Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CNFinance Holdings Ltd (CNF, Financial) achieved a year-over-year growth of approximately 10% in outstanding loan principal, reaching RMB16 billion as of June 30, 2024.
- The company maintained a stable non-performing loans (NPL) ratio of approximately 1.2% as of June 30, 2024, consistent with the previous year.
- Interest income increased by 5% compared to the same period last year, amounting to approximately RMB930 million.
- CNFinance Holdings Ltd (CNF) successfully reduced its average financing rate by approximately 4% year-over-year, allowing for a decrease in end-user interest rates by about 1% point.
- The company observed a decrease in collaboration costs for sales partners by 3.9%, contributing to an increase in net interest and fee income after collaboration costs by 5.3%.
Negative Points
- Net profit for the first half of 2024 decreased to RMB48 million, compared to RMB93.1 million in the same period of 2023.
- Total interest and fees expenses increased due to a rise in the average daily balance of interest-bearing borrowings.
- Provisions for credit losses increased significantly to RMB170.8 million from RMB129.6 million in the same period of 2023, driven by an increase in outstanding loan principal.
- Other expenses surged by 62.2% to RMB97 million, primarily due to higher fees paid to third-party asset management companies for delinquent loan collections.
- The delinquency ratio for loans originated by the company increased from 15.5% as of December 31, 2023, to 17.4% as of June 30, 2024.
Q & A Highlights
Q: Can you provide an overview of CNFinance's loan origination and asset quality for the first half of 2024?
A: Jun Qian, Vice President and Director, stated that CNFinance originated loans totaling RMB6.9 billion, with an outstanding loan principal of approximately RMB16 billion as of June 30, 2024, marking a 10% year-over-year growth. The non-performing loans (NPL) ratio was maintained at 1.2%, consistent with the previous year-end.
Q: How has CNFinance managed its interest income and expenses during this period?
A: Jing Li, Acting CFO, reported an interest income of approximately RMB930 million, a 5% increase from the previous year. However, interest expenses rose slightly due to an increase in average daily loan principal under the trust model.
Q: What strategic measures has CNFinance taken to manage funding costs?
A: Jun Qian highlighted that CNFinance has actively negotiated with funding partners to reduce the average financing rate by approximately 4% year-over-year. This reduction allowed the company to decrease the end-user interest rate by about 1 percentage point.
Q: How has CNFinance's collaboration with third-party asset management institutions impacted its operations?
A: Jun Qian explained that enhanced collaboration with third-party asset management institutions significantly boosted recovery amounts from overdue loans, although it led to increased operating expenses due to service fees.
Q: What are CNFinance's future strategic focuses in light of current market conditions?
A: Jun Qian stated that CNFinance will continue to focus on asset quality and operational efficiency, aiming to improve both the quality and profitability of its business. This includes rigorous management of credit approval standards and enhancing delinquent loan recovery processes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
