Company Presentation
May 2015
2
China: Financial Services Being Transformed by the Internet
Online
Games
E-Commerce Social Media Financial Services Portal
3
Huge Market Opportunity: Multi-trillion Dollar Addressable Market
$18Bn China’s Online
Game Market
$25Bn China’s Online
Ad Market
$2Tn China’s Online
Shopping
Market
$20Tn China’s Non-standard
Financial Assets
Source: iResearch, Oliver Wyman Research
4
Most Prominent and Recognized China Internet Finance Platform
“We encourage Mr. Gibb to bring further innovative ideas and contributions to Internet finance in China”
——Xi JinPing, PRC President
Lufax Has Won National Recognition Lufax Has Won Multiple Awards
2014.5
"The Most Important P2P Company in
China", “Global Top 3 P2P Online Trading
Services”, Lend Academy
2014.6
“Most Influential Brand" and “Most Innovative
P2P Product“, Shanghai Internet Finance
Exposition
2014.6
"Best Risk Management“, Shanghai
Securities Journal
2014.11
"Innovative Internet Investing and Financing
Platform of the Year“, Shanghai Municipal
Government
2015.1
“The Most Popular Internet Finance
Platform”, Caijing China Annual Conference
5
Huge P2P Market Opportunity
$565Bn
2014
$40Bn
2018E $60Bn
2014
$5.5Bn
2018E
China U.S.
Notes
1. Data represents annual transaction volume
Source: Wangdaizhijia, iResearch Source: Liberum Research
6
Distinctive Driving Forces for China P2P
Consumer Loan
Penetration (1) 23% 83%
China U.S.
Notes
1. Consumer loans as % of GDP
2. Direct financing as % of total financing
Credit System • Well-established nationwide credit information system • Lack of a nationwide consumer credit database and credit scores
Direct Financing
Penetration (2) 17% 70%
Typical Borrowing
Purposes
Home Remodelling Wedding Travel
Continuing Education Durable Goods
$ SME Financing
Debt Consolidation SME Financing
Regulatory
Environment
• Established and clear framework
• P2P platforms viewed as people helping other peers
• Generally supportive of a sector in the early stage
• P2P platforms seen as a real economy tool, addressing unmet
consumer / SME financing needs across China
Incumbents Banks
Consumer
Finance
Providers
Loan
Associates
Auto
Finance
Providers
Banks Micro Finance
Companies
Investors • Retail and institutional investors • Principally retail investors
7
Ranking by Number of Borrowers
100
80
73
73
69
65
49
45
29
P2P Market Leadership
In RMB Bn
Ranking by Loan Balance
Borrowers as individuals and enterprises Borrowers as individuals
14
6
6
5
5
5
4
4
4
Unsecured P2P Secured P2P B2C
Source: Wangdaizhijia, as of May 2015
In 000s
8
Lufax – The New Online Financial Services Powerhouse
Borrowers /
Asset Providers Investors
I need money!
What will it cost me?
When could I get it?
What choice do I have?
Can I assess risk easily?
Can I sell if I have to?
