The scale of loans has continued to grow, but business problems have gradually become prominent, and Lexin is also at a disadvantage in the industry competition
The CEO of LX.O has said that "high-quality growth is the development principle that Lexin has always adhered to". However, recently, problems such as salesmen "inducing" loans, high interest rates, and violent collection have caused many users to be dissatisfied. Among them, many users said that without consent, Lexin salesmen operated the user's mobile phone to apply for a loan product, and the user still had to pay a high fee for early repayment.
According to the financial report data for the third quarter of 2021, the total loan disbursement of Lexin was 55.8 billion yuan, up 15.6% year-on-year. However, as of September 30, 2021, the outstanding principal balance of loans amounted to RMB92.9 billion, up 37.8% year-on-year. In terms of asset quality, Lexin's 90-day + overdue rate is relatively high in the industry, at 1.85%. Operating performance is also reflected in the capital market, the current market value of Lexin is 611 million US dollars, down nearly 60% from the highest value.
The salesman "borrows" the user
Recently, many installment music users complained on the black cat platform, saying that the installment music salesman opened a loan business without authorization on the grounds of applying for a "large amount of low interest" business, and applied for a high-interest loan product.
User Li Li (pseudonym) told China Science and Technology Investment that in December 2021, Lexin salesmen came to his store to introduce installment le products to him, and said that he could help Li Apply for "large amounts of low interest" business, which was lower than the interest rate of large loan business of other platforms.
Li Li considered that there may be capital needs in the future, so he agreed that the salesman would help him download the installment music APP and open a "large amount and low interest" business. But then, without asking Li Li's opinion, the salesman operated his mobile phone without authorization to open the "Lehua Loan Money" product and applied for a loan of 40,000 yuan.
*Image source: Screenshot of the loan provided by Li Li
"I clearly told the salesman that he didn't need a loan now, and he checked his bank card two days later to learn that he had a loan, and now he needed to pay back an additional interest expense for no reason," Li li said, the loan was repaid in 12 installments, and the interest cost for one year was 3894.4 yuan, with a comprehensive annual interest rate of 18%.
In addition, the loan could not be applied for a one-time repayment, and Li Li's repeated contact with customer service was not resolved. "Later, the customer service said that it could be repaid for 3 months first, and the latter could be repaid in one lump sum, but the interest rate for the first 3 months was the highest, adding up to about 1425 yuan." Li Li said that at present, he still chooses to repay the loan on time.
Another user, Wang Hua (pseudonym), also suffered the same problem. Wang Hua told the "China Science and Technology Investment" reporter that at the end of 2021, Lexin salesmen came to the door to promote installment le products, and also introduced "large amounts of low interest" products to him, but finally without Wang Hua's consent, he helped him apply for a loan of 40,000 yuan, with a one-year interest cost of about 5,000 yuan.
Since then, Wang Hua has contacted Lexin customer service several times to cancel the loan, and after many communications, Lexin agreed to repay Wang Hua in advance, but still needs to repay the increased interest. "Originally, the interest in the first month was about four or five hundred yuan, but after agreeing to repay the loan in advance, the interest in the first month was repaid by almost seven or eight hundred yuan." Wang Hua said.
In addition, there are a number of anonymous users on the black cat complaint platform said that they encountered Lexin salesmen to promote installment products, and without the consent of users, the salesmen applied for a loan for users without authorization, and could not pay off the loan at one time, increasing the cost of repayment by users.
*Image source: Black Cat Complaint Platform
According to the official website of Lexin, Installment Le is a quality installment shopping mall under Lexin, founded in October 2013, and is one of the earliest e-commerce platforms in China to launch installment shopping. According to Tianyan' investigation, Shenzhen Installment Le Network Technology Co., Ltd., a company to which Installment Music belongs, has a number of legal proceedings related to the company between 2016 and 2021, involving loan contract disputes and private lending disputes.
Su Xiaorui, a senior analyst at Analysys, told China Science and Technology Investment that offline induced loans were once the hardest hit areas for consumer finance violations, such as offline training institutions inducing student loans, and offline medical and aesthetic institutions inducing college student loans. At present, with the increasingly fierce competition in consumer finance online and the gradual peak of traffic dividends, some institutions that originally mainly focused on online business have also begun to expand offline and set up their own push teams, and there is no corresponding threshold for practitioners, and the quality of practitioners is uneven, which can easily lead to cases of infringement of financial consumers.
