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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lufax Holding Ltd | NYSE:LU | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.01 | 0.23% | 4.40 | 4.47 | 4.35 | 4.38 | 1,290,020 | 01:00:00 |
Lufax Holding Ltd (“Lufax” or the “Company”) (NYSE: LU), a leading technology-empowered personal financial services platform in China, today announced its unaudited financial results for the third quarter and nine months ended September 30, 2020.
Third Quarter 2020 Financial Highlights
(In millions except percentages, unaudited)
Three Months Ended September 30,
2019
2020
YoY
RMB
RMB
USD
Total income
11,838
13,076
1,926
10.5%
Total expense
(7,147)
(9,455)
(1,393)
32.3%
Net profit
3,414
2,157
318
-36.8%
Non-IFRS adjusted net profit1
3,414
3,483
513
2.0%
Net Margin
28.8%
16.5%
16.5%
-42.7%
Non-IFRS adjusted net margin1
28.8%
26.6%
26.6%
-7.6%
Third Quarter 2020 Operational Highlights
Retail credit facilitation business:
Wealth management business:
Mr. Gregory Gibb, Chief Executive Officer of Lufax, commented, “We delivered solid results in the third quarter of 2020, with our balance of loans facilitated growing by 21.4% year over year to RMB 535.8 billion. Also, the leading indicators for risk performance on our lending platform (i.e. flow rates) returned to their pre-COVID-19 levels. As planned, we also continued to make progress in establishing a more sustainable risk-sharing business model with our funding partners during the quarter. On the wealth management front, our client assets grew by 7.8% year over year to RMB 378.3 billion, among which the current product portion grew by 61.6% year over year to RMB 346.0 billion. From a broader perspective, we continue to observe market concerns across the regulatory landscape for Fintech companies in China as well as the tightening of regulatory controls. As such, we remain vigilant and are ready to comply with any new regulatory requirements.”
Mr. James Zheng, Chief Financial Officer of Lufax, commented, “We delivered solid financial results in the third quarter of 2020. During the period, our total income was 13.1 billion, up by 10.5% year over year, while our net profit was 2.2 billion, down by 36.8% year over year. Excluding non-recurring charges of 1.3 billion related to our C-round convertible note restructuring, our adjusted net profit was 3.5 billion in the third quarter, an increase of 2.0% year over year. We achieved these solid financial results during a period in which we were dealing with the residual impacts of COVID-19, transitioning our business to a more balanced risk-sharing model, and adjusting our Annual Percentage Rates (or APRs) to keep the all-in costs for new borrowers below 24%. Our strong performance in spite of these changes is a testament to both the resilience of our business model and stability of our earnings.”
Third Quarter 2020 Financial Results
TOTAL INCOME
Total income increased by 10.5% to RMB13,076 million (US$1,926 million) in the third quarter of 2020 from RMB11,838 million in the same period of 2019. The Company’s revenue mix changed with the evolution of its business model as it started to gradually bear more credit risks and increased funding from those consolidated trust plans that offered lower funding costs.
TOTAL EXPENSES
Total expenses increased by 32.3% to RMB9,455 million (US$1,393 million) in the third quarter of 2020 from RMB7,147 million in the same period of 2019. Expenses excluding impairment losses and financing costs increased by 6.6% to RMB6,851 million (US$1,009 million) in the third quarter of 2020 from RMB6,429 million in the same period of 2019.
NET PROFIT
Net profit was RMB2,157 million (US$318 million) in the third quarter of 2020, as compared to RMB3,414 million in the same period of 2019. Non-IFRS adjusted net profit, excluding the non-recurring expense of RMB1,326 million (US$195 million) recognized in relation to the Company’s C-round convertible notes restructuring, was RMB3,483 million (US$513 million) in the third quarter of 2020, as compared to RMB3,414 million in the same period of 2019.
EARNINGS PER ADS
Basic and diluted earnings per American Depositary Share (“ADS”) were both RMB1.01 (US$0.15) in the third quarter of 2020. In comparison, basic and diluted earnings per ADS were both RMB1.58 in the same period of 2019.
Adjusted basic and diluted earnings per ADS were both RMB1.62 (US$0.24) in the third quarter of 2020. In comparison, adjusted basic and diluted earnings per ADS were both RMB1.58 in the same period of 2019. Two ADSs represent one of the Company’s ordinary shares.
BALANCE SHEET
The Company had RMB14,377 million (US$2,118 million) in cash at bank as of September 30, 2020, as compared to RMB7,352 million as of December 31, 2019.
