Simply put, consumer finance is modern finance in which capital suppliers (i.e. consumer finance companies) directly or indirectly provide cash loans, commodity installments, and consumer credit to consumers from all walks of life. Service method.
Compared with the traditional credit loan business provided by banks, the consumer finance business has the characteristics of small credit limit per transaction, short loan term, fast approval, no mortgage guarantee, etc., and the use of money is limited to the purchase of homes. Durable consumer goods such as electrical appliances and electronic products, or personal non-profit consumption such as travel, weddings, education, decoration, etc.
There are the following four business models of consumer finance: The business model of bank consumer finance is mainly based on credit cards, supplemented by car loans and consumer loans; the corresponding business model of licensed consumer finance companies is based on consumption Mainly loans and cash loans; the consumer finance business models of e-commerce and payment platforms holding online small loan licenses are mainly commodity installment and bill installment. Among them, the consumer finance business of new Internet consumer finance platforms also includes consumer loans and credit cards. Compensation; in addition, many entrepreneurial platforms without licenses are also involved in the consumer finance business in the form of diversion and loan assistance.
The "China Consumer Finance Company Development Report (2021)" released by the China Banking Association on July 26, 2021 shows that as of the end of 2020, the asset size of consumer finance companies exceeded 500 billion yuan for the first time, reaching 524.649 billion; a total of 163.3947 million customers have been served, a year-on-year increase of 28.37%.
As of June 2021, the number of consumer finance companies registered in my country has reached 30. The era of horse racing is over and polarization is intensifying.
Recently, the Consumer Finance Channel, in conjunction with the China Index Research Institute, the TOP100 Organizing Committee and other institutions, released the "2021 Top 30 Consumer Financial Institutions List", of which the TOP10 are as follows:
The meaning of consumer finance For advanced consumption or credit consumption, the essence is borrowing. Therefore, the basis for consumer finance companies to make profits is to earn interest differentials, which is mainly based on interest income, fees and commission income. But it does not mean that the greater the overdue proportion of the total loan balance and the higher the overdue amount, the more profitable the company will be.
Consumer finance companies need to implement risk control in three stages before lending, during lending, and after lending to achieve a balance between overdue interest income and the proportion of non-performing assets and maximize benefits.
The pre-loan approval process for consumer finance business includes five links: APP application-anti-fraud approval-credit rule approval-cash withdrawal approval-loan.
For consumer finance companies, the ultimate goal of risk control is to make profits for the company. Therefore, throughout the entire risk control process, the primary indicator of concern is overall asset quality.
Consumer finance companies understand the current asset composition, non-performing changes and future asset maturity through monthly asset quality reports. From the perspective of asset increase, they conduct comprehensive comparisons and correlations among various channels based on customer changes and risk changes. Analysis of causes of changes.
The general analysis structure and related core indicators are as follows.
1. Asset profile
The core indicators of the asset profile include two parts: asset size and asset structure, of which the following should be focused on:
(1) Changes in non-performing balances. According to the adjustment requirements of the five-level classification of the latest "Loan Risk Classification Guidelines" of the China Banking and Insurance Regulatory Commission (Yinjianfa [2007] No. 54), the off-maturity method is used to directly classify loan categories according to the length of the loan, and the loan categories that are overdue for more than 60 days will be Include non-performing assets. ?Therefore, among the indicators in the above figure, what needs to be paid most attention to is the change in non-performing balance, that is, the change in the amount that is overdue for more than 60 days, and the corresponding aging is M2.
(2) Weighted average term. Since product pricing is related to the term, interest rate and amount of the loan, the measurement of the loan term also needs to take into account the impact of the amount. Namely
(3) Future maturity asset balance and aging distribution.
Because the M2 balance mainly comes from the rollover of the unpaid balance of M1, there are also a small number of unpaid balances of M3, M4 and other high-aged IOUs that are rolled back to M2. Therefore, in the asset structure, we generally pay attention to the balance of assets that are due to expire in the next 0-3 months and 3-6 months, and the aging distribution of each stage within at least one year, so as to achieve timely analysis of the non-performing rate. Take control.
(4) Proportion of balance of special-mentioned loans. According to the requirements of the China Banking and Insurance Regulatory Commission for the five-level classification of credit assets based on the off-maturity method, special-mention loans are loans that are overdue for 4-60 days. The proportion of special-mention loans is directly related to the asset quality and the rationality and soundness of the asset structure of consumer finance companies. Therefore, the calculation criteria for the balance of special mention loans should be consistent with the regulatory reporting criteria.
2. Risk profile
Risk control analysis is divided into three parts, including credit risk analysis, fraud risk analysis and collection analysis.
(1) First pass rate. The first installment is the overdue ratio. The first overpayment can measure the borrower's willingness and ability to repay, and is generally calculated in terms of amount, that is
(2) MOB6 & VINTAGE60. By observing the vintage performance of the loan balance at each aging stage, we can approximate the change in quality of the loan and predict its future performance. It should be noted that in the calculation formula of the vintage indicator at this time, the denominator should be the loan balance before disposal in order to observe the asset quality more directly.
(3) Asset quality matrix chart. That is, the x-axis is the ratio of the weighted average interest rate level to the balance level, and the y-axis is the non-performing rate level. It is used to analyze asset changes, compare the changes in indicators between two months, and observe product pricing strategies through the interest rate and non-performing matrix chart. Rationality, observe the rationality of the placement strategy through the balance and bad matrix diagram.
(4) Malicious delay rate. During the credit approval stage, applicants need to pass anti-fraud rule verification before entering subsequent procedures. Similarly, during the loan and post-loan stages, there are also corresponding indicators to prevent such credit risks, such as the malicious delay rate. Malicious delay refers to the behavior of never repaying the loan after it is overdue. Generally, the focus is on the first three installments of IOUs that should have been repaid. If the first three installments are not repaid, it is regarded as malicious delay. In order to eliminate the impact of amount, it is generally measured by the IOU dimension to approximately estimate the proportion of fraudulent transactions. The formula is as follows:
(5) Drop rate. That is, the decrease in overdue loan balances over a period of time. Half of them use 14 days and 30 days as the statistical time points to observe the collection effect after the loan, which also reflects the borrower's actual repayment ability and willingness to repay. The specific formula is as follows:
As consumer finance enters the mature stage of the industry, the explosive growth of the consumer finance industry has pressed the pause button, and performance differentiation has become increasingly clear; coupled with the recent reduction in 1-year LPR quotations, regulatory authorities have further restricted consumption. The annualized interest rate of loans has gradually reduced the profit margin of consumer finance companies. The current industry competition has made risk control capabilities and capital costs important factors for the profitability and development of consumer finance companies. It is also a general trend to use financial technology to achieve big data risk control.