Home Credit Emerges as China’s Most Profitable Consumer Finance Company in 2018

Home Credit rose from third to first place in terms of net profits amongst Chinese consumer finance companies in 2018.

2018 financial data for 10 out of China’s 23 licensed consumer finance companies has been made publicly available, pointing to combined profit of over 4 billion yuan according to a report from Securities Times.

Home Credit (捷信消费金融) was the top performer overall in 2018, being the only consumer finance company in China to breach 10 billion yuan in operating revenues, while rising from third to first position in terms of net profits.

2018 operating revenues for Home Credit were 18.5 billion yuan for YoY growth of 40.59%, while net profits were 1.396 billion yuan, for a YoY rise of 39.56%.

Home Credit’s net profits were 1.022 billion yuan in 2017, putting it behind MUCFC (招联金融) (1.189 billion yuan) and Bank of China Consumer Finance (中银消费金融) (1.375 billion yuan) that year.

China Unicom’s annual report indicates that MUCFC’s operating revenues were 6.956 billion yuan in 2018 for YoY growth of 67.10%, while net profits were 1.253 billion yuan, for a YoY rise of 5.37%.

Home Credit and MUCFC are thus far the only two consumer finance companies in China to report net profits of over 1 billion yuan in 2018.

Shanghai-listed Chongqing Department’s annual report indicates Mashang Consumer Finance (马上金融) saw operating revenues of 8.239 billion yuan in 2018 for YoY growth of 76.51%, as well as net profits of 801 million yuan, for YoY growth of 38.6%.

Both MUCFC and Mashang saw a considerable slowdown in their net profit growth in 2018, after posting YoY surges of 266.97% and a staggering 8792% respectively in 2017.

A source from MUCFC said that key factors for the sharp drop in profit growth in 2018 included a marked rise in funding and customer acquisition costs as a result of changes in the external operating environment.

While MUCFC has sought to prioritise financial inclusion, risk costs have risen in tandem with the expansion of customer coverage, putting a squeeze on profits given the company’s efforts to maintain comparatively low prices.

Amongst mid-tier companies PSBC Consumer Finance (中邮消费金融) and Haier Consumer Finance (海尔消费金融) emerged as two top performers.

Haier Consumer Finance has thus far seen the biggest rise in net profits, with operating revenues of 1.049 billion yuan and net profits of 168 million yuan in 2018, for YoY gains of 313% and 250% respectively.

PSBC Consumer Finance came in second place in terms of net profit growth. The company saw operating revenues of 2.09 billion yuan in 2018, for YoY growth of 227.73%, and net profits of 203 million yuan, for a rise of 199%.


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