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Lufax Reports Fourth Quarter and Full Year 2021 Financial Results

03/09/2022

SHANGHAI, China--(BUSINESS WIRE)-- 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 fourth quarter and full year ended December 31, 2021. In addition, Lufax announced a cash dividend of US$0.68 per ordinary share (US$0.34 per ADS) with a record date of April 8, 2022 and a new US$500 million share repurchase program.

Fourth Quarter 2021 Financial Highlights

  • Total income increased by 19.2% to RMB15,831 million (US$2,484 million) in the fourth quarter of 2021 from RMB13,286 million in the same period of 2020.
  • Net profit increased by 1.7% to RMB2,896 million (US$454 million) in the fourth quarter of 2021 from RMB2,847 million in the same period of 2020.
  • Non-IFRS adjusted net profit1 increased by 19.7% to RMB3,409 million (US$535 million) in the fourth quarter of 2021 from RMB2,847 million in the same period of 2020.

(In millions except percentages,
unaudited)

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2020

2021

YoY

2020

 

2021

YoY

 

RMB

RMB

USD

 

RMB

RMB

USD

 

Total income

13,286

 

15,831

 

2,484

 

19.2

%

52,046

 

61,835

 

9,703

 

18.8

%

Total expenses

(9,106

)

(11,492

)

(1,803

)

26.2

%

(34,136

)

(38,435

)

(6,031

)

12.6

%

Total expenses excluding credit and
asset impairment losses, financial
costs and other gains/(losses) - net

(7,982

)

(8,302

)

(1,303

)

4.0

%

(28,612

)

(30,194

)

(4,738

)

5.5

%

Credit and asset impairment losses

(992

)

(3,222

)

(506

)

224.8

%

(3,042

)

(7,745

)

(1,215

)

154.6

%

Financial costs and other
gains/(losses) - net

(132

)

32

 

5

 

(124.2

%)

(2,481

)

(496

)

(78

)

(80.0

%)

Net profit

2,847

 

2,896

 

454

 

1.7

%

12,276

 

16,709

 

2,622

 

36.1

%

Non-IFRS adjusted net profit

2,847

 

3,409

 

535

 

19.7

%

13,602

 

17,561

 

2,756

 

29.1

%

Net margin

21.4

%

18.3

%

18.3

%

NA

23.6

%

27.0

%

27.0

%

NA

Non-IFRS adjusted net margin

21.4

%

21.5

%

21.5

%

NA

26.1

%

28.4

%

28.4

%

NA

Fourth Quarter 2021 Operational Highlights

Retail credit facilitation business:

  • Outstanding balance of loans facilitated increased by 21.3% to RMB661.0 billion as of December 31, 2021 from RMB545.1 billion as of December 31, 2020.
  • New loans facilitated increased by 14.3% to RMB151.6 billion in the fourth quarter of 2021 from RMB132.7 billion in the same period of 2020.
  • Cumulative number of borrowers increased by 16.4% to approximately 16.8 million as of December 31, 2021 from approximately 14.5 million as of December 31, 2020.
  • During the fourth quarter of 2021, excluding the consumer finance subsidiary, 79.6% of new loans facilitated were disbursed to small business owners, up from 74.4% in the same period of 2020.
  • As of December 31, 2021, excluding the consumer finance subsidiary, outstanding balance of loans facilitated with guarantees from credit enhancement partners accounted for 78.9% of the total outstanding balance of loans facilitated, down from 89.4% as of December 31, 2020.
  • During the fourth quarter of 2021, excluding the consumer finance subsidiary, the Company bore risk on 20.8% of its new loans facilitated, up from 10.0% in the same period of 2020.
  • As of December 31, 2021, including the consumer finance subsidiary, the Company bore risk on 16.6% of its outstanding balance, up from 6.3% as of December 31, 2020.
  • For the fourth quarter of 2021, the Company’s retail credit facilitation revenue take rate2 based on loan balance was 9.0%, as compared to 9.1% for the fourth quarter of 2020.
  • C-M3 flow rate3 for the total loans the Company had facilitated was 0.5% in the fourth quarter of 2021, as compared to 0.4% in the third quarter of 2021. Flow rates for the general unsecured loans and secured loans the Company had facilitated were 0.6% and 0.2%, respectively in the fourth quarter of 2021, as compared to 0.5% and 0.1%, respectively in the third quarter of 2021.
  • Days past due (“DPD”) 30+ delinquency rate4 for the total loans the Company had facilitated was 2.2% as of December 31, 2021, as compared to 1.9% as of September 30, 2021. DPD 30+ delinquency rate for general unsecured loans was 2.6% as of December 31, 2021, as compared to 2.2% as of September 30, 2021. DPD 30+ delinquency rate for secured loans was 0.8% as of December 31, 2021, as compared to 0.5% as of September 30, 2021.
  • DPD 90+ delinquency rate5 for the total loans facilitated was 1.2% as of December 31, 2021, as compared to 1.1% as of September 30, 2021. DPD 90+ delinquency rate for general unsecured loans was 1.5% as of December 31, 2021, as compared to 1.3% as of September 30, 2021. DPD 90+ delinquency rate for secured loans was 0.4% as of December 31, 2021, as compared to 0.3% as of September 30, 2021.

