CNFinance Announces Fourth Quarter and Fiscal Year 2023 Unaudited Financial Results
- Total outstanding loan principal increased by 17.6% to RMB16.0 billion in Q4 2023.
- Net income decreased by 33.6% to RMB18.6 million in Q4 2023.
- Total loan origination volume grew by 17.7% to RMB17.3 billion for FY 2023.
- Net income increased by 21.5% to RMB164.5 million for FY 2023.
- Net income decreased by 33.6% in Q4 2023.
- Net losses on sales of loans increased to RMB11.6 million in Q4 2023.
- Operating expenses increased by 14.8% to RMB96.7 million in Q4 2023.
- Total operating expenses increased by 12.6% to RMB381.4 million for FY 2023.
Insights
The reported increase in total outstanding loan principal and loan origination volume for CNFinance Holdings Limited points to an expansion in lending activities, which is a positive indicator of business growth. However, the mixed performance in net income, with a decrease in the fourth quarter but an increase for the fiscal year, suggests variability in profitability. This could be influenced by external factors such as market conditions and internal factors like cost management.
Investors may find the decrease in net income for Q4 concerning, despite the overall fiscal year increase. The reduced net income in the fourth quarter could reflect seasonal effects or rising costs not fully offset by revenue growth. Additionally, the reduction in fees under the commercial bank partnership model and the increased collaboration costs could indicate pressure on profit margins, which requires close monitoring in subsequent quarters.
The emphasis on Tier 1 and Tier 2 cities for loan facilitation demonstrates a strategic focus on China's more economically robust regions. This could mitigate risk and enhance asset quality, given that these areas typically have more stable real estate markets. The reported decrease in the delinquency ratio aligns with this strategy and suggests improved loan performance.
However, the company's shift towards innovation and product diversification as a growth strategy for 2024 could introduce new risks. While innovation is essential for staying competitive, it requires careful execution to ensure that new products meet market needs without compromising underwriting standards. The ability of CNFinance to manage this balance will be critical to its future performance.
The financial results of CNFinance need to be contextualized within the broader economic landscape of China, particularly the real estate market. The company's performance is closely tied to property values and the ability of borrowers to repay loans. The reported results suggest resilience in a fluctuating market, but ongoing real estate sector challenges in China could affect future loan performance.
Additionally, the reduced VAT on service fees charged to trust plans indicates a tactical response to tax regulatory conditions. This could improve the company's cost structure in the short term, but it is also indicative of the complex regulatory environment in China that financial institutions must navigate, which can have implications for long-term strategy and profitability.
Fourth Quarter 2023 Operational and Financial Highlights
- Total outstanding loan principal[1] was
RMB16.0 billion (US ) as of December 31, 2023, representing an increase of$2.2 billion 17.6% fromRMB13.6 billion as of December 31, 2022. - Net interest and fees income were
RMB257.9 million (US ) in the fourth quarter of 2023, representing an increase of$36.4 million 1.8% fromRMB253.3 million in the same period of 2022. - Net income was
RMB18.6 million (US ) in the fourth quarter of 2023, representing a decrease of$2.6 million 33.6% fromRMB28.0 million in the same period of 2022. - Basic and diluted earnings per ADS were
RMB0.27 (US ) and$0.04 RMB0.26 (US ), respectively, in the fourth quarter of 2023, compared to$0.04 RMB0.41 andRMB0.37 , respectively, in the same period of 2022.
Fiscal Year 2023 Operational and Financial Highlights
- Total loan origination volume[2] was
RMB17.3 billion (US ) during the fiscal year of 2023, representing an increase of$2.4 billion 17.7% fromRMB14.7 billion in 2022. - Total number of active borrowers[3] was 26,005 as of December 31, 2023, representing an increase of
1.6% from 25,600 as of December 31, 2022. - Total interest and fees income were
RMB1,754.6 million (US ) for the fiscal year of 2023, representing an increase of$247.1 million 1.3% fromRMB1,731.4 million in 2022. - Net income was
RMB164.5 million (US ) for the fiscal year of 2023, representing an increase of$23.2 million 21.5% fromRMB135.4 million in 2022. - Basic and diluted earnings per ADS were
RMB2.40 (US ) and$0.34 RMB2.28 (US ), respectively, in the fiscal year of 2023, as compared to$0.32 RMB1.97 andRMB1.77 , respectively, in 2022.
