SHANGHAI, Aug. 21, 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 second quarter ended June 30, 2024.
Second Quarter 2024 & First Half 2024 Financial Highlights
(In millions except percentages, unaudited) | Three Months Ended June 30, | |||||
2023 | 2024 | YoY | ||||
RMB | RMB | USD | ||||
Total income | 9,270 | 5,976 | 822 | (35.5 %) | ||
Total expenses | (7,957) | (6,341) | (873) | (20.3 %) | ||
Total expenses excluding credit | (4,954) | (3,485) | (480) | (29.7 %) | ||
Credit impairment losses, finance costs and | (3,003) | (2,856) | (393) | (4.9 %) | ||
Net profit/(loss) | 1,004 | (730) | (100) | (172.7 %) | ||
(In millions except percentages, unaudited) | Six Months Ended June 30, | |||||
2023 | 2024 | YoY | ||||
RMB | RMB | USD | ||||
Total income | 19,348 | 12,940 | 1,781 | (33.1 %) | ||
Total expenses | (16,920) | (12,857) | (1,769) | (24.0 %) | ||
Total expenses excluding credit | (10,639) | (7,065) | (972) | (33.6 %) | ||
Credit impairment losses, finance costs and | (6,281) | (5,792) | (797) | (7.8 %) | ||
Net profit | 1,736 | (1,560) | (215) | (189.9 %) | ||
Second Quarter 2024 Operational Highlights
Mr. YongSuk Cho, Chairman and Chief Executive Officer of Lufax, commented, "During the second quarter, our focus on quality over quantity yielded notable improvements of asset quality across both our Puhui and consumer finance portfolios. Loan quality trended higher within both segments, demonstrating the efficacy of our strategic approach. As our Puhui loan balance increasingly represents loans enabled under the 100% guarantee model, we anticipate the ongoing shift will drive further enhancements to our take rate going forward. Furthermore, as we continue to execute our strategy of obtaining and utilizing strong licenses to bolster our business, we expect our licenses will help us improve our funding costs, product diversity, and capital management efficiency. Looking ahead, we will seek to deepen our synergies with Ping An Group, leveraging their brand reputation, technological resources, and extensive network to strengthen our market position. These initiatives, combined with our direct sales force and ongoing emphasis on operational caution, uniquely position us to support China's small and micro enterprise economy. We are encouraged by our progress to date, and remain committed to drive persistent, high-quality growth for our customers and our shareholders."
Mr. Gregory Gibb, Co-Chief Executive Officer of Lufax, commented, "Our ongoing emphasis on operational refinements helped us strengthen our business during the second quarter. Our disciplined approach to credit standards led to enhancements in asset quality, with the C-M3 flow rate of Puhui loans improving to 0.9% and the NPL ratio for consumer finance loans decreasing to 1.4%. Meanwhile, the implementation of our 100% guarantee model for Puhui loans has positively impacted the take rate on our outstanding balance, which reached 9.3% this quarter. Our consumer finance segment also continued to grow, with a 23.6% year-over-year increase in new loan sales, representing 49% of total new loan sales in the quarter. Our prudent approach and ongoing operational refinements will be key as we pursue sustainable future growth."
Mr. Alston Peiqing Zhu, Chief Financial Officer of Lufax, commented, "During the second quarter, our leverage remained low, and our two main operating entities have maintained their strong capital positions. Our guarantee subsidiary's leverage ratio is stable at 2.4x, still comfortably below the 10x regulatory limit. At the same time, our consumer finance company has a healthy 14.7% capital adequacy ratio, surpassing the 10.5% regulatory requirement. Amidst a complex economic environment, we are seeing positive trends in asset quality and notable growth in consumer finance. We remain steadfast in our disciplined approach, aiming to construct a resilient platform for enduring success and shareholder value creation."
Second Quarter 2024 & First Half 2024 Financial Results
TOTAL INCOME
Total income was RMB5,976 million (US$822 million) in the second quarter of 2024, compared to RMB9,270 million in the same period of 2023, representing a decrease of 36%.
