The long rumored transfer of equity of Jiexin Consumer Finance Co., Ltd. (hereinafter referred to as "Jiexin Consumer Finance") has finally settled.
On December 20th, Tianjin Bank (01578. HK), a Hong Kong listed company, announced that it will jointly participate in the restructuring of Jiexin Consumer Finance with Guangdong Jingdong Trading Co., Ltd. (hereinafter referred to as "Jingdong Trading"), Online Banking Online (Beijing) Business Services Co., Ltd. (hereinafter referred to as "Online Banking Online"), China Foreign Economic and Trade Trust Co., Ltd., Tianjin Economic Development Zone State owned Assets Management Co., Ltd., and others.
It is worth noting that Jingdong Trading and Online Banking are both affiliated companies of JD Group. They will contribute 2.5 billion yuan and 750 million yuan respectively, holding a total of 65% of the shares of Jiexin Consumer Finance, while the original shareholder Home Credit N.V's shareholding will be reduced to 2%.
JD.com replied to a reporter from China Business News that under the guidance of the Tianjin Municipal Government and relevant regulatory agencies, JD.com will participate in the restructuring of Jiexin Consumer Finance in an orderly manner with China Foreign Economic and Trade Trust Co., Ltd. (hereinafter referred to as "Foreign Trade Trust"), Tianjin Economic and Technological Development Zone State owned Assets Management Co., Ltd., Tianjin Bank, and Home Credit N.V (Jiexin Group).
In fact, there have been constant rumors in the industry about the parent company of Jiexin Consumer Finance looking for a successor to its equity. Ultimately, it ended up with JD.com. What breakthroughs can it bring to its consumer finance business?
Former industry giants' falling behind '
Today's "selling" Jiexin Consumer Finance used to rank among the top in the industry.
Jiexin Consumer Finance was established in 2010 with a registered capital of 7 billion yuan. Jiexin Group fully controls Jiexin Consumer Finance. It is one of the first four pilot consumer finance companies approved by the former China Banking Regulatory Commission.
In 2017, the net profit of Jiexin Consumer Finance exceeded 1 billion yuan; In 2018, Jiexin Consumer Finance ranked first in the industry with a net profit of 1.398 billion yuan; As of the end of 2019, the total assets of Jiexin Consumer Finance reached 104.5 billion yuan, becoming the first consumer finance company in the industry to exceed 100 billion yuan in asset size.
2020 was an important turning point, as Jiexin Consumer Finance achieved a revenue of 11.238 billion yuan, a year-on-year decrease of 34.08%. As of the end of 2020, the asset size of Jiexin Consumer Finance was 65.207 billion yuan, a year-on-year decrease of 37.62%; Net profit was 136 million yuan, a year-on-year decrease of 88%. Horizontally comparing the top ranked companies in the industry, China Merchants Union Consumer Finance Co., Ltd., China Merchants Bank Consumer Finance Co., Ltd., and China Merchants Bank Consumer Finance Co., Ltd., their net profits for the same year were 1.663 billion yuan, 712 million yuan, and 1.35 billion yuan, respectively.
After 2020, Jiexin Consumer Finance will no longer disclose its financial reports separately to the public. However, according to the disclosure of PPF Group, the parent company of Jiexin Consumer Finance, Jiexin Group, the total revenue of PPF Group in China in the first half of 2023 was 61 million euros, a year-on-year decrease of 75%; The total net interest income was 13 million euros, a year-on-year decrease of 89.9%.
In October 2023, Jiexin Group pledged its 4.69 billion yuan stake in Jiexin Consumer Finance to Foreign Trade Trust. On January 25th of this year, the remaining 2.31 billion yuan equity of Jiexin Consumer Finance was pledged to Tianjin Bank.
Foreign Trade Trust and Tianjin Bank also appeared among the investors in this round. According to the announcement, Foreign Trade Trust contributed 600 million yuan and holds a 12% stake; Tianjin Economic and Technological Development Zone State owned Assets Management Co., Ltd. invested 550 million yuan and holds 11% of the shares; Tianjin Bank invested 500 million yuan and holds a 10% stake.
Test JD's integration capability
Although JD started consumer finance business earlier among Internet platform companies, it mainly relied on small loan licenses to develop its business.
With the increasingly strict supervision of online small loans, in recent years, JD.com has successively cancelled and exited its small loan companies in many places. Currently, it only relies on the online small loan license of Chongqing JD Shengji Small Loan Co., Ltd. as a carrier for the development of consumer finance business. According to business information, the registered capital of this license has reached 8 billion yuan, but compared to consumer finance licenses, its weakness in leverage ratio is obvious.
A consumer finance company insider stated that currently, the asset quality of Jiexin Consumer Finance and JD's future integration capabilities are the focus of industry attention.
According to the year-end data of 2020, the proportion of overdue loans of Jiexin Consumer Finance reached 21.87%; From 2017 to 2019, the proportion of overdue loans of Jiexin Consumer Finance was 16%, 21%, and 16% respectively.
The aforementioned individuals stated that China's consumer finance industry is still in a pattern of continuous standardization, declining interest rates, ongoing digitization, and increasing competition. Although some market participants have already occupied a certain market share, the development space of the entire industry is still huge, especially with the development of technology and the diversification of consumer demand. New entrants still have the opportunity to gain market share through innovation and differentiated competition. Therefore, from this perspective, it is not too late to enter the game now.
However, in addition to the asset quality of Jiexin Consumer Finance itself, the non-performing loans of other consumer finance companies have begun to rise, which has put higher demands on JD's risk control, "the person added.
Wang Peng, Associate Researcher at the Beijing Academy of Social Sciences, stated that the advantages of JD's entry into consumer finance lie in its technology, scene, and brand influence. However, it also faces challenges such as fierce market competition, optimization of risk control models, and strict compliance requirements. We need to continuously innovate service models, optimize risk control systems, and ensure compliant business development.
Wang Pengbo, Chief Analyst of the Financial Industry at Broadcom Consulting, believes that JD.com has a wide range of financial products and has accumulated many years of experience in this area. In addition, JD.com covers numerous consumer categories and rich consumer scenarios, and its own supply chain system is also relatively sound. These are all good foundations for doing consumer finance. Moreover, Jiexin Consumer Finance has accumulated many years of offline experience, and although its performance has declined in recent years, it is also a good lever for JD.com to develop offline business.
Wang Pengbo also pointed out that at the same time, it must be noted that the competition in the consumer finance market is fierce. In addition to traditional commercial banks and consumer finance companies, many Internet enterprises have set foot in this field. JD still faces strong competition. In addition, after JD participates in the restructuring of Jiexin Consumer Finance, it needs to integrate and collaborate with the original team, business, systems, etc. of Jiexin Consumer Finance, which are all issues that must be noted in the future.