1. Report's Industry Investment Rating - The document does not mention the industry investment rating. 2. Core Viewpoints of the Report - In 2025, influenced by the significant increase in NPL product issuance, the number and scale of credit - asset - backed securities issuances rebounded. The secondary - market trading volume also rebounded, with NPL products and sub - grade securities becoming the main trading components. The spreads of normal - class products continued to decline, while those of NPL products showed differentiation. Retail asset delinquency rates fluctuated at high levels, and the real recovery of NPL products continued to decline [6][7][55]. - In 2026, the credit asset securitization market is expected to be dominated by NPL products. The issuance spreads of other product types are expected to remain low, and the trading proportion of NPL and sub - grade securities in the secondary market is expected to further increase. Retail asset performance is unlikely to improve significantly in the short term, and the actual recovery of NPL products will continue to face pressure. Attention should be paid to the impact of consumer credit and industry policies [6][55]. 3. Summary by Relevant Catalogs 3.1 Issuance - In 2025, a total of 238 credit - asset - backed securities were issued, with a total issuance scale of 291.522 billion yuan, representing a year - on - year increase of 23.96% in the number of issuances and 7.82% in scale. NPL products accounted for 74.79% of the issuance number and 28.15% of the scale, both reaching historical highs [6][7]. - Auto ABS: 32 issues were issued, with a total scale of 118.543 billion yuan, a year - on - year decrease of 8.58% in scale. Green Auto ABS accounted for 17.62% of the total Auto ABS issuance scale, a decrease of 8.67 percentage points compared to 2024 [10]. - NPL: 178 issues were issued, with a total scale of 82.057 billion yuan, a year - on - year increase of 36.92% in the number of issuances and 61.32% in scale, and a cumulative disposal of 519.086 billion yuan in non - performing assets [10]. - Micro - enterprise loan ABS: 10 issues were issued, with a total scale of 58.645 billion yuan, a year - on - year decrease of 23.08% in the number of issuances and 10.49% in scale [12]. - Personal consumption - loan ABS: 18 issues were issued, with a total scale of 32.277 billion yuan, a year - on - year increase of 5.88% in the number of issuances and 32.70% in scale [13]. 3.2 Issuance Interest Rate - In 2025, the issuance interest rate of normal - class asset credit ABS remained low, while the NPL product issuance interest rate deviated from the benchmark interest rate at the end of the year. The issuance interest rates of Auto ABS, personal consumption - loan ABS, and micro - enterprise loan ABS decreased in the first half of the year and then remained stable, while the NPL issuance interest rate increased significantly in the fourth quarter [17]. - The average spread of AAAsf - rated products and the benchmark interest rate was 56bp, and that of AA + sf - rated products was 48bp, a decrease of 2bp and 18bp respectively compared to 2024. The spreads of different types of products all declined to varying degrees, with NPL products still at a relatively high level [20]. 3.3 Secondary Market - By the end of 2025, the credit - asset - backed securities' outstanding scale decreased by 11.85% to 435.812 billion yuan. The trading volume increased by 4.38% to 130.514 billion yuan, the number of transactions increased by 27.90% to 2,388, and the turnover rate increased by 8.83 percentage points to 28.06% [23][25][26]. - NPL products were the main trading variety, with a trading volume of 53.206 billion yuan, accounting for 40.77% of the total trading volume. Auto ABS trading volume was 48.574 billion yuan, accounting for 37.22% of the total trading volume [28]. 3.4 Credit Performance - Auto ABS: The cumulative default rate of recently issued products increased significantly, the delinquency rate increased, and the prepayment rate showed a slow upward trend, with the fluctuation center between 8% - 10% [31][33][35]. - Personal consumption - loan ABS: The performance was significantly differentiated, the delinquency rate fluctuated, and the prepayment rate continued to rise [38][40][43]. - RMBS: The cumulative default rate remained low, the delinquency rate first increased and then decreased, and the prepayment rate fluctuated to a high level and then returned to stability [45][47][49]. - NPL: The real recovery situation declined year by year, and 11 issues of priority - class asset - backed securities failed to be fully redeemed by the expected maturity date [52].

Economic Overview - In 2024, China's economy is expected to show a steady but slowing trend, with final consumption's contribution to economic growth weakening marginally[4] - By the end of 2024, the narrow personal consumption loan balance is projected to reach CNY 21.01 trillion, reflecting a growth of 6.23% compared to the end of 2023[5] Policy Initiatives - The government has introduced multiple policies aimed at stimulating consumption and regulating the consumer finance market, focusing on consumer rights protection and risk management[12][14] - Key policies include promoting large-scale equipment updates and encouraging the recycling of consumer goods, which are expected to enhance consumption potential[15][17] ABS Issuance Trends - In 2024, the issuance of personal consumption loan ABS products totaled 17 transactions, with a cumulative issuance scale of CNY 243.23 billion, marking a significant decrease of 48.22% year-on-year[5][18] - The issuance rates for priority (AAAsf) securities ranged from 1.90% to 2.50%, indicating a narrowing compared to 2023[28] Market Performance - The secondary market for personal consumption loan ABS products saw a transaction volume of CNY 77.14 billion, down 45.79% from the previous year, with an average transaction amount of CNY 0.68 billion[30][32] - The cumulative default rates for ABS products initiated by commercial banks are generally lower than those initiated by consumer finance companies, reflecting stronger risk management practices[51][38] Asset Quality and Characteristics - The average loan amount in the asset pool for 2024 was CNY 6.93 million, with a high degree of asset pool dispersion[32][33] - The average weighted contract interest rate for the underlying assets was 16.35%, indicating a relatively high cost of borrowing[33] Future Outlook - The outlook for 2025 suggests that under the dual pressures of declining LPR rates and rising non-performing loan ratios, financial institutions will need to optimize their pricing strategies and risk management capabilities[51] - Continued monitoring of macroeconomic trends is essential, as they may impact the credit quality of personal consumption loan ABS products in the long term[51]