According to the Zhitong Finance App, Lu Control (06623) announced that for the first quarter of 2024, total revenue was RMB 6.964 billion (same unit value) (US$964 million), a decrease of 31% compared with RMB 10.078 billion in the same period in 2023.
For the first quarter of 2024, net loss was $830 million (US$115 million), and net profit for the same period in 2023 was $732 million.
As of March 31, 2024, the loan balance granted was $27.2 billion, down 45.4% from the 495.2 billion yuan ended March 31, 2023.
As of March 31, 2024, the cumulative number of borrowers increased by 12.4% from about 19.4 million as of March 31, 2023 to about 21.7 million.
Mr. Zhao Rongyi, Chairman and CEO of Lujin Institute Holdings, said, “In the first quarter, we continued to put prudent management and long-term stability first, and insisted on focusing on quality rather than quantity. Early risk indicators improved after completing five major risk reduction and diversification actions (including four combination changes and one business model adjustment). Nevertheless, we remained patient to ensure that this success was sustainable. We are strategically shifting our product portfolio from SBO loans to a more diversified approach, with a greater focus on consumer finance products. Meanwhile, all new loans added this quarter were issued by consumer finance subsidiaries or backed by guarantee companies under our 100% guarantee model. This shift will have a positive impact on revenue rates, as it reduces the burden of high CGI premiums, although the upfront provision for such loans means it will take longer for our bottom line to recover. In terms of asset quality, the C-M3 migration rate for inclusive businesses improved from the fourth quarter of 2023 to the first quarter of 2024. Some key operating indicators have been initially improved, and we believe our strategic initiatives have laid a solid foundation for continued success. We will remain vigilant and plan to operate prudently for the foreseeable future.”
Mr. Ji Kuisheng, Co-CEO of Lujin Institute Holdings, said, “In the first quarter of 2024, we began to feel the impact of perfect strategic initiatives. We have seen growth in the consumer finance business. Consumer finance loans accounted for 42% of new loan sales this quarter, up from 24% in the same period last year. Consumer finance loans currently account for 14% of the total balance, an increase over the previous year and quarter. The proportion of loans under the 100% guarantee model is also increasing. Currently, 26% of the balance of inclusive loans is supported by this model. As a result of our accumulation of this balance, the revenue rate was 9.0% as of the end of the first quarter, and it is expected that through continued strategy implementation, the revenue rate will increase further in the future. The improvement in the macro environment, the elimination of temporary negative effects of regional and direct sales restructuring in the third quarter, and the reduction of longer-term loans as we gradually set up new books, helped improve the quality of our assets.”
Mr. Xu Zhaogan, Chief Financial Officer of Lujin Institute Holdings, said, “Total expenses (excluding credit and asset impairment losses, financing costs and other losses) decreased by 37% year on year, and total expenses decreased by 27% year on year, which proves our commitment to continuous cost optimization. Furthermore, our leverage levels are still low, but our two main operating entities are well-capitalized. Driven by an increase in our guarantee balance associated with increased risk exposure and a decrease in net assets due to dividend payments, our guarantee subsidiary's leverage ratio increased to 2.4 times, while the regulatory limit was 10 times. Our consumer finance company's capital adequacy ratio is approximately 15.1%, which is higher than the 10.5% regulatory requirement. As of March 31, 2024, our bank balance was 39.4 billion yuan.”