Banks are directing an increasing volume of funds to licensed consumer finance companies in China, as Beijing pushes for growth in consumption as a share of national GDP.
In the first three quarters of 2022 China’s licensed consumer financial institutions obtained over 10 billion yuan in supplementary funds, from a range of sources including capital increases from shareholders, issues of asset-backed securities (ABS) and syndicated bank loans, according to a report from Securities Daily.
Syndicated bank loans have emerged as one of the most popular funding sources, with Xiaomi Consumer Finance raising 680 million yuan via this method, Mashang Consumer Finance 675 million yuan, and Ping An Consumer Finance 630 million yuan.
Haier Consumer Finance tapped syndicated bank loans for 510 million yuan in funds, and VipFubon Consumer Finance 200 million yuan.
In June of this year Xiaman Jinmei Consumer Finance (厦门金美信消费金融) obtained approval to increase its registered capital from 500 million yuan to 1 billion yuan via a capital increase from existing shareholders, while earlier in April Industrial Consumer Finance (兴业消费金融) raised 1.952 billion yuan in funds via the issue of ABS on the interbank bond market.
“Since the start of the year consumer finance companies have used multiple methods to actively increased capital or funding, and continued to raise their funding strength,” said Su Xiaorui (苏筱芮), senior financial sector analyst with Analysys, to Securities Daily.
“Actively expanding pluralised financing channels will also help consumer finance companies to ‘walk a path with multiple legs’ when it comes to financing.”