EqualOcean on Lufax: Unexpected Stimulus of COVID-19 (2/8)

Financials Author: Skye Lan Editor: Luke Sheehan Jan 05, 2021 09:50 AM (GMT+8)

The COVID-19 hit the financial services industry hard, but also promoted the development of 'new finance.'

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This article is Chapter 2 of EqualOcean's comprehensive analysis of Lufax Holding. Explore all the chapters of the report:

Chapter 1: Industry evolution

Chapter 2: COVID-19: Unexpected stimulus

Chapter 3: The race between China's fintech trio: Lufax, Ant Group, JD Digits

Chapter 4: Huge growth potential in markets

Chapter 5: Operation strategy: Capital-light model and unique client segment

Chapter 6: Lufax and Ping An

Chapter 7: Diverse client acquisition channels

Chapter 8: Risks

Chapter 2: COVID-19: Unexpected stimulus

● The pandemic impeded the traditional Financial Institutions (FIs) but spurred their transformation and therefore became a unanticipated catalyst  for fintech firms.

● Lufax has seized the opportunities with timely response and suitable strategies. 

 The COVID-19 pandemic came unexpected and hit the entire financial services industry hard, especially for banks, which mainly serves customers through offline branches. The quarantine caused many traditional FIs to close for a while and deteriorated their asset qualities. By end of September of 2020, traditional banks still suffer from the credit issues as their Non-Performing Loan (NPL) ratios remained high and kept increasing. Only a few commercial banks improved their loan qualities.


However, on the other perspective, the pandemic speeded up the transformation of the industry, FIs started to rethink their reliance on offering products and services in person. Banks accelerated the online services implements and deployed non-contact services. It also became an anticipated catalyst for non-traditional financial services firms and fintech companies. To-C platforms, like Ant Group and Lufax, launched several support projects helping individuals and small businesses solve financing problems, and to-B ones, like OneConnect, had the best time outputting technologies with FIs' surging demands of digital transformation.

Lufax, as one of the representative fintech platforms, responded timely and caught the opportunity to grow. The intelligent robot client representatives solved over 97% of the problems effectively with 7/24 online. As a personal financing platform, Lufax actively applied new technologies to simplifies the loan process, which increased the service efficiency five times higher. As a wealth management platform, Lufax launched online investment courses with many famous fund managers invited, which successfully transferred large number of audiences to clients.

Thanks to the responses the company's revenue went up by 9.5% during the first half of 2020, and grew up by 10.5% during the third quarter, on a year-over-year basis.

The COVID-19 offers opportunities along with the credit issue. The loan quality decreased as people had difficulties repaying debt on time. However, Lufax did not perform badly.


During the first half of 2020, the growth of the loan balance facilitated Lufax to hit 12%, outperforming Ant Group’s 7%, but the ratio of a loan at 90 days past due are controlled lower than Ant Group, representing a better loan quality among players.

Next chapter will further illustrate how Lufax compares with other players on more perspectives.