On November 14th, Lujin Holdings Limited (NYSE: LU; 06623. HK) released its third quarter report for 2023. According to the financial report, Lujin Holdings achieved an operating revenue of approximately 8.1 billion yuan and a net profit of 131 million yuan in the third quarter. The financial report also shows that stabilizing the quality of new loan assets and optimizing costs are the main reasons for Lujin Holdings to maintain profitability. In the third quarter, credit impairment losses decreased by 24.1% year-on-year, and total expenses in the third quarter decreased by 30.1% year-on-year.
  In the third quarter, Lujin Holdings adhered to a prudent business strategy and focused on the quality of newly added assets. We believe that these difficult but necessary measures will lay the foundation for the company's sustainable and high-quality development
It is worth noting that the financial report shows that the operating expenses of Lujin Holdings decreased by 6.1% month on month in the third quarter, and the total expenses decreased by 30.1% year-on-year. The effect of cost reduction and efficiency increase is significant.
Regarding this, Ji Kuisheng, co CEO of Lujin Holdings, introduced that the company's direct sales team reform has achieved initial results. 68% of new loans in the third quarter came from direct sales, while 61% in the second quarter. The average production capacity of the direct sales team increased by 25.4% month on month, continuing the positive trend in the second quarter.
Ready to transition to a 100% guarantee model
The consumer finance business continues to be a major highlight of Lujin Holdings' third quarter report. According to the financial report, Lujin Holdings added 20.6 billion yuan in new loans to its consumer finance business in the third quarter, an increase of 15.3% and 48.5% respectively compared to the same period last year. As of the end of the third quarter, the cumulative balance of consumer finance loans reached 36.1 billion, an increase of 9.9% compared to the end of the previous quarter and 29.4% compared to the end of the previous quarter. The non-performing rate of consumer finance in the third quarter was 1.9%, and in the second quarter it was 2.2%.
According to Ji Kui sheng's interpretation, smaller and shorter term consumer loans can help enrich the product line controlled by Lujin and facilitate business diversification. In addition, as the proportion of consumer credit in new loans increases, the decrease in financing costs for consumer finance business will also help reduce overall financing costs. The company plans to continue its efforts to expand its consumer finance business.
The performance of financing guarantee business is also worth paying attention to. The financial report also shows that in the third quarter, the risk-taking ratio of new loans granted by Lujin Holdings (excluding consumer finance companies) increased from 21.7% in the same period last year to 54.3%.
  Ping An Inclusive Financing Guarantee Co., Ltd., a subsidiary of Lujin Holdings, has strengthened its guarantee responsibilities and continuously increased its guarantee ratio, helping cooperative banks better achieve the "dare to lend and willing to lend" of small and micro loans through the financing and guarantee model. The transformation of business model has gained recognition from a large number of cooperative banks, and is expected to increase revenue and improve the profitability of Lujin Holdings in the medium term.
Acquisition of 100% stake in Ping An One Account Bank
On the day of the financial report release, Lujin Holdings announced that it will acquire 100% of the shares of Ping An One Account Bank from Financial One Account. The announcement shows that Ping An One Account Bank is the first virtual bank in Hong Kong to focus on providing flexible and efficient banking services for small and medium-sized enterprises. The capital adequacy ratio of Ping An One Account Bank is 100%, significantly higher than regulatory requirements. All of its loans are for small and medium-sized enterprises in Hong Kong, and a significant portion of the outstanding balance is supported by the Hong Kong SAR Government's Small and Medium sized Enterprise Financing Guarantee Scheme.
  Its target customers and business are relatively consistent with the existing business form of Land Control, allowing us to leverage our past operational experience and technical expertise to develop our business. This acquisition will supplement the business layout of Land Control and contribute to business diversification.
Market participants believe that the acquisition of Ping An One Account Bank is an important step for Lujin Holdings to expand into the international market with its financial technology strength. LuJinSuo Holdings has been deeply engaged in digital small and micro financing services for 18 years. Based on its understanding of the Hong Kong market, LuJinSuo can leverage its virtual banking license to create innovative digital banking services, and use financial technology to support inclusive finance in Hong Kong.