Wealth management business:

  • Total number of registered users grew to 51.6 million as of December 31, 2021 from 46.2 million as of December 31, 2020.
  • Total number of active investors grew to 15.5 million as of December 31, 2021 from 14.9 million as of December 31, 2020.
  • Total client assets grew by 1.4% to RMB432.7 billion as of December 31, 2021 from RMB426.6 billion as of December 31, 2020.
  • The 12-month investor retention rate was 96.1% as of December 31, 2021, as compared to 96.8% as of December 31, 2020.
  • Contribution to total client assets from customers with investments of more than RMB300,000 on the Company’s platform increased to 81.0% as of December 31, 2021 from 75.5% as of December 31, 2020.
  • During the fourth quarter of 2021, the annualized take rate6 for current products and services on the Company’s wealth management platform was 64.0 bps, up from 44.1 bps during the third quarter of 2021.

Mr. Ji Guangheng, Chairman of Lufax, commented, “During 2021, we sustained our business growth, enhanced our regulatory compliance status, and maintained our overseas listing standard. Aligning with new industry regulations, we have completed the vast majority of our business transformation initiatives and are on track to complete the remainder in an orderly manner. On the business licensing front, we possess not only guarantee licenses through our locally approved subsidiaries, but also a consumer finance license which equips us with a far greater allowable leverage ratio than that being considered for the proposed national micro-lending license. In addition, having abundant capital reserves and licensing eligibility, we have already made preparations and stand ready to apply for any new licenses if necessary. Looking ahead, we will continue to leverage the competitive advantages born out of our unique business model, methodically execute our strategic adjustments, reward our shareholders through share repurchases and dividend payouts, empower small business owners with high-quality financial services, and deliver growing value for our shareholders and society at large.”

Mr. Gregory Gibb, Co-Chief Executive Officer of Lufax, commented, “We closed 2021 with strong financial and operating results in the fourth quarter. During 2021, we deftly executed a number of operational adjustments to ensure the sustainability of our long-term growth and profitability. We succeeded in maintaining our overall net profit margins and unit economics for our retail credit facilitation business while continually reducing the average APR of our loan portfolio. Operationally, we fully aligned our business with regulatory requirements, continued our transition toward a more sustainable risk-sharing model, and improved our direct salesforce productivity. In our wealth management business, we deepened our product reform to place greater emphasis on serving high-value clients and providing high take-rate products, thus sequentially boosting our take rate by 19.9 basis points in the fourth quarter. Looking ahead, we will continue to closely monitor our new loan sales, optimize our channel mix, improve our asset quality, and increase our direct salesforce productivity. Having established a strong track record of executing transformational initiatives, we strive to evolve our business further to capture emerging opportunities amidst a rapidly changing environment.”

