SHANGHAI, April 23, 2024 /PRNewswire/ -- Lufax Holding Ltd ("Lufax" or the "Company") (NYSE: LU and HKEX: 6623), a leading financial services enabler for small business owners in China, today announced its unaudited financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial Highlights
(In millions except percentages, unaudited) |
Three Months Ended March 31, |
|||||
2023 |
2024 |
YoY |
||||
RMB |
RMB |
USD |
||||
Total income |
10,078 |
6,964 |
964 |
(30.9 %) |
||
Total expenses |
(8,964) |
(6,517) |
(903) |
(27.3 %) |
||
Total expenses excluding credit impairment losses, finance costs and |
(5,685) |
(3,580) |
(496) |
(37.0 %) |
||
Credit impairment losses, finance costs |
(3,278) |
(2,936) |
(407) |
(10.4 %) |
||
Net profit/(loss) |
732 |
(830) |
(115) |
(213.3 %) |
||
First Quarter 2024 Operational Highlights
Mr. YongSuk Cho, Chairman and Chief Executive Officer of Lufax, commented, "During the first quarter, we maintained our emphasis on quality over quantity as we continued to prioritize operational prudence and long-term stability. Following the completion of five major de-risking and diversification actions, including four mix changes and one business model adjustment, we witnessed some improvements in our early risk indicators. However, we maintained a patient approach to ensure that this success will be sustainable. We have strategically shifted our product mix from SBO loans to a more diverse approach which puts a greater emphasis on consumer finance products. Meanwhile, all new loans during the quarter were either granted by our consumer finance subsidiary or enabled by our guarantee company under our 100% guarantee model. This switch will have a positive impact on our take rate as it eases the burden of elevated CGI premiums, though the upfront provisioning of these loans means our bottom-line will take longer to recover. In terms of asset quality, the C-M3 flow rate for our Puhui business improved from the fourth quarter of 2023 to the first quarter of 2024. Having already witnessed preliminary enhancements to some key operating metrics, we believe that our strategic initiatives have created a solid foundation for ongoing success. We will remain vigilant, and plan to embrace a cautious approach to our operations for the foreseeable future."
Mr. Gregory Gibb, Co-Chief Executive Officer of Lufax, commented, "We began to feel the impact of our refined strategic initiatives during the first quarter of 2024. We witnessed the growth of our consumer finance business, with consumer finance loans accounting for 42% of new loan sales in the quarter, up from 24% in the same period last year. Consumer finance loans now comprise 14% of our total balance, an increase from both the year and quarter prior. We have also been growing the portion of loans under our 100% guarantee model, with 26% of Puhui's loan balance now enabled under this model. As of the end of the first quarter, our take rate stood at 9.0% as we built up this balance, and we expect it to rise further in the future through ongoing strategic execution. The improvement in the macro environment, removal of temporary negative impacts from our geographic and direct sales restructuring in the third quarter, and the vintage run off as we build up a new book helped improve our asset quality."
Mr. David Choy, Chief Financial Officer of Lufax, commented, "We remain committed to ongoing cost optimizations, as evidenced by the 37% year-over-year decrease in total expenses, excluding credit and asset impairment losses, finance costs, and other losses, and the 27% year-over-year decrease in our total expenses. Furthermore, our leverage level remains low, and both of our main operating entities are well-capitalized. Our guarantee subsidiary's leverage ratio increased to 2.4x, driven by the increase of our guarantee balance associated with our increased risk exposure and the decrease of net assets due to the distribution of dividends, compared to a maximum regulatory limit of 10x. Our consumer finance company's capital adequacy ratio stood at approximately 15.1%, exceeding the required 10.5% regulatory requirement. As of March 31, 2024, our cash at bank balance amounted to RMB39.4 billion."
[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, 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. [4] DPD 90+ delinquency rate refers to the outstanding balance of loans for which any payment is 90 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. [5] Non-performing loan ratio for consumer finance loans is calculated by using the outstanding balance of consumer finance loans for which any payment is 91 or more calendar days past due and not written off, and certain restructured loans, divided by the outstanding balance of consumer finance loans. |
First Quarter 2024 Financial Results
TOTAL INCOME
Total income was RMB6,964 million (US$964 million) in the first quarter of 2024, compared to RMB10,078 million in the same period of 2023, representing a decrease of 31%.
