Lufax Holding (LU) Q3 2024 earnings summary

Executive summary

• Total new loan sales in Q3 2024 were CNY 50.5 billion, flat year-over-year but up 11.7% sequentially, driven by growth in consumer finance despite weak SME demand.

• Net loss for the quarter was CNY 725 million, compared to a net profit of CNY 131 million a year ago, impacted by higher credit impairment losses and upfront provisions under the 100% guarantee model.

• Asset quality remained stable, with improved NPL ratio for consumer finance loans and steady C-M3 flow rate.

• Policy stimulus and local government initiatives are expected to support future growth, but benefits for small business owners will take time to materialize.

Financial highlights

• Total income decreased 31.1% year-over-year to RMB 5.5 billion, mainly due to a 41.8% drop in outstanding loan balance.

• Total expenses fell 19.2% to RMB 6.3 billion, with operating expenses down 35.9% to RMB 3 billion.

• Credit impairment losses rose 9% to CNY 3.3 billion, reflecting prudent provisioning and macroeconomic uncertainties.

• Technology platform-based income dropped 49.9% to RMB 1.6 billion, affected by lower retail credit service fees and cessation of LuJinTong business.

• Cash at bank as of September 30, 2024: RMB 27,039 million.

Outlook and guidance

• Loan volume guidance for 2024 remains at RMB 190–220 billion, with loan balance guidance at RMB 200–230 billion.

• Management expects lifetime profitability to improve as the loan portfolio under the 100% guarantee model matures.

• Emphasis will shift toward non-SBO customers and further development of the consumer finance business.

• Funding costs are expected to continue decreasing due to favorable monetary policy and optimized funding structure.