Ping An's ending balance as of the end of last year was 3.5 billion yuan.
Zheng Xigui also disclosed that the consumer finance license was obtained in April last year and opened in May last year. By the end of 65438+February last year, more than 200,000 new customers had been added, and the ending balance was about 3.5 billion yuan. According to Financial Tiger, this is the first time that Ping An Consumer Finance has disclosed its operation since its opening. Lufax relies on three companies to control 70% equity of Ping An Xiaojin. Previously, the prospectus disclosed that Ping An Consumer Currency and Ping An Pratt & Whitney were both listed in lufax.
Zheng Xigui said: "We have made a good start. This is a supplementary business for young borrowers and consumer borrowers. I believe this is an opportunity for us, and then this can be a new benchmark for our progress. " .
Regarding issues related to consumer finance licenses, Zheng Xigui also revealed that this is very different from its traditional business. The credit line does not exceed 200,000, but is actually controlled below 50,000. He pointed out that the size of borrowers is less than RMB 20,000 per borrower, the average price is very low, and the interest rate is lower than 17%.
When answering the analyst's question, Zheng Xigui emphasized: "It is a credit line product. Just like a virtual credit card. So customers can choose to pay whenever they want, and then repay the service-sorry, they can use it for 3 months, 6 months or the next 12 months, and then 24 months. " .
Internet deposit business accounts for 16% of total assets.
When talking about the suspended Internet deposit business, Gregory D Gibb disclosed that by the end of last year, the Internet deposit business accounted for about 16% of the total assets, or 660 billion yuan, which meant that the income generated by this business was less than 0.4% of the company's total income. He stressed that he would try to transfer customers' money from these products to other areas on the platform, just as he did in P2P in the past. This will be a continuous change.
Gregory D Gibb pointed out that this will enable it to continue to meet the revenue expectations of this business. But when optimizing the portfolio, the accelerator on the client's assets will be turned off a little. So this is the focus in the near future, but it will be updated if the situation changes. Regarding the acceptance rate, it did achieve a very strong growth in the fourth quarter before some changes such as deposits took effect. (Kevin)
The following is a summary of the analyst's Q&A session:
Elsie Cheng, an analyst at Goldman Sachs: I have two questions. The first is the revolving loan interest rate. We must understand that in this environment, our target customers are high-quality customers with different interest rates. However, considering that the applicability of the four-fold LPR limit has been clarified recently, we just want to know, since we may have more flexibility in interest rates and target customer groups, can we expect the revolving loan interest rate to rise? The second question is about guidance. If my calculation is correct, our new loan sales in the first half of 20021will increase steadily at the rate of 2 1%. So, can management share more colors in the main drivers of growth? Can we really push this growth momentum to the second half of the year?
Zheng Xigui: Let me explain the first question. In the fourth quarter of last year, in our new loans, the unit economic income was very small. Because we reduced the borrowing cost, the loan interest rate and profit rate were reduced. However, the financing cost, CGI premium and our procurement cost did not decrease immediately, and the new loans in the fourth quarter did not decrease, accounting for about 25% of the loan balance at the end of 2020.
This is the reason why interest rates fell in the fourth quarter of last year. Compared with 20 19, we have more trust funds and guarantees. This is because of other reasons. But if you look at the data of 2002 11or last month, we have achieved a record sales of new loans this year1,and the sales of new loans in one month are almost 100 billion RMB.
We can see that the financing cost, CGI premium and borrower cost have all dropped significantly. So the interest rate and profit rate are in line with our previous expectations. So in general, this will return to the overall interest rate and net profit rate in 2020, and we believe this will continue. We are very confident about the whole year of 202 1, and the interest rate and net interest rate (inaudible) of our new RCF business will not change much.
The four-fold interest rate of the Supreme Court on LPR does not apply to financial lending institutions, including loan companies, customer financing and small companies. However, we believe that the overall guideline remains unchanged at 24%. Therefore, we don't have any plans to adjust the price.
