During the Year, the Group’s total income increased by 41.2% to RMB3,864.4 million, underpinned by the Group’s strategy to shift completely to a pure online consumer finance platform while transitioning to a more balanced funding split between direct lending, trust lending and loan facilitation. 40.4% new registered users increased during the Year. The Group’s highly automated and intelligent credit and risk management and transaction processing systems allow the Group to market products which gain popular acceptance by the market. Loan facilitation service fees surged 362.3% to RMB1,247.4 million. Net profit increased to RMB64.8 million. Adjusted net profit increased by 24.5% to RMB368.2 million.
In 2019, the number of loan transactions received by the Group increased by 71.7% to RMB 3,833.2 thousands. The amount of loans also increased by 62.6% to RMB33.75 billion. The Group’s newly established customer acquisition algorithm has further bolstered its customer reachability, while the credit card balance transfer products and consumption credit products are both purely originated and assessed online through an automated process utilizing its proprietary Hummingbird system. The Group applied its own advanced fintech technology to online consumer finance business, to further boost its nationwide recognition and gain market share.
The Group has successfully transformed into a pure online consumer finance service provider, and it overcame numerous difficulties by leveraging on its leading industry fintech capabilities. 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.
The Year saw a significant tightening-up of the regulatory framework of China’s consumer finance industry, raising the qualification requirements and codes of conduct of industry participants that are becoming almost exclusively funded by licensed financial institutions. The Group’s long-standing track record of working with licensed financial institutions enables it to maintain a high standard of business setup that can withstand regulatory changes and challenges. During the Year, in order to expand its consumer finance ecosystem, the Group has successfully established mutually beneficial cooperation with 15 new institutional funding partners with diversified backgrounds, including commercial banks, consumer finance companies and trusts. With its institutional funding partners, which now number 45 and are expected to grow, the Group aims to leverage its stable funding sources to better serve its customers. Moreover, the Group has cooperated with third-party guarantee companies and has begun to establish strategic cooperation with asset management companies, which offered added flexibility and protection to its institutional funding partners.
The Group’s fintech strength has been further upgraded during the Year. Through the collaborations for joint modeling with leading Chinese internet companies, a new comprehensive scorecard was successfully constructed which can effectively enable the Group to differentiate risk between new and repeat borrowers, thereby enhancing its risk underwriting ability vis-a-vis prospective borrowers. For example, the Group has been working closely with Beijing Baidu Wangxun Technology Co., Ltd. (“Baidu”) in developing big data incorporated borrowers’ credit scores which assist the Group in making credit decisions. These scores have the potential to be commercially licensed to other financial institutions and third parties to the financial benefit of the Company and Baidu, respectively. In June 2019, the Group has established a subsidiary, Chengdu Vcredit Jiaozi Digital Technology Co., Ltd. (“Vcredit Jiaozi”) in Chengdu, which was jointly invested in by Chengdu Financial DreamWorks Investment Management Co., Ltd. Chengdu Vcredit Jiaozi was designed to provide one-stop risk management solutions for data collection, third-party data integration, machine learning, business intelligence analytics and model building to equip traditional financial institutions with more comprehensive and intelligent risk prevention capabilities.
In 2019, the cooperation between the Group and China Telecom Co., Ltd. (“China Telecom”) has continuously strengthened. Through the collaboration with China Telecom, the Group offered products to help China Telecom customers purchase mobile phones with its financing. During the Year, the Group offered credit lines to more than 1.5 million China Telecom customers from 230 different cities in China, with more than 60% of them eventually using the collaboration loan products accounting for a total loan volume of RMB873.2 million. At the same time, the Group has built a strategic relationship with China Mobile Communications Group Co., Ltd. (“China Mobile”) to develop installment loan products. In cooperation with China Mobile, the Group introduced China Foreign Economy and Trade Trust Co., Ltd. as the new funding partner and re-launched the collaborative products with China Mobile in December 2019.
In early 2020, the outbreak of novel coronavirus pneumonia (COVID-19) hit China, causing disruptions to business and economic activity. The Group will continue to monitor the development of the COVID-19 outbreak and market situation, assess the impact on its operations and taking measures to best protect its employees from being infected. Looking forward, the Group is committed to further build and expand its online consumer finance business to better serve its borrowers, funding partners and business partners, as well as to bring value to the shareholders. In the meantime, the Group will keep a foothold on fintech, to further develop its risk-based pricing and risk management capabilities. The internet finance industry is still in the period of survival of the fittest while the Group has successfully transformed into a pure online business platform and its business scale has grown steadily. Operational efficiency continues to improve. Furthermore, the Group will continue to invest proactively in fintech to strengthen its own business, provide customers with higher quality and enriched products.
About VCREDIT Holdings Limited (2003.HK)
VCREDIT Holdings Limited (“VCREDIT”) is a leading player in China’s consumer finance industry 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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