Lexin(US:LX)2022-04-29 10:26Financial Performance - The company originated RMB214 billion (US$33.6 billion) in loans in 2021, representing a year-on-year increase of 21%[401]. - As of December 31, 2021, the average user loan balance was RMB8,753 (US$1,374), up from RMB8,125 in 2020[401]. - The total operating revenue was RMB11,381 million (US$1,786 million) in 2021, with contributions from technology-driven platform services exceeding 30%[394]. - The outstanding balance of funds provided by institutional funding partners increased from RMB52.1 billion in 2019 to RMB88.6 billion (US$13.9 billion) in 2021[408]. - The loan origination generated by serving SME owners reached RMB15.3 billion in 2021, accounting for 7.1% of total loan origination[393]. - The company served more than 36.9 million users, with over 60% being urban working population and more than 5% being SME owners as of December 31, 2021[400]. - The company added 14 new funding partners in 2021, cumulatively serving over 130 funding partners by year-end[408]. Research and Development - Research and development expenses in 2021 amounted to RMB 549 million (US$ 86.2 million), representing a year-on-year increase of 15.8%[423]. - The company has developed over 60,300 decisioning rules using 22,000 potential data variables, accumulating data from over 36.9 million users and 249.9 million credit applications since inception[416]. - The proprietary Hawkeye system supports various analytical techniques and model outputs, including traditional regression models and artificial intelligence[415]. - The company has built a high-accuracy customer profiling and risk modeling system based on thousands of variables from extensive data resources[421]. - The company has registered 165 patents in China and applied for 385 additional patents, along with 202 software copyrights[439]. Data Security and Compliance - The company has received ISO/IEC 27701:2019 certification for its data security and privacy protection efforts, indicating compliance with international standards[426]. - The company has formed strategic cooperation with Qi'anxin, a leading information security company, to enhance data security practices in consumer finance[425]. - The PRC Foreign Investment Law, effective January 2020, replaces previous laws and establishes a unified legal framework for foreign investment in China[445]. - The 2021 Negative List reduces the number of industries with restrictions on foreign investment, expanding permitted sectors[445]. - Foreign investors must report investment activities through the Enterprise Registration System and National Enterprise Credit Information Publicity System since January 1, 2020[445]. - The Security Review Mechanism for foreign investments, effective January 18, 2021, requires declarations for investments in sensitive sectors[446]. - The company operates value-added telecommunication services through consolidated variable interest entities to comply with foreign investment restrictions[451]. Regulatory Environment - The company must comply with regulations requiring real identity authentication for online audio-visual information service providers[461]. - The CAC's amended provisions require providers to implement strict user registration and verification processes, including measures like compound verification based on mobile phone numbers and identity card numbers[464]. - The Circular 141 specifies that cash loans must not exceed an annualized interest rate limit set by the Supreme People's Court, and loans to borrowers without income sources are prohibited[465]. - Commercial banks are restricted from granting individual credit lines exceeding RMB200,000 and must ensure that the loan term does not exceed one year for lump-sum repayments[468]. - The Civil Code of PRC stipulates that interest rates under loan agreements must comply with applicable laws, and advance deduction of interest from loan proceeds is prohibited[472]. - The Supreme People's Court's amendments to private lending interest rates now set the upper limit based on the Quadruple LPR Limit, replacing previous thresholds of 24% and 36%[475]. - The CBIRC's guidelines prohibit marketing loans to individuals unable to repay and restrict lending services to college students under 18[478]. Consumer Protection and Advertising - The Measures for Financial Consumer Protection, effective November 1, 2020, require non-bank payment institutions to implement internal management measures to protect financial consumers' rights[562]. - The Advertising Law, amended in April 2021, mandates that advertisements must be authentic and legal, with penalties for violations including fines and orders to cease dissemination[563]. - The Internet Advertising Interim Measures, effective September 2016, require internet advertisers to ensure the authenticity of advertisement content and to clearly mark advertisements[564]. - The Circular 316, effective January 25, 2020, prohibits unqualified market players from conducting financial marketing campaigns[565]. - The E-Commerce Law requires e-commerce operators to respect and protect consumers' legitimate rights and provide options without targeting personal characteristics[569]. Financial Operations and Licensing - The company operates network microcredit businesses through Ji'an Microcredit, which holds a valid network microcredit license updated in July 2021, expiring in July 2023[501]. - The registered capital for a network microcredit business must not be less than RMB1 billion, and it is prohibited to use loans for investments in bonds, stocks, or to repay mortgage loans[500]. - The financing balance of microcredit companies funded by bank loans and shareholder loans must not exceed the company's net assets[499]. - Microcredit companies are restricted from upfront deduction of interest and fees from loans, ensuring borrowers only repay the actual loan amount[499]. - Outstanding guarantee liabilities of a financing guarantee company must not exceed ten times its net assets, with specific limits on liabilities to the same guaranteed party[505]. Intellectual Property - The company has registered 165 patents in China and applied for 385 additional patents with the PRC State Intellectual Property Office[583]. - The company has registered 202 software copyrights and 3 copyrights for artworks with the PRC National Copyright Administration[583]. - The company holds 160 registered domain names, including lexin.com, lexinfintech.com, and fenqile.com[583]. - The company has 446 registered trademarks, including "LEXIN乐信," "Fenqile," and others[583].