The Development of P2P Online Lending in China

2016 The Development of P2P Online Lending in China
The Development of P2P Online Lending in China
Industry Overview
The online lending is a type of direct lending between individuals and individuals through the
internet platform. The online lending platform (or institution), making a business under the law, is a
sort of financial information intermediary company focusing on the lending activities through the
internet channel. These platforms provide various kinds of services which include information search,
information disclosure, credit assessing, information interaction, matching funds between lenders and
borrowers and so on for users to achieve the deal of direct lending.
2016 is the ninth year of P2P online lending to keep a foothold in China. In this year, the entire P2P
online lending industry has maintained the rapid growth of the loan balance and participants. On the
August 24th, Chinas Bank Regulatory Commission and other three governmental branches formally
published the regulatory document named the Interim Measures for Regulating the Economic
Activities of Information Intermediary Institution in the Online Lending Industry. Accordingly, the
situation of no barriers, no rules and no regulation in this industry ended. The table below shows the
development of P2P online lending in China.
Table1The Chronicle of the Development of P2P Online Lending in China

2007
2009
2010
Shanghai, China Paipaidai was online, opening the first page of online
lending in China
Shenzhen, China My089 went online, and created the principal advance
payment model
Beijing, China Renrendai went online, representative online lending
platform using risk reserve provision
2011
Shanghai, China Lufax, the first online lending platform backed by bank
2012
The number of online lending platform reached more than 200 in China
2013
The Year One of Internet Finance in China when online lending

Platforms bloomed everywhere and transaction volume exploded out
1
www.wdzj.com
2014
2015
2016
Swarming tide of venture capital, online lending industry developed

rapidly
The Exposure Draft of government regulatory policy about online
lending industry came out
On the August 24th, Chinas Bank Regulatory Commission and other
three governmental branches formally published the regulatory document
Source: Yincan Consulting, WDZJ.com
According to statistics from Yincan Consulting and the WDZJ.com, as of the end of the August in
2016, the number of operational online lending platforms in China was 2,235 and the historical
accumulative transaction volume exceeded USD 385.88 billion (RMB 2581.509 billion). From
January to the end of August in 2016, the accumulative transaction volume reached USD 181.81
billion (RMB 1216.288 billion), almost 2.53 times the 2015 (from January to the end of August)
figure which was USD 71.84 billion (RMB 480.591 billion). As of the end of the August, this year,
the loan balance on the online lending platforms was USD 101.69 billion (RMB 680.332 billion), a
164% rise compared to the USD 38.53 billion (RMB 257.762 billion) of 2015(by the end of August).
The comprehensive rate of return continued to drop, from 12.98% in the August of 2015 to 10.08%
at the end of eighth month of 2016. In the August of 2016, the average term of loan was 8.04 months,
and the numbers of active online lending industry lenders and borrowers were 3518,000 and
1353,100 respectively, with an increase of 1.04% and 17.26% correspondingly compared to that in
the last month.
The Size and Distribution of Online Lending Platforms

There were about 2,235 online lending platforms in China as of the end of August in 2016. The
number of platforms reduced 2.02%, compared to that in the last month. And a year ago, there were
about 2,283 online lending platforms, which showed that the number of platforms experienced a
year-on-year decrease for the first time. It is anticipated that the number of platforms will continue to
decline after the regulatory rules come out.
www.wdzj.com
Data source: Yincan Consulting, WDZJ.com

Figure 1: The Number of online lending Platforms in China

Figure 2: Geographical Distribution of Online Lending Platforms in China
The platforms are mainly distributed in the coastal regions with relatively developed finance and IT
industry. By the end of August in 2016, from the perspective of number of platforms, Guangdong,
Beijing, Zhejiang, Shandong and Shanghai are among TOP 5 in order, with 404, 296, 277, 226 and
208 respectively.
3
www.wdzj.com
The Transaction Volume and Loan Balance of Online Lending Industry

Up to the end of August in 2016, the historical accumulative transaction volume of the online lending
industry in China exceeded USD 385.88 billion (RMB 2581.509 billion). From January to the end of
August in 2016, the accumulative transaction volume reached USD 181.81 billion (RMB 1216.288
billion), almost 2.53 times the 2015 (from January to the end of August) figure of USD 71.84 billion
(RMB 480.591 billion). It is expected that the transaction volume will reach USD 300 billion (RMB
2 trillion more or less) in 2016.

Figure 3: Transaction Volume of Online Lending Industry in China
It can be observed that, from January to the end of August, with regard to the transaction volume,
Guangdong, Beijing and Shanghai were TOP 3 in order, with USD 50.72 billion, 48.64 billion and
33.27 billion respectively. The sum of the transaction volume of these three districts accounted for
72.95% of the whole country. So it is easy to find out that the market size of these three districts is
definitely big.
www.wdzj.com

Figure 4: Geographical Distribution of Transaction Volume
As of the end of August in 2016, the overall loan balance went up to USD 101.69 billion (RMB
680.332 billion), performing a 164% year-on-year growth, which means the figure was USD 38.53
billion (RMB 257.762 billion) a year ago. It is predicted that the loan balance will touch USD 127.06
billion (RMB 850 billion) at the end of 2016.

