Date
17 December 2017

Peering into the thriving P2P lending zone

Peer-to-peer (P2P) online lending is an increasingly popular form of financing and investment and there’s no shortage of players trying to get into the act, according to the Hong Kong Economic Journal’s EJ Tactics column.

In January, about 11.14 billion yuan (US$1.81 billion) had been borrowed through 356 P2P sites for an average annual interest rate of 21.98 percent, with an average maturity of 5.73 months.

Last year, such lending topped 100 billion yuan. More than 60 percent of borrowers are individuals and small businesses.

As a kind of internet financial innovation, P2P online lending complements traditional bank loans. And some believe P2P can become the third major internet finance business, following third-party payments and mini loans.

Traditional banks, meanwhile, have devised a range of investment products for their P2P platforms to tap the growing demand.

A product from pioneer Shanghai Lujiazui International Financial Asset Exchange Co. Ltd. (Lufax), a unit of Ping An Insurance (Group) Co. of China Ltd. (02318.HK), offered an expected annualized return of 8.6 percent and was quickly sold out.

Similar products marketed by China Merchants Bank Co. Ltd. (03968.HK) under its e-commerce schemes for small businesses are fully subscribed. Those funds have a minimum investment threshold of 50,000 yuan, with an expected yield capped at 7.5 percent. Most of the funds mature in 180 days.

Agricultural Bank of China Ltd. (01288.HK), Shanghai Pudong Development Bank Co. Ltd. and China Guangfa Bank Co. Ltd. are reportedly studying the possibility of launching similar P2P businesses.

To improve the attractiveness to investors, Ping An has set up a separate unit to audit and offer certain guarantees to Lufax’s products. The use of a third-party payment platform further improves product safety.

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Freelance journalist

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