing and more prudent credit limit assignments based on prevailing market environment. Cumulative life-cycle credit losses for recent vintages have come at expected levels, indicating the effectiveness of its latest credit policies. Overall first payment delinquency ratio is consistent with the Group’s strategies which leveraging the mix of shorter tenor products.
Looking forward, the Group is committed to further building and expanding its online consumer finance business to better serve its borrowers, funding partners and business partners, as well as to bring value to the shareholders. At the same time, the Group will keep a foothold on fintech, to further develop its risk-based pricing and risk management capabilities. As the Group deepens its cooperation with the three major telecom operators and collaborates with leading companies in the fitness and education industry, hence, the Group’s business scale will further expand in the future. There are strong and large licensed financial institutions to provide funding sources, and the national regulatory policies that lead to the survival of the fittest in the industry. The Group’s development prospects are worth looking forward to. All sufferings have their rewards. VCREDIT, the financial services at your fingertips.
Note:
(1) Non-IFRS Adjusted Net Profit is defined as profit for the Period with fair value loss of convertible redeemable preferred shares and share-based compensation expenses added back.