Three Months Ended March 31, |
|||||||
(In millions except percentages, |
2023 |
2024 |
YoY |
||||
RMB |
% of income |
RMB |
% of income |
||||
Technology platform-based income |
5,010 |
49.7 % |
2,553 |
36.7 % |
(49.0 %) |
||
Net interest income |
3,349 |
33.2 % |
2,845 |
40.9 % |
(15.0 %) |
||
Guarantee income |
1,417 |
14.1 % |
925 |
13.3 % |
(34.7 %) |
||
Other income |
227 |
2.3 % |
319 |
4.6 % |
40.3 % |
||
Investment income |
75 |
0.7 % |
322 |
4.6 % |
329.2 % |
||
Share of net profits of investments |
(0) |
(0.0 %) |
(1) |
(0.0 %) |
(58.5 %) |
||
Total income |
10,078 |
100.0 % |
6,964 |
100.0 % |
(30.9 %) |
||
TOTAL EXPENSES
Total expenses decreased by 27% to RMB6,517 million (US$903 million) in the first quarter of 2024 from RMB8,964 million in the same period of 2023. This decrease was mainly due to the decrease in sales and marketing expenses by 50% to RMB1,518 million (US$210 million) in the first quarter of 2024 from RMB3,030 million in the same period of 2023. Total expenses excluding credit impairment losses, finance costs and other (gains)/losses decreased by 37% to RMB3,580 million (US$496 million) in the first quarter of 2024 from RMB5,685 million in the same period of 2023.
Three Months Ended March 31, |
|||||||
(In millions except percentages, unaudited) |
2023 |
2024 |
YoY |
||||
RMB |
% of income |
RMB |
% of income |
||||
Sales and marketing expenses |
3,030 |
30.1 % |
1,518 |
21.8 % |
(49.9 %) |
||
General and administrative expenses |
756 |
7.5 % |
483 |
6.9 % |
(36.2 %) |
||
Operation and servicing expenses |
1,558 |
15.5 % |
1,327 |
19.1 % |
(14.8 %) |
||
Technology and analytics expenses |
341 |
3.4 % |
252 |
3.6 % |
(26.1 %) |
||
Credit impairment losses |
3,132 |
31.1 % |
2,861 |
41.1 % |
(8.6 %) |
||
Finance costs |
189 |
1.9 % |
58 |
0.8 % |
(69.2 %) |
||
Other (gains)/losses - net |
(42) |
(0.4 %) |
17 |
0.2 % |
(138.9 %) |
||
Total expenses |
8,964 |
88.9 % |
6,517 |
93.6 % |
(27.3 %) |
||
NET LOSS
Net loss was RMB830 million (US$115 million) in the first quarter of 2024, compared to a net profit of RMB732 million in the same period of 2023, as a result of the aforementioned factors and increased withholding tax of RMB1,050 million associated with one-off dividends that were paid by the Company's PRC subsidiaries in order to support the distribution of the special dividend the Company announced on March 21, 2024.
LOSS PER ADS
Basic and diluted loss per American Depositary Share ("ADS") were both RMB1.52 (US$0.21) in the first quarter of 2024. Each one ADS represents two ordinary shares.
BALANCE SHEET
The Company had RMB39,442 million (US$5,463 million) in cash at bank as of March 31, 2024, as compared to RMB39,599 million as of December 31, 2023. Net assets of the Company amounted to RMB92,825 million (US$12,856 million) as of March 31, 2024, as compared to RMB93,684 million as of December 31, 2023.
Change in Management Team
Mr. David Siu Kam Choy has tendered his resignation as the chief financial officer of the Company due to personal reasons. Mr. Peiqing Zhu has been appointed as the new chief financial officer and the board secretary of the Company. This change will take effect on April 30, 2024.
Mr. Zhu joined Ping An Bank in April 2018, where he served as the general manager of the financial planning department at the Head Office of Ping An Bank from April 2018 to April 2024. Prior to that, Mr. Zhu served as the managing partner of the financial services industry in Greater China at Capgemini China from May 2016 to April 2018 and as the first vice president and deputy chief financial officer at United Overseas Bank (China) from May 2013 to May 2016. From June 2003 to May 2013, he held various positions at PricewaterhouseCoopers, Ernst & Young, and Deloitte Consulting, providing audit, financial management, risk, tax, and digital services to the financial industry. Mr. Zhu began his career at the Industrial and Commercial Bank of China in September 2002. Mr. Zhu received his bachelor's degree in economics at the University of International Business and Economics. Mr. Zhu is a member of the AICPA, the CIMA, the Association of Chartered Certified Accountants in the United Kingdom, and the Certified Public Accountants Australia
Conference Call Information
The Company's management will hold an earnings conference call at 9:00 P.M. U.S. Eastern Time on Monday, April 22, 2024 (9:00 A.M. Beijing Time on Tuesday, April 23, 2024) to discuss the financial results. For participants who wish to join the call, please complete online registration using the link provided below in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the event passcode, and a unique access PIN, which can be used to join the conference call.