"The year 2023 is another important year in the history of CNFinance. As
In the year of 2024, to maintain our momentum of growth given the current market condition, we will make innovation a more important part of our business. Designing and promoting more products to cover more customers will remain an important part of our major tasks. We will also keep investing in technology to continuously refine the overall loan decisioning process, therefore cut expenses and increase our margin." Commented Mr. Zhai Bin, Chairman and CEO of CNFinance.
[1] Refers to the total amount of loans outstanding for loans CNFinance originated under the trust lending model and commercial bank partnership model at the end of the relevant period. |
[2] Refers to the total amount of loans CNFinance originated under the trust lending model and commercial bank partnership model during the relevant period. |
[3] Refers to borrowers with outstanding loan principal of home equity loans originated under the trust lending model and loans recommended to commercial banks under the commercial bank partnership model as at the end of a specific period. |
Fourth Quarter 2023 Financial Results
Total interest and fees income for the fourth quarter of 2023 was
Interest and financing service fees on loans was
Interest income charged to sales partners, representing interest charged to sales partners who choose to repurchase default loans in installments, increased by
Interest on deposits with banks decreased by
Total interest and fees expenses decreased by
Net interest and fees income increased by
Net revenue under the commercial bank partnership model, representing fees charged to commercial banks for services including introducing borrowers, initial credit assessment, facilitating loans from the banks to the borrowers and providing technical assistance to the borrowers and banks, net of fees paid to third-party guarantor and commissions paid to sales channels, was
Collaboration cost for sales partners representing sales incentives paid to sales partners increased to
Net interest and fees income after collaboration cost was
Provision for credit losses, representing provision for credit losses under the trust lending model and the expected credit losses of guarantee under the commercial bank partnership model was
Realized gains/(losses) on sales of investments, net representing realized losses from the sales of investment securities was
Net losses on sales of loans was
Other gains/(losses), net was losses of
Total operating expenses increased by
Employee compensation and benefits was
Share-based compensation expenses for the fourth quarter of 2023 was
Taxes and surcharges decreased by
Operating lease cost increased to
Other expenses increased by
Income tax expense/(benefit) was a tax benefit of
Net income decreased by
Basic earnings per ADS and diluted earnings per ADS were
Fiscal Year 2023 Financial Results
Total interest and fees income for fiscal year 2023 increased by
Interest and financing service fees on loans increased by
Interest income charged to sales partners, representing interest charged to sales partners who choose to repurchase default loans in installments, increased by
Interest on deposits with banks increased by
Total interest and fees expenses decreased by
Net interest and fees income increased by
Net revenue under the commercial bank partnership model, representing fees charged to commercial banks for services including introducing borrowers, initial credit assessment, facilitating loans from the banks to the borrowers and providing technical assistance to the borrowers and banks, net of fees paid to third-party guarantor and commissions paid to sales channels, increased by
Collaboration cost for sales partners representing sales incentives paid to sales partners increased by
Net interest and fees income after collaboration cost was
Provision for credit losses, representing provision for credit losses under the trust lending model and the expected credit losses of guarantee under the commercial bank partnership model was
Realized gains on sales of investments, net representing realized gains from the sales of investment securities was
Net losses on sales of loans was
Other gains, net was
Total operating expenses increased by
Employee compensation and benefits increased by
Share-based compensation expenses increased by
Taxes and surcharges decreased by
Operating lease cost increased by
Other expenses increased by
Income tax expenses increased by
Effective tax rate decreased to
Net income increased by
Basic and diluted earnings per ADS were
As of December 31, 2023, the Company held cash and cash equivalents of
The delinquency ratio (excluding loans held for sale) for loans originated by the Company decreased from
The NPL ratio (excluding loans held for sale) for loans originated by the Company increased from
Recent Development
Share Repurchase
On March 16, 2022, the Company's board of directors authorized a share repurchase program under which the Company may repurchase up to US
Conference Call
CNFinance's management will host an earnings conference call at 8:00 AM
Dial-in numbers for the live conference call are as follows:
International: | +1-412-902-4272 |
Mainland | +86-4001-201203 |
+1-888-346-8982 | |
+852-301-84992 | |
Passcode: | CNFinance |
A telephone replay of the call will be available after the conclusion of the conference call until 11:59 PM ET April 4, 2024.
