China Lending Corp FY17 Results Signal Brace For Loan Losses

China-based alternative small business lender China Lending Corporation released its Fiscal Year 2017 results this week, revealing financial difficulties and plans to prepare for more challenges ahead.

A press release issued on Tuesday (May 1) said the company, which provides micro-, small- and medium-sized businesses with access to financing, recorded fewer loans issued for FY2017 compared to the fiscal year prior: Loans issued for FY2017 amounted to $192.6 million, compared to $331.7 million for FY2016.

Interest and fee income declined by 53.5 percent, attributed to heightened industry competition as well as the financial difficulties of borrowers of supply chain financing loans.

China Lending Corporation also noted a net loss of $3.20 per diluted share for the fiscal year, for a combined net loss of $55.47 million.

In a statement, Co-Founder and Chief Executive Officer Jingping Li said the company is watching its financials closely.

“Our 2017 financial results highlighted increasing headwinds facing the micro-lending industry as the industry growth momentum slowed and competition heated up during the year,” he said. “Our 2017 financial results were also adversely affected by financial difficulties at certain supply chain financing customers that led to [a] significant decrease in our total interest and fee income, dramatic increase in provisions for loan losses and quickly [a] deteriorating cash flow situation.”

“We are closely monitoring the situation at those customers and expect further impact on our business as additional loans become due over time based on management’s current assessment,” he added.

The company’s latest financial data are not indicative of the nation’s alternative lending market overall, however. Competition from new market entrants is on the rise as regulators urge the banking industry against risky loans. One alt-lender, Dianrong, announced $220 million in new funding last year.

China is the Asia-Pacific region’s top market for alternative lending, according to KPMG’s Cambridge Centre for Alternative Finance, which released a report last September that found 99.2 percent of APAC’s alternative finance industry is concentrated in China.