Then, according to the results of financing cost, credit cost reduction and operating cost optimization, gradually and slowly reduce the borrowing cost, and become more affordable and competitive in this weak trading market, while maintaining the current interest rate and net profit rate. So at present, we don't have any plans to reduce prices throughout the year. But looking ahead, in the long run, we still plan to significantly reduce the cost of borrowing. This is the answer to the first question.
The second question is, yes, our sales have increased. As I mentioned just now, our sales in June this year of 5438+ 10 are almost close to 1000 billion RMB, which is a very strong sales momentum. Looking into the future, we believe that the sales volume will increase, the market demand will be sufficient, and then the productivity of our sales team will increase. Obviously, compared with last year, we achieved an annual sales growth of 14.4% without increasing sales staff. Therefore, we will focus on increasing profits. At the same time, with the appreciation of artificial intelligence, for example, we are trying to acquire and develop new access channels.
But at the same time, because of the interest rate market in China, our experience is that we haven't seen other online channels that can provide us with high-quality borrowers like offline channels. So during this period, our offline sales will continue to contribute about 85%. But in the future, we are planning to develop more self-acquisition channels.
May Yan, UBS analyst: My first question is related to regulation. This problem is related to the credit rating business. Some people think that this may apply to loan facilitation businesses and loan facilitation companies. So, do you need a credit rating license? Does this have anything to do with Jin Lu? The second question is the adoption rate. As far as I know, the interest rate may have dropped temporarily. In the fourth quarter, pre-tax net profit accounted for 3. 1%, and revenue accounted for 9. 1%, but it was lower than previously expected. This year you said that you would gradually return to the net interest rate of 3.4% to 3.5% to 4%. So what should we do? What is the latest CGI cost you mentioned? 6.7% in the fourth quarter, and the financing cost of partners? Our loan scale and new loan interest rate are below 24%. Are they much larger in size than before? I remember, in the third quarter, you mentioned that each loan was about 200 thousand? Is it higher than now? Are there any guidelines to increase the credit risk exposure from 20% to a higher level, which may reach about 30%?
Ji Guangheng: As far as credit scoring business is concerned, we think the current guidelines are quite early and preliminary. At present, the business requirements and shareholder requirements of credit rating agencies are not clear. We really think that leading institutions (especially public institutions) may become targets and become part of the approval plan, which is why they do so. Of course, news suitable for special circumstances may be widely used in this industry in the future.
In the loan facilitation business, we don't think it is directly involved at present. We don't think our business will be classified as a credit rating agency at this stage. We are maintaining various dialogues with regulators. Therefore, if this happens in the future, please rest assured that we will get enough early warning so that we can plan and position our business in advance accordingly.
In a word, we think this is an early and preliminary stage. We need more specific requirements to respond. Therefore, it may take a quarter of time to clarify these rules.
Zheng Xigui: Actually, I think there are more problems. So the third question is the adoption rate in the fourth quarter, which is 9. 1%. I hope this is mainly due to the low adoption rate of new loans in the fourth quarter, and the deposit must reduce the high borrowing cost in September last year to below 24%, but this is the figure of 1 month. I believe these figures will change. Generally speaking, our interest rate and net profit rate have returned to our expected level. Generally speaking, it is not lower than the overall level in 2020.
So we are in good shape now. How did you do that? There are obvious borrowing and financing costs and CGI premiums. Our interest partner CGI premium also changed the charging method from the amount date-loan amount date to the balance date from mid-June 5438+10. Therefore, we adopt CGI premium rate, which also reduces the outsourcing cost of borrowers.
I started in January, and we reduced the sales commission by 15%. So we saved a lot of borrowers' acquisition costs. So our net profit rate has returned to the original level very well. As for the next question, the size of the share, we can't see any changes in recent months or months.
Before September 4th, our average scale was 654.38 yuan+6,000 yuan. If you still remember, since then, because we reduced the higher borrowing cost, we switched to a better quarter at a lower price from September 5, and the scale increased to 200,000 yuan, an increase of more than 20%, which is why we can reduce the sales commission by 654.38+0.5%. Finally, about our 20% sales guarantee share. By the end of 65438+February last year, the sales guarantee of our new loans had been raised to 13.6%, and in June, we also raised the sales guarantee of new loans to 20%, which was one of the contents we discussed with the regulatory authorities.