Business Outlook
For the full year of 2020, the Company expects new loan sales to be in the range of RMB558 billion to RMB568 billion, year-end client assets to be in the range of RMB395 billion to RMB420 billion, total income to be in the range of RMB51.0 billion to RMB51.5 billion, and non-IFRS adjusted net profit, which excludes the non-recurring C-round convertible notes restructuring expense, to be in the range of RMB13.2 billion to RMB13.4 billion. These forecasts reflect the Company’s current and preliminary views on the market and operational conditions, which are subject to changes.
Conference Call Information
The Company will hold an earnings conference call at 8:00 P.M. U.S. Eastern Time on Tuesday, December 1, 2020 (9:00 A.M. Beijing Time on Wednesday, December 2, 2020) to discuss the financial results. For participants who wish to join the call, please complete online registration using the link provided below in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique access PIN, which can be used to join the conference call.
Registration Link: http://www.directeventreg.com/registration/event/7557988
A replay of the conference call will be accessible through December 8, 2020 (dial-in numbers: +1 (800) 585-8367 or +1 (416) 621-4642; conference ID: 7557988). A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://ir.lufaxholding.com.
About Lufax
Lufax Holding Ltd is a leading technology-empowered personal financial services platform in China. Lufax Holding Ltd primarily utilizes its customer-centric product offerings and offline-to-online channels to provide retail credit facilitation services to small business owners and salaried workers in China as well as tailor-made wealth management solutions to China’s rapidly growing middle class. The Company has implemented a unique, capital-light, hub-and-spoke business model combining purpose-built technology applications, extensive data, and financial services expertise to effectively facilitate the right products to the right customers.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.7896 to US$1.00, the rate in effect as of September 30, 2020 as certified for customs purposes by the Federal Reserve Bank of New York.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about Lufax’s beliefs and expectations, are forward-looking statements. Lufax has based these forward-looking statements largely on its current expectations and projections about future events and financial trends, which involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company’s control. These forward-looking statements include, but are not limited to, statements about Lufax's goals and strategies; Lufax's future business development, financial condition and results of operations; expected changes in Lufax's income, expenses or expenditures; expected growth of the retail credit facility and wealth management markets; Lufax' expectations regarding demand for, and market acceptance of, its services; Lufax's expectations regarding its relationship with borrowers, platform investors, funding sources, product providers and other business partners; general economic and business conditions; and government policies and regulations relating to the industry Lufax operates in. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in Lufax’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Lufax does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Use of Non-IFRS Financial Measures
Lufax uses non-IFRS measures including adjusted net profit, adjusted net margin and adjusted basic and diluted earnings per ADS, in evaluating the Company’s operating results and for financial and operational decision-making purposes. Lufax believes that adjusted net profit help identify underlying trends in the Company’s business by excluding the impact of non-recurring expense related to C-round convertible notes restructuring. The Non-IFRS adjusted net margin is calculated by dividing net profit excluding non-recurring expense related to C-round convertible notes restructuring by total income. Non-IFRS basic and diluted earnings per ADS represents basic and diluted earnings per ADS calculated by dividing non-IFRS net income attributable to Lufax, which is adjusted for non-recurring expense related to C-round convertible notes restructuring, by the weighted average number of ordinary shares expressed in ADS.
Lufax believes that adjusted net profit, adjusted net margin and adjusted basic and diluted EPS per ADS provide useful information about the Company’s operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by Lufax’s management in its financial and operational decision-making.
Non-IFRS adjusted net profit, adjusted net margin and basic and diluted EPS per ADS are not defined under IFRS and are not presented in accordance with IFRS. This Non-IFRS financial measures have limitations as analytical tool, and when assessing the Company’s operating performance, cash flows or its liquidity, investors should not consider them in isolation, or as a substitute for net profit, net margin or other consolidated statements of comprehensive income data prepared in accordance with IFRS. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
For more information on this Non-IFRS financial measures, please see the table captioned “UNAUDITED RECONCILIATION OF IFRS AND NON-IFRS RESULTS” set forth at the end of this press release.
