Photo/Shetuwang

Dec. 19 (NBD) -- The Chinese internet finance industry, which has taken a hit due to tightened regulatory scrutiny and bankruptcies of hundreds of peer-to-peer platforms, is predicted to remain stagnant until the second half of 2019, Xu Bei, director of strategy development at HFMoney.com, a financial service platform centering on urban household consumption, said to the 21st Century Business Herald. 

Xu noted the industry is at its lowest ebb in a decade, and there is no sign of recovery at present. 

In such case, cutting jobs and increasing efficiency has become the top choice of many internet finance companies. 

According to media reports, Qudian Inc.'s auto financing business Dabai Auto has laid off nearly 100 employees since November. In July, it eliminated roughly 30 management trainee positions.  

Xu explained that many internet finance platforms actually adopted a model of achieving business growth by taking advantages of the large size of labor force. Since the industry is now stagnating and even shrinking, it is difficult to continue the original business model and layoffs are undoubtedly inevitable under such circumstance. 

Employees who kept their jobs are also feeling the pinch due to a substantial drop in salaries, Xu said. An industry practitioner told the 21st Century Business Herald his company hasn't paid wages to employees in full for two months because of operational difficulties. 

Financial reports for the third quarter of this year released by listed internet finance firms including Yirendai Ltd., Qudian, PPDAI Group Inc., and LexinFintech Holdings Ltd. also reveal the predicament of the industry, namely, dropping revenue and rising delinquency rate for loans. 

Taking Yirendai for example, the company's total net revenue for the July-September period was around 1.1 billion yuan (159.7 million U.S. dollars), a decrease of 26 percent from the prior year. Net income was 151.6 million yuan (22.0 million U.S. dollars), a drop of 50 percent from a year ago. In the quarter, Yirendai facilitated 6.5 billion (943.8 million U.S. dollars) of loans to 96,402 qualified individual borrowers through its online marketplace, a fall of 24 percent and 50 percent, respectively, from the previous year. 

As of September 30, 2018, the delinquency rates for loans that are past due for 15-29 days, 30-59 days and 60-89 days were 1.1 percent, 1.8 percent and 1.5 percent at Yirendai, compared to 0.8 percent, 1.2 percent and 1.3 percent as of June 30, 2018, the financial report shows.   

According to statistics of wdzj.com, China's first portal focusing on the P2P lending industry, the total amount of transaction of the online lending industry reached 374.8 billion yuan (54.4 billion U.S. dollars) in the third quarter of this year, a drop of 49.24 percent from the same period of last year and a dip of 29.48 percent from the previous quarter. 

Despite the worrying situation, the online lending industry still has great development space, said Tang Ning, Chairman of the Beijing Internet Finance Industry Association and founder and chief executive officer of CreditEase, a Chinese P2P wealth management company. 

In his view, the past decade witnessed the prosperity of the P2P lending market, but in the next decade, online lenders could find enormous business opportunities in serving small and macro businesses and addressing issues of agriculture, farmer, and rural areas.

Email: lansuying@nbd.com.cn