Three Months Ended June 30, | |||||||
(In millions except percentages, | 2023 | 2024 | YoY | ||||
RMB | % of income | RMB | % of income | ||||
Technology platform-based income | 4,076 | 44.0 % | 1,999 | 33.4 % | (51.0 %) | ||
Net interest income | 3,367 | 36.3 % | 2,716 | 45.4 % | (19.3 %) | ||
Guarantee income | 1,149 | 12.4 % | 850 | 14.2 % | (26.0 %) | ||
Other income | 310 | 3.3 % | 318 | 5.3 % | 2.4 % | ||
Investment income | 370 | 4.0 % | 94 | 1.6 % | (74.6 %) | ||
Share of net profits of investments | (1) | (0.0 %) | - | - | 100.0 % | ||
Total income | 9,270 | 100.0 % | 5,976 | 100.0 % | (35.5 %) | ||
Six Months Ended June 30, | |||||||
(In millions except percentages, | 2023 | 2024 | YoY | ||||
RMB | % of income | RMB | % of income | ||||
Technology platform-based income | 9,086 | 47.0 % | 4,552 | 35.2 % | (49.9 %) | ||
Net interest income | 6,716 | 34.7 % | 5,561 | 43.0 % | (17.2 %) | ||
Guarantee income | 2,565 | 13.3 % | 1,775 | 13.7 % | (30.8 %) | ||
Other income | 538 | 2.8 % | 637 | 4.9 % | 18.4 % | ||
Investment income | 445 | 2.3 % | 416 | 3.2 % | (6.6 %) | ||
Share of net profits of investments | (2) | (0.0 %) | (1) | (0.0 %) | 56.5 % | ||
Total income | 19,348 | 100.0 % | 12,940 | 100.0 % | (33.1 %) | ||
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[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 (excluding revenue from PAObank and LUAN credit subsidiaries), 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. |
[6] Lujintong was a platform the company launched in 2019, aiming to help its financial institution partners to acquire borrowers directly through dispersed sourcing nationwide. The company downscaled the operations of Lujintong in 2023 and ceased its operation by the end of April 2024. |
TOTAL EXPENSES
Total expenses decreased by 20% to RMB6,341 million (US$873 million) in the second quarter of 2024 from RMB7,957 million in the same period of 2023. This decrease was mainly due to the decrease in sales and marketing expenses by 46% to RMB1,372 million (US$189 million) in the second quarter of 2024 from RMB2,540 million in the same period of 2023. Total expenses excluding credit impairment losses, finance costs and other (gains)/losses decreased by 30% to RMB3,485 million (US$480 million) in the second quarter of 2024 from RMB4,954 million in the same period of 2023.
Three Months Ended June 30, | |||||||
(In millions except percentages, unaudited) | 2023 | 2024 | YoY | ||||
RMB | % of income | RMB | % of income | ||||
Sales and marketing expenses | 2,540 | 27.4 % | 1,372 | 22.9 % | (46.0 %) | ||
General and administrative expenses | 493 | 5.3 % | 511 | 8.5 % | 3.5 % | ||
Operation and servicing expenses | 1,576 | 17.0 % | 1,327 | 22.2 % | (15.8 %) | ||
Technology and analytics expenses | 344 | 3.7 % | 275 | 4.6 % | (20.0 %) | ||
Credit impairment losses | 2,998 | 32.3 % | 2,560 | 42.8 % | (14.6 %) | ||
Finance costs | 136 | 1.5 % | 13 | 0.2 % | (90.2 %) | ||
Other (gains)/losses - net | (130) | (1.4 %) | 282 | 4.7 % | 316.6 % | ||
Total expenses | 7,957 | 85.8 % | 6,341 | 106.1 % | (20.3 %) | ||
Six Months Ended June 30, | |||||||
(In millions except percentages, unaudited) | 2023 | 2024 | YoY | ||||
RMB | % of income | RMB | % of income | ||||
Sales and marketing expenses | 5,570 | 28.8 % | 2,890 | 22.3 % | (48.1 %) | ||
General and administrative expenses | 1,249 | 6.5 % | 993 | 7.7 % | (20.5 %) | ||
Operation and servicing expenses | 3,134 | 16.2 % | 2,655 | 20.5 % | (15.3 %) | ||
Technology and analytics expenses | 686 | 3.5 % | 528 | 4.1 % | (23.0 %) | ||
Credit impairment losses | 6,130 | 31.7 % | 5,422 | 41.9 % | (11.5 %) | ||
Finance costs | 324 | 1.7 % | 71 | 0.6 % | (78.0 %) | ||
Other (gains)/losses - net | (173) | (0.9 %) | 299 | 2.3 % | 273.0 % | ||
Total expenses | 16,920 | 87.5 % | 12,857 | 99.4 % | (24.0 %) | ||
NET LOSS
Net loss was RMB730 million (US$100 million) in the second quarter of 2024, compared to a net profit of RMB1,004 million in the same period of 2023, as a result of the aforementioned factors.
LOSS PER ADS
Basic and diluted loss per American Depositary Share ("ADS") were both RMB1.38 (US$0.19) in the second quarter of 2024. Each one ADS represents two ordinary shares.