LUFAX HOLDING LTD
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(All amounts in thousands, except share data, or otherwise noted)
Three Months Ended September 30,
Nine Months Ended September 30,
2019
2020
2019
2020
RMB
RMB
USD
RMB
RMB
USD
Technology platform-based income
10,644,280
9,909,716
1,459,543
31,151,238
31,362,840
4,619,247
Retail credit facilitation service fees
10,011,057
9,419,963
1,387,411
29,026,050
30,173,838
4,444,126
Wealth management transaction and service fees
633,223
489,753
72,133
2,125,188
1,189,002
175,121
Net interest income
768,607
2,419,021
356,283
2,940,338
5,417,227
797,871
Guarantee income
93,191
175,170
25,800
407,161
345,636
50,907
Other income
206,831
409,171
60,264
536,069
1,064,779
156,825
Investment income
111,856
107,124
15,778
211,387
553,895
81,580
Share of net profits of investments accounted for using the equity method
13,580
56,011
8,250
38,584
15,364
2,263
Total income
11,838,345
13,076,213
1,925,919
35,284,777
38,759,741
5,708,693
Sales and marketing expenses
(3,769,599)
(4,308,549)
(634,581)
(10,877,846)
(12,928,843)
(1,904,213)
General and administrative expenses
(666,983)
(641,771)
(94,523)
(2,186,314)
(1,989,484)
(293,019)
Operation and servicing expenses
(1,482,164)
(1,562,413)
(230,119)
(3,979,157)
(4,381,019)
(645,254)
Technology and analytics expenses
(529,997)
(482,211)
(71,022)
(1,394,472)
(1,330,888)
(196,019)
Credit impairment losses
(421,891)
(951,695)
(140,170)
(892,046)
(2,050,499)
(302,006)
Asset impairment losses
(62)
-
-
-
-
-
Finance costs
(296,787)
(1,652,346)
(243,364)
(1,126,839)
(2,539,693)
(374,056)
Other gains/(losses) - net
20,242
144,163
21,233
210,169
189,842
27,960
Total expenses
(7,147,241)
(9,454,822)
(1,392,546)
(20,246,505)
(25,030,584)
(3,686,607)
Profit before income tax expenses
4,691,104
3,621,391
533,373
15,038,272
13,729,157
2,022,086
Income tax expenses
(1,276,882)
(1,464,193)
(215,652)
(4,145,938)
(4,300,400)
(633,380)
Net profit for the period
3,414,222
2,157,198
317,721
10,892,334
9,428,757
1,388,706
Net profit/(loss) attributable to:
Owners of the Group
3,420,838
2,184,179
321,695
10,904,677
9,467,681
1,394,439
Non-controlling interests
(6,616)
(26,981)
(3,974)
(12,343)
(38,924)
(5,733)
Net profit for the period
3,414,222
2,157,198
317,721
10,892,334
9,428,757
1,388,706
Other comprehensive income/(loss), net of tax:
Exchange differences on translation of foreign operations
(360,392)
(790,487)
(116,426)
(435,467)
(944,645)
(139,131)
Total comprehensive income for the period
3,053,830
1,366,711
201,295
10,456,867
8,484,112
1,249,575
Total comprehensive income/(loss) attributable to:
Owners of the Company
3,060,446
1,394,658
205,411
10,469,210
8,523,036
1,255,308
Non-controlling interests
(6,616)
(27,947)
(4,116)
(12,343)
(38,924)
(5,733)
Total comprehensive income for the period
3,053,830
1,366,711
201,295
10,456,867
8,484,112
1,249,575
Earnings per share
-Basic and diluted earnings per share
3.15
2.01
0.30
10.03
8.71
1.28
-Basic and diluted earnings per ADS
1.58
1.01
0.15
5.02
4.36
0.64
LUFAX HOLDING LTD
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data, or otherwise noted)
As of December 31,
As of September 30,
2019
2020
RMB
RMB
USD
Assets
Cash at bank
7,352,394
14,376,509
2,117,431
Restricted cash
24,602,779
19,120,967
2,816,214
Financial assets at fair value through profit or loss
18,583,056
26,615,157
3,919,989
Financial assets at amortized cost
8,623,012
6,997,231
1,030,581
Financial Assets purchased under reverse repurchase agreements
-
1,705,057
251,128
Accounts and other receivables and contract assets
26,296,438
24,663,814
3,632,587
Loans to customers
47,498,512
99,706,472
14,685,176
Deferred tax assets
3,000,156
2,903,685
427,667
Property and equipment
517,237
417,691
61,519
Investments accounted for using the equity method
434,770
490,457
72,237
Intangible assets
1,896,575
1,882,149
277,211
Right-of-use assets
914,960
1,055,260
155,423
Goodwill
9,046,830
9,046,830
1,332,454
Other assets
766,795
723,014
106,487
Total assets
149,533,514
209,704,293
30,886,104
Liabilities
Payable to platform users
15,344,417
8,845,775
1,302,842
Borrowings
2,989,862
10,018,803
1,475,610
Current income tax liabilities
1,264,027
1,707,328
251,462
Accounts and other payables and contract liabilities
4,826,010
6,228,174
917,311
Payable to investors of consolidated structured entities
47,243,050
92,375,173
13,605,393
Financial guarantee liabilities
242,749
553,672
81,547
Deferred tax liabilities
5,311,972
5,682,917
837,003
Lease liabilities
939,089
1,073,343
158,086
Convertible promissory note payable