Mr. James Zheng, Chief Financial Officer of Lufax, commented, “We attribute our solid financial results in the fourth quarter of 2021 to stable unit economics, steady loan volume growth, high loan portfolio quality, and improved wealth management take rates. Both our full year revenues and net profit exceeded the high end of our previously announced guidance range. Our total income increased by RMB2.5 billion or 19.2% year over year to RMB15.8 billion in the fourth quarter. While our total expenses increased by RMB2.4 billion or 26.2% year over year primarily as a result of our increased credit risk exposure and a one-time asset impairment cost, our operating related costs remained flat thanks to our efficiency gains. Excluding the one-time asset impairment cost, our non-IFRS adjusted net profit increased by 19.7% to reach RMB3.4 billion. For the full year 2022, we expect new loans facilitated to grow by 9% - 12%, with the pace of growth accelerating noticeably in the second half of the year as we complete our channel optimization initiatives. At the same time, we expect to grow our total annual income by 10% - 12% while increasing our operating related costs at a much slower pace of 6% - 8%. Given that we initiated our risk-sharing business model and started to take on more credit risk in the first half of 2021, we expect the increase in our credit-related provision cost to taper off in the second half of 2022, thus the credit cost will be normalized, and should lead to a net profit growth of 11% - 13% for the full year.”

Fourth Quarter 2021 Financial Results

TOTAL INCOME

Total income increased by 19.2% to RMB15,831 million (US$2,484 million) in the fourth quarter of 2021 from RMB13,286 million in the same period of 2020. The Company’s total income mix changed with the evolution of its business model, as it bore more credit risk and increased funding from consolidated trust plans that provided lower funding costs.

 

Three Months Ended December 31,

 

(In millions except percentages, unaudited)

2020

 

2021

YoY

 

RMB

% of income

RMB

 

% of income

 

Technology platform-based income

9,859

 

74.2

%

8,836

 

55.8

%

(10.4

%)

Retail credit facilitation service fees

9,283

 

69.9

%

8,128

 

51.3

%

(12.4

%)

Wealth management transaction and service fees

576

 

4.3

%

708

 

4.5

%

22.9

%

Net interest income

2,333

 

17.6

%

4,234

 

26.7

%

81.5

%

Guarantee income

256

 

1.9

%

1,635

 

10.3

%

538.7

%

Other income

452

 

3.4

%

769

 

4.9

%

70.1

%

Investment income

386

 

2.9

%

359

 

2.3

%

(7.0

%)

Share of net profits of investments accounted for
using the equity method

(1

)

(0.0

%)

(2

)

(0.0

%)

100.0

%

Total income

13,286

 

100

%

15,831

 

100

%

19.2

%

 
  • Technology platform-based income decreased by 10.4% to RMB8,836 million (US$1,387 million) in the fourth quarter of 2021 from RMB9,859 million in the same period of 2020 due to the decrease in retail credit facilitation service fees, partially offset by the increase in wealth management transaction and service fees.
    • Retail credit facilitation service fees decreased by 12.4% to RMB8,128 million (US$1,275 million) in the fourth quarter of 2021 from RMB9,283 million in the same period of 2020, mainly due to a change in revenue mix driven by the evolution of the Company’s risk-sharing business model.
    • Wealth management transaction and service fees increased by 22.9% to RMB708 million (US$111 million) in the fourth quarter of 2021 from RMB576 million in the same period of 2020. The increase was mainly driven by the increase in fees generated from the Company’s current products, which was partially offset by the run-off of legacy products.
  • Net interest income increased by 81.5% to RMB4,234 million (US$664 million) in the fourth quarter of 2021 from RMB2,333 million in the same period of 2020, mainly as a result of the Company’s increased usage of trust funding channels that were consolidated by the Company. As of December 31, 2021, the Company’s on-balance sheet loans accounted for 32.5% of its total loan balance under management, as compared to 21.7% as of December 31, 2020.
  • Guarantee income increased by 538.7% to RMB1,635 million (US$257 million) in the fourth quarter of 2021 from RMB256 million in the same period of 2020, primarily due to the increase in the loans for which the Company bore credit risk.
  • Other income increased to RMB769 million (US$121 million) in the fourth quarter of 2021 from RMB452 million in the same period of 2020, mainly due to the increase in account management fees, collections, and other value-added service fees charged to the Company’s credit enhancement partners as part of the retail credit facilitation process.
  • Investment income decreased by 7.0% to RMB359 million (US$56 million) in the fourth quarter of 2021 from RMB386 million in the same period of 2020, mainly due to the fair value losses from investment assets.

