8 trillion online loans "investor" changes and assessments

The rumors about state-owned banks completely withdrawing from online lending are rampant.

The fermentation of related information began with the release of the "Notice on Strengthening the Management of Internet Loan Facilitation Business by Commercial Banks to Improve the Quality and Efficiency of Financial Services" (hereinafter referred to as the "New Facilitation Regulations") by the Financial Regulatory Bureau in April this year, which stipulates that banks must manage cooperative platforms through a list system.

According to the requirements, banks should publicly disclose the list of cooperative internet loan facilitation platforms on their official websites, apps, and other channels, and must not cooperate with institutions outside the whitelist.

This new regulation will officially take effect in October this year, and the empty public disclosure columns of state-owned banks are seen as a silent announcement of the leading institutions' exit from the online lending business.

However, for the online lending market, the funds from state-owned banks, which have significantly shrunk since 2023, may not necessarily lead to a "reshuffling" change even if they do withdraw;

In corners of the market that have not been under scrutiny, the rotation of funding sources spurred by the new facilitation regulations may be quietly occurring among small and medium-sized banks, as well as non-bank institutions such as consumer finance and trusts.

Tightening by Major Banks

The new facilitation regulations will officially take effect in October, leaving only a little over two months for adjustments.

Although the new regulations require banks to publicly disclose the list of cooperative loan facilitation platforms on their official websites, there are no unified columns, positions, or other specific information, and major banks have not yet released more cooperation information.

Since most online lending platforms are not licensed financial institutions, the Financial Regulatory Bureau can only strengthen regulation in this area by restricting licensed funding sources such as banks, consumer finance, and trusts.

The new facilitation regulations require banks to establish list management, clarify that "equity fees" are included in the comprehensive financing costs, and prohibit indirectly raising the rates to over 24%;

At the same time, it proposes that loan facilitation business be centralized under the head office, with the head office clearly defining the responsible departments and implementing strict management of indicators such as scale, growth rate, concentration, non-performing loan rate, non-performing loan formation rate, and compensation payment rate for different platforms and products.

With strict regulatory guidance and layers of internal approval, online lending has nearly disappeared within state-owned banks.

Several individuals from major banks have confirmed to Xin Feng that loan facilitation business "is indeed participating very little now."

An employee from a state-owned bank's South China branch revealed that the bank had applied to cooperate with an online lending platform under performance pressure but was not approved.

According to their description, the branch in their region had submitted an application to the local regulatory bureau, hoping to cooperate with a leading online lending platform that has its own small loan company, but the response was that the procedure should first be reported to the head office, which would then report to the bureau for approval;

During the subsequent reporting process, the aforementioned cooperation matter was "verbally rejected" by the head office leadership and the higher regulatory agency, and the expectations for online lending business were thus dashed.

If cooperation with leading platforms has sunk without a trace, it is even less likely for smaller platforms with higher non-performing rates and greater hidden risks.

Looking back over a longer timeline, the tightening of online lending business by state-owned banks has not occurred suddenly.

Since 2023, major banks have proactively reduced their online lending business under risk control requirements.

For example, ICBC has reduced cooperation with high-risk platforms in 2023.

An employee from a state-owned bank's North China branch stated to Xin Feng, "I haven't heard much about online lending in the past two years, and there have been no performance requirements mentioned in this area within the bank." Under the pressure of risk control and the strict guidance of new lending regulations, the major banks' intention to withdraw from online lending has become a foregone conclusion.

However, even if the major banks, which have significantly reduced their online lending scale, fully withdraw in the future, the impact on the online lending market will be limited.

A leading online lending platform told XinFeng, "Currently, the notion that major banks are fully withdrawing from online lending is not very significant, as they have not been the main source of funding for online lending in the past three years."

According to the platform, the main source of funding in the online lending market still primarily comes from banks, but the participation ratio of state-owned banks is relatively low. "Just like our platform, we mainly cooperate with small and medium-sized banks."

In this regard, the impact of the new regulations on online lending business may occur more between small and medium-sized banks and consumer finance, trust, and other financial institutions.

The Choices of Small and Medium-Sized Banks

Small and medium-sized banks do not seem to easily give up the asset outlet of online lending.

XinFeng's incomplete statistics show that after the release of the new lending regulations in April, several banks, including Guangzhou Bank, Chengde Bank, and China Resources Bank, have publicly announced lists of cooperative platforms, with most entrants being small and medium-sized banks.

For example, Guangzhou Bank announced a list of 17 internet loan business partners, including six leading online lending platforms such as Lexin and Qifu Technology, seven financing guarantee companies, as well as WeBank and MYbank;

Chengde Bank revealed that its digital credit business will cooperate with some companies under Ant Group and JD Group;

Huishang Bank disclosed 39 online lending partners, covering customer acquisition institutions, joint lending institutions, payment institutions, financing guarantee institutions, and collection institutions, including platforms like Ant, JD, Douyin, and Fenqile.

The different attitudes of small and medium-sized banks and major banks towards online lending are not due to indifference to risk control requirements;

Because compared to large banks with substantial scale, diversified businesses, and thick "safety cushions" of capital, small and medium-sized banks have much weaker capacity to absorb risks.

