Wed, Mar 14, 2018 - Page 10 News List

Ant Financial consumer lending tops US$94.7bn

REGULATORY CHALLENGES:Sources said regulators have over the past three months halted approval of securities backed by loans not specifically for shopping

Bloomberg

Ant Financial Services Group’s (螞蟻金服) consumer lending has reached at least 600 billion yuan (US$94.7 billion), despite the Alibaba Group Holding Ltd (阿里巴巴) affiliate facing a tougher environment for securitizing its loans, people familiar with the matter said.

From the start of last year to this month, Ant’s consumer lending has doubled via its Huabei and Jiebei units, even as the government reduces quotas for new asset-backed securities that can underpin such loans, one of the people said, asking not to be named as the matter is private.

The loans can incur annual interest rates as high as 15 percent, although they are normally less than that, another person said.

Controlled by Alibaba chairman Jack Ma (馬雲), Ant has become a financial giant that has been reportedly valued at US$60 billion and currently has more outstanding consumer loans than China’s second-biggest bank.

The Hangzhou, China-based company has evolved from the Alipay (支付寶) payments business into money market funds and microloans, and is reportedly considering an initial public offering.

The firm’s struggle to issue new asset-backed securities could dramatically hamper growth, as Ant would be forced to carry more of the loans on its balance sheet or reduce lending.

China has been making it harder for online finance companies to create asset-backed securities, complex financial products that repackage debt to be sold to investors.

Ant Financial has this year sold just 10.7 billion yuan of asset-backed securities, compared with 31 billion yuan in the first quarter of last year, data compiled by Bloomberg showed.

Ant last year issued a total of 243 billion yuan of asset-backed securities.

Users of Huabei, which provides revolving credit lines to Alipay users who need spare cash for consumption, borrow an average of 700 yuan per month, while Jiebei, a short-term consumer lender, doles out an average of 3,000 yuan per month, one of the people said.

Ant’s outstanding consumer loans are almost 3.7 times the size of China Construction Bank Corp’s (中國建設銀行).

In the past three months, regulators have halted the approval of sales of asset-backed securities backed by loans not specifically for shopping, people familiar with the matter have said.

China’s regulators are targeting the estimated 1 trillion yuan online cash microlending industry that has drawn criticism for sometimes high interest rates and underhanded lending practices.

Ant’s lending practices have helped fuel consumption on Alibaba’s online shopping platforms, with any slowdown in loan growth likely to hit the ability of users to buy everything from iPhones to hair dryers.

Ant was formally known as Zhejiang Ant Small & Micro Financial Services Group (浙江螞蟻小微金融服務集團).

Last month, Alibaba announced it would buy 33 percent of Ant in a move seen as clearing the way for an initial public offering.

Alibaba has not held a stake in its finance affiliate since Ma spun out the business in 2011.

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