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LX - Lexinfintech Holdings News Story

$8.01 0.1  1.1%

Last Trade - 4:26pm

Sector
Financials
Size
Mid Cap
Market Cap £1.02bn
Enterprise Value £1.87bn
Revenue £1.28bn
Position in Universe 2491st / 6853

BREAKINGVIEWS-China's web lenders march past a crushed Ant

Fri 19th March, 2021 3:25am
(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.) By Robyn Mak HONG KONG, March 19 (Reuters Breakingviews) - Ant may be down, but China's online lenders are anything but out. LexinFintech LX.O , a much smaller, capital-light rival grew its loan book by 26% to $12 billion last quarter. It's an example of how nimbler peers are thriving amid Beijing's clampdown. Ant's troubles have cast a pall over the country's booming consumer credit sector. Recent new rules include a requirement that online outfits fund 30% of consumer loans offered jointly with financial partners. These have forced Jack Ma's financial group to overhaul its business model. The company may be worth nearly a third less than the $315 billion valuation it was targeting less than six months ago, according to sources cited by Reuters this month. The fear is that smaller lenders would become collateral damage in Beijing's campaign against Ant and other technology giants. LexinFintech's quarterly results suggest just the opposite. Unlike Ant, the $2.4 billion company matches lenders with borrowers and does not use any of its capital for loans. This so-called credit facilitation model has largely been unaffected by the latest regulations. On the contrary, loan originations at LexinFintech surged by nearly a quarter in the three months to the end of December to $8 billion from a year earlier. Notably, the company on Friday hiked up its full-year guidance and reckons its total loan book will increase by roughly a quarter in 2021. One factor is less competition for borrowers and funding sources. Ant boasts 731 million monthly active users on its app and a $261 billion lending balance as of June - more than a fifth of all short-term consumer loans issued by Chinese deposit-taking financial institutions, according to Reuters. A restrained Ant means new business for smaller peers like LexinFintech and 360 DigiTech QFIN.O that have been long been out-muscled. Moreover, nimbler rivals are adapting much better to a fast-evolving environment. LexinFintech, for instance, is shifting to a new profit-sharing business model with its lending partners and has recently rolled out a buy-now-pay-later product, modelled after Australia's AfterPay APT.AX . The Chinese company’s shares have more than doubled since the start of the year, suggesting shareholders, too, are shaking off Ant’s woes. Regulatory risks linger, but brave investors in the sector can reap rewards. On Twitter https://twitter.com/mak_robyn CONTEXT NEWS - Chinese consumer credit company LexinFintech on March 18 reported fourth-quarter revenue of 3 billion yuan ($461 million), a decrease of 3.6% from the same period in 2019. The company partially attributes the decrease to an accounting change. - Total loan originations in the quarter grew 24.2% from the final three months of 2019 to 53.2 billion yuan. Outstanding loans as of December reached 76.5 billion yuan, up 26.3%. - For previous columns by the author, Reuters customers can click on MAK/ - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ LexinFintech earnings release https://ir.lexinfintech.com/news-releases/news-release-details/lexinfintech-holdings-ltd-reports-fourth-quarter-and-full-year-2 BREAKINGVIEWS-Lufax slips softly priced IPO past Ant hullaballoo urn:newsml:reuters.com:*:nL4N2HL0H4 BREAKINGVIEWS-Becoming a bank would shrink but not squash Ant urn:newsml:reuters.com:*:nL1N2JH021 BREAKINGVIEWS-Lufax may find three’s a China fintech IPO crowd urn:newsml:reuters.com:*:nL4N2H40B8 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Antony Currie and Katrina Hamlin) ((robyn.mak@thomsonreuters.com; Reuters Messaging: robyn.mak.thomsonreuters.com@reuters.net))
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