Dial-in numbers for the replay are as follows:
International: | +1-412-317-0088 |
+1-877-344-7529 | |
Passcode: | 8490811 |
A live and archived webcast of the conference call will be available on the Investor Relations section of CNFinance's website at http://ir.cashchina.cn/.
Statement Regarding Preliminary Unaudited Financial Information
The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the condensed consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in differences from the preliminary unaudited financial information contained in this earnings release.
Exchange Rate
The Company's business is primarily conducted in
Safe Harbor Statement
This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the
About CNFinance Holdings Limited
CNFinance Holdings Limited (NYSE: CNF) ("CNFinance" or the "Company") is a leading home equity loan service provider in
For more information, please contact:
CNFinance
E-mail: ir@cashchina.cn
CNFINANCE HOLDINGS LIMITED | ||||||||||||
Unaudited condensed consolidated balance sheets | ||||||||||||
(In thousands, except for number of shares) | ||||||||||||
December 31, 2022 |
December 31, 2023 | |||||||||||
RMB | RMB | US$ | ||||||||||
Assets | ||||||||||||
Cash, cash equivalents and restricted cash | 1,772,184 | 2,001,602 | 281,920 | |||||||||
Loans principal, interest and financing | 9,456,802 | 9,815,754 | 1,382,520 | |||||||||
Allowance for credit losses | 763,996 | 781,795 | 110,113 | |||||||||
Net loans principal, interest and financing | 8,692,806 | 9,033,959 | 1,272,407 | |||||||||
Loans held-for-sale | 1,844,438 | 2,471,414 | 348,091 | |||||||||
Investment securities | 518,645 | 413,908 | 58,298 | |||||||||
Property and equipment | 2,284 | 8,159 | 1,149 | |||||||||
Intangible assets and goodwill | 3,488 | 3,015 | 425 | |||||||||
Deferred tax assets | 76,905 | 92,225 | 12,990 | |||||||||
Deposits | 145,093 | 163,114 | 22,974 | |||||||||
Right-of-use assets | 29,777 | 27,828 | 3,919 | |||||||||
Guaranteed assets | 726,411 | 875,031 | 123,246 | |||||||||
Other assets | 669,889 | 1,256,946 | 177,037 | |||||||||
Total assets | 14,481,920 | 16,347,201 | 2,302,456 | |||||||||
Liabilities and shareholders' equity | ||||||||||||
Interest-bearing borrowings | ||||||||||||
Borrowings under agreements to repurchase | 112,642 | 686,581 | 96,703 | |||||||||
Other borrowings | 7,727,559 | 8,221,365 | 1,157,955 | |||||||||
Accrued employee benefits | 31,645 | 25,663 | 3,615 | |||||||||
Income taxes payable | 186,901 | 181,032 | 25,498 | |||||||||
Deferred tax liabilities | 73,752 | 72,579 | 10,223 | |||||||||
Lease liabilities | 28,583 | 26,073 | 3,672 | |||||||||
Credit risk mitigation position | 1,354,653 | 1,589,184 | 223,832 | |||||||||
Other liabilities | 1,028,471 | 1,535,797 | 216,312 | |||||||||
Total liabilities | 10,544,206 | 12,338,274 | 1,737,810 | |||||||||
Ordinary shares ( |
917 |
917 |
129 | |||||||||
Treasury stock | (87,631) | (118,323) | (16,665) | |||||||||
Additional paid-in capital | 1,024,204 | 1,031,721 | 145,315 | |||||||||
Retained earnings | 2,958,716 | 3,103,957 | 437,183 | |||||||||
Accumulated other comprehensive losses | (10,212) | (9,345) | (1,316) | |||||||||
Non-controlling interests | 51,720 | - | - | |||||||||
