Jinmei Credit Consumer Finance Berencana Menerbitkan ABS Periode Pertama untuk Menggalang Dana 500 Juta; Tingkat NPL Meningkat Tiga Tahun Berturut-turut

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 non-performing loan (NPL) data. Over the past three years (2019, 2020, 2021) and at the end of the first phase (Q1 2022), its NPL ratio (calculated by overdue 60 days) was 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

Regarding issues such as “rising non-performing rates year after year,” China Internet Finance News contacted Jinmei Xin Consumer Finance for an interview, but had not received a reply 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.

The reporter noted that 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 consumer loan products, totaling 7,179 loans with an outstanding principal balance 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, and must meet conditions such as a minimum capital adequacy ratio and three consecutive years of profitability. In March this year, Jinmei Xin Consumer Finance obtained approval from the Xiamen CBIRC bureau to issue ABS.

From the perspective of diversified financing channels, 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 this year, through existing shareholders increasing registered capital proportionally with cash, its registered capital was raised from 500 million yuan to 1 billion yuan.

Non-performing loan ratio rising annually

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 non-performing loan ratio has been rising year after year 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 non-performing loan balances were 4.287 million yuan, 30.1455 million yuan, 60.6633 million yuan, and 74.3213 million yuan, respectively. The NPL ratios (calculated by overdue 60 days) were 0.20%, 1.04%, 1.46%, and 1.65%.

During its business development, Jinmei Xin Consumer Finance also exposed many risks. Last year, due to deficiencies in credit management systems 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 penalty in the consumer finance industry this year.

Licensed consumer finance accelerates financing to replenish capital

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 approval to issue ABS and financial bonds, mainly aiming to optimize their financing structure and strengthen capital reserves.

“Now, 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 obtained financial bond issuance qualifications, and 14 have obtained ABS issuance qualifications, indicating increasingly diversified financing channels.