From the end of 2020 to the first quarter of 2025, the net interest margin decline for state-owned banks, joint-stock banks, city commercial banks, and rural commercial banks was 72, 51, 63, and 91 basis points, respectively, with rural commercial banks experiencing the largest decline among all types of banks.

However, during the process of net interest margin decline, small and medium-sized banks, which highly rely on credit for income, do not have the possibility to hedge the liability side's rigid repayment like state-owned banks with light asset businesses or intermediate income;

As a result, they can only passively turn to "high yield - high risk" products, unable to quit online lending business for a long time, while trying to maintain balance while walking on a tightrope.

It can be observed that the overall change in online lending financing rates is not strongly correlated with the LPR.

For example, from 2020 to now, the five-year LPR rate has dropped from nearly 5% to around 3.5%, but the financing rates of legally protected online lending products in the market still maintain around the statutory critical value of 24% year-round.

However, the portion of this overall 24% rate belonging to small and medium-sized banks is still limited.

Market participants have pointed out that the current funding quotes for small and medium-sized banks participating in online lending are about 7.5%; the average interest rate for three-year fixed deposits in banks in the first quarter of this year was about 2.2%. Based on this, the online lending yield after deducting funding costs is about 5% At the same time, the cost for banks to acquire customers through online lending platforms continues to rise.

The leading online lending institutions often rely on broad traffic entry points like Douyin and possess small loan licenses.

This business model not only attracts customers but also connects them to different funding sources based on customer segmentation. Moreover, it can transfer subprime loan customers who do not meet the platform's own risk control requirements to lower-tier assistance lending platforms through API channels, charging a traffic fee.

More than one online lending institution has pointed out to XinFeng that the leading platforms that control traffic still hold strong bargaining power even when dealing with small and medium-sized banks.

XinFeng has learned that among the many funding sources of online lending platforms, banks still expect high-quality customers with low bad debt risks and have strict requirements for their partners.

A mid-tier online lending platform that once attempted to list on the Hong Kong stock market told XinFeng, "Banks place great importance on qualifications, both for customers and platforms. We must enhance credibility in various ways, and going public is the fastest way after careful consideration."

The stringent risk control requirements mean that, despite the seemingly vast market of over 4,000 online lending institutions, banks still have only a few top players to choose from that possess both traffic and qualifications.

However, online lending platforms that control low-cost traffic can conduct preliminary screening of customer qualifications and set high prices for low-risk, high-quality customers.

A bank executive once stated that they had encountered platforms maliciously inducing competition among banks, driving up traffic costs, resulting in customer acquisition costs rising from hundreds to thousands of yuan per case.

With the implementation of new assistance lending regulations, on one hand, it can guide banks to standardize their operations, strengthen information disclosure and market transparency, and help curb the phenomenon of leading platforms leveraging traffic advantages to inflate cooperation prices;

On the other hand, while non-compliant lower-tier online lending platforms struggle to find funding sources and gradually disappear, leading platforms will concentrate more market share. Whether small and medium-sized banks can successfully establish an alliance to counteract "traffic price competition" remains uncertain.

Industry insiders have pointed out that in the future, small and medium-sized banks may shift their focus to "self-operated + online lending," striving for greater profit margins through breakthroughs in business scenarios and forms;

However, after leaving the platform's customer sources, how to break through the current limited self-operated scenarios and effectively reach more customers with credit products remains a challenge to overcome.

Whose Opportunity

Affected by residents' proactive deleveraging, increased deposits, and strengthened regulation, the development of consumer loans in China has shown differentiation.

By the end of 2024, the balance of "consumer loans excluding personal housing loans" in the banking sector reached 21.01 trillion yuan, a year-on-year increase of 6.2%;

Consumer finance companies have become an important force in the growth of funding scale, with asset scales and loan balances reaching 1.38 trillion yuan and 1.35 trillion yuan, respectively, year-on-year increases of 14.58% and 16.66%.

If, under the strict supervision of new assistance lending regulations, some banks begin to withdraw, then non-bank financial institutions like consumer finance companies that are still experiencing rapid growth may welcome more opportunities.

Currently, the financing costs for consumer finance companies have reached a historical low.

In terms of financial bonds, the new bond issuance rates for seven consumer finance companies in the first half of the year were generally below 2.2%, all lower than the industry's lowest level in the same period last year.

The newly issued ABS rates have also dropped to around 2%. For example, the ABS of Zhongyuan Consumer Finance decreased from 2.5% in 2024 to 2.04%. The company stated that the raised funds will be used to cover a broader customer base, especially the "long-tail" users that traditional finance finds difficult to reach Beyond consumer finance companies, consumer trust businesses are also 迎来机会。

For a long time, many trust companies have raised funds by issuing collective fund trust plans to invest in online lending products.

For example, the "Puhui Xinan" series of collective fund trust plans from Aijian Trust collaborates with FinVolution and the online lending platform under Focus Media, with the latter responsible for customer acquisition and the trust company earning the interest spread;

Shanxi Trust has partnered with Jiayin's Jirong Cloud Technology to launch multiple collective fund trust plans such as Maoyue No. 1, No. 2, and No. 3, providing online lending funds.

These trust assets are also expected to be standardized through ABS.

In the first half of the year, a large number of ABS based on consumer loans and small loans, with trust companies as the original equity holders, have been approved for issuance;

This means that in the future, more consumer trust funds may join the supply side of online lending funds