Total shareholders' equity | 3,937,714 | 4,008,927 | 564,646 | |||||||||
Total liabilities and shareholders' equity | 14,481,920 | 16,347,201 | 2,302,456 | |||||||||
CNFINANCE HOLDINGS LIMITED | ||||||||||||
Unaudited condensed consolidated statements of comprehensive income | ||||||||||||
(In thousands, except for earnings per share and earnings per ADS) | ||||||||||||
Fiscal year ended December 31, | ||||||||||||
2022 | 2023 | 2023 | ||||||||||
RMB | RMB | US$ | ||||||||||
Interest and fees income | ||||||||||||
Interest and financing service fees on loans | 1,596,270 | 1,600,471 | 225,422 | |||||||||
Interest income charged to sales partners | 122,019 | 134,542 | 18,950 | |||||||||
Interest on deposits with banks | 13,064 | 19,582 | 2,758 | |||||||||
Total interest and fees income | 1,731,353 | 1,754,595 | 247,130 | |||||||||
Interest expenses on interest-bearing borrowings | (784,777) |
(723,081) |
(101,844) | |||||||||
Total interest and fees expenses | (784,777) |
(723,081) |
(101,844) | |||||||||
Net interest and fees income | 946,576 | 1,031,514 | 145,286 | |||||||||
Net revenue under the commercial bank partnership model | 57,551 | 87,936 | 12,386 | |||||||||
Collaboration cost for sales partners | (320,827) | (343,508) | (48,382) | |||||||||
Net interest and fees income after collaboration cost | 683,300 | 775,942 | 109,290 | |||||||||
Provision for credit losses | (238,085) | (183,191) | (25,802) | |||||||||
Net interest and fees income after collaboration cost and | 445,215 | 592,751 | 83,488 | |||||||||
Realized gains on sales of investments, net | 20,567 | 6,548 | 922 | |||||||||
Net losses on sales of loans | (44,555) | (17,191) | (2,421) | |||||||||
Other gains, net | 89,914 | 4,849 | 683 | |||||||||
Total non-interest income | 65,926 | (5,794) | (816) | |||||||||
Operating expenses | ||||||||||||
Employee compensation and benefits | (197,036) | (204,573) | (28,814) | |||||||||
Share-based compensation expenses | (5,774) | (7,517) | (1,059) | |||||||||
Taxes and surcharges | (35,891) | (31,344) | (4,415) | |||||||||
Operating lease cost | (13,967) | (16,367) | (2,305) | |||||||||
Other expenses | (85,889) | (121,521) | (17,116) | |||||||||
Total operating expenses | (338,557) | (381,322)
| (53,709) | |||||||||
Income before income tax expense | 172,584 | 205,635 | 28,963 | |||||||||
Income tax expense | (37,233) | (41,017) | (5,777) | |||||||||
Net income | 135,351 | 164,618 | 23,186 | |||||||||
Earnings per share | ||||||||||||
Basic | 0.10 | 0.12 | 0.02 | |||||||||
Diluted | 0.09 | 0.11 | 0.02 | |||||||||
Earnings per ADS (1 ADS equals 20 ordinary shares) | ||||||||||||
Basic | 1.97 | 2.40 | 0.34 | |||||||||
Diluted | 1.77 | 2.28 | 0.32 | |||||||||
Other comprehensive Income | ||||||||||||
Foreign currency translation adjustment | 15,182 | 867 | 122 | |||||||||
Comprehensive income | 150,533 | 165,485 | 23,308 | |||||||||
Less: net income attributable to non-controlling interests | 970 | 19,377 | 2,729 | |||||||||
Total comprehensive income attributable to ordinary | 149,563 | 146,108 | 20,579 | |||||||||
CNFINANCE HOLDINGS LIMITED | ||||||||||||
Unaudited condensed consolidated statements of comprehensive income | ||||||||||||
