Lufax Holding (LU) Q3 2024 earnings summary

Executive summary

• Total income declined 31.1% year-over-year to RMB 5.5 billion in Q3 2024, resulting in a net loss of RMB 725 million, as weak loan demand from small business owners was offset by 27.8% growth in consumer finance loans.

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

• Policy stimulus measures by the Chinese government in late September are expected to gradually improve the macro environment and business performance.

• The company remains prudent in strategy execution, focusing on asset quality and expanding the non-SBO customer base.

Financial highlights

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

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

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

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

• Credit impairment losses rose 9% to RMB 3.3 billion, reflecting a more prudent approach in the ECL model.

Outlook and guidance

• Volume guidance for full year 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, despite short-term accounting losses.

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

• Management expects a cautious approach as small business owners take time to benefit from recent stimulus policies.

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