CNFinance Reports Decreased Income, Shifts Focus to Sales Partners
The Chinese home equity loan facilitator reported a two-digit decrease in net income, sending its shares down 4 percent to $5.65 apiece Wednesday.
CNFinance Holdings Ltd. (NYSE: CNF), a Chinese home equity loan facilitator, reported a two-digit decrease in net income, sending its shares down 4 percent to $5.65 apiece by noon Wednesday.
The Guangzhou-based company said in a statement today that its net income reached $20.2 million, or 27 cents per American depositary share, in the first quarter, at a 31 percent decrease from the same period of 2018.
The company said its total loan origination volume was $148.6 million, while interest and financing service fees decreased by 17 percent to $132.3 million in the three months through March year-over-year.
CNFinance attributed the decrease to the company's strategic focus on ensuring loan quality over loan growth and devoting its resources to implementing a new strategy.
"In order to broaden our customer reach, reduce credit risk and lower customer acquisition costs, we started to develop a new collaboration model," Bin Zhai, the chief executive officer of CNFinance, said in the statement.
CNFinance said it began to conduct a nationwide plan partnering with its sales partners to connect the loan services with prospective borrowers. "We have signed cooperation agreements with approximately 600 sales partners, 300 of whom have already begun introducing borrowers to our company," Zhai said.
CNFinance was spun off from Fanhua Inc. (Nasdaq: FANH), which provides insurance and financial services in China. It became publicly traded in New York in November 2018, with the initial price of $7.50 per ADS.
Looking ahead, the company said it expects net income of between 100 million yuan and 150 million yuan, or nearly $14.5 million to $21.7 million, for the second quarter of 2019.