But over 20%, we have no plans at present. I can only say that the regulatory requirements exceed 20% and 30%, and we have enough organic cash flow to support additional and more sales guarantees. So we don't have to worry too much.
Winnie Wu, Bank of America Merrill Lynch analyst: I have two questions. First of all, about the regulations and our license. Since June last year 165438+ 10, the CBRC has issued a draft for soliciting opinions on the license of online microfinance companies. Have you started to communicate with the regulatory authorities about applying for a national business license? Do regulators have any feedback on the prospect of when we can get the national operating license? In addition, Jin Lu obtained a consumer finance license early last year. So, how is the use of consumer finance licenses progressing? How many businesses, whether loan facilities or outstanding balance, are completed through consumer finance licenses? What is the plan?
Secondly, the accounting differences between on-balance sheet and off-balance sheet. By the end of last year, there were more than 20% outstanding loans on your balance sheet. What's the plan? Do you think it will be further increased to 30% or 40%? Or will it stabilize at around 20%? In other words, the relevant question is when can we see the standardization or stability of accounting accounts such as income and expenses? When will this cardinal utility be standardized?
Zheng Xigui: The first question is about two licenses, the online microfinance license. We have three license plates in Chongqing, Hunan and Shenzhen, and there are three other network microfinance licenses in China. However, we have not been clarified and confirmed by the regulatory authorities for the next development of these businesses. These licenses are not currently in use.
Then there is the consumer finance license, which we got in April last year and started business in May last year. By the end of 65438+February last year, we had-we booked 6.5 billion euros, added about 200,000 customers, and the ending balance was about 3.5 billion yuan.
Therefore, we have a good start. This is a supplementary business for young borrowers and consumer borrowers. Therefore, we think this is an opportunity for us, and then it can be a new benchmark for our progress.
Whether the online balance sheet or the offline balance sheet depends on our capital portfolio, and I think it has stabilized. Looking ahead, our financing portfolio will remain stable, with 70% from cooperative banks and 30% from trust banks. I believe this portfolio will not change much. So, inside and outside the table, I think this combination has been very stable.
Winnie Wu, an analyst at Bank of America Merrill Lynch: So the ratio between fines and trust has stabilized. Are there any plans, for example, that the growth of consumer finance business may mean that you will have more self-funded loans? Will this change the status quo?
Zheng Xigui: Yes. This is correct. This is very correct. But if we consider our scale, our loan balance today is close to 600 billion yuan. But what is customer wealth management business? Only 3.5 billion yuan. So no matter how fast it grows, it will not account for a large part of our total loan balance sheet. So it will take some time.
Gregory D Gibb: I think it can be said that the stability of funds between banks and trusts on other balance sheets next year basically depends on our credit line, which is why I said our goal is to reach 20% by June. Therefore, with the passage of time, there will be more, but the overall stability.
Zheng Xigui: I think it is 25%.
Winnie Wu, Bank of America Merrill Lynch analyst: Yes. Therefore, for consumer finance licenses, it will be more restricted to do a very different business line, that is, unsecured consumer loans. What is the average quota there? What's the loan interest rate? Is this very different from our traditional business?
Zheng Xigui: Yes. This is quite different from our traditional business. If we take this as an example, it will not exceed 200,000, but it will actually be controlled below 50,000. The size of our borrowers is less than 20,000 yuan per borrower, and the average price is very low, and the interest rate is lower than 65,438+07%.
Winnie Wu, Bank of America Merrill Lynch analyst: How mature is it? Are these loans similar to short-term loans, that is, the term is only a few months?
Zheng Xigui: I don't know if it is very open. This is a credit line product. Just like a virtual credit card. So customers can choose to pay whenever they want and then repay the service-sorry, they can use it for 3 months, 6 months or the next 12 months and then 24 months.
Thomas Chong, Jefferies analyst: First of all, I have a question about wealth management. Can you provide us with the latest information on how we used technology in the automated portfolio strategy in the fourth quarter? On the other hand, I'm talking about online deposit. How much does it contribute to our customer portfolio? Then my second question is about the prospects for the second half of the year. Considering that we have the first quarter and the first half of the year, how should we consider the annual income and profit?
