360 Finance Stock Drops 3% as Sino-U.S. Tensions Worsen

The digital consumer finance platform expects a better second quarter.

Author: Anthony Russo   

The stock in 360 Finance Inc. (Nasdaq: QFIN) slipped nearly 3% to $9.60 per American depositary share after reporting strong first-quarter revenues.

The Shanghai-based digital consumer finance platform said in a statement today that in the three months through March its revenues reached $449.51 million. However, its net income fell to $25.87 million compared with $107.45 million in the same period of 2019.

"In response to the pandemic, we implemented a more prudent risk management strategy. When granting credit lines to borrowers, we quickly adjusted to adopt a tighter credit approval policy for new borrowers living in areas most affected by the pandemic and to those working in industries that were significantly impacted," Yan Zheng, the vice president of 360, said in a statement today. 

He added, "After borrowers made a credit drawdown, we focused on borrower management and offered more flexible and diversified products. We also continued to enhance overall efficiency in loan collection processes through constantly refining our AI bots."

The company's stock drop occurred as the trade relations between Beijing and Washington intensified over Hong Kong and the Covid-19 blame game. In President Trump's latest anti-China Tweet he said "All over the World the CoronaVirus, a very bad "gift" from China, marches on. Not good!"

However, 360 Finance's stock performance hasn't been as bad as some other Chinese stocks. Its shares are down just about 3% year-to-date.

Founded in 2016, 360 provides online consumer finance products to borrowers. As of March, it had 141.63 million cumulative registered users, up 49% from the same period in 2019.

360 Finance said it expects to reach loan originations in the range of 200 billion yuan and 220 billion yuan for the fiscal year 2020.

"In the second quarter, we are witnessing a continuing improvement of asset quality and modest growth of loan origination volume, driven by the recovery of domestic economy and our efforts on the enhancing operation efficiency," Jiang Wu, the chief financial officer and director of 360, said in a statement today.

He concluded, "Hence, we do expect further improvement on our financials in the coming quarter. However, we are still evaluating the impact of global pandemic situation on China's economy and our business. Given that, we will remain cautious on the full year outlook."