Jinmei Credit Finance to Issue First-Phase ABS to Raise 500 Million, Delinquency Rates Rise Year-on-Year Over Past Three Years

China Internet Finance, November 21 (Reporter An Ran, Zhu Ling) Recently, Jinmei Xin Consumer Finance announced the issuance of the first batch of 2022 personal consumer loan asset-backed securities (ABS), with an issuance scale of 500 million yuan, including 365 million yuan in the senior tranche and 135 million yuan in the subordinate tranche.

The issuance report also disclosed Jinmei Xin Consumer Finance’s non-performing loan (NPL) data in recent years. Over the past three years (2019, 2020, 2021) and at the end of the first quarter of 2022, its NPL ratios (calculated by overdue 60 days) were 0.20%, 1.04%, 1.46%, and 1.65%, respectively.

Regarding issues such as “rising non-performing rates year after year,” China Internet Finance contacted Jinmei Xin Consumer Finance for an interview. As of press time, no response has been received.

First Batch of ABS to Raise 500 Million Yuan

Jinmei Xin Consumer Finance was established in October 2018 with an initial registered capital of 500 million yuan. It is a consumer finance company jointly funded by Xiamen Jinyuan Financial Holdings Co., Ltd., Gome Holdings Group Co., Ltd., and China Trust Commercial Bank Co., Ltd.

Notably, this is Jinmei Xin Consumer Finance’s first time raising funds through ABS issuance. The assets pooled into this ABS are all offline large-scale consumer loans, totaling 7,179 loans with an outstanding principal balance of 500 million yuan. The average remaining principal per borrower is 69,700 yuan. The loans are used for renovation, home appliances, furniture, mobile phones and digital devices, education, travel, and wedding expenses.

Issuing ABS by consumer finance companies involves certain thresholds. According to regulatory requirements, licensed consumer finance companies need approval from the China Banking and Insurance Regulatory Commission (CBIRC) to issue ABS, and must meet conditions such as maintaining a minimum capital adequacy ratio and having three consecutive years of profitability. In March this year, Jinmei Xin Consumer Finance obtained approval from the Xiamen CBIRC bureau to issue ABS.

From a diversified financing perspective, Jinmei Xin Consumer Finance currently only lacks access to financial bonds. In September last year, it successfully secured its first two-year pure Taiwanese syndicated loan, raising 400 million yuan with a 2-year term. In June this year, it increased its registered capital from 500 million to 1 billion yuan through cash contributions from existing shareholders.

Non-Performing Rate Continues to Rise

Within the industry, Jinmei Xin Consumer Finance has been known as a “small but refined” company. As of December 31, 2021, its operating net income was 312 million yuan, a 30% increase year-over-year; net profit was 69.3 million yuan, up 18.3%. By the end of 2021, total assets reached 4.563 billion yuan, and total liabilities were 3.92 billion yuan.

However, the reporter also noted that its NPL ratio has been rising year after year. The issuance report shows that over the past three years (2019-2021) and at the end of Q1 2022, the non-performing loan balances were 4.287 million yuan, 30.1455 million yuan, 60.6633 million yuan, and 74.3213 million yuan, respectively. The NPL ratios (overdue 60 days) were 0.20%, 1.04%, 1.46%, and 1.65%.

During its business operations, Jinmei Xin Consumer Finance has also exposed various risks. Last year, it was fined 2.9 million yuan by the Xiamen CBIRC bureau for violations such as deficiencies in its credit management system and misappropriation of loan funds. This was the largest penalty in the consumer finance industry so far this year.

Licensed Consumer Finance Accelerates Financing to Reinforce Capital

Since the beginning of this year, multiple consumer finance companies have diversified their funding channels through asset securitization, syndicated loans, and financial bonds. Overall, in the first three quarters, licensed consumer finance institutions planned to raise over 100 billion yuan. Among them, only MaShang Consumer Finance issued more than 5 billion yuan in ABS this year.

Su Xiaorui, senior consulting analyst at Analysys, said that since the second half of last year, licensed consumer finance companies have frequently received approvals for issuing ABS and financial bonds, mainly aiming to optimize their financing structures and strengthen their capital bases.

“Today, competition among consumer finance institutions is increasingly about comprehensive capabilities, including diversified funding sources, cost control, risk management, and compliance operations,” said Wang Pengbo, senior analyst at Broadcom Consulting.

According to incomplete statistics by the reporter, among the 30 consumer finance companies currently operating, 21 have obtained interbank borrowing qualifications, 8 have approval to issue financial bonds, and 14 have approval to issue ABS, indicating that funding channels are becoming increasingly diversified.