#1 China P2P Platform
#1 China Securitization Platform
Trust
Bank
Public
Fund
Private
Equity Securities
Insurance
Gold
P2P
Real
Estate /
Government /
Large
Enterprises
9
Formula for Success in Mainland China
Lufax: Diversified Asset Sources
• Access to assets from the full
financial services spectrum
• Optimized sourcing costs / speed
• Strong relationships across China
Lufax: Massive Base & Engagement
• ~10M Registered Users
• Growing average investment
• Increasing conversion rate
Lufax: Data-Driven Risk Management
• Big data analytics
• Unique data sources, e.g. credit
bureau, insurance data
• Full disclosure
User
Traffic
Asset
Sourcing
Risk Management
10
Leading Open Market for Non-Standard Assets in China and Globally
Non-Standard
Assets
Five Core
Markets in
China
Equity
Bond
Interbank Market
Gold / Foreign
Exchange
Supporting Mechanism
Product
Provides the most
extensive products,
including cash
management, fixed
income, variable
income, equity-
linked products and
commodities
Service
Provides the lowest
cost, the highest
transparency and
the best liquidity
through account
integration
Positioning
Leading Open Market for Non-Standard
Assets in China and Globally
Customer
Online wealth
management and
trading platform for
high-end individuals
and institutions
Risk control Standards Systems
11
Future Development Strategy of Lufax: Open Platform of 9158
Bank Securities
Trust Insurance
Public Fund Real
Estate/Government
/Large Enterprises
Private
Equity Gold
P2P
Individuals
Micro-lending
Companies
Small & Medium
Companies
P2P Companies
B
System
Risk Control
Products
Marketing
Shared
Resources
1: B2B
Primary
Market
Model Product Risk Control Account Customer
Experience
System Marketing Operations
5 Markets 1 Platform 9 Funnels
8 Keys
B end
Lfex
Lufax
2: B2B
Secondary
Market
5: C2C
4: B2C
3: P2P
B End
C End
1
2
3
4
5
6
7
8
9
12
Recent Development: Creation of Inclusive Finance Business Group
Dedicated
Management Enhanced Valuation
Combination of Online
and Offline Strengths Economies of Scale
Better Resource
Coordination
• One of China’s largest
offline consumer loan
provider
• 500+ stores in
100+ cities
• 1.7M borrowers
• US$5Bn loan
outstanding
Xinbao Telesales
• One of the largest
consumer loan
telemarketing teams in
China
• 2000+ sales
representatives
• Contributed ~10% of
Xinbao and ~50% of Lufax P2P borrowers
China’s Leading Provider of Consumer Financial Services
13
Exponential User Base Growth
MM ‘000
1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
Cumulative Registered Users Cumulative Retail Investors
+30x
Growth
+140x
Growth
14
Retail Investors Keep Adding to Their Accounts
Monthly Cumulative Investment per Investor
Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014 Apr 2014 Jul 2014 Oct 2014 Feb 2015
US$000
15
Lufax vs. LendingClub – P2P Platform Comparison
Key Data
Online Market Position • #1 in China • #1 in US
2014 vs. 2013 P2P Growth • 5x • 1x
Market Environment
Key Growth Drivers
• Fast-growing middle-class
• Large, aspirational financing needs
• Traditional banks reticent to consumer credit
• Leveraged consumers seeking refinancing
• Traditional banks underprice consumer credit
Marketplace Participants
Borrowers • Mostly individuals • Mostly individuals
Investors • Retail (~100%) • Retail (~55%)
• Institutionals (~45%)
Product Characteristics
Product Types • Unsecured
• Secured • Unsecured only
% 2ary Trading • ~20% • New loans only
• Some trading via 3rd-party platforms
Risk Exposure • Some with guarantee, increasing number of loans
without guarantee • Not guaranteed
16
Strong Business Volume Growth
RMB Bn RMB Bn
Business Volume Including Institution & Individual Quarterly Retail Volume Transaction
1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
P2P
B2C
+150x
Growth
+350x
Growth
1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
B2C P2P C2C B2B/F2F
B2C
C2C
F2F/
B2B
P2P
C2C
17
Fund-end Asset-end
Asset Security Guarantee
Plan
Whole Process Risk
Control System for Asset
Admittance
Leading Risk Model
Prudent Account Opening
Authentication System
Scientific Model for
Investor Admittance
Comprehensive
Information Disclosure
Customer Risk Type and
Product Matching Model
Risk Control through Multiple Approaches
Clear Contract
Relationship
Comprehensive Risk
Rating System
Integrated System of
Three Defense Lines
Big Data Analytics
Model
Significant Input in
System Security
Financial
Institutions
Corporates
Ping An
Retail / SME
Funding
Needs
Retail
Investors
Financial
Institutions
Corporates
18
Various Products Based on Different Customer Risk Preference
Conservative
Robust
Balanced
Growth
Aggressive
Customer
Risk
Preference
Customer Acquisition Customer Identification Product Matching
Product
Risk
Level 1
Product
Risk
Level 2
Product
Risk
Level 3
Product
Risk
Level 4
Product
Risk
Level 5
19
Full Information Disclosure and Well-Established Risk Rating
Full Information Disclosure Well-Established Risk Rating
Borrower Information Disclosure
Transferor Information Disclosure
Transaction Document
Product Information Disclosure
Rating Definition Disclosure
Rating Level Disclosure
Project Introduction
• Product: Rainbow–
Henghanxi No.03C
• Expected Ann. Yield:
7.70%
• Term: 146 days
• Threshold:
RMB300,000.00
• Remaining Investable
Amount:
RMB1,449,200.00
• Status: 92%
• Interest Period: 17/04/2015~10/09/2015