(In thousands, except for earnings per share and earnings per ADS) | ||||||||||||
Three months ended December 31, | ||||||||||||
2022 | 2023 | 2023 | ||||||||||
RMB | RMB | US$ | ||||||||||
Interest and fees income | ||||||||||||
Interest and financing service fees on loans | 417,712 | 405,177 | 57,068 | |||||||||
Interest income charged to sales partners | 32,518 | 35,865 | 5,051 | |||||||||
Interest on deposits with banks | 4,308 | 4,119 | 581 | |||||||||
Total interest and fees income | 454,538 | 445,161 | 62,700 | |||||||||
Interest expenses on interest-bearing borrowings | (201,187) |
(187,181) |
(26,364) | |||||||||
Total interest and fees expenses | (201,187) |
(187,181) |
(26,364) | |||||||||
Net interest and fees income | 253,351 | 257,980 | 36,336 | |||||||||
Net revenue under the commercial bank partnership model | 56,283 | 10,254 | 1,444 | |||||||||
Collaboration cost for sales partners | (79,664) | (91,030) | (12,821) | |||||||||
Net interest and fees income after collaboration cost | 229,970 | 177,204 | 24,959 | |||||||||
Provision for credit losses | (142,662) | (42,055) | (5,923) | |||||||||
Net interest and fees income after collaboration cost and | 87,308 | 135,149 | 19,036 | |||||||||
Realized gains/(losses) on sales of investments, net | 3,633 | (176) | (25) | |||||||||
Net losses on sales of loans | (1,344) | (11,570) | (1,630) | |||||||||
Other gains/(losses), net | 24,593 | (11,142) | (1,569) | |||||||||
Total non-interest income | 26,882 | (22,888) | (3,224) | |||||||||
Operating expenses | ||||||||||||
Employee compensation and benefits | (55,614) | (52,047) | (7,331) | |||||||||
Share-based compensation expenses | (1,444) | (7,517) | (1,059) | |||||||||
Taxes and surcharges | (11,068) | (6,409) | (903) | |||||||||
Operating lease cost | (3,202) | (3,932) | (554) | |||||||||
Other expenses | (12,860) | (26,864) | (3,783) | |||||||||
Total operating expenses | (84,188) |
(96,769) |
(13,630) | |||||||||
Income before income tax expense | 30,002 | 15,492 | 2,182 | |||||||||
Income tax expense/(benefit) | (1,866) | 3,005 | 423 | |||||||||
Net income | 28,136 | 18,497 | 2,605 | |||||||||
Earnings per share | ||||||||||||
Basic | 0.02 | 0.01 | 0.00 | |||||||||
Diluted | 0.02 | 0.01 | 0.00 | |||||||||
Earnings per ADS (1 ADS equals 20 ordinary shares) | ||||||||||||
Basic | 0.41 | 0.27 | 0.04 | |||||||||
Diluted | 0.37 | 0.26 | 0.04 | |||||||||
Other comprehensive income | ||||||||||||
Foreign currency translation adjustment | (3,566) | (8,533) | (1,202) | |||||||||
Comprehensive income | 24,570 | 9,964 | 1,403 | |||||||||
Less: net income attributable to non-controlling interests | 970 | 1,486 | 209 | |||||||||
Total comprehensive income attributable to ordinary | 23,600 | 8,478 | 1,194 | |||||||||
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SOURCE CNFinance Holdings Limited
FAQ
What was the percentage increase in total outstanding loan principal in Q4 2023 for CNFinance (CNF)?
How much did net income decrease in Q4 2023 for CNFinance (CNF)?
What was the percentage increase in total loan origination volume for CNFinance (CNF) in FY 2023?
How much did net income increase in FY 2023 for CNFinance (CNF)?
