Ping An OneConnect to expand lending to retail SMEs in growth push
Ping An OneConnect Bank, the Hong Kong virtual lender indirectly owned by Ping An Insurance, plans to increase lending to small and mediumsized enterprises (SMEs) in the retail sector to capture growth opportunities in the post-Covid era, its chief executive said.
“After the border between Hong Kong and the mainland reopened in January, the number of visitors to the city has multiplied,” Michael Fei Yiming said yesterday.
“The resumption of crossborder travel has provided a growth engine for the retail sector. We are strongly confident the sector is recovering again.”
More than 10 million visitors arrived in Hong Kong in the first five months of this year, according to Tourism Board data. Last year, the city recorded only 34,982 arrivals in this time frame and 27,549 the year before.
Ping An OneConnect last week introduced a revolving loan target for retail SMEs that are using payment company eftPay to accept electronic payments.
The bank would use eftPay data to assess the credit quality of retailers, which could each get a credit line of up to HK$300,000, Fei said.
Unlike traditional lenders, which offer loans with property or other assets as collateral, virtual banks use big data and other trading or payment information to access firms’ credit quality.
This allowed many SMEs, which previously could not get bank loans, to get credit from lenders such as Ping An OneConnect as long as their business data was sound, Fei said.
“This is a sign of financial inclusion and marks a major contribution of virtual banks to our society,” he added.
The Hong Kong Monetary Authority licensed eight virtual banks to promote fintech development and the provision of better banking services at a lower cost. These banks can only offer online services and started operations in 2020.
All these banks have yet to make a profit. Ping An OneConnect reported the smallest loss among them for 2022, at HK$157 million, a 27 per cent contraction from 2021.
“In the past two years, our performance has actually been quite satisfactory,” Fei said. “It is just a matter of time for us to break even. To achieve that, our team will need to cover more industries, bring in more partnerships and introduce more products to satisfy the needs of SMEs.”
There were more than 360,000 SMEs in Hong Kong as of March, according to government data, accounting for 98 per cent of business establishments and employing more than 44 per cent of the city’s workforce in the private sector.
“Right now, we only have just over 1,000 SME clients,” Fei said. “There is a lot of room for growth.”