• Receipt: 15/09/2015
• Term: 146 days
• Payment: One-off Payment; Zero Coupon
• Transferor: Shenzhen Ping An Huifu Asset Management
Risk Profile
• Project name: Rainbow-Henghanxi No. 03C
• External rating: N/A
• External Rating Agency: N/A
• Internal Rating: A-1
Short-Term Debt Rating (Within 1 Year)
Medium- to Long-Term Debt Rating (Over 1 Year)
20
Sponsored by Ping An – China’s #1 Non-SOE Financial Institution
Insurance Banking
Investment Internet
Finance
Largest Non-SOE Financial Institution
80M+ Customers
US$646Bn Total Assets
US$110Bn Market Cap
21
Unique Access to Ping An and Financial Resources
Access to 21 Licenses
Life Insurance
Motor Insurance
Trust
Fund Sales
Securities
Bank
Asset Management
Exchange
…
Largest License Set
in China Finance by
Both Number and
Breadth
• Certain licenses (e.g. trust) can be used to
package assets into investable products
• Flexibility to adapt packaging format to
each product
Packaging & Distribution
• Access to assets from the full financial
services spectrum: bank, insurance, trust,
fund, securities, etc.
• Optimized sourcing costs and easiness
Asset Sourcing
• Develop products combining the various
licenses across sectors
• E.g. secured P2P loans backed by
insurance policies
Product Innovation
22
Clear Growth Strategy
More Investors More Products
• Build strong brand awareness via
social media marketing
• Diverse avenues – online and offline
integration, Ping An, user referrer
programs
• Provide more products with
innovative structure
• Vary investment thresholds and
terms to attract investors
• Maintain strict asset quality and risk
criteria
• Increasing integration with Ping An
resources
More Open Marketplace
• Continue to grow our current nine product flows
• Work with more external partners (e.g. TrustCos, FMCs)
• Increase secondary trading volume
23
Lufax’s Powerful Network Effects
Significant First Mover Advantage and High Entry Barrier
Better
Pricing
More
Innovative and
Tailored
Products Better Customer
Experience
More
Transactions
More
Customers
More
Data
24
Disclaimer
This Presentation is for informational purposes only and is not a solicitation of any bid from any investor. Nothing in this presentation shall constitute and/or deem to constitute an offer or
invitation to purchase or subscribe for any securities in any jurisdiction, including the United States. No part of it should form the basis of or be relied upon in connection with any
investment decision or any contract or commitment to purchase or subscribe for any securities. This Presentation is being furnished to you solely for your information and was prepared
without considering your individual objectives, financial situation or needs. This Presentation is strictly confidential and is solely for your own use and that of your professional advisers. It
may not be reproduced, redistributed or published, directly or indirectly, in whole or in part, to any other person. By attending the meeting where this Presentation is made, or by reading
the presentation slides, you agree to be bound by the limitations stated below.
This document contains certain forward-looking statements relating to the business, financial performance, strategy and results of the Company and/or the industry in which it operates.
Forward-looking statements are statements concerning future circumstances and results, and any other statements that are not historical facts, sometimes identified by the words
"believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements, including
those cited from third party sources, contained in this Presentation are based on numerous assumptions and are uncertain and subject to risks. A multitude of factors including, but not
limited to, changes in demand and competition, can cause actual events, performance or results to differ significantly from any anticipated development. Neither the Company nor any of
its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future
accuracy of the forward-looking statements contained in this Presentation or the actual occurrence of the forecasted developments. Forward-looking statements speak only as of the date
of this presentation. As a result, the Company expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements in this presentation
as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which these forward-looking statements are based.
No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the accuracy, completeness or correctness of any information, including any
projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein and, accordingly,
none of the Company or its officers or employees accept any liability (in negligence or otherwise) whatsoever arising directly or indirectly from the use of this Presentation.
By attending this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you should
conduct your own independent review, investigations, verification and analysis of the information contained or referred to in this Presentation. You will be solely responsible for forming
your own view of the potential future performance of the Company's business. Statements in this Presentation are made only as of the date of this Presentation unless otherwise stated
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since such date.
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