In response to such cases, "the relevant responsibilities of licensed financial institutions should be strengthened in the follow-up, and financial institutions need to verify the true wishes of loan applicants, and if necessary, they can refer to the 'loan cooling-off period' system that already exists in the industry to provide due protection for applicants, in addition to strengthening the review of partners, before cooperation, it is necessary to clarify the rights and responsibilities of all parties in the agreement, so as to avoid institutions with low compliance or even active infringement of the rights and interests of financial consumers", Su Xiaorui further explained.
It should be mentioned that some anonymous users said that some salesmen went to the university dormitory to promote installment music products, with an annual interest rate of 34%, and some students made more than 400 calls to them a month after overdue, and sent reminder text messages to friends and parents, infringing on personal privacy. At present, the student body has initiated a collective complaint with a total of 542 complaints.
In March 2021, the China Banking and Insurance Regulatory Commission and five other departments issued the Notice on Further Regulating the Supervision and Administration of Internet Consumer Loans for College Students, which clarifies that microfinance companies may not issue Internet consumer loans to college students, and non-licensed institutions are not allowed to provide credit services to college students.
The performance is inferior to the competition
According to the financial report, Lexin's operating income in the third quarter of 2021 decreased by 5.9% from THE same period last year of 3.154 billion yuan to 2.968 billion yuan. Among them, the credit service income was 1.765 billion yuan, the platform service income was 775 million yuan, and the direct sales and service income was 428 million yuan. The decrease in operating income was due to a decrease in credit-oriented services revenue and online direct sales and service revenue.
From the perspective of credit business, in the third quarter of 2021, the number of active users using Lexin loan products was 7.7 million, an increase of 3.9% year-on-year, and the number of new active users using Lexin loan products was 1.4 million, a decrease of 15.6% year-on-year. Loan disbursements totaled RMB55.8 billion during the same period, up 15.6% year-on-year. However, as of September 30, 2021, the outstanding principal balance of loans amounted to RMB92.9 billion, up 37.8% year-on-year.
At the same time, marketing expenses and personnel costs have further increased. In the third quarter, Lexin's sales and marketing expenses increased by 36.4% year-on-year from RMB360 million in the third quarter of 2020 to RMB491 million in the third quarter of 2021, and processing and service costs increased by 44.7% from RMB362 million in the third quarter of 2020 to RMB524 million in the third quarter of 2021, primarily due to increased risk management and collection fees and increased fees for third-party payment platforms.
In addition, in the third quarter, Lexin landed a number of independently developed platforms and systems, deployed more than 60,000 core risk control rules, undertook 500,000+ decision-making tasks per minute, and research and development expenses increased by 10.7% year-on-year to 131 million yuan in the third quarter of 2021, accounting for 18% of operating expenses.
The increase in related expenses eroded some profits. According to the financial report, Lexin's adjusted net profit in the third quarter was 641 million yuan, an increase of 44.8% year-on-year, but a decrease of 24.7% from the previous quarter. Due to lexin's large provision in the third quarter of 2020, which led to a sharp decline in the profit of the current period and a low base, the net profit in the third quarter of 2021 increased significantly year-on-year.
Compared with the data of previous years, the growth rate of Lexin's net profit has dropped sharply, and from 2018 to 2020, Lexin's net profit was 1.977 billion yuan, 2.295 billion yuan and 595 million yuan, respectively, with a year-on-year growth rate of 722.67%, 16.04% and -74.07% respectively.
With the rapid growth of consumer financial institutions, many enterprises have laid out the field of consumer finance, and industry competition has intensified. Judging from the latest performance data, Lexin has shown a backward trend compared with the industry's leading lending platform 360 Digital (QFIN.O) and Xinye Technology (FINV.N).
In the third quarter of 2021, the operating income of Xinye Technology was 2.53 billion yuan, an increase of 40.8% year-on-year, the highest growth rate, and the net profit of 360 Digital Branch was the highest, at 1.56 billion yuan. In terms of asset quality, the 90-day + overdue rate of the three platforms was basically stable compared with the previous month, and the 90-day + overdue rate of Xinye Technology was the lowest, at 1.04%, followed by 360 digital subjects, and the highest was Lexin, which was 1.85%.
In the secondary market, as of noon on January 20, 360 Digital Had the highest market capitalization at $3.11 billion, followed by Shinya Technology at $1.267 billion, while Lexin's market capitalization was $611 million, down nearly 60% from the highest. In terms of valuation, 360 Digital Andy is relatively close to the price-earnings ratio of Xinye Technology, which is 3.51 times and 3.41 times, respectively, while Lexin is relatively low, at 1.53 times.
The reporter sent a letter to Lexin on issues related to the operation of loans and performance development of the salesman, but as of press time, he has not received a reply.
Source: Zhongke Finance