TOTAL EXPENSES

Total expenses increased by 26.2% to RMB11,492 million (US$1,803 million) in the fourth quarter of 2021 from RMB9,106 million in the same period of 2020. Total expenses excluding credit and asset impairment losses, finance costs, and other (gains)/losses increased by 4.0% to RMB8,302 million (US$1,303 million) in the fourth quarter of 2021 from RMB7,982 million in the same period of 2020.

 

Three Months Ended December 31,

(In millions except percentages, unaudited)

2020

2021

YoY

 

RMB

% of income

RMB

% of income

 

Sales and marketing expenses

4,885

 

36.8

%

4,835

 

30.5

%

(1.0

%)

General and administrative expenses

986

 

7.4

%

971

 

6.1

%

(1.5

%)

Operation and servicing expenses

1,650

 

12.4

%

1,900

 

12.0

%

15.2

%

Technology and analytics expenses

461

 

3.5

%

597

 

3.8

%

29.5

%

Credit impairment losses

985

 

7.4

%

2,533

 

16.0

%

157.2

%

Asset impairment losses

7

 

0.1

%

689

 

4.4

%

9,742.9

%

Finance costs

326

 

2.5

%

267

 

1.7

%

(18.1

%)

Other (gains)/losses - net

(194

)

(1.5

%)

(300

)

(1.9

%)

54.6

%

Total expenses

9,106

 

68.5

%

11,492

 

72.6

%

26.2

%

 
  • Sales and marketing expenses decreased by 1.0% to RMB4,835 million (US$759 million) in the fourth quarter of 2021 from RMB4,885 million in the same period of 2020.
    • Borrower acquisition expenses decreased by 18.3% to RMB2,297 million (US$360 million) in the fourth quarter of 2021 from RMB2,810 million in the same period of 2020. The decrease was mainly due to 1) increased sales productivity and decreased sales commissions; and 2) the higher base in the fourth quarter of 2020 due to the recognition of amortized selling expenses from loans originated in prior years.
    • Investor acquisition and retention expenses decreased by 23.8% to RMB173 million (US$27 million) in the fourth quarter of 2021 from RMB227 million in the same period of 2020, mostly due to the improvement in the Company’s investor acquisition efficiency.
    • General sales and marketing expenses increased by 28.0% to RMB2,365 million (US$371 million) in the fourth quarter of 2021 from RMB1,848 million in the same period of 2020, primarily due to an increase in general sales cost and the lower base in the fourth quarter of 2020 as a result of the social security relief during the COVID-19 outbreak.
  • General and administrative expenses decreased by 1.5% to RMB971 million (US$152 million) in the fourth quarter of 2021 from RMB986 million in the same period of 2020 as a result of the Company’s expense control measures.
  • Operation and servicing expenses increased by 15.2% to RMB1,900 million (US$298 million) in the fourth quarter of 2021 from RMB1,650 million in the same period of 2020, primarily due to 1) the increase of trust plan management expenses, which resulted from the increase in consolidated trust plans, and 2) growth in the outstanding balance of loans facilitated.
  • Technology and analytics expenses increased by 29.5% to RMB597 million (US$94 million) in the fourth quarter of 2021 from RMB461 million in the same period of 2020, mainly due to the Company’s ongoing investments in technology research and development.
  • Credit impairment losses increased by 157.2% to RMB2,533 million (US$397 million) in the fourth quarter of 2021 from RMB985 million in the same period of 2020, mainly driven by 1) increase of provision and indemnity loss driven by increased risk exposure, as of December 31, 2021, the Company bore risk on 16.6% of its outstanding balance, up from 6.3% as of December 31, 2020, and 2) increased provision expense due to cash flow changes in non-performing assets related to legacy business.
  • Asset impairment losses increased to RMB689 million (US$108 million) in the fourth quarter of 2021 from RMB7 million in the same period of 2020, mainly due to impairment loss of intangible assets related to Qianhai exchange and Tianjin guarantee company.
  • Finance costs decreased by 18.1% to RMB267 million (US$42 million) in the fourth quarter of 2021 from RMB326 million in the same period of 2020, mainly due to a decrease in the balance of convertible bonds following the Company’s C-round convertible notes restructuring and the increase in interest income resulting from the increase in deposits.
  • Other gains increased to RMB300 million (US$47 million) in the fourth quarter of 2021 from RMB194 million in the same period of 2020, mainly due to the foreign exchange gain in the fourth quarter of 2021.