Registration Link: https://dpregister.com/sreg/10188298/fc485dda60
A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://ir.lufaxholding.com.
The replay will be accessible through April 29, 2024, by dialing the following numbers:
United States: 1-877-344-7529
International: 1-412-317-0088
Conference ID: 2835954
About Lufax
Lufax is a leading financial services enabler for small business owners in China. The Company offers financing products designed principally to address the needs of small business owners. In doing so, the Company has established relationships with 85 financial institutions in China as funding partners, many of which have worked with the Company for over three years.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.2203 to US$1.00, the rate in effect as of March 31, 2024, as certified for customs purposes by the Federal Reserve Bank of New York.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about Lufax' s beliefs and expectations, are forward-looking statements. Lufax has based these forward-looking statements largely on its current expectations and projections about future events and financial trends, which involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control. These forward-looking statements include, but are not limited to, statements about Lufax' s goals and strategies; Lufax' s future business development, financial condition and results of operations; expected changes in Lufax' s income, expenses or expenditures; expected growth of the retail credit enablement; Lufax' s expectations regarding demand for, and market acceptance of, its services; Lufax's expectations regarding its relationship with borrowers, platform investors, funding sources, product providers and other business partners; general economic and business conditions; and government policies and regulations relating to the industry Lufax operates in. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in Lufax's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Lufax does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Investor Relations Contact
Lufax Holding Ltd
Email: Investor_Relations@lu.com
ICR, LLC
Robin Yang
Tel: +1 (646) 308-0546
Email: lufax.ir@icrinc.com
LUFAX HOLDING LTD UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS (All amounts in thousands, except share data, or otherwise noted) |
|||||||
Three Months Ended March 31, |
|||||||
2023 |
2024 |
||||||
RMB |
RMB |
USD |
|||||
Technology platform-based income |
5,010,373 |
2,553,075 |
353,597 |
||||
Net interest income |
3,348,630 |
2,845,191 |
394,054 |
||||
Guarantee income |
1,416,759 |
925,248 |
128,145 |
||||
Other income |
227,462 |
319,183 |
44,206 |
||||
Investment income |
74,964 |
321,758 |
44,563 |
||||
Share of net profits of investments accounted for using the |
(436) |
(691) |
(96) |
||||
Total income |
10,077,752 |
6,963,764 |
964,470 |
||||
Sales and marketing expenses |
(3,030,053) |
(1,518,096) |
(210,254) |
||||
General and administrative expenses |
(756,071) |
(482,504) |
(66,826) |
||||
Operation and servicing expenses |
(1,557,889) |
(1,327,421) |
(183,846) |
||||
Technology and analytics expenses |
(341,485) |
(252,338) |
(34,948) |
||||
Credit impairment losses |
(3,131,800) |
(2,861,484) |
(396,311) |
||||
Finance costs |
(188,639) |
(58,156) |
(8,055) |
||||
Other gains/(losses) - net |
42,412 |
(16,502) |
(2,286) |
||||
Total expenses |
(8,963,525) |
(6,516,501) |
(902,525) |
||||
Profit before income tax expenses |
1,114,227 |
447,263 |
61,945 |
||||
Income tax expenses |
(381,857) |
(1,277,224) |
(176,893) |
||||
Net profit/(loss) for the period |
732,370 |
(829,961) |
(114,948) |
||||
Net profit/(loss) attributable to: |
|||||||
Owners of the Group |
671,976 |
(870,463) |
(120,558) |
||||
