Ping An’s Fintech Arm Lufax Drops at 2023 Hong Kong Retail Business Exit
(Yicai Global) Dec. 6 — Shares in Lufax Holding fell after the fintech arm of Ping An Insurance Group said it will stop offering services to retail investors in Hong Kong early next year due to falling profits.
The share price of the asset management platform [NYSE: LU] rose 1.1 percent in after-hours trading at 2:16 p.m. Beijing time after falling 4.1 percent in New York yesterday. Equity has fallen by more than 60 per cent this year.
Lufax Hong Kong-based subsidiary Lu International will stop providing consumer-facing services on January 6, 2023, and suspend registration, account opening, product subscription, automatic investment plans and application for other new products or services indefinitely, the Shanghai-headquartered company said in a statement on its mobile application yesterday. After that, the fintech platform will only offer asset transfer, asset realization, cash withdrawal and currency exchange services, it added.
The company decided to withdraw to integrate resources and optimize business focus, Lufax told Yicai Global. Next, Lu International will zoom in on empowering financial institutions via technology, it added.
The move is a change in direction as the mainland firm said in June 2020 that it had obtained three types of licenses to provide securities brokerage, advisory and asset management services in Hong Kong. The offshore app was launched in August 2020 to serve residents of the special administrative region.
Lu International cut its consumer-facing business due to profit concerns, industry insiders said. Lufax recently reported some of its most dismal earnings since going public in October 2021.
In the third quarter, Lufax earned $1.9 billion in total revenue, down 17 percent from a year earlier, as income from credit facilities fell nearly 31 percent, the firm said in its latest financial report. Net profit fell by almost 67 percent to around USD 190 million.
Meanwhile, Lufax more than doubled its losses on credit impairments to USD556 million due to a decline in loan quality. Evidently, a growing group of customers did not pay back on time as about 3.6 percent of all loans were past due more than 30 days as of Sept. 30, up from 3.1 percent a quarter earlier, as the outbreak of Covid-19 affected small business owners’ finances.
Lufax is not optimistic about earnings this year. New loans arranged in 2022 could fall 23 or 24 percent to CNY 495 billion (US$71.1 billion), it predicted. Annual revenue may decline by 6 to 8 percent to CNY 58 billion (US$8.3 billion), and net profit may fall by 47 to 49 percent to CNY 8.9 billion (US$1.3 billion).
Editor: Emmi Laine, Xiao Yi