10,014,377
10,334,729
1,522,141
Convertible redeemable preferred shares
10,258,898
336,462
49,555
Optionally convertible promissory notes
-
7,762,475
1,143,289
Automatically convertible promissory notes
-
1,393,954
205,307
Other liabilities
2,953,646
2,418,619
356,224
Total liabilities
101,388,097
148,731,424
21,905,770
Equity
Share capital
69
69
10
Share premium
14,113,311
14,113,311
2,078,666
Treasury shares
(2)
(2)
(0)
Other reserves
4,582,291
6,416,102
944,990
Retained earnings
29,345,949
38,813,630
5,716,630
Total equity attributable to owners of the Company
48,041,618
59,343,110
8,740,296
Non-controlling interests
103,799
1,629,759
240,038
Total equity
48,145,417
60,972,869
8,980,334
Total liabilities and equity
149,533,514
209,704,293
30,886,104
LUFAX HOLDING LTD
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except share data, or otherwise noted)
Three Months Ended September 30,
Nine Months Ended September 30,
2019
2020
2019
2020
RMB
RMB
USD
RMB
RMB
USD
Net cash generated from operating activities
1,339,540
5,022,897
739,793
3,288,986
9,499,366
1,399,105
Net used in investing activities
(5,853,996)
(9,458,344)
(1,393,064)
(4,147,639)
(9,827,415)
(1,447,422)
Net cash generated from/(used in) financing
activities
1,095,522
3,112,378
458,404
(3,100,813)
6,856,221
1,009,812
Effects of exchange rate changes on cash and cash
equivalents
136,797
196,795
28,985
138,813
187,626
27,635
Net increase/(decrease) in cash and cash equivalents
(3,282,137)
(1,126,274)
(165,882)
(3,820,653)
6,715,798
989,130
Cash and cash equivalents at the beginning of the
period
18,037,574
15,154,133
2,231,962
18,576,090
7,312,061
1,076,950
Cash and cash equivalents at the end of the period
14,755,437
14,027,859
2,066,080
14,755,437
14,027,859
2,066,080
LUFAX HOLDING LTD
UNAUDITED Reconciliation of IFRS and Non-IFRS Results
(All amounts in thousands, except share data, or otherwise noted)
Three Months Ended September 30,
Nine Months Ended September 30,
2019
2020
2019
2020
RMB
RMB
USD
RMB
RMB
USD
Net profit
3,414,222
2,157,198
317,721
10,892,334
9,428,757
1,388,706
Add: Non-recurring expense related to C-
round convertible notes restructuring
-
1,326,007
195,300
-
1,326,007
195,300
Non-IFRS adjusted net profit
3,414,222
3,483,205
513,021
10,892,334
10,754,764
1,584,006
Total income
11,838,345
13,076,213
1,925,919
35,284,777
38,759,741
5,708,693
Net margin
28.8%
16.5%
16.5%
30.9%
24.3%
24.3%
Non-IFRS adjusted net margin
28.8%
26.6%
26.6%
30.9%
27.7%
27.7%
Basic and diluted earnings per ADS
1.58
1.01
0.15
5.02
4.36
0.64
Add: Non-recurring expense related to C-
round convertible notes restructuring
-
0.61
0.09
-
0.61
0.09
Non-IFRS adjusted basic and diluted
earnings per ADS
1.58
1.62
0.24
5.02
4.97
0.73
1 Please refer to “UNAUDITED RECONCILIATION OF IFRS AND NON-IFRS RESULTS” for reconciliation between IFRS and non-IFRS metrics. 2 Flow rate estimates the percentage of current loans that will become non-performing at the end of three months, and is defined as the product of (i) the loan balance that is overdue from 1 to 29 days as a percentage of the total current loan balance of the previous month, (ii) the loan balance that is overdue from 30 to 59 days as a percentage of the loan balance that was overdue from 1 to 29 days in the previous month, and (iii) the loan balance that is overdue from 60 to 89 days as a percentage of the loan balance that was overdue from 30 days to 59 days in the previous month. 3 DPD 30+ delinquency rate refers to the outstanding balance of loans for which any payment is 30 to 179 calendar days past due divided by the outstanding balance of loans. 4 Legacy products refer to a variety of products and related services that the Company has historically offered but no longer offers, primarily due to shifts in strategy and regulatory requirements. Legacy products are primarily comprised of certain types of structured alternative products originated from financial institutions and peer-to-peer platforms. 5 The take rate is calculated as a percentage of the fees collected from third-party asset providers and platform investors by the Company and the affiliated company, which the Company intends to acquire a majority interest in, over the corresponding average client assets generated through the Company’s platform.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201201005795/en/
Investor Relations Lufax Holding Ltd Email: Investor_Relations@lu.com ICR Inc. Jack Wang Tel: +1 (646) 308-0546 Email: lufax.ir@icrinc.com
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