NET PROFIT

Net profit increased by 1.7% to RMB2,896 million (US$454 million) in the fourth quarter of 2021 from RMB2,847 million in the same period of 2020, driven by the aforementioned factors. Non-IFRS adjusted net profit increased by 19.7% to RMB3,409 million (US$535 million) in the fourth quarter of 2021 from RMB2,847 million in the same period of 2020.

EARNINGS PER ADS

Basic and diluted earnings per American Depositary Share (“ADS”) were RMB1.26 (US$0.20) and RMB1.21 (US$0.19), respectively, in the fourth quarter of 2021.

BALANCE SHEET

The Company had RMB34,743 million (US$5,452 million) in cash at bank as of December 31, 2021, as compared to RMB24,159 million as of December 31, 2020.

Recent Developments­

US$1 Billion Share Repurchase Program

During 2021, the Company’s board of directors authorized share repurchase programs under which the Company could repurchase up to an aggregate of US$1 billion of its ADSs during the specific period. As of December 31, 2021, the Company had repurchased approximately 107.0 million ADSs for approximately US$863.5 million under these share repurchase programs.

US$500 Million Share Repurchase Program

On March 7, 2022, the Company’s board of directors authorized an additional share repurchase program (the “US$500M Share Repurchase Program”), under which the Company may repurchase up to an aggregate of US$500 million worth of its ADSs over the following twelve months. The Company’s proposed repurchases under this share repurchase program may be made from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations.

Annual Dividend Policy

On March 7, 2022, the board of directors of the Company approved and declared a cash dividend of US$0.68 per ordinary share on the Company's outstanding shares to shareholders of record as of the close of trading on the New York Stock Exchange on April 8, 2022. The payment date will be April 15, 2022. Holders of ADSs, each two ADSs representing one ordinary share, will accordingly be entitled to a cash dividend of US$0.34 per ADS. The depository, Citibank, N.A., will distribute the dividend to holders of ADSs on or about April 22, 2022.

Business Outlook

For the full year of 2022, the Company expects its new loans facilitated to grow by 9% - 12% to the range of RMB706.8 billion to RMB726.2 billion and wealth management client assets to grow by 2% - 3% to the range of RMB441.3 billion to RMB445.7 billion. The Company expects its total income to grow by 10% - 12% to the range of RMB68.0 billion to RMB69.3 billion, and net profit to grow by 11% - 13% year over year to the range of RMB18.6 billion to RMB18.9 billion.

For the first quarter of 2022, the Company expects its new loans facilitated to grow by -2% - 2% year over year to the range of RMB169.0 billion to RMB175.8 billion and wealth management client assets to grow by 2% - 3% year over year to the range of RMB429.6 billion to RMB433.8 billion. Since retail credit facilitation income is recognized over the life of a loan and is more driven by loan balance, the Company expects its total income to grow by 8% - 10% year over year to the range of RMB16.5 billion to RMB16.8 billion. In the first quarter, net profit will grow by -2% - 2% year over year to the range of RMB4.9 billion to RMB5.1 billion, when excluding impact from the legacy P2P products in 2021, net profit is expected to grow by 6% - 10% year over year.

For the first half of 2022, the Company expects its new loans facilitated to grow by 3% - 6% year over year to the range of RMB334.8 billion to RMB344.6 billion and wealth management client assets to grow by 3% - 4% year over year to the range of RMB433.7 billion to RMB437.9 billion. The Company expects its total income to grow by 10% - 12% year over year to the range of RMB33.1 billion to RMB33.7 billion, and net profit to grow by 1% - 3% year over year to the range of RMB9.8 billion to RMB10.0 billion, and by 6% - 9% excluding the legacy P2P impact in 2021.

Conference Call Information

The Company’s management will hold an earnings conference call at 8:00 P.M. U.S. Eastern Time on Wednesday, March 9, 2022 (9:00 A.M. Beijing Time on Thursday, March 10, 2022) 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: https://www.incommglobalevents.com/registration/q4inc/10252/lufax-holding-ltd-fourth-quarter-2021-earnings-conference-call/

A replay of the conference call will be accessible through March 17, 2022 (+1 (866) 813-9403 or +1 (226) 828-7578; replay access code: 597354). 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 RMB6.3726 to US$1.00, the rate in effect as of December 30, 2021, 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's 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 and adjusted net margin, 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 impairment losses of good will and intangible asset and 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 the impairment losses of good will and intangible asset and non-recurring expense related to C-round convertible notes restructuring by total income.

