CNFinance(US:CNF)2022-05-26 16:55Financial Data and Key Metrics Changes - In Q1 2022, the company facilitated loans of RMB 2.3 billion, with revenue and net income recorded at approximately RMB 417 million and RMB 43 million, respectively [6][7] - Total interest and fees income decreased by 1.9% year-over-year to RMB 417 million from RMB 425 million [16] - Net income dropped by 50% from RMB 86 million in Q1 2021 to RMB 43 million in Q1 2022 [18] Business Line Data and Key Metrics Changes - The average daily outstanding loan principal increased by over 20% year-on-year to RMB 10 billion, while revenue under the collaboration model also saw a year-on-year increase of over 20% to RMB 40 million [7] - Collaboration costs for sales partners decreased by 19% to RMB 80 million compared to RMB 98 million in the previous year [17] Market Data and Key Metrics Changes - The delinquency ratio for loans increased from 24% to 26% compared to the end of 2021, while the NPL ratio rose from 9.4% to 10.4% [19][20] - The economic downturn in China, with GDP growth slowing to 1.3% compared to Q4 2021, impacted the company's operations [7] Company Strategy and Development Direction - The company plans to focus on diversifying its product profile and helping sales partners expand their business scale while reducing funding costs [10] - A shift towards an operation-oriented and asset-light model is underway, aiming to act as a service provider and manager of loans [11] - The company aims to achieve 20% to 30% of its lending from the commercial bank model by the end of the year, supported by government policies encouraging banks to assist MSEs [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 lockdowns but expressed confidence in overcoming these obstacles and capitalizing on future opportunities [26][27] - The government’s increasing support for MSEs is expected to drive demand for capital, with a surge anticipated by the end of June [31] Other Important Information - The company is investing in technology, including the development of a mobile app to streamline loan application processes [14] - The weighted average interest rate for loans is currently around 16.4%, influenced by macroeconomic conditions and regulatory policies [23] Q&A Session Summary Question: What is the average interest rate for lending currently? - The weighted average interest rate of loans is around 16.4%, with lower rates due to both voluntary adjustments and macroeconomic conditions [23] Question: How have COVID lockdowns impacted the first quarter? - Lockdowns significantly affected capital demand, particularly in major cities like Shanghai and Shenzhen, leading to a decrease in loan facilitation [26] Question: Is the goal of achieving 30% lending from the commercial model still achievable? - The company remains positive about achieving 20% to 30% of total loans from the commercial bank model by year-end, supported by strong government policies [29] Question: Has there been an increase in demand from SMEs due to government support? - Government support for MSEs is expected to lead to a surge in demand for capital, particularly with new refinancing policies being implemented [31]