Core Viewpoint - The consumer finance industry is experiencing a shift, with most licensed consumer finance institutions showing growth in revenue and net profit, while Zhaolian Consumer Finance (Zhaolian) reports declines in total assets, revenue, and net profit for the first half of 2025, despite maintaining the highest net profit in the industry at 1.504 billion yuan [2][5]. Financial Performance - In the first half of 2025, Zhaolian's revenue was 7.899 billion yuan, a decrease of 14.77% year-on-year, and net profit was 1.504 billion yuan, down 12.76% year-on-year [2][3]. - As of June 30, 2025, Zhaolian's total assets were 157.722 billion yuan, a reduction of 60.29 billion yuan from the end of 2024, representing a decline of 3.68% [2][3]. - Zhaolian's performance has been declining since 2024, marking the first time in nine years that both revenue and net profit have decreased [2][5]. Market Environment - The complex macroeconomic environment is a significant external factor contributing to Zhaolian's performance decline, with slow recovery in consumer credit demand and increased caution among consumers regarding borrowing [5]. - The consumer finance industry has entered a phase of stock competition, limiting growth opportunities for leading institutions like Zhaolian, which has seen simultaneous declines in total assets, revenue, and net profit since 2024 [5]. Historical Growth Trends - Zhaolian previously maintained high growth rates, with revenue growth exceeding 50% from 2016 to 2019, peaking at 1070% in 2016 [6]. - However, revenue growth sharply declined to 9.8% in 2022, rebounded to 12% in 2023, and then fell again to -11.65% in 2024 [6]. Revenue Sources - In 2024, Zhaolian's net interest and fee income decreased by 11.63% year-on-year, primarily due to a reduction in business scale, although it remained the main source of operating income [6][9]. - The company also has a small amount of non-interest and fee income, mainly from government subsidies [6]. Product Performance - In 2024, Zhaolian's "Good Period Loan" balance decreased to 99.13 billion yuan, down 8.57%, and "Credit Payment" balance fell to 69.649 billion yuan, down 5.51% [9][11]. - The company faces significant customer acquisition and retention pressures in an increasingly competitive market [9]. Asset Quality and Risk Management - Zhaolian's debt scale decreased alongside its business scale, with interest expenses relative to average interest-bearing liabilities declining by 0.45 percentage points [13]. - The company's non-performing loan (NPL) ratio improved to 1.95% in 2024, a significant decrease of 0.5 percentage points from the previous year [13][14]. - Zhaolian actively wrote off high-risk customers and increased lending to low-risk customers to stabilize asset quality, with a 23.32% year-on-year increase in the write-off of non-performing loans [15].

Core Viewpoint - The consumer finance industry is experiencing a shift, with most licensed institutions showing growth in revenue and profit, while Zhaolian Consumer Finance has reported declines in total assets, revenue, and net profit for the first half of 2025, despite maintaining the highest net profit in the industry at 1.504 billion yuan [1][3]. Financial Performance - In the first half of 2025, Zhaolian Consumer Finance reported revenue of 7.899 billion yuan, a decrease of 14.77% year-on-year, and a net profit of 1.504 billion yuan, down 12.76% year-on-year [1][2]. - As of June 30, 2025, the total assets of Zhaolian Consumer Finance were 157.722 billion yuan, a reduction of 60.29 billion yuan from the end of 2024, representing a decline of 3.68% [1][2]. - The company has entered a downward performance cycle since 2024, marking its first instance of simultaneous revenue and profit decline in nine years, with annual revenue and net profit decreasing by 11.65% and 16.22% respectively [1][3]. Market Conditions - The macroeconomic environment has contributed to Zhaolian Consumer Finance's performance decline, with slow recovery in consumer credit demand and increased caution among consumers regarding borrowing [3]. - The consumer finance industry is now in a phase of stock competition, limiting growth opportunities for leading institutions like Zhaolian Consumer Finance, which has seen its total assets, revenue, and net profit decline since 2024 [3]. Historical Growth Trends - Zhaolian Consumer Finance previously experienced high growth rates, with revenue growth exceeding 50% from 2016 to 2019, peaking at 1070% in 2016 [3]. - The revenue growth rate fell to 9.8% in 2022, and while it rebounded to 12% in 2023, it dropped again to -11.65% in 2024 [3]. Product Performance - In 2024, the loan balance for Zhaolian Consumer Finance's "Good Period Loan" decreased to 99.13 billion yuan, down 8.57%, and the "Credit Payment" loan balance fell to 69.649 billion yuan, down 5.51% [5][6]. - The company faces significant customer acquisition and retention pressures in an increasingly competitive market [5]. Asset Quality and Financial Ratios - Zhaolian Consumer Finance's debt scale decreased alongside its business scale, with interest expenses relative to average interest-bearing liabilities declining by 0.45 percentage points [7]. - The company reported a non-performing loan (NPL) ratio of 1.95% in 2024, a significant decrease of 0.5 percentage points from the previous year, and a provision coverage ratio that increased by 107.58 percentage points to 471.63% [7][8]. Risk Management - Zhaolian Consumer Finance has actively written off high-risk customers and increased lending to low-risk customers to stabilize asset quality, with a total of 14.478 billion yuan in bad loans written off in 2024, a year-on-year increase of 23.32% [9]. - The overall recovery rate for overdue loans remains high, with overdue loans amounting to 6.404 billion yuan at the end of 2024, representing 3.79% of total loans, a decrease of 0.54 percentage points year-on-year [9].