CNFinance Announces Fourth Quarter 2021 and Fiscal Year 2021 Unaudited Financial Results


GUANGZHOU, China, March 18, 2022 /PRNewswire/ — CNFinance Holdings Limited (NYSE: CNF) (“CNFinance” or the “Company”), a leading home equity loan service provider in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2021.

Fourth Quarter 2021 Operational and Financial Highlights

  • Total loan origination volume[1] was RMB3.1 billion (US$480.1 million) during the fourth quarter of 2021, representing an increase of 14.8% from RMB2.7 billion in the same period of 2020.
  • Total number of transactions[2] was 5,510 during the fourth quarter of 2021, representing an increase of 6.5% from 5,172 in the same period of 2020.
  • Total interest and fees income were RMB448.8 million (US$70.4 million) in the fourth quarter of 2021, representing an increase of 6.6% from RMB421.1 million in the same period of 2020.
  • Net income/(losses) was a net loss of RMB104.9 million (US$16.5 million) in the fourth quarter of 2021, comparing with a net income of RMB105.3 million in the same period of 2020.
  • Basic and diluted earnings per ADS were RMB(1.53) (US$(0.24)) and RMB(1.53)(US$(0.24)), respectively, in the fourth quarter of 2021, as compared to RMB1.54 and RMB1.42, respectively, in the same period of 2020.

Fiscal Year 2021 Operational and Financial Highlights

  • Total loan origination volume[1]was RMB12.8 billion (US$2.0 billion) during the fiscal year of 2021, representing an increase of 45.5% from RMB8.8 billion in 2020.
  • Total outstanding loan principal[3] was RMB10.4 billion as of December 31, 2021, as compared to RMB9.7 billion as of December 31, 2020.
  • Total number of active borrowers[4] was 22,741 as of December 31, 2021, as compared to 25,337 as of December 31, 2020.
  • Total number of transactions was 22,060 during the fiscal year of 2021, representing an increase of 24.6% from 17,703 in 2020.
  • Total interest and fees income were RMB1,782.4 million (US$279.7 million) for the fiscal year of 2021, representing a decrease of 3.4% from RMB1,844.8 million in 2020.
  • Net income was RMB65.0 million (US$10.3 million) for the fiscal year of 2021, representing a decrease of 43.4% from RMB114.9 million in 2020.
  • Basic and diluted earnings per ADS were RMB0.95(US$0.15) and RMB0.90 (US$0.14), respectively, in the fiscal year of 2021, as compared to RMB1.67 and RMB1.55, respectively, in 2020.

[1] Refers to the total amount of loans CNFinance originated during the relevant period.

[2] Refers to the total number of loans CNFinance originated during the relevant period.

[3] Refers to the total amount of loans outstanding for loans CNFinance at the end of the relevant period.

[4] Refers to borrowers with outstanding loan principal of home equity loans as at the end of a specific period.

“The year of 2021 was very important in CNF’s history as we achieved major success in expanding our Collaboration Model. During the year, we dedicated to work under the government’s call of ‘working on providing financial solutions for MSEs’. We acted as the bridge connecting our funding partners and MSE owners and helped over 22,000 of them get access to capital to meet their most urgent needs. The loan origination volume of 2021 was RMB12.8 billion and the outstanding loan principal under the Collaboration Model was RMB10.2 billion as of December 31, 2021. In 2021, we achieved major breakthroughs in our bank lending model as we finalized our terms with certain renowned commercial banks. We believe the success of the bank lending model will provide momentum to our further reformation.

While recognizing our achievements, we are keenly aware of our greater mission in 2022. As I have introduced on many occasions, as a key component to build China’s inclusive financial system, CNF shoulders important responsibilities to help MSEs to meet their most urgent financing needs, which requires us to forge ahead to provide better services and solutions. Our goal for 2022 is to build our model into a real service platform under which we bear less risks and do not carry heavy assets on our book. We believe such model will be the solution to cover more MSEs while maintaining sustainable growth of our business, and to create continuous return for our shareholders.” Commented Mr. Bin Zhai, Chairman and CEO of CNFinance.

Fourth Quarter 2021 Financial Results

Total interest and fees income for the fourth quarter of 2021 increased by 6.6% to RMB448.8 million (US$70.4 million) as compared to RMB421.1 million for the same period of 2020.

Interest and financing service fees on loans increased by 6.6% to RMB444.7 million (US$69.8 million) for the fourth quarter of 2021 as compared to RMB417.1 million for the same period of 2020, primarily due to the increase in the balance of average daily outstanding loan principal.

Interest on deposits with banks increased by 2.5% to RMB4.1 million (US$0.6 million) for the fourth quarter of 2021 as compared to RMB4.0 million for the same period of 2020, primarily due to larger average daily balance of time deposits in the fourth quarter of 2021 as compared to the same period of 2020.

