During the Period, we completed changes that we initiated in the second half of 2020 to adjust our risk management and shift our strategy focus towards better prime and near-prime customers. At the same time, we have improved our operational efficiency and enhanced our target customer identification and market penetration by dynamic involvement within diversified channels and customer experience optimization. Also, the improved economic and market conditions of China has leaded to a continuing strong demand for consumer financing. The above helped the Company to deliver an outstanding operating performance and financial results for the Period.
The Group primarily offers installment based credit products through our pure online loan origination process, services including, direct lending, trust lending, credit-enhanced loan facilities and pure loan facilitation. For the Period, the total number of transactions was 1.7 million and the average term of our credit products was approximately 9.6 months and the average loan size was approximately RMB13,091.
Initiate Strategy Changes
The Group has, through the combination of these changes in our strategy focus and proactive management, expanded our user base, with the number of our registered users reaching 103.5 million, and achieved a significant increase in our loan facilitation volume. In order to reach more of our target customers, the Group has expanded our network of customer acquisition channels and use of industry platforms, such as collaborating with newly-partnered channels, such as OPPO, Xiaomi and China Telecom. To improve our delinquency ratios and asset quality metrics, the Group focused on better prime and near-prime customers. Those ratios are currently at levels that are considerably better than pre-COVID 19 pandemic levels. Promising outcomes of asset quality are driven by the iteration of our credit risk model.
Continuous Improvement of Asset Quality
During the Period, new generations of multi-source scorecards have been implemented, further boosting our risk management capability. Sophisticated testing was conducted throughout the Period based on the ever-changing macro environment and customer behavior, which brought more insights into our risk policy optimization strategy. Among our key leading indicators of asset quality, our first payment delinquency ratio remained at a similar level during the Period to the first payment delinquency ratio of around 0.4% for the fourth quarter of 2020. Meanwhile, our M1-M3 ratio and M3+ ratio reached their lowest levels ever in our history, declining to 2.06% and 1.40%, respectively, in the second quarter of 2021 from 2.50% and 2.86%, respectively, in the fourth quarter of 2020.
Stable Funding Source
By the end of the Period, the Group had long-term collaborative relationships with 64 external funding partners, including commercial banks, consumer finance companies and trusts, providing a stable funding source to ensure we fulfill the under-served borrowing needs of customers. Through solid cooperation, funding costs continue presenting a declining tendency. The Group has been exploring potential co-operation business opportunities with third-party guarantee companies and asset management companies, including offering our talents in product operation, marketing strategy and credit risk modelling, to secure our funding flexibility and protection to our funding partners.
Outlook
Looking forward, as an innovation-oriented and technology-driven finance company, we will strive to maintain our agile, efficient and regulated business approach. The Group will continuously through systemize marketing strategies, upgrade credit risk algorithms and models, and optimize product operation to fulfil our prime and near-prime customers under-served credit demands. At the same time, the Group will streamline and extend our credit solutions to better serve our customers, enhance risk-centered technology capability through constant research and development. The operating environment remained competitive as progressive regulations tightened, but with our flexible attitude, we will continue to observe the market situation closely and react. Together with our dynamic enterprise value and culture, the Group believed that we can maintain a steady growth in the industry. VCREDIT, the financial services at your fingertips.
About VCREDIT Holdings Limited (2003.HK)
VCREDIT Holdings Limited ("VCREDIT") is a leading player in China's consumer finance industry with over 10 years of track record. The Company caters to prime and near-prime borrowers underserved by traditional financial institutions by offering online consumption products. To match the funding needs for these products, the Company primarily engages institutional funding partners through three types of sustainable and scalable funding structures: trust lending, credit-enhanced loan facilitation and pure loan facilitation. Through such funding structures, VCREDIT provides institutional funding partners with solutions at varying levels of risk discretion and flexible profit-sharing arrangements.
Website: http://www.vcredit.com/
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