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China Fund News reporter Ma Jiaxin

Recently, the State Financial Supervision and Administration Bureau issued an announcement to approveCITIC Consumer Finance Co., Ltd. (hereinafter referred to as CITIC Consumer Finance)The qualification to carry out credit asset securitization business means that a consumer finance company has been approved to carry out this business again after a lapse of two years.

CITIC Consumer Finance was approved for ABS business qualification

The Beijing Regulatory Bureau of the State Financial Supervision and Administration Bureau stated that according to the "Implementation Measures for Administrative Licensing of Non-Banking Financial Institutions" and other relevant regulations, after review,CITIC Consumer Finance is now approved to carry out credit asset securitization business。

At the same time, regulators require CITIC Consumer Finance to strictly abide by relevant regulations such as the "Supervision and Administration Measures for the Pilot Program of Securitization of Credit Assets of Financial Institutions" and the "Notice of the Office of the China Banking and Insurance Regulatory Commission on Matters Concerning Information Registration for Securitization of Credit Assets of Banking Financial Institutions", perform corresponding information registration procedures, strengthen risk management, continuously improve the information management system, and effectively prevent various risks.

Asset securitization (ABS) business is one of the important means of financing for consumer finance companies. The approval of CITIC Consumer Finance means that after two years, another consumer finance company has been approved to carry out ABS business, which also means that the number of consumer finance companies qualified to issue ABS has increased to 19. So far, 13 consumer finance companies have completed the issuance of ABS.

In response to this, CITIC Consumer Finance also responded to our reporter and told us that the company will carry out related business in strict accordance with regulatory requirements.

Su Xiaorui, a senior researcher at Suxi Zhiyan, said that the issuance of ABS by licensed consumer finance companies had experienced a "frozen period" for a period of time. In 2022, the approval for licensed consumer finance companies to raise funds in the open market was relatively strict, but since last year, as consumer demand has gradually recovered, regulators have also continuously released signals to strengthen consumer credit support and encourage consumer finance companies to replenish capital. Consumer finance companies have frequently "replenished their blood" through the issuance of ABS, financial bonds and other open markets.

In the industry's view, compared with other financing methods, consumer finance companies issuing ABS have advantages in terms of capital costs, fundraising methods, and time efficiency. The fact that another consumer finance company has been approved to carry out ABS business also means a positive signal for the consumer finance industry.

CITIC Consumer Finance's equity will usher in new changes

It is worth mentioning that the equity of CITIC Consumer Finance will also usher in new changes. On July 3, CITIC Consumer Finance issued an announcement stating that the company had recently received a reply from the Beijing Banking and Insurance Regulatory Bureau regarding the company's equity change. After the equity change is completed, CITIC Financial Holdings will hold 70% of the company's equity and Kingdee Software will hold 30% of the equity. The subsequent equity change procedures will be handled in accordance with relevant laws and regulations.

It is reported that previously, the equity structure of CITIC Consumer Finance was 35.1% of CITIC Financial Holdings, 34.9% of CITIC Trust and 30% of Kingdee Software. This means that CITIC Trust will withdraw from CITIC Consumer Finance and transfer all its shares to CITIC Financial Holdings.

Regarding the equity change, CITIC Consumer Finance stated that the equity transfer represents the importance that CITIC Group and CITIC Financial Holdings attach to the company's development. CITIC Financial Holdings' equity ratio in CITIC Consumer Finance will be further increased, which will provide strong support for the company's stable development.

According to data, CITIC Consumer Finance is the 24th licensed consumer finance institution approved by the former China Banking and Insurance Regulatory Commission. It was approved to open in June 2019 with a registered capital of 700 million yuan. CITIC Group disclosed in its annual report that the establishment of the consumer finance company was to form a closed-loop industrial chain. In terms of the financial sector, CITIC already has banking, trust, securities, insurance and other financial businesses.

In March 2022, CITIC Financial Holdings was established, becoming one of the first two institutions to obtain a financial holding license. Subsequently, CITIC Bank, CITIC Securities, CITIC Trust, CITIC Prudential Life Insurance, CITIC Consumer Finance and others were successively designated as its financial subsidiaries.

Performance data showed that in 2022, CITIC Consumer Finance achieved a net profit of 86 million yuan, a year-on-year increase of 31.51%; as of the end of 2022, CITIC Consumer Finance had served a total of 9.96 million customers and issued a total of 37.1 million loans with a total amount of 72.648 billion yuan; total assets were 10.144 billion yuan, an increase of 8.19% from the end of the previous year; the loan balance was 9.623 billion yuan, an increase of 6.89% from the end of the previous year.

Editor: Xiaomo

Review: Xu Wen

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