BALANCE SHEET
The Company had RMB37,114 million (US$5,107 million) in cash at bank as of June 30, 2024, as compared to RMB39,599 million as of December 31, 2023. Net assets of the Company amounted to RMB82,676 million (US$11,377 million) as of June 30, 2024, as compared to RMB93,684 million as of December 31, 2023.
SEMI-ANNUAL DIVIDEND
In light of the net loss recorded for the six months ended June 30, 2024, the board of directors of the Company has determined that no semi-annual dividend shall be paid at this time.
Conference Call Information
The Company's management will hold an earnings conference call at 9:00 P.M. U.S. Eastern Time on Wednesday, August 21, 2024 (9:00 A.M. Beijing Time on Thursday, August 22, 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/10191825/fd49d1bf63
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 August 28, 2024, by dialing the following numbers:
United States: | 1-877-344-7529 |
International: | 1-412-317-0088 |
Conference ID: | 8154019 |
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 RMB7.2672 to US$1.00, the rate in effect as of June 30, 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 June 30, | Six Months Ended June 30, | ||||||||||
2023 | 2024 | 2023 | 2024 | ||||||||
RMB | RMB | USD | RMB | RMB | USD | ||||||
Technology platform-based income | 4,075,697 | 1,998,817 | 275,046 | 9,086,070 | 4,551,892 | 626,361 | |||||
Net interest income | 3,366,917 | 2,715,749 | 373,699 | 6,715,547 | 5,560,940 | 765,211 | |||||
Guarantee income | 1,148,646 | 850,152 | 116,985 | 2,565,405 | 1,775,400 | 244,303 | |||||
Other income | 310,170 | 317,600 | 43,703 | 537,632 | 636,783 | 87,624 | |||||
Investment income | 370,043 | 93,899 | 12,921 | 445,007 | 415,657 | 57,196 | |||||
Share of net profits of investments accounted for using | (1,151) | - | - | (1,587) | (691) | (95) | |||||
Total income | 9,270,322 | 5,976,217 | 822,355 | 19,348,074 | 12,939,981 | 1,780,601 | |||||
Sales and marketing expenses | (2,540,067) | (1,371,539) | (188,730) | (5,570,120) | (2,889,635) | (397,627) | |||||
General and administrative | (493,345) | (510,695) | (70,274) | (1,249,416) | (993,199) | (136,669) | |||||
Operation and servicing expenses | (1,576,137) | (1,327,251) | (182,636) | (3,134,026) | (2,654,672) | (365,295) | |||||
Technology and analytics | (344,131) | (275,395) | (37,896) | (685,616) | (527,733) | (72,618) | |||||
Credit impairment losses | (2,997,706) | (2,560,088) | (352,280) | (6,129,506) | (5,421,572) | (746,033) | |||||
Finance costs | (135,649) | (13,249) | (1,823) | (324,288) | (71,405) | (9,826) | |||||
Other gains/(losses) - net | 130,444 | (282,488) | (38,872) | 172,856 | (298,990) | (41,142) | |||||
Total expenses | (7,956,591) | (6,340,705) | (872,510) | (16,920,116) | (12,857,206) | (1,769,210) | |||||
Profit before income tax | 1,313,731 | (364,488) | (50,155) | 2,427,958 | 82,775 | 11,390 | |||||
Income tax expenses | (310,113) | (365,503) | (50,295) | (691,970) | (1,642,727) | (226,047) | |||||
Net profit/(loss) for the period | 1,003,618 | (729,991) | (100,450) | 1,735,988 | (1,559,952) | (214,657) | |||||
Net profit/(loss) attributable to: | |||||||||||
Owners of the Group | 965,349 | (792,072) | (108,993) | 1,637,325 | (1,662,535) | (228,772) | |||||
Non-controlling interests | 38,269 | 62,081 | 8,543 | 98,663 | 102,583 | 14,116 | |||||
Net profit/(loss) for the period | 1,003,618 | (729,991) | (100,450) | 1,735,988 | (1,559,952) | (214,657) | |||||
Earnings per share | |||||||||||
-Basic earnings/(loss) per share | 0.84 | (0.69) | (0.09) | 1.43 | (1.45) | (0.20) | |||||
-Diluted earnings/(loss) per share | 0.84 | (0.69) | (0.09) | 1.43 | (1.45) | (0.20) | |||||
-Basic earnings/(loss) per ADS | 1.68 | (1.38) | (0.19) | 2.86 | (2.90) | (0.40) | |||||
