Jinmei Xin Finance Co., Ltd. planea emitir su primer ABS para recaudar 500 millones de yuanes; la tasa de morosidad ha aumentado consecutivamente en los últimos tres años

China Internet Finance News, November 21 (Reporter An Ran, Zhu Ling) Recently, Jinmei Xin Consumer Finance disclosed the issuance announcement of the first phase of its 2022 personal consumer loan asset-backed securities, with an issuance scale of 500 million yuan, including 365 million yuan in the senior tranche and 135 million yuan in the subordinate tranche.

The issuance report also revealed Jinmei Xin Consumer Finance’s recent default rate data. Over the past three years (2019, 2020, 2021) and at the end of the first phase (Q1 2022), its default rates (calculated by overdue 60 days) were 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

Regarding issues such as “rising default rates year after year,” China Internet Finance News contacted Jinmei Xin Consumer Finance for an interview, but had not received a response as of press time.

First Phase ABS aims to raise 500 million yuan

Jinmei Xin Consumer Finance was established in October 2018 with an initial registered capital of 500 million yuan. It is a consumer finance company jointly funded by Xiamen Jinyuan Financial Holdings Co., Ltd., Gome Holdings Group Co., Ltd., and China Trust Commercial Bank Co., Ltd.

Notably, this is Jinmei Xin Consumer Finance’s first time raising funds through ABS issuance. The assets pooled into this ABS are all offline large-scale living loan products, totaling 7,179 loans with an outstanding principal of 500 million yuan. The average outstanding principal per borrower is 69,700 yuan. The loans are used for renovation, household appliances, furniture, mobile phones and digital devices, education, travel, wedding expenses, etc.

Issuing ABS by consumer finance companies involves certain thresholds. According to regulatory requirements, licensed consumer finance companies need approval from the China Banking and Insurance Regulatory Commission (CBIRC) to issue ABS, which requires meeting minimum capital adequacy ratios and maintaining profitability over the past three years. In March this year, Jinmei Xin Consumer Finance obtained approval from the Xiamen CBIRC bureau for ABS issuance.

From a diversified financing perspective, Jinmei Xin Consumer Finance currently only lacks access to financial bonds. In September last year, it successfully secured its first two-year pure Taiwanese syndicated loan, raising 400 million yuan with a 2-year term. In June, it increased its registered capital from 500 million to 1 billion yuan through cash contributions from existing shareholders.

Default rates rising year by year

In the industry, Jinmei Xin Consumer Finance has been known as a “small but beautiful” company. As of December 31, 2021, its operating net income was 312 million yuan, a 30% increase year-over-year; net profit was 69.3 million yuan, up 18.3%. By the end of 2021, total assets reached 4.563 billion yuan, and total liabilities were 3.92 billion yuan.

However, the reporter also noted that its default rate has been rising annually in recent years. The issuance report shows that over the past three years (2019, 2020, 2021) and at the end of the first phase (Q1 2022), the balance of non-performing loans was 4.287 million yuan, 30.145 million yuan, 60.663 million yuan, and 74.321 million yuan, respectively. The default rates (calculated by overdue 60 days) were 0.20%, 1.04%, 1.46%, and 1.65%.

During its business operations, Jinmei Xin Consumer Finance has also exposed various risks. Last year, due to deficiencies in its credit management system and improper loan management leading to misappropriation of funds, it was fined 2.9 million yuan by the Xiamen CBIRC bureau. This is the largest fine in the consumer finance industry so far this year.

Licensed consumer finance companies accelerate financing to replenish funds

Since the beginning of this year, multiple consumer finance companies have diversified their financing channels through asset securitization, syndicated loans, financial bonds, etc. Overall, in the first three quarters, licensed consumer finance institutions planned to raise over 100 billion yuan. In terms of ABS, only Mashang Consumer Finance has issued over 5 billion yuan this year.

Su Xiaorui, senior consulting advisor at Analysys, said that since the second half of last year, licensed consumer finance companies have frequently received approvals to issue ABS and financial bonds, mainly aiming to optimize their financing structures and strengthen capital adequacy.

“Nowadays, competition among consumer finance institutions is more about comprehensive capabilities, including diversified funding sources, costs, risk control, and compliance management,” said Wang Pengbo, senior analyst at Broadcom Consulting.

According to incomplete statistics by the reporter, among the 30 consumer finance companies currently operating, 21 have obtained interbank borrowing qualifications, 8 have approval to issue financial bonds, and 14 have approval to issue ABS, indicating that financing channels are becoming increasingly diversified.