Figure 5: Loan Balance of the Online Lending Industry in China
From the perspective of the distribution by province, the loan balance of Beijing Shanghai and
Guangdong was USD 39.92 billion, 22.95 billion and 17.82 billion
respectively. And the total
number of loan balance of these three districts accounted for 79.35% of the whole country. Definitely,
5
www.wdzj.com
the total size of loan balance in these three districts is significant and important.

Figure 6: Geographical Distribution of Loan Balance
Rate of Return and Loan Terms of Online Lending Industry

From January to the end of August in 2016, the comprehensive rate of return of online lending
industry was 10.96%. It is predicted that the comprehensive rate will go down to 9.5% at the end of
2016. As the regulatory rules come out and the demands from the lenders continue to go up, many
platforms will choose to lower the comprehensive rate of return down. But compared to the other
investment channels in China, the returns of online lending still own strong attraction.
www.wdzj.com

Figure 7: Comprehensive Rate of Return of Online Lending Industry in China
In terms of the number of platforms, 43.99% platforms had the rate of return concentrating between
8% and 12%; 37.32% platforms had the rate of return concentrating between 12% and 18%; 8.47%
of the total platforms focused on the rate of return above 18%.

Figure 8: Distribution of Rate of Return of Online Lending Platforms
From January to the end of August in 2016, the average term of loan in the online lending industry
was 7.62 months. The short-term loan became the major type of loans and provided a good
complement to the long-term loans issued by the traditional commercial banks.
www.wdzj.com

Figure 9: Average Loan Terms of Online Lending Platforms in China
From the view of distribution of the online lending platforms, over 82% platforms had the loan term
within six months; 43.73% platforms had the loan term within 1-3 months; 32.85% platforms
focused on the loan term between 3-6 months; 17.29%relatively small, platforms had the loan term
concentrating six months above.

Figure 10: Distribution of Average Loan Terms of Online Lending Platforms
8
www.wdzj.com
The Number of Borrowers and Lenders

In the August of 2016, there were as many as 3,518,000 lenders, a 1.04% rise compared with persons
of last month, and 1,353,100 borrowers, a 17.26% rise compared to those of July.

Figure 11: The Number of Online Lending Platforms Borrowers and Lenders
The Development Trends of Online Lending Industry in China
In China, the online lending industry has still been in the rapid growth situation, but all the platforms
will face a lot of challenges. However, the online lending has been effectively increasing the total
supply of loanable funds in the financial market, enhancing social welfare of the average citizens,
and financing the historically underfinanced businesses.
The trends as follows:

1. Liquidity goes up and the gap between demand and supply of money still exists. The central bank
9
www.wdzj.com
increases the liquidity all the time and tries to bring down the credit rate, but the top design takes a
long time to come into effect, lax currency policy doesnt work well and the micro and small
businesses cant receive the sufficient credit loans from the traditional banks because of being short
of enough assets for mortgage and lacking the past credit reports, valid financial reports and enough
information disclosures. Accordingly, for the smaller enterprises, the difficult access to credit still
exists. The gap between demand and supply of money expands and the underserved financial market
will stay stubborn.
2. The competition for credit will be intensified and online lending will be the trend. More and more
companies will struggle for the credit business. The development of credit is determined by the level
of credit checking. In other words, the development situation of credit checking is the leading
indicator and also the cornerstone of the credit business. In addition, when the technology of credit
investigation improves more and more completely, pure online lending will be the trend.
3. Mobile channel will be the main access. In China, the mobile internet becomes the mainstream
faster and faster. Without doubt, several years later, the number of users on the mobile internet will
continue to increase further. From the view of lenders capital in the online lending industry, the
competition for the PC users intensifies seriously. In the future, the mobile channel will be the main
access. The competition focusing on the mobile channel among the platforms is going to break out
sooner or later.
In the future, online lending will be on the right track towards development with a solid foundation
to gain the confidence and acceptance from the regulators. With the strong demand and supply for
loanable funds, online lending can be expected to be more flourished with increasing transaction
volumes. At the same time, the online lending industry will become more and more competitive, and
the winners will likely be the fewer survivors that could eventually dominate the industry on their
own. Chinese online lending will continue to make for significant progresses.
10
www.wdzj.com

The Development of P2P Online Lending in China

Transféré par

Informations du document

Copyright

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

The Development of P2P Online Lending in China

Transféré par

Droits d'auteur :

2016 The Development of P2P Online Lending in China