SHANGHAI, Aug. 21, 2024 /PRNewswire/ -- Lufax Holding Ltd ("Lufax" or the "Company") (NYSE:LU), a leading financial services enabler for small business owners in China, today announced its unaudited financial results for the second quarter ended June 30, 2024.
Second Quarter 2024 & First Half 2024 Financial Highlights
Total income was RMB5,976 million (US$822 million) in the second quarter of 2024, compared to RMB9,270 million in the same period of 2023.
Net loss was RMB730 million (US$100 million) in the second quarter of 2024, compared to net profit of RMB1,004 million in the same period of 2023.
(In millions except percentages, unaudited)
Three Months Ended June 30,
2023
2024
YoY
RMB
RMB
USD
Total income
9,270
5,976
822
(35.5 %)
Total expenses
(7,957)
(6,341)
(873)
(20.3 %)
Total expenses excluding creditimpairment losses, finance costs andother (gains)/losses
(4,954)
(3,485)
(480)
(29.7 %)
Credit impairment losses, finance costs and other (gains)/losses
(3,003)
(2,856)
(393)
(4.9 %)
Net profit/(loss)
1,004
(730)
(100)
(172.7 %)
(In millions except percentages, unaudited)
Six Months Ended June 30,
2023
2024
YoY
RMB
RMB
USD
Total income
19,348
12,940
1,781
(33.1 %)
Total expenses
(16,920)
(12,857)
(1,769)
(24.0 %)
Total expenses excluding creditimpairment losses, finance costs andother (gains)/losses
(10,639)
(7,065)
(972)
(33.6 %)
Credit impairment losses, finance costs and other (gains)/losses
(6,281)
(5,792)
(797)
(7.8 %)
Net profit
1,736
(1,560)
(215)
(189.9 %)
Second Quarter 2024 Operational Highlights
Total outstanding balance of loans was RMB235.2 billion as of June 30, 2024 compared to RMB426.4 billion as of June 30, 2023, representing a decrease of 44.8%, among which the outstanding balance of consumer finance loans was RMB42.0 billion as of June 30, 2024, compared to RMB32.8 billion as of June 30, 2023, representing an increase of 27.9%.
Total new loans enabled were RMB45.2 billion in the second quarter of 2024, compared to RMB53.5 billion in the same period of 2023, representing a decrease of 15.5%, among which new consumer finance loans were RMB22.1 billion in the second quarter of 2024, compared to RMB17.9 billion in the same period of 2023, representing an increase of 23.6%.
Cumulative number of borrowers increased by 17.4% to approximately 23.2 million as of June 30, 2024 from approximately 19.7 million as of June 30, 2023.
As of June 30, 2024, including the consumer finance subsidiary, the Company bore risk on 56.7% of its outstanding balance, up from 27.5% as of June 30, 2023. Credit enhancement partners bore risk on the other 42.2% of the outstanding balance, among which Ping An Property & Casualty Insurance Company of China, Ltd. accounted for a majority.
As of June 30, 2024, excluding the consumer finance subsidiary, the Company bore risk on 49.9% of its outstanding balance, up from 22.4% as of June 30, 2023.
For the second quarter of 2024, the Company's retail credit enablement business take rate[1] based on loan balance was 9.3%, as compared to 7.0% for the second quarter of 2023.
C-M3 flow rate[2] for the total loans the Company had enabled, excluding the consumer finance subsidiary, was 0.9% in the second quarter of 2024, compared to 1.0% in the first quarter of 2024. Flow rates for the general unsecured loans and secured loans the Company had enabled were 0.9% and 0.7% respectively in the second quarter of 2024, as compared to 1.0% and 0.7% respectively in the first quarter of 2024.
Days past due ("DPD") 30+ delinquency rate[3] for the total loans the Company had enabled, excluding the consumer finance subsidiary, was 5.4% as of June 30, 2024, as compared to 6.6% as of March 31, 2024. DPD 30+ delinquency rate for general unsecured loans was 5.8% as of June 30, 2024, as compared to 7.4% as of March 31, 2024. DPD 30+ delinquency rate for secured loans was 4.1% as of June 30, 2024, as compared to 4.5% as of March 31, 2024.
DPD 90+ delinquency rate[4] for total loans enabled, excluding the consumer finance subsidiary, was 3.4% as of June 30, 2024, as compared to 4.4% as of March 31, 2024. DPD 90+ delinquency rate for general unsecured loans was 3.7% as of June 30, 2024, as compared to 5.0% as of March 31, 2024. DPD 90+ delinquency rate for secured loans was 2.5% as of June 30, 2024, as compared to 2.6% as of March 31, 2024.
As of June 30, 2024, the non-performing loan (NPL) ratio[5] for consumer finance loans was 1.4% as compared to 1.6% as of March 31, 2024.
Mr. YongSuk Cho, Chairman and Chief Executive Officer of Lufax, commented, "During the second quarter, our focus on quality over quantity yielded notable improvements of asset quality across both our Puhui and consumer finance portfolios. Loan quality trended higher within both segments, demonstrating the efficacy of our strategic approach. As our Puhui loan balance increasingly represents loans enabled under the 100% guarantee model, we anticipate the ongoing shift will drive further enhancements to our take rate going forward. Furthermore, as we continue to execute our strategy of obtaining and utilizing strong licenses to bolster our business, we expect our licenses will help us improve our funding costs, product diversity, and capital management efficiency. Looking ahead, we will seek to deepen our synergies with Ping An Group, leveraging their brand reputation, technological resources, and extensive network to strengthen our market position. These initiatives, combined with our direct sales force and ongoing emphasis on operational caution, uniquely position us to support China's small and micro enterprise economy. We are encouraged by our progress to date, and remain committed to drive persistent, high-quality growth for our customers and our shareholders."
