China’s P2P Indices Drop for First Time in History, Only 300 Platforms to Weather 2019

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A slew of key indices for China’s P2P lending sector have posted their first decline since the inception of the industry over a decade ago, with a new report forecasting that only 300 – 500 platforms will still be in normal operation by the end of 2019.

A report on China’s P2P online lending sector in 2018 released by Wangdai Zhijia (网贷之家) indicates that nationwide transaction volumes posted a YoY decline of 36.01% last year, while the number of “basically normal platforms” fell by 54.42%, and the loan balance and number of participating individuals fell by 24.27% and 16.00% respectively.

China’s P2P transaction volumes posted a steady increase during the four year period from 2014 to 2017, rising from 329.194 billion yuan to 3.895235 trillion yuan, before plunging to 1.936633 trillion yuan last year.

According to Wangdai Zhijia one of the chief reasons for the decline in P2P lending platforms in 2018 was a plunge in the number of new platforms, with only 60 launching operation last year.

China also saw a sharp increase in the number of P2P lending platforms that suspended operation or succumbed to risk issues, with the single month number exceeding 100 in both July and August.

As of the end of 2018 China’s total P2P online loan balance had fallen 24.27% compared to the previous year to 788.965 billion yuan.

Wangdai Zhijia said that a key reason for the decline was the large number of mid-sized platforms who succumbed to problems, and whose loan balances were in excess of 100 million yuan.

A slump in investor confidence and heightened scrutiny from Chinese regulators also played key roles in the marked decline in the P2P lending balance last year.

Wangdai Zhijia further estimates that the number of online lending investors was 13.31 million in 2018, for a YoY decline of 22.30%, while the number of borrowers was 19.92 million, for a YoY decline of 11.19%.

 

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