Lufax believes that adjusted net profit and adjusted net margin 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 and adjusted net margin 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 INCOME STATEMENTS

(All amounts in thousands, except share data, or otherwise noted)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2020

 

2021

 

2020

 

2021

 

RMB

 

RMB

 

USD

 

RMB

 

RMB

 

USD

Technology platform-based income

9,859,002

 

 

8,836,164

 

 

1,386,587

 

 

41,221,842

 

 

38,294,317

 

 

6,009,214

 

Retail credit facilitation service fees

9,283,066

 

 

8,127,905

 

 

1,275,446

 

 

39,456,904

 

 

36,086,974

 

 

5,662,834

 

Wealth management transaction and service
fees

575,936

 

 

708,259

 

 

111,141

 

 

1,764,938

 

 

2,207,343

 

 

346,380

 

Net interest income

2,333,233

 

 

4,234,114

 

 

664,425

 

 

7,750,460

 

 

14,174,231

 

 

2,224,246

 

Guarantee income

256,008

 

 

1,634,938

 

 

256,557

 

 

601,644

 

 

4,370,342

 

 

685,802

 

Other income

452,263

 

 

769,097

 

 

120,688

 

 

1,517,042

 

 

3,875,407

 

 

608,136

 

Investment income

386,004

 

 

358,866

 

 

56,314

 

 

939,899

 

 

1,151,753

 

 

180,735

 

Share of net profits of investments accounted for
using the equity method

(527

)

 

(1,725

)

 

(271

)

 

14,837

 

 

(31,143

)

 

(4,887

)

Total income

13,285,983

 

 

15,831,454

 

 

2,484,301

 

 

52,045,724

 

 

61,834,907

 

 

9,703,246

 

Sales and marketing expenses

(4,884,714

)

 

(4,834,811

)

 

(758,687

)

 

(17,813,557

)

 

(17,993,072

)

 

(2,823,506

)

General and administrative expenses

(986,060

)

 

(970,864

)

 

(152,350

)

 

(2,975,544

)

 

(3,559,323

)

 

(558,535

)

Operation and servicing expenses

(1,650,278

)

 

(1,899,665

)

 

(298,099

)

 

(6,031,297

)

 

(6,557,595

)

 

(1,029,030

)

Technology and analytics expenses

(461,193

)

 

(596,647

)

 

(93,627

)

 

(1,792,081

)

 

(2,083,994

)

 

(327,024

)

Credit impairment losses

(984,689

)

 

(2,532,985

)

 

(397,481

)

 

(3,035,188

)

 

(6,643,727

)

 

(1,042,546

)

Asset impairment losses

(7,168

)

 

(689,286

)

 

(108,164

)

 

(7,168

)

 

(1,100,882

)

 

(172,752

)

Finance costs

(325,961

)

 

(267,359

)

 

(41,954

)

 

(2,865,654

)

 

(995,515

)

 

(156,218

)

Other gains/(losses) - net

194,428

 

 

299,807

 

 

47,046

 

 

384,270

 

 

499,379

 

 

78,363

 

Total expenses

(9,105,635

)

 

(11,491,810

)

 

(1,803,316

)

 

(34,136,219

)

 

(38,434,729

)

 

(6,031,248

)

Profit before income tax expenses

4,180,348

 

 

4,339,644

 

 

680,985

 

 

17,909,505

 

 

23,400,178

 

 

3,671,999

 

Income tax expenses

(1,332,865

)

 

(1,443,350

)

 

(226,493

)

 

(5,633,265

)

 

(6,691,118

)

 

(1,049,982

)

Net profit for the period

2,847,483

 

 

2,896,294

 

 

454,492

 

 

12,276,240

 

 

16,709,060

 

 

2,622,016

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit/(loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

Owners of the Group

2,886,433

 

 

2,906,087

 

 

456,028

 

 

12,354,114

 

 

16,804,380

 

 

2,636,974

 

Non-controlling interests

(38,950

)

 

(9,793

)

 

(1,537

)

 

(77,874

)

 

(95,320

)

 

