7月28日,广州万穗小额贷款公司创始人蒋晓勤和董事长张化桥应日本野村证券公司的邀请,到香港做了题为"微型金融的远大前程"的演讲。下面是张化桥的讲稿的部分内容。
Micro-Finance, Great Expectations

Joe Zhang, Chairman, Wansui Micro Credit, Guangzhou,

A speech at a luncheon hosted for Hong Kong fund managers by Nomura Securities
on 28 July 2011.
Ladies and gentlemen, thank you for the opportunity today. I will speak on two
topics: the micro-finance industry in China and our game plan for success. My
conclusions are as follows:

(1) In China's vast banking industry, micro-finance is a tiny and neglected
segment, accounting for half a percent of total domestic credit;
(2) Demand for micro-finance is huge and fast-growing, as millions of
self-employed businessmen, SMEs and consumers start to tap credit;
(3) Regulators have imposed a cap of 4x the prime lending rate on micro-finance,
but the cap is not always enforced;
(4) Rules on the sector are excessive and deregulation is only a matter of time;
(5) We want to grow our own micro-finance business, as well as create a
management company for the sector, much like Hilton or Marriott in the hotel
sector.
(6) Our mid-term target is to become a deposit-taking village bank.

At the outset, let me introduce our company, Wansui Micro Credit. We operate in
Huadu District of Guangzhou. Huadu has a population of over 1 million and an
area of 961 square kilometers. We are the only licensed micro-finance firm in
Huadu. Our website is www.gzwsdk.com.

Regulation as it stands today does not allow us to branch into other
geographical areas. But we are not complaining about that particular rule yet.
Our money is fully lent, and we have a long queue of anxious customers waiting
for loans. If you gave us another Rmb2bn today, we could safely and profitably
lend it out within six months.
Like most of the 3,000+ firms in our sector, we are licensed and regulated by
the Finance Department of local governments (not by CBRC or the central bank).
We have three outlets in three biggest towns of Huadu handling customer
services. We employ 50 people (compared to the industry average of 7 employees
per institution). Our paid-in capital is Rmb150m and China Development Bank has
lent us Rmb75m on a long-term basis.

At present, we have lent to 1,700 customers. Our average loan size is
Rmb133,000. Most of our loans go to small business as we de-emphasize consumer
lending.

From day one (April 2009), our accounts have been audited by Grant Thornton. We
made a profit of about Rmb5m in 2009, and a profit of about Rmb19m in 2010. This
year, we will likely make a profit of Rmb27m or so.

We have to overcome at least two major hurdles before we realize our full
potential. First, our capital base is still far too small. The current
regulatory cap of Rmb200m in Guangdong is likely to be lifted soon, as has been
in some other parts of China. For months, our well-trained and highly-motivated
credit officers have had little money to lend. In Guangdong, there are 126
micro-finance firms, about one per county or city district. So, our competition
is manly with credit unions, pawnshops and micro-finance divisions of banks.
Fortunately for us and unfortunately for the economy, we have met with very weak
competition, as most lenders are only interested in big-ticket deals. Many
institutions claim to endorse the micro-finance concept, but not the
nitty-gritty side of it.

Secondly, we are currently allowed to borrow only 50 percent of our paid-in
capital, compared to 10-20x leverage at banks. We are not allowed to take
deposits or borrow from the inter-bank market or other sources. That is very
restrictive and unfair to us. We will continue to lobby the government to relax
this restriction. I think deregulation will come over time, as regulators start
to appreciate our good behavior and the contributions our sector is making to
agriculture and SMEs.

At Wansui, we apply private-equity methods to lending. As we focus on business
loans rather than consumer loans, we analyze and predict cash flows vigorously.
If you walk in our office and ask for a loan to finance, say, your holiday in
South Africa, we will politely ask you to go to another institution, even though
you have a big house as collateral. Our approach to business is quite different
from other firms. We do not just sit in the office, waiting for customers to
call. We assign three or five streets or villages to each credit officer. They
proactively go out and visit prospective customers. Before customers ask for a
loan, our credit officer should have done a reasonable amount of due diligence.
We emphasize consumer experience. Repeat customers are a very important
phenomenon, so are customer referrals. As we serve repeat customers, our cost of
loan appraisals declines. As our staff say, walk-in customers are, on average, a
lower-quality credit.

For loans above Rmb300,000, we demand collateral (usually real estate or factory
or ownership of a business), and for loans below that threshold, we demand a
guarantee from a qualified person (who may own real estate or have a high-income
job). We emphasize cash flows and de-emphasize collateral and guarantees. If a
loan had to be repaid by selling collateral or calling the guarantor, it means
our credit officers had done a bad job at credit evaluation. In the two years
since opening for business, we have suffered a zero loan loss, and only a
handful of all our loans (over 2,000 transactions) have had to lean on
collateral or guarantors. While our return on capital will likely exceed 20% in
our third year of operation, we are far from realizing our full potential. There
are seven items on my to-do list:

(1) We must overcome our capital constraint. Raising fresh equity is easy for us
though we are not yet a public company, and it will get easier as the Rmb200m
equity ceiling is removed in the next year. However, fresh capital is only part
of the story. We want to lobby the government to allow us to borrow more from
banks and other sources. So far, several banks have expressed an interest to
lend us to support agriculture and SMEs but we have exhausted the 0.5x leverage
ratio permitted by current rules.
(2) We want to act as a Lending Assistant to banks. Under a Lending Assistance
Program, we can act as banks’ foot soldiers. We will find customers, assess
credit, service loans and collect repayment on behalf the bank. For micro loans,
interest rates we charge can be as high as 24 percent per annum. While our
partner bank receives a prime lending rate (say, 7 percent+), we as the Lending
Assistant will get the difference between 24 percent and the 7 percent. Of
course, we will have to buy bad debts from the bank in addition to the
administrative expenses. Effectively, our partner bank makes a loan underwritten
by us, saves all the trouble associated with micro-finance. We would be
delighted to roll up sleeves and do dirty work, and as our slogan goes, we are
here to serve.