Total interest and fees expenses increased by 28.8% to RMB205.2 million (US$32.2 million) for the fourth quarter of 2021 as compared to RMB159.3 million for the same period of 2020, primarily due to the increase in the principals of other borrowings as well as the funding cost from trust companies.

Net interest and fees income decreased by 7.0% to RMB243.6 million (US$38.2 million) for the fourth quarter of 2021 as compared to RMB261.8 million for the same period of 2020 as the increase in interest and fees expenses being more significant than the increase in interest and fees income.

Collaboration cost for sales partners, representing sales incentives paid to sales partners, increased to RMB119.5 million (US$18.8 million) for the fourth quarter of 2021 as compared to RMB104.4 million for the same period of 2020, primarily due to the increase in average daily outstanding loan principal under the collaboration model as compared to the same period of 2020.

Net interest and fees income after collaboration cost was RMB124.1 million (US$19.4 million) for the fourth quarter of 2021, representing a decrease of 21.2% from RMB157.4 million in the same period of 2020 due to higher interest and fees expenses.

Provision for credit losses recorded a reversal of RMB308.2 million (US$48.4 million) for the fourth quarter of 2021 as compared to a reversal of RMB30.9 million for the same period of 2020, primarily due to the combined effect of (a) higher loss given default (LGD) under the current expected credit loss (CECL) model which takes into account the Company’s historical data of actual loss in the past few years, and (b) the fact that the Company transferred loans under the traditional facilitation model to third parties in bulk during the fourth quarter of 2021 and the allowance of such loans was reversed.

Net gains/(losses) on sales of loans decreased to a net loss of RMB468.6million (US$73.5 million) for the fourth quarter of 2021 from a net gain of RMB43.7 million in the same period of 2020, primarily attributable to the fact that the Company transferred loans under the traditional facilitation model to third parties in bulk during the fourth quarter of 2021. Such loans were all facilitated prior to 2019, and the majority of them were long past due and therefore sold at a large discount.

Other gains, net was RMB16.2 million (US$2.5 million) for the fourth quarter of 2021, compared to RMB7.8 million for the same period of 2020, primarily attributable to (a) the increase of Credit Risk Mitigation Position forfeited by the sales partners, and (b) the credit loss associated with an investment in debt securities. During the fourth quarter of 2021, the Company established a limited partnership with a third-party company, in which the Company acts as the limited partner and receives fixed rate of return of its investment on a quarterly basis, and such investment is recognized as debt securities.

Total operating expenses decreased by 7.6% to RMB106.3 million (US$16.7million) for the fourth quarter of 2021, compared with RMB115.0 million for the same period of 2020.

Employee compensation and benefits increased by 19.5% to RMB62.4 million (US$9.8 million) for the fourth quarter of 2021 as compared to RMB52.2 million for the same period of 2020, primarily due to a one-time compensation payment to our former CFO as he stepped down from his position in the fourth quarter of 2021.

Share-based compensation expenses decreased by 69.7% to RMB4.7 million (US$0.7 million) for the fourth quarter of 2021 from RMB15.5 million in the same period of 2020. According to the Company’s share option plan adopted on December 31, 2019, approximately 50%, 30% and 20% of the option granted will be vested on December 31, 2020, 2021 and 2022, respectively. Related compensation cost of the option grants will be recognized over the requisite period.

Taxes and surcharges decreased by 20.5% to RMB10.1 million (US$1.6 million) for the fourth quarter of 2021, as compared to RMB12.7 million for the same period of 2020, primarily attributable to a decrease in the non-deductible value added tax (“VAT”). The decrease in VAT was attributable to the characterization of certain amounts as “service fees charged to trust plans” which are a non-deductible item. According to PRC tax regulations, “service fees charged to trust plans” incur a 6% VAT on the subsidiary level, but are not recorded as an input VAT on a consolidated trust plan level. “Service fees charged to trust plans” were significantly decreased in the fourth quarter of 2021 compared to the same period of 2020 due to maturity of some trust plans.

Operating lease cost decreased by 30.4% to RMB3.2 million (US$0.5 million) for the fourth quarter of 2021 as compared to RMB4.6 million for the same period of 2020, primarily due to the continued development of the collaboration model that allowed the Company to further reduce the office leasing costs which was used to rent offices to accommodate sales staff.

Other expenses decreased by 14.0% to RMB25.9 million (US$4.1 million) for the fourth quarter of 2021 as compared to RMB30.1 million for the same period of 2020, such expenses were mainly attributable to decreases in (a) the IT R&D and outsourcing service fees related to an employee service technology platform which was delivered and paid in full; (b) service fees paid to third-party consultants, and (c) costs related to the promotion of the collaboration model as it has been widely accepted. 

Income tax (expense)/benefit recorded an income tax benefit of RMB15.4 million (US$2.4 million) for the fourth quarter of 2021 as compared to an income tax expense of RMB24.2 million for the same period of 2020, primarily due to the fact that the Company recorded a loss before income tax for the fourth quarter of 2021, such loss was due to the loss…



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