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 on 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 (ABS). The issuance size is 500 million yuan, including 365 million yuan for the senior tranche and 135 million yuan for the subordinated tranche.

This issuance report also disclosed the delinquency rate data of Jinmeixin Consumer Finance in recent years. In the past three years (2019, 2020, 2021) and at the end of the first tranche (2022 Q1), its delinquency rate (calculated based on overdue 60 days) was 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

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

The first ABS plans to raise 500 million yuan

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

The reporter noted that this is Jinmeixin Consumer Finance’s first time financing through issuing ABS. All of the underlying assets in the ABS pool are offline large-ticket consumer loan products. The ABS pool consists of 7,179 loans, with an outstanding principal balance of 500 million yuan. The average outstanding principal balance per borrower is 69.7 thousand yuan. Loan purposes include home renovation, home appliances, furniture appliances, phones and consumer electronics, education, travel, weddings, and so on.

Consumer finance companies face certain thresholds when issuing ABS. According to regulatory requirements, licensed consumer finance companies need approval from the CBIRC (China Banking and Insurance Regulatory Commission) departments to issue ABS, and must meet conditions such as a capital adequacy ratio not lower than the minimum required 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 lacks only one item: financial bonds. In September last year, it successfully completed its first single two-year pure Sino-foreign bank syndicated loan, with a total fundraising amount of 400 million yuan and a term of two years. In June this year, through the existing shareholders increasing registered capital in cash on a pro-rata basis, 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 its “small but excellent” positioning. As of December 31, 2021, its operating net income was 312 million yuan, up 30%; net profit was 69.2986 million yuan, up 18.3%. By the end of 2021, total assets were 69.7k yuan and total liabilities were 3.92 billion yuan.

However, the reporter also noticed that in recent years, its delinquency rate has kept climbing year after year. The issuance report shows that over the past three years (2019, 2020, 2021) and at the end of the first tranche (2022 Q1), Jinmeixin Consumer Finance’s 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 based on overdue 60 days) was 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

In the course of expanding its business, Jinmeixin Consumer Finance also exposed many risks. Last year, it was penalized by the CBIRC Xiamen Regulatory Bureau with a fine of 4.29M yuan due to illegal and违规 facts including defects in its credit management system mechanisms and failure in loan management duties leading to some loan funds being misappropriated. This is also the largest penalty fine in the consumer finance (消金) industry in terms of amount since this year.

Licensed consumer finance speeds up financing to replenish capital

Since this year, multiple consumer finance companies have raised funds through diversified channels such as asset securitization, syndicated loans, and financial bond issuance. Overall, in the first three quarters, licensed consumer finance institutions have planned to complete capital replenishment of more than 2.9M yuan. In terms of ABS, only Manjucai Consumer Finance (马上消费金融) alone, the total ABS issued so far this year has already exceeded 5 billion yuan.

Su Xiaorui, a senior consulting advisor for the financial industry at iFinD, said that since the second half of last year, licensed consumer finance companies have had frequent good news in obtaining approvals to carry out ABS and financial bond issuance businesses. The main purpose is to optimize their financing structure through multiple measures and to strengthen the institution’s capital strength.

“Now, competition among consumer finance institutions is reflected more in comprehensive capabilities, including diversification and cost on the funding side, as well as risk control and compliance business operation capabilities,” said Wang Pengbo, a senior analyst at Bontong Consulting.

According to an incomplete count by the reporter, among the 30 consumer finance companies that have already commenced operations, 21 have obtained approval for interbank borrowing (同业拆借) qualification, 8 have obtained approval for issuing financial bonds, and 14 have obtained approval for issuing ABS. Financing channels are becoming increasingly diversified.

(Editor: Liu Haimei)

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