Lufax results show she emerged from peer-to-peer lending unscathed


Lufax Holding Ltd. appears to have come out unscathed from its decision to exit the scandal-prone and heavy-regulatory peer lending business as it posted healthy fourth quarter earnings growth.

The fintech player, backed by financial conglomerate Ping An Insurance (Group) Co. of China Ltd., focused on wealth management after choosing to leave the peer-to-peer lending arena ( P2P) struggling in 2019 and issued no new P2P loans in 2020, according to company statements.

Fourth-quarter net profit rose 17.4 percent year-on-year to about 2.8 billion yuan ($ 433 million), Lufax reported in its first Tuesday. report as a listed company.

In contrast, net profits for the year 2020 declined to about 12.3 billion yuan, from 13.3 billion yuan in 2019, according to the report.

Created by Ping An Group in 2011 as a P2P lending platform, Lufax has become one of the biggest players in the sector.

But a series of industry scandals that left millions of investors with heavy losses have sparked a repression by financial regulators. The toughening of the regulatory environment and Lufax’s decision to end P2P activity and reinvent itself have delayed its plan to Go in public in Hong Kong.

Since withdrawing from the P2P market, Lufax has grown into one of the largest wealth management companies in China.

Capitalizing on this success, he started to negotiate on October 30 on the New York Stock Exchange, raising about $ 2.4 billion and closing a nearly three-year marathon to achieve an overseas listing that began in 2017.

Lufax said total customer assets reached 426.6 billion yuan at the end of last year, an increase of 23% from the end of 2019. At the end of last year, “Legacy products” – services mainly derived from Lufax’s peer-to-peer activity that it historically offered but no longer marketed – represented 4.5% of total customer assets, up from 29.8% at the end of 2019, according to the quarterly report.

Lufax has experienced steady growth in its wealth management business. In the fourth quarter, its wealth management service and transaction fees increased 20.3% year-on-year. This increase is primarily due to the year-over-year increase in fees generated by its current products, partially offset by the year-over-year decrease in fees generated by existing products, he said.

P2P platforms were supposed to serve primarily as an intermediary, connecting individuals with money to lend with borrowers who have limited access to bank loans. However, the lack of effective oversight and the high returns promised by some platforms fueled a lending boom in China that attracted both speculators and borrowers without too much money to repay their debts.

The country’s four-year crackdown on the once-booming P2P sector has led to a dramatic contraction in the industry, as survivors the operators are out (link in Chinese) the company at the end of last year.

Read more
In detail: Is China’s booming P2P sector facing a dead end?

Ji Guangheng, President of Lufax, said in his report, “With our advanced technological capabilities, sophisticated management know-how, strong pricing power and versatile risk mitigation expertise, we complete our business transition smoothly and maintain regulatory compliance at the same time. ”

At the end of last year, outstanding loans processed on Lufax’s platforms stood at 545.1 billion yuan, an increase of 17.9% from levels at the end of 2019, according to the report. .

The report also revealed a management reshuffle. Li Renjie, who has been chairman since March 2016, has retired and Ji, who was previously co-chairman, will assume the exclusive chairmanship of the board. Meanwhile, Yong Suk Cho and Gregory Dean Gibb have been appointed co-CEOs, with Cho in charge of the company’s retail credit facilitation activities and Gibb in charge of wealth management, according to the report.

Tang Ziyi and Luo Meihan contributed to this report.

Contact reporter Timmy Shen ([email protected])

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