Mr. Gregory Gibb, Co-Chief Executive Officer of Lufax, commented, "Our ongoing emphasis on operational refinements helped us strengthen our business during the second quarter. Our disciplined approach to credit standards led to enhancements in asset quality, with the C-M3 flow rate of Puhui loans improving to 0.9% and the NPL ratio for consumer finance loans decreasing to 1.4%. Meanwhile, the implementation of our 100% guarantee model for Puhui loans has positively impacted the take rate on our outstanding balance, which reached 9.3% this quarter. Our consumer finance segment also continued to grow, with a 23.6% year-over-year increase in new loan sales, representing 49% of total new loan sales in the quarter. Our prudent approach and ongoing operational refinements will be key as we pursue sustainable future growth."
Mr. Alston Peiqing Zhu, Chief Financial Officer of Lufax, commented, "During the second quarter, our leverage remained low, and our two main operating entities have maintained their strong capital positions. Our guarantee subsidiary's leverage ratio is stable at 2.4x, still comfortably below the 10x regulatory limit. At the same time, our consumer finance company has a healthy 14.7% capital adequacy ratio, surpassing the 10.5% regulatory requirement. Amidst a complex economic environment, we are seeing positive trends in asset quality and notable growth in consumer finance. We remain steadfast in our disciplined approach, aiming to construct a resilient platform for enduring success and shareholder value creation."
Second Quarter 2024 & First Half 2024 Financial Results
TOTAL INCOME
Total income was RMB5,976 million (US$822 million) in the second quarter of 2024, compared to RMB9,270 million in the same period of 2023, representing a decrease of 36%.
Three Months Ended June 30,
(In millions except percentages,unaudited)
2023
2024
YoY
RMB
% of income
RMB
% of income
Technology platform-based income
4,076
44.0 %
1,999
33.4 %
(51.0 %)
Net interest income
3,367
36.3 %
2,716
45.4 %
(19.3 %)
Guarantee income
1,149
12.4 %
850
14.2 %
(26.0 %)
Other income
310
3.3 %
318
5.3 %
2.4 %
Investment income
370
4.0 %
94
1.6 %
(74.6 %)
Share of net profits of investments accounted for using the equity method
(1)
(0.0 %)
-
-
100.0 %
Total income
9,270
100.0 %
5,976
100.0 %
(35.5 %)
Six Months Ended June 30,
(In millions except percentages, unaudited)
2023
2024
YoY
RMB
% of income
RMB
% of income
Technology platform-based income
9,086
47.0 %
4,552
35.2 %
(49.9 %)
Net interest income
6,716
34.7 %
5,561
43.0 %
(17.2 %)
Guarantee income
2,565
13.3 %
1,775
13.7 %
(30.8 %)
Other income
538
2.8 %
637
4.9 %
18.4 %
Investment income
445
2.3 %
416
3.2 %
(6.6 %)
Share of net profits of investments accounted for using the equity method
(2)
(0.0 %)
(1)
(0.0 %)
56.5 %
Total income
19,348
100.0 %
12,940
100.0 %
(33.1 %)
Technology platform-based income was RMB1,999 million (US$275 million) in the second quarter of 2024, compared to RMB4,076 million in the same period of 2023, representing a decrease of 51.0%, due to 1) the decrease of retail credit service fees due to the decrease in loan balance and 2) the decrease of referral and other technology platform-based income due to the Company's exit from the Lujintong[6] business that it had previously conducted.
Net interest income was RMB2,716 million (US$374 million) in the second quarter of 2024, compared to RMB3,367 million in the same period of 2023, representing a decrease of 19.3%, mainly due to the decrease in loan balance, partially offset by the increase of net interest income from the Company's consumer finance business.
Guarantee income was RMB850 million (US$117 million) in the second quarter of 2024, compared to RMB1,149 million in the same period of 2023, representing a decrease of 26.0%, primarily due to the decrease in loan balance and a lower average fee rate.
Other income was RMB318 million (US$44 million) in the second quarter of 2024, compared to other income of RMB310 million in the same period of 2023. The increase was mainly due to the increased account management fees driven by improved collection performance.
Investment income was RMB94 million (US$13 million) in the second quarter of 2024, compared to RMB370 million in the same period of 2023, mainly due to the increased losses associated with certain investment assets.
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[1] The take rate of retail credit enablement business is calculated by dividing the aggregated amount of loan enablement service fees, post-origination service fees, net interest income (excluding revenue from PAObank and LUAN credit subsidiaries), guarantee income and the penalty fees and account management fees by the average outstanding balance of loans enabled for each period.
[2] C-M3 flow rate estimates the percentage of current loans that will become non-performing at the end of three months, and is defined as the product of (i) the loan balance that is overdue from 1 to 29 days as a percentage of the total current loan balance of the previous month, (ii) the loan balance that is overdue from 30 to 59 days as a percentage of the loan balance that was overdue from 1 to 29 days in the previous month, and (iii) the loan balance that is overdue from 60 to 89 days as a percentage of the loan balance that was overdue from 30 days to 59 days in the previous month. Loans from legacy products and consumer finance subsidiary are excluded from the flow rate calculation.
[3] DPD 30+ delinquency rate refers to the outstanding balance of loans for which any payment is 30 to 179 calendar days past due divided by the outstanding balance of loans. Loans from legacy products and consumer finance subsidiary are excluded from the calculation.