(14,958

)

Net profit for the period

2,847,483

 

 

2,896,294

 

 

454,492

 

 

12,276,240

 

 

16,709,060

 

 

2,622,016

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

-Basic earnings per share

2.50

 

 

2.51

 

 

0.39

 

 

11.19

 

 

14.22

 

 

2.23

 

-Diluted earnings per share

2.44

 

 

2.42

 

 

0.38

 

 

11.10

 

 

13.38

 

 

2.10

 

-Basic earnings per ADS

1.25

 

 

1.26

 

 

0.20

 

 

5.59

 

 

7.11

 

 

1.12

 

-Diluted earnings per ADS

1.22

 

 

1.21

 

 

0.19

 

 

5.55

 

 

6.69

 

 

1.05

 

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 December 31,

 

2020

 

2021

 

RMB

 

RMB

 

USD

Assets

 

 

 

 

 

Cash at bank

24,158,568

 

 

34,743,188

 

 

5,451,964

 

Restricted cash

23,029,588

 

 

30,453,539

 

 

4,778,825

 

Financial assets at fair value through profit or loss

34,423,897

 

 

31,023,211

 

 

4,868,219

 

Financial assets at amortized cost

6,563,969

 

 

3,784,613

 

 

593,888

 

Financial assets purchased under reverse repurchase agreements

700,007

 

 

5,527,177

 

 

867,335

 

Accounts and other receivables and contract assets

23,325,978

 

 

22,344,773

 

 

3,506,382

 

Loans to customers

119,825,814

 

 

214,972,110

 

 

33,733,815

 

Deferred tax assets

3,358,664

 

 

4,873,370

 

 

764,738

 

Property and equipment

424,043

 

 

380,081

 

 

59,643

 

Investments accounted for using the equity method

489,931

 

 

459,496

 

 

72,105

 

Intangible assets

1,882,462

 

 

899,406

 

 

141,136

 

Right-of-use assets

973,547

 

 

804,990

 

 

126,320

 

Goodwill

9,046,830

 

 

8,918,108

 

 

1,399,446

 

Other assets

686,949

 

 

1,249,424

 

 

196,062

 

Total assets

248,890,247

 

 

360,433,486

 

 

56,559,879

 

Liabilities

 

 

 

 

 

Payable to platform users

9,114,906

 

 

2,747,891

 

 

431,204

 

Borrowings

10,315,445

 

 

25,927,417

 

 

4,068,578

 

Current income tax liabilities

2,610,610

 

 

8,222,684

 

 

1,290,319

 

Accounts and other payables and contract liabilities

5,483,757

 

 

8,814,255

 

 

1,383,149

 

Payable to investors of consolidated structured entities

110,367,718

 

 

195,446,140

 

 

30,669,764

 

Financial guarantee liabilities

748,674

 

 

2,697,109

 

 

423,235

 

Deferred tax liabilities

5,733,733

 

 

833,694

 

 

130,825

 

Lease liabilities

979,419

 

 

794,544

 

 

124,681

 

Convertible promissory note payable

10,117,188

 

 

10,669,498

 

 

1,674,277

 

Optionally convertible promissory notes

7,530,542

 

 

7,405,103

 

 

1,162,022

 

Other liabilities

2,736,934

 

 

2,315,948

 

 

363,423

 

Total liabilities

165,738,926

 

 

265,874,283

 

 

41,721,477

 

Equity

 

 

 

 

 

Share capital

77

 

 

75

 

 

12

 

Share premium

33,213,426

 

 

33,365,786

 

 

5,235,820

 

Treasury shares

(2

)

 

(5,560,104

)

 

(872,502

)

Other reserves

7,418,710

 

 

9,304,995

 

 

1,460,157

 

Retained earnings

40,927,597

 

 

55,942,943

 

 

8,778,669

 

Total equity attributable to owners of the Company

81,559,808

 

 

93,053,695

 

 

14,602,155

 

Non-controlling interests

1,591,513

 

 

1,505,508

 

 

236,247

 

Total equity

83,151,321

 

 

94,559,203

 

 

14,838,402

 

Total liabilities and equity

248,890,247

 

 

360,433,486

 

 

56,559,879

 

LUFAX HOLDING LTD

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands, except share data, or otherwise noted)

   

