Jinmei Xin Consumer Finance plans to issue its first tranche of ABS to raise 500 million yuan, with the non-performing loan rate rising year after year over the past three years.

China Net Finance November 21 (reporters An Ran and Zhu Ling) Recently, Jinmeixin Consumer Finance disclosed the issuance announcement for its 2022 first tranche of personal consumer loan asset-backed securities. The issuance size is 500 million yuan, of which the senior tranche is 365 million yuan and the subordinated tranche is 135 million yuan.

This issuance report also disclosed Jinmeixin Consumer Finance’s delinquency rate data in recent years. Over the past three years (2019, 2020, 2021) and at the end of one period (2022 Q1), its delinquency rate (calculated as overdue by 60 days) was 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

Regarding issues such as “delinquency rates rising year after year,” China Net Finance reporters contacted Jinmeixin Consumer Finance for an interview. As of the time of publication, no response has been received.

The first ABS plans to raise 500 million yuan

Jinmeixin Consumer Finance was established in October 2018, with initial registered capital of 500 million yuan. It was jointly funded and established by Xiamen Jinyuan Jinkun Financial Holding Co., Ltd., Gome Holdings Group Co., Ltd., and China Trust and Commercial Bank Co., Ltd.

The reporter noted that this is the first time Jinmeixin Consumer Finance has raised financing by issuing ABS. The assets in this ABS pool are all offline large-ticket consumer loan products. The pool consists of a total of 7,179 loans, with an outstanding principal balance of 500 million yuan. The average outstanding principal balance per borrower is 69.7k yuan. The loan purposes include renovation, home appliances, furniture and home appliances, mobile phone and digital electronics, education, travel, weddings, and so on.

Consumer finance companies issuing ABS face certain thresholds. According to regulatory requirements, licensed consumer finance companies need approval from the CBIRC departments in order to issue ABS, and they must meet conditions such as a capital adequacy ratio not lower than the minimum requirement set by regulators and continuous profitability over the most recent three years. In March this year, Jinmeixin Consumer Finance obtained ABS qualification approved by the CBIRC Xiamen Regulatory Bureau.

From the perspective of diversified financing channels, Jinmeixin Consumer Finance currently only lacks one item: financial bonds. Last September, it successfully completed its first single two-year pure Taiwan-funded syndicated loan, with a total fund-raising amount of 400 million yuan and a term of two years. In June this year, through increasing registered capital by cash in proportion to existing shareholders, Jinmeixin Consumer Finance’s registered capital increased from 500 million yuan to 1 billion yuan.

Delinquency rates rise year by year

In the industry, Jinmeixin Consumer Finance has long been known for being “small but high-quality.” As of December 31, 2021, its operating net income was 312 million yuan, up 30% year over year; its net profit was 69.2986 million yuan, up 18.3% year over year. At the end of 2021, total assets were 69.7k yuan and total liabilities were 3.92 billion yuan.

However, the reporter also noted that in recent years its delinquency rate has climbed year after year. The issuance report shows that over the past three years (2019, 2020, 2021) and at the end of one period (2022 Q1), Jinmeixin Consumer Finance’s outstanding delinquent loan balances were 4.287 million yuan, 30.1455 million yuan, 60.6633 million yuan, and 74.3213 million yuan, respectively. Its delinquency rate (calculated as overdue by 60 days) was 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

In the course of business development, Jinmeixin Consumer Finance has also exposed many risks. Last year, for illegal and non-compliant facts such as defects in its credit management system and mechanisms and failure in loan management that led to some loan funds being misappropriated, it was fined 4.29M yuan by the CBIRC Xiamen Regulatory Bureau. This is also the largest penalty order in the consumer finance industry by amount since the beginning of this year.

Licensed consumer finance firms speed up financing to replenish capital

Since this year, multiple consumer finance companies have raised financing through diversified channels such as asset securitization, syndicated loans, and financial bond issuance. Taken together, in the first three quarters, licensed consumer finance institutions’ plans to complete capital replenishment had already exceeded 2.9M yuan. In terms of ABS, only immediately after consumption finance has issued ABS; as of this year, the total amount of ABS issued has exceeded 5 billion yuan.

Su Xiaorui, senior consulting advisor in the financial industry at Analysys, said that since the second half of last year, licensed consumer finance companies have frequently reported good news regarding approvals to carry out businesses such as ABS and financial bond issuance. The main purpose is to optimize their financing structure through multiple measures and strengthen the institutions’ capital strength.

“As competition among consumer finance institutions today is more reflected in overall capabilities, including the diversification and costs of the funding side, as well as risk control and compliance operation capabilities,” said Wang Pengbo, a senior analyst at Bocom Consulting.

According to the reporter’s incomplete statistics, among the 30 consumer finance companies that have already commenced operations, 21 have been approved for interbank borrowing, 8 have been approved for financial bond issuance qualification, and 14 have been approved for ABS issuance qualification. Financing channels have become increasingly diversified.

(Editor: Liu Haimei)

Report