Non-controlling interests |
60,394 |
40,502 |
5,609 |
||||
Net profit/(loss) for the period |
732,370 |
(829,961) |
(114,948) |
||||
Earnings per share |
|||||||
-Basic earnings/(loss) per share |
0.59 |
(0.76) |
(0.11) |
||||
-Diluted earnings/(loss) per share |
0.59 |
(0.76) |
(0.11) |
||||
-Basic earnings/(loss) per ADS |
1.18 |
(1.52) |
(0.21) |
||||
-Diluted earnings/(loss) per ADS |
1.18 |
(1.52) |
(0.21) |
||||
LUFAX HOLDING LTD UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (All amounts in thousands, except share data, or otherwise noted) |
|||||
As of December 31, |
As of March 31, |
||||
2023 |
2024 |
||||
RMB |
RMB |
USD |
|||
Assets |
|||||
Cash at bank |
39,598,785 |
39,442,267 |
5,462,691 |
||
Restricted cash |
11,145,838 |
14,662,440 |
2,030,724 |
||
Financial assets at fair value through profit or loss |
28,892,604 |
32,848,689 |
4,549,491 |
||
Financial assets at amortized cost |
3,011,570 |
2,937,778 |
406,878 |
||
Accounts and other receivables and contract assets |
7,293,671 |
6,288,652 |
870,968 |
||
Loans to customers |
129,693,954 |
116,572,471 |
16,145,101 |
||
Deferred tax assets |
5,572,042 |
5,584,639 |
773,464 |
||
Property and equipment |
180,310 |
174,039 |
24,104 |
||
Investments accounted for using the equity method |
2,609 |
- |
- |
||
Intangible assets |
874,919 |
877,961 |
121,596 |
||
Right-of-use assets |
400,900 |
376,663 |
52,167 |
||
Goodwill |
8,911,445 |
8,911,445 |
1,234,221 |
||
Other assets |
1,444,362 |
1,228,805 |
170,188 |
||
Total assets |
237,023,009 |
229,905,849 |
31,841,592 |
||
Liabilities |
|||||
Payable to platform users |
985,761 |
832,667 |
115,323 |
||
Borrowings |
38,823,284 |
42,114,863 |
5,832,841 |
||
Current income tax liabilities |
782,096 |
752,420 |
104,209 |
||
Accounts and other payables and contract liabilities |
6,977,118 |
5,835,253 |
808,173 |
||
Payable to investors of consolidated structured entities |
83,264,738 |
75,562,879 |
10,465,338 |
||
Financing guarantee liabilities |
4,185,532 |
3,690,790 |
511,169 |
||
Deferred tax liabilities |
524,064 |
552,654 |
76,542 |
||
Lease liabilities |
386,694 |
361,467 |
50,063 |
||
Convertible promissory note payable |
5,650,268 |
5,752,392 |
796,697 |
||
Other liabilities |
1,759,672 |
1,625,282 |
225,099 |
||
Total liabilities |
143,339,227 |
137,080,667 |
18,985,453 |
||
Equity |
|||||
Share capital |
75 |
75 |
10 |
||
Share premium |
32,142,233 |
32,153,525 |
4,453,212 |
||
Treasury shares |
(5,642,768) |
(5,642,768) |
(781,514) |
||
Other reserves |
155,849 |
116,026 |
16,069 |
||
Retained earnings |
65,487,099 |
64,616,636 |
8,949,301 |
||
Total equity attributable to owners of the Company |
92,142,488 |
91,243,494 |
12,637,078 |
||
Non-controlling interests |
1,541,294 |
1,581,688 |
219,061 |
||
Total equity |
93,683,782 |
92,825,182 |
12,856,139 |
||
Total liabilities and equity |
237,023,009 |
229,905,849 |
31,841,592 |
||
LUFAX HOLDING LTD UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (All amounts in thousands, except share data, or otherwise noted) |
|||||
Three Months Ended March 31, |
|||||
2023 |
2024 |
||||
RMB |
RMB |
USD |
|||
Net cash generated from/(used in) operating activities |
3,286,049 |
502,532 |
69,600 |
||
Net cash generated from/(used in) investing activities |
2,174,740 |
2,747,041 |
380,461 |
||
Net cash generated from/(used in) financing activities |
(2,777,226) |
499,183 |
69,136 |
||
Effects of exchange rate changes on cash and cash equivalents |
33,680 |
6,701 |
928 |
||
Net increase/(decrease) in cash and cash equivalents |
2,717,243 |
3,755,457 |
520,125 |
||
Cash and cash equivalents at the beginning of the period |
29,537,511 |
18,480,096 |
2,559,464 |
||
Cash and cash equivalents at the end of the period |
32,254,754 |
22,235,553 |
3,079,589 |
||