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2020

 

2021

 

2020

 

2021

 

 

RMB

 

RMB

 

USD

 

RMB

 

RMB

 

USD

Net cash generated from/(used in) operating activities

 

(2,378,084

)

 

(629,561

)

 

(98,792

)

 

7,121,282

 

 

4,987,472

 

 

782,643

 

Net cash generated from/(used in) investing activities

 

(5,176,335

)

 

2,949,461

 

 

462,835

 

 

(15,003,750

)

 

313,822

 

 

49,246

 

Net cash generated from/(used in) financing activities

 

18,017,702

 

 

(1,631,703

)

 

(256,050

)

 

24,873,923

 

 

(2,448,028

)

 

(384,149

)

Effects of exchange rate changes on cash and cash
equivalents

 

(705,491

)

 

(98,354

)

 

(15,434

)

 

(517,865

)

 

(142,607

)

 

(22,378

)

Net increase in cash and cash equivalents

 

9,757,792

 

 

589,843

 

 

92,559

 

 

16,473,590

 

 

2,710,659

 

 

425,362

 

Cash and cash equivalents at the beginning of the
period

 

14,027,859

 

 

25,906,467

 

 

4,065,290

 

 

7,312,061

 

 

23,785,651

 

 

3,732,488

 

Cash and cash equivalents at the end of the period

 

23,785,651

 

 

26,496,310

 

 

4,157,849

 

 

23,785,651

 

 

26,496,310

 

 

4,157,849

 

LUFAX HOLDING LTD

UNAUDITED RECONCILIATION OF IFRS AND NON-IFRS RESULTS

(All amounts in thousands, except share data, or otherwise noted)
 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2020

 

2021

 

2020

 

2021

 

RMB

 

RMB

 

USD

 

RMB

 

RMB

 

USD

Net profit

2,847,483

 

 

2,896,294

 

 

454,492

 

 

12,276,240

 

 

16,709,060

 

 

2,622,016

 

Add: Non-recurring expense related to C-
round convertible notes restructuring

-

 

 

-

 

 

-

 

 

1,326,007

 

 

-

 

 

-

 

Impairment losses of good will and intangible asset

-

 

 

682,646

 

 

107,122

 

 

-

 

 

1,092,662

 

 

171,463

 

Less: Tax effects on impairment losses of good will and
intangible asset

-

 

 

(170,033

)

 

(26,682

)

 

-

 

 

(240,985

)

 

(37,816

)

Non-IFRS adjusted net profit

2,847,483

 

 

3,408,907

 

 

534,932

 

 

13,602,247

 

 

17,560,737

 

 

2,755,663

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income

13,285,983

 

 

15,831,454

 

 

2,484,301

 

 

52,045,724

 

 

61,834,907

 

 

9,703,246

 

 

 

 

 

 

 

 

 

 

 

 

 

Net margin

21.4

%

 

18.3

%

 

18.3

%

 

23.6

%

 

27.0

%

 

27.0

%

Non-IFRS adjusted net margin

21.4

%

 

21.5

%

 

21.5

%

 

26.1

%

 

28.4

%

 

28.4

%


1Please refer to “UNAUDITED RECONCILIATION OF IFRS AND NON-IFRS RESULTS” for reconciliation between IFRS and non-IFRS metrics.

2The take rate of retail credit facilitation business is calculated by dividing the aggregated amount of retail credit facilitation service fee, net interest income, guarantee income and the penalty fees and account management fees by the average outstanding balance of loans facilitated for each period.

3 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. Loans from legacy products and consumer finance subsidiary are excluded from flow rate estimation.

4 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. Loans from legacy products and consumer finance subsidiary are excluded from calculation.

5 DPD 90+ delinquency rate refers to the outstanding balance of loans for which any payment is 90 to 179 calendar days past due divided by the outstanding balance of loans. Loans from legacy products and consumer finance subsidiary are excluded from calculation.

6 The take rate for the wealth management business is calculated by dividing total wealth management transaction and service fees for current products by average client assets in the Company’s current products.

Investor Relations
Lufax Holding Ltd
Email: Investor_Relations@lu.com

ICR, LLC
Robin Yang
Tel: +1 (646) 308-0546
Email: lufax.ir@icrinc.com

Source: Lufax Holding Ltd

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