Consumer Finance Industry Reshuffles as Some Companies Up While Others Leave

Financials Author: Hu Bi Editor: Yiru Qian Jun 23, 2022 06:39 PM (GMT+8)

Everyone has a different fate, and the same applies to companies in China’s consumer finance industry as reshuffling begins.

Consumer finance

Consumer finance companies have seen a new wave of financing, with nine companies in the industry completing financing in the past four months and two last week. Currently, these firms are the main force in the consumer credit market.

On June 22, Haier Consumer Finance successfully raised a syndicated loan of CNY 510 million. While on June 20, MSXF (Chinese: 马上消费金融) raised CNY 1.4 billion by issuing inter-bank public ABS.  

Insiders suggest that the new financing wave this year is related to the abundant market capital and low financing cost. The latest ABS issued has a senior A coupon rate of 3.3% and a senior B coupon rate of 3.8%, both of which are at historical lows.

Besides, another major reason behind this round of financing is the desire of consumer finance companies to accelerate their business expansion. As a non-banking institution, they cannot take public deposits, and the main sources of funding for their business are through financial institution borrowing, shareholder capital increase, interbank lending and the issuance of ABS or financial bonds.

While some are busy attracting additional investments to expand their businesses, others have started to drown. For instance, rumours suggest that the once-leading Home Credit (Chinese: 捷信消费金融) is now selling parts of its shares.

Nonetheless, Home Credit’s fall has not affected the heat of the market nor the value of the license. Many banks, especially city merchant banks, are still highly favorable to this industry. In the first half of 2022, Bank of Ningbo and Bank of Nanjing have taken controlling stakes in consumer finance companies in hopes of broadening their retail finance footprint.

Moreover, the consumer finance industry is filled with corporations from both the public and private sector. There are banks such as Bank of China Consumer Finance, Bank of Beijing Consumer Finance and privately-owned corporations like MSXF.