China Fintech – Financials of JD Finance and Baidu Finance

JD Finance

The finance arm of JD, the second largest e-commerce company in China, reportedly recorded a net loss of RMB568 million in 2016. JD Finance offers a wide range of financial products and services to the individual and business customers of JD.

Baitiao (白条), a virtual line of credit available to all JD shoppers, had signed up 11.5 million users as of June23rd, 2017, with RMB25.7 billion in accounts receivable.

Launched in February 2014, Baitiao supports purchases on the online retail platform and with partnering businesses of JD, and provides cash advances to a portion of JD shoppers.

Baitiao’s portfolio consists primarily of small-balance loans, with accounts carrying a balance of less than 3000 yuan accounting for 97% of the total transactions and 72% of the total receivables as of June 2017. The average 90-day+ delinquency rate in the first six months of 2017 was 2.44%.

Consumer electronics and appliances, and clothing accounted for a combined over 70% of the total volume of Baitiao payment transactions as of February 2017.

JD Finance uses its own big data-based credit scoring and underwriting system. ZestFinance, a US-based underwriting tech developer, helped revamp JD’s underwriting system after JD invested in it in 2015. JD’s system had scored about 200 million users as of June 2016.

JD and JD Finance had issued a total of RMB41.2 billion ABS as of December 5th, 2017.

( Source: Chinese report by First Consumer Finance)


 (Source in CN)

Baidu’s online consumer loan business is operated by two companies, Chongqing Baidu Small Loans Co., Ltd.(not official translation), established in October 2015, and Shanghai Baidu Small Loans Co., Ltd.(not official translation), with the bulk of the total loan volume originated by the former.

Chongqing Baidu Small Loans recorded RMB44.6 million in net loss on revenues of RMB401 million in the first half of 2017. The loss was mainly due to the loan loss provision, 2.5% of the total outstanding loan receivables, the company set aside and R&D costs in software system development, according to the company.

The sources of funding for Baidu’s online lending businesses include RPs, bank borrowing and corporate ABS.

(Source: Report in Chinese)

ABN (asset-backed notes)

Chinese authorities have reportedly suspended approving issuances of consumer loan-backed ABS (asset-backed securities) as part of the recent crackdown on online consumer lending. (Caixin report in CN) Major players now turn to ABN to raise funds. ABN allows non-financial enterprises to raise funds in China’s interbank market.

In November, the company behind Ant Cash Now, the online personal loan product provided by Alibaba’s finance affiliate, and one of Baidu’s personal loan companies registered to issue RMB30 billion and RMB4 billion worth of ABN, respectively, according to their registration statements with the National Association of Financial Market Institutional Investors, the supervisory body of ABN.

But Alibaba’s Ant Cash Now has recently withdrawn the registration. It is speculated that it’s due to the pressure from authorities. (Source in CN)


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