Several Chinese banks have set up such a program with micro-financiers in
Shenzhen, Shanghai and a few other cities. We want to replicate their model.
Becoming a Lending Assistant is very important in significantly boosting our
capability, and improving our profitability.

(3) Loan securitization can also boost our lending and profitability. Again,
several banks have conducted loans securitization with micro-finance firms so
far. We are in negotiation with a couple of banks with a view to selling
packaged loans to them. Hopefully, we will complete a few transactions in the
next six months.
(4) Exporting our management expertise will be a triumph of dedication over fast
bucks. In our industry, many firms find it much easier to make a small number of
big loans, and watch grass grow than make a large number of small loans. At
Wansui, we believe smaller loans are not only safer to our portfolio, but also
more profitable, and more meaningful to the economy. Counter-intuitive perhaps
but it is true. We are passionate about real micro-finance. And we have become
very good at it. As a result, many micro-finance operators want us to manage
their business. Naturally, we will be happy to oblige, for a fee.

(5) M&A opportunities are emerging in our sector, as some operators are tired of
regulatory burden and seek to exit. We are pleased with these opportunities.
Given our limited capital, we will seek to manage other firms for a service fee,
rather than taking significant equity stakes in them, though we do not rule out
equity investments in compelling cases.

(6) We are planning an SME & Agriculture Oasis Fund, the first tranche of which
aims to raise Rmb1bn to invest in micro-finance operators. Being an industry
leader, Waisui is well positioned to do quality control and advisory work.

(7) Becoming a village and township bank is our mid-term goal. There are tough
requirements about turning micro-finance companies into village banks. Come
March, we will turn three years old and will be eligible to apply for a bank
license. Between now and then, the government will likely add a few new
requirements, but we have always observed the highest standards in our business,
and are confident of winning one of the first mandates in our sector, given many
of the accolades we have been given so far. Naturally, the exact timing of such
a mandate is unknown.


Micro-finance came to China only three years ago. A few years earlier, the
government legalized lending among citizens. Today, there are 3,000
micro-finance operators and a few thousand pawnshops across China. The history
of pawnshops is less than twenty years, and almost all of them are small, with a
paid-in capital of less than Rmb100m each. In the past twenty years, the
government authorized tens of thousands of guarantee companies, with the
objective of improving credit environment for millions of SMEs. Essentially,
they sell credit default swaps. Some have made loans despite a regulatory ban.

Chinese banks understand the critical importance of agriculture and SMEs, but
have done little thus far to help them. The fact that free market rates of
interest are 5-7x higher than prime lending rates speaks volumes about the
banks’ inaction and ineffectiveness. This stems from their ownership, governance
and cost structure. Farmers and SMEs complain that banks are inflexible (their
loans assessment time-consuming), and demanding (when it comes to collateral,
loan size, and documentation) and have a culture of avoiding trouble (No one
gets the blame for losing money on China Mobile). In a period of credit
tightening, SMEs and the agricultural sector suffer the most.


How can a normal business survive on a high interest rate of 24-26 percent a
year - I hear you ask? Think about this: private-equity funds, hedge funds and
investment banks routinely demand an internal rate of return above 25 percent,
and they rarely have trouble finding target projects. Indeed, they are often
spoiled for choice. If these investors cut the average size of their investment
tickets to our average loan size of 133,000 from, say, 10 million US dollars, I
am sure they will be swamped. Smaller loans are not only safer, but also more
profitable, particularly when you are dealing with repeat customers as we do.

Think also about this: the usual interest rate banks globally charge credit card
balances is 30-40 percent, irrespective of economic cycles. They never have a
shortage of willing takers for their money.

Our usual micro-finance customers are small businesses neglected by banks, and
even by credit unions. We are often their only place to go to. Interest rates
are not the issue, but the availability of money is. If we charge customers 25
percent pa for our money, and they recycle the money three or four times a year,
they find the interest rate very affordable, particularly considering the
tedious procedure, the long wait period, the uncertainty, and even extra
expenses associated with bank borrowing.


In terms of corporate governance, Wansui Micro Credit makes me very proud. About
a year ago, I became interested in micro-finance and travelled around China to
do research, looking for investment opportunities. Having visited over 60 such
firms in various cities, I decided Wansui was the most outstanding in terms of
management depth, and technical expertise. In late June, a few days after I
approached Wansui to invest my personal money with the firm, I was offered the
chairmanship. I was thrilled. Wansui's founder and then chairperson, Ms. Jiang
Xiaoqin, has kindly agreed to stay on as Head of our Supervisory Board. I am
fortunate to have her continued support. I worked at the central bank in Beijing
in the 1980s, and then at Hong Kong-based investment banks for 15 years, 11 of
which at UBS.I look forward to working with you to make a contribution to the
Chinese micro-finance industry, doing well by doing good.