Yirendai Reports Revenue, Income Drop; Acquires CreditEase
The Chinese provider of lending and wealth management services suffered a weak first quarter amid changes in the regulatory environment.
The stock in Yirendai Ltd. (NYSE: YRD) was trading nearly level Thursday afternoon, at $12.62 per American depositary share, after the company said it completed its business realignment transactions with CreditEase Holdings (Cayman) Ltd. and announced a decrease in revenue and income.
The Beijing-based FinTech company reported revenue of $295.1 million for the first three months through March, down 47 percent from the corresponding period in 2018. Its net income declined 31 percent year-over-year to $55 million, or 59 cents per ADS, it said.
Yirendai provides consumer credit and wealth management services. Although revenue from Yiren Wealth saw a 23 percent increase from a year ago, the results were offset by a 56 percent decline in revenue from Yiren Credit, according to the report.
The number of borrowers in the three months was 149,000, representing a decrease of 48 percent from 287,000 one year ago.
Amid turbulent times in the peer-to-peer lending industry in China, the company has acquired CreditEase for its 62 million ordinary shares and cash of 230 million yuan, a cumulative total of about $820 million. Yirendai said the amount will be paid off in installments in an 18-month period.
"The combined credit business will become one of the largest creditech platforms in China that provide a full suite of online and offline multichannel lending products and services," Tang Ning, the chief executive officer of Yirendai, said in a statement today.
Over the past year, regulators in Beijing have set up 400 risk management teams to increase control over high-risk online lending institutions, according to the China Securities Journal. Regulators expect to downsize the market of online lending in the third quarter.
Under stricter regulation, online consumer lending firms were seeking strategic alternatives to maximize shareholder value and their business continued to face headwinds in China's lending industry.