NIM Reddit Mentions | ChartExchange

Executive summary
Key findings in this report
Near-term GDP pressured by tariffs, but likely supported by consumption
later: Bracing for more downside from tariff pressure, UBS China Economist
recently downgraded China’s nominal/ real GDP growth in 2025E to +2.7%/
\+3.4% YoY, with even lower estimates for 2026E at + 2.5%/+3.0% YoY on
lingering negative impacts. Notwithstanding still weak domestic demand that may
result in a dip in consumption growth in 2026E, we expect stronger consumption
policy supports to partly offset the external weakness. As such, we expect private
consumption as a % of nominal GDP may also rise from 41.2% in 2024E to 42.5%
in 2029E. Against that backdrop, we see consumer finance – mainly comprised of
lending, payment and wealth management segments – to also weaken near term,
followed by a robust growth outlook in the medium-to-long run.
Traditional fintech business penetration high, yet we still expect decent
HSD growth ahead: While new technology might revolutionise the financial
sector again sometime in the future, as of now, the traditional fintech businesses
have high penetration, particularly in lending and payment businesses. Even so,
we still forecast a decent and slightly re-accelerating HSD growth in the coming
years (8.2% CAGR between 2024-2029E vs 7.3% between 2020-2024), as the
fintech sector benefits from: 1) a stabilising regulatory environment; 2) a potential
consumption-led economic model change; and 3) a natural edge in client reach
and risk pricing which could help seize market share from traditional banks in
small-ticket consumer finance. More specifically, we expect:
Online lending could contribute 46% of GP in 2029E with an 8.1% CAGR,
riding on its edge in small-ticket consumer loan outreach through digital client
acquisition and tech-enabled risk pricing. By comparison, we expect banks'
consumer lending business to be dragged by narrower NIM, slow retail loan
expansion (especially credit cards), as well as weakening retail asset quality.
Payment business may grow at 8.2% CAGR in GP up to 2029E, decelerating
from previous growth given an increasingly saturated market. Looking closer,
we expect a dip in YoY growth of GP/NP in 2025-2026E along with macro
pressure, followed by a slight rebound in 2027E and onwards, boosted by
consumption strength and a slowly recovering fee rate with less competition.
For online wealth management, we think insurance distribution GP could
grow at 9.6% CAGR mainly on premium growth, while we estimate mutual
fund distribution GP to grow at the slowest CAGR of 2.2% on falling fee rates.
Lift Tencent & Alibaba's valuation on growing but underappreciated
fintech businesses: Within the fintech market, Tencent's fintech arm and Ant
Group affiliated to BABA are far ahead of peers, and we think such businesses are
currently being underappreciated by investors. We value Tencent's fintech
businesses at HK$601bn, accounting for 10% of Tencent's fair value, on 3x 2025E
P/S (from 2x; or 1x PEG, on par with consumer finance peers). We value Ant Group
at Rmb770bn, accounting for 9% of Alibaba's fair value after factoring in the
33% stake Alibaba owns, on 15x FY26E P/E for Ant (on 15% earnings growth), or
1x PEG. Besides domestic businesses, Ant is also actively expanding overseas, with
Ant International offering Alipay+ (e-wallet), Antom (acquiring business),
WorldFirst (B2B cross-border payment and FX services).