-Diluted earnings/(loss) per ADS | 1.68 | (1.38) | (0.19) | 2.86 | (2.90) | (0.40) | |||||
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 June 30, | ||||
2023 | 2024 | ||||
RMB | RMB | USD | |||
Assets | |||||
Cash at bank | 39,598,785 | 37,113,898 | 5,107,042 | ||
Restricted cash | 11,145,838 | 10,683,924 | 1,470,157 | ||
Financial assets at fair value through profit or loss | 28,892,604 | 29,249,592 | 4,024,878 | ||
Financial assets at fair value through other comprehensive income | - | 1,739,416 | 239,352 | ||
Financial assets at amortized cost | 3,011,570 | 2,918,120 | 401,547 | ||
Accounts and other receivables and contract assets | 7,293,671 | 5,410,456 | 744,504 | ||
Loans to customers | 129,693,954 | 112,708,888 | 15,509,259 | ||
Deferred tax assets | 5,572,042 | 5,476,280 | 753,561 | ||
Property and equipment | 180,310 | 162,426 | 22,351 | ||
Investments accounted for using the equity method | 2,609 | - | - | ||
Intangible assets | 874,919 | 1,016,210 | 139,835 | ||
Right-of-use assets | 400,900 | 349,884 | 48,146 | ||
Goodwill | 8,911,445 | 9,171,729 | 1,262,072 | ||
Other assets | 1,444,362 | 929,279 | 127,873 | ||
Total assets | 237,023,009 | 216,930,102 | 29,850,575 | ||
Liabilities | |||||
Payable to platform users | 985,761 | 781,083 | 107,481 | ||
Borrowings | 38,823,284 | 41,002,213 | 5,642,092 | ||
Customer deposits | - | 3,126,937 | 430,281 | ||
Current income tax liabilities | 782,096 | 447,523 | 61,581 | ||
Accounts and other payables and contract liabilities | 6,977,118 | 15,188,201 | 2,089,966 | ||
Payable to investors of consolidated structured entities | 83,264,738 | 61,693,369 | 8,489,290 | ||
Financing guarantee liabilities | 4,185,532 | 3,507,405 | 482,635 | ||
Deferred tax liabilities | 524,064 | 427,332 | 58,803 | ||
Lease liabilities | 386,694 | 342,671 | 47,153 | ||
Convertible promissory note payable | 5,650,268 | 5,898,783 | 811,700 | ||
Other liabilities | 1,759,672 | 1,838,182 | 252,942 | ||
Total liabilities | 143,339,227 | 134,253,699 | 18,473,924 | ||
Equity | |||||
Share capital | 75 | 75 | 10 | ||
Share premium | 32,142,233 | 22,306,417 | 3,069,465 | ||
Treasury shares | (5,642,768) | (5,642,768) | (776,471) | ||
Other reserves | 155,849 | 544,621 | 74,942 | ||
Retained earnings | 65,487,099 | 63,824,564 | 8,782,552 | ||
Total equity attributable to owners of the Company | 92,142,488 | 81,032,909 | 11,150,499 | ||
Non-controlling interests | 1,541,294 | 1,643,494 | 226,152 | ||
Total equity | 93,683,782 | 82,676,403 | 11,376,652 | ||
Total liabilities and equity | 237,023,009 | 216,930,102 | 29,850,575 | ||
LUFAX HOLDING LTD | |||||||||||
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(All amounts in thousands, except share data, or otherwise noted) | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30 | ||||||||||
2023 | 2024 | 2023 | 2024 | ||||||||
RMB | RMB | USD | RMB | RMB | USD | ||||||
Net cash generated from/(used in) | 1,994,730 | 2,997,614 | 412,485 | 5,280,779 | 3,500,146 | 481,636 | |||||
Net cash (used in)/generated from | (339,249) | (224,994) | (30,960) | 1,835,491 | 2,522,047 | 347,045 | |||||
Net cash (used in) financing activities | (8,844,090) | (4,688,244) | (645,124) | (11,621,316) | (4,189,061) | (576,434) | |||||
Effects of exchange rate changes on | 393,412 | 78,616 | 10,818 | 427,092 | 85,317 | 11,740 | |||||
Net (decrease)/increase in cash and | (6,795,197) | (1,837,008) | (252,781) | (4,077,954) | 1,918,449 | 263,987 | |||||
Cash and cash equivalents at the | 32,254,754 | 22,235,553 | 3,059,714 | 29,537,511 | 18,480,096 | 2,542,946 | |||||
Cash and cash equivalents at the end of | 25,459,557 | 20,398,545 | 2,806,933 | 25,459,557 | 20,398,545 | 2,806,933 | |||||
SOURCE Lufax Holding Ltd