Gregory D Gibb: In terms of wealth management in the fourth quarter, we mainly did two things. Therefore, in the existing portfolio management tools, we continue to use more and more market data to provide customers with diversified investment strategies, which continued to make progress in the fourth quarter, just like last year. What we do is to open the platform for other financial consulting service providers to join in, basically providing more products and services to customers. Therefore, this is an area that continues to grow at a good speed, and we think it will become more important in the whole market. We will continue to promote more and more automation and share more and more content with customers in this industry so that they can adapt to diversified investments.
Regarding deposits, if we look at the total assets of customers at the end of last year, deposits account for about 16% of the total assets, which is 660 billion yuan, which means that the income generated by this business is less than 0.4% of the company's total income. So when we let these deposit products mature naturally, we will find ways to transfer customers' funds from these products to other areas on the platform, just as we did on P2P in the past. Therefore, this will be a continuous transition.
Hans Fan, CLSA analyst: I have two questions. The first is wealth management. Just mentioned the strong growth of AUM in the fourth quarter of last year. Look at the guidelines for the first quarter and the first half of this year and look at customer assets. In fact, the growth rate is slowing down. Therefore, I want to know why we are cautious about the asset prospects of wealth management customers. Also related to wealth management, we want to know why the acceptance rate of products actually decreases quarter by quarter. What is the reason behind this? The second question is, I want to know about the bonus. As far as we know, the management mentioned earlier that there is no short-term plan to pay any dividends at present. But I want to know, in the long run, once we have completed the capital, should we pay dividends to investors?
This will enable us to continue to meet the revenue expectations of this business. But when optimizing the portfolio, we will turn off the accelerator on the client's assets. So this is the focus in the near future, but if things change, we will update them. Regarding the acceptance rate, we did achieve very strong growth in the fourth quarter before some changes such as deposits took effect.
The growth in the fourth quarter is the combination of bank asset management products and bank deposits, so the denominator growth rate has accelerated. We reduced the acquisition rate a little, so it decreased by 5% month on month, but increased by 10% year on year. Therefore, when we look forward to 202 1 this year, we expect that we will continue to see an increase in the acquisition rate in the next three to four quarters. Because we promote product mixing on the platform.
Zhao Rongxuan: I tried to limit the interest rate ceiling to 15.4%. The Supreme Court suggested that quadruple LPR is not applicable to financial lending institutions, such as the United States or small companies, and CBI is 2%, so the mixed part is not important. As long as the total interest rate is lower than 24%, we think this is very in line with the requirements and there is no problem in the current loan environment.
The first question is about the cost assessment. The overall impact of interest rate is 202 1 unchanged. We have no plans to increase or decrease the cost of borrowing. Then referring to the figure of 1 month, I said that our profit margin and net interest rate have returned to the level of 2020. So in general, our profitability and net interest rate are in line with our previous expectations, and the interest rate will remain unchanged or slightly change, and 202 1 will not change much.
Gregory D Gibb: So, I think part of the problem may lie in the combination of service fees and other interest income, because we have also increased risk sharing or changed the risk sharing mode.
Zhao Rongxuan: Yes, in terms of our fee portfolio, we will increase the sales guarantee of new loans to 20% before the end of June. This will increase our cost mix. I think this will increase our guarantee part, and then the service fee, and they will reduce-quite reduce, and the service fee will increase.
Zheng Xigui: I can add one thing. As I explained in my part, the change of income mix is basically driven by two factors. One is the combination of online and off-balance-sheet changes, because you have seen the on-balance-sheet loans increase from 10% at the end of 20 19 to 22% in 2020. This is because we have more trust loans, right? This is a change. The second change is that we are taking more risks. The self-insurance risk increased from 2.2% at the end of 20 19 to 6.3%. Because of these two factors, it is changing the income structure, so you will see that the platform fee of revolving loan has decreased, but the interest income of guaranteed income has greatly increased. This is why at the beginning-in the middle, we discussed that the changes caused by these business factors are reflected in our financial data.