VCREDIT Holdings Limited (stock code: 2003.HK), a leading independent online consumer financial service provider in China, is pleased to announce its audited consolidated annual results for the 12 months ended 31 December 2020 (the “Year”).
During the Year, the Group’s total income was RMB2.573 billion (2019: RMB3.864 billion). Although the business of the Group was adversely affected by the impact of the Covid-19 pandemic, the Group was also able to improve the operational metrics, realising by the end of the Year even lower delinquency ratios than pre-pandemic levels. Apart from the effects of the Covid-19 pandemic, the significant tightening-up of regulatory framework for China’s consumer finance industry causing the exit of almost P2P lending platforms from the market.
The Group’s policy of cooperating only with licensed financial institutions as its partners has enable the Group to comply with new regulations and grow its operations. During the Year, the Group added 16 new institutional funding partners, which is a critical element to the Group’s business strategy and to the sustainability and expansion of its business.
The Group primary 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. During the Year, the Group saw growth in the number of its new borrowers during the Year, with an increase in the number of new registered users by 14.4% as compared to 2019. Meanwhile, the loan origination volume for consumption credit products contributing 79.9% of revenue also increased by 19.0% to RMB24.600 billion (2019: RMB 20.678 billion). In the face of Covid-19, the Group promptly enhanced its credit and risk management systems to protect asset quality. With the recovery in China’s macro environment from the second quarter of 2020, the Group’s key indicators of asset quality improved gradually. Among the Group’s leading indicators of asset quality, the first payment delinquency ratio(1) declined to 0.4% in the fourth quarter of 2020 from 2.0% at the end of the first quarter of 2020, achieving the best first payment delinquency ratio of the Group historically. Meanwhile, the M1-M3 ratio(2) and M3+ ratio(3) respectively decreased to 2.5% and 2.9% in the fourth quarter of 2020 from 7.4% and 7.1% in the second quarter of 2020. The Group will keep optimizing its risk management framework to ensure sustainable enhancement in asset quality, such as revamping risk models and policies, optimizing life-time customer level valuation and running multiple high impact tests to better differentiate customers and significantly improve risk performance. The Group believes its ongoing overall first payment delinquency ratio will be around 0.5% in 2021.
Technology-advancement is an important driving force for the Group’s business development. By further improving a customer life-time value model, the Group able to better identify the characteristics of customers who will bring long-term value and profit, supporting its long-term or short-term business goals on a large scale. The Group succeeded in improving retaining high-quality customers and reducing customer churn rate by more actively servicing and encouraging repeat borrowing. The Group also implemented a multi-source scorecard to increase the efficiency of evaluating customers’ credit profiles and the likelihood of default. Through the continuous investment in financial technology, the Group has successfully realized the migration of its customer base to higher-quality prime and near prime customers.
During the Year, the Group sourced its customers primarily through online advertisements principally through feeds and other types of retailers to embed its products in the service they provide to their customers. In order to acquire more customers with customized products, the Group partnered with different operators including OPPO, Xiaomi and China Telecom. In order to increase exposure to social media platforms, the Group also raised the proposition of feeds advertisements, building up collaboration relationships with leading media proprietors such as Tencent Data Cloud and ByteDance’s modeling platform which places products closer to customers’ daily lives. Through these different customer acquisition channels, the Group able to analyze the characteristics of social media and different internet platform users at regular intervals, giving help to devise way to reach more prime customers and improve cost efficiency.
The Group also invested RMB20 million to acquire a 0.27% interest in Guoren Property and Casualty Insurance Co. Ltd. (“Guoren P&C”) to become one of its shareholders. This investment has strengthened the Group’s strategic relationship with Guoren and give help to capturing new business opportunities in the tech insurance sector by allying its customer finance strategy to innovate products offered by Guoren to their customers.
As the rollout of vaccines for the Covid-19 pandemic within China and around the world gather pace leading to further improvements in the Group’s operating conditions. The Group is committed to seeking steady growth by serving higher-quality prime and near-prime borrowers with offerings of innovative financial products delivered in collaboration with its licensed funding partners and business partners. Simultaneously, the Group will continue to invest in research and development to empower its technological and risk management capability, maintain precision acquisition of higher-quality customers, as well as further enhance and deepen mutually beneficial relationships with its funding and business partners, so as to maintain its leading position in the industry.
(1) First payment delinquency ratio is defined as the total balance of outstanding principal amount of the loans the Group originated in the applicable period that were delinquent on their first payment due dates divided by the aggregate loan origination volume in that period.
(2) M1-M3 ratio is calculated by dividing (i) the outstanding balance of online loans which have been delinquent up to 3 months, by (ii) the total outstanding balance of loans to customers excluding offline credit products, which had a negligible balance of RMB 101.6 million as at December 31, 2020.
(3) M3+ ratio is calculated by dividing (i) the outstanding balance of online loans which have been delinquent for more than 3 months and have not been written off by (ii) the total outstanding balance of loans to customers excluding offline credit products, which had a negligible balance of RMB 101.6 million as at December 31, 2020.
About VCREDIT Holdings Limited (2003.HK)
VCREDIT Holdings Limited (“VCREDIT”) is a leading independent online consumer financial service provider in China with over 10 years of track record. The Company caters to prime and near-prime borrowers underserved by traditional financial institutions by offering credit card balance transfer products, and consumption credit products. To match the funding needs for these products, the Company primarily engages institutional funding partners through three types of sustainable and scalable funding structures: trust lending, credit-enhanced loan facilitation and pure loan facilitation. Through such funding structures, VCREDIT provides institutional funding partners with solutions at varying levels of risk discretion and flexible profit-sharing arrangements.
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