WUJIANG, CHINA -- (Marketwired) -- 08/27/13 -- China Commercial Credit, Inc. (NASDAQ: CCCR), a microcredit company providing loans and loan guarantees to small-to-medium sized enterprises (SMEs), farmers and individuals, today issued a corporate outlook for the next 12 months. Mr. Huichun Qin, founder and CEO, cited three primary factors expected to fuel the company's growth:
•CCC's improved access to capital to increase its lending capacity. •Continuing expansion of the microcredit industry, in both China and Jiangsu Province, where the company is based. •Ongoing government measures making the microcredit sector more attractive to borrowers.
CCC's improved access to capital. As a result of raising $8.9 million in its recent IPO -- thereby becoming the first China-based microcredit company to go public in the U.S. -- China Commercial Credit is expected to increase its available lending capital from $98 million (RMB 600 million) to $130 million (RMB 800 million). This, in turn, should positively impact the company's interest revenue in the near term, said Mr. Qin.
Mr. Qin, a former Deputy Director of Peoples Bank of China (PBOC) -- the nation's Central Bank -- added that, with its Nasdaq listing, CCC has the option to raise additional equity or issue debt in the U.S. and Hong-Kong, thereby further increasing its lending capacity and accelerating company growth.
Continuing expansion of the microcredit industry. According to recent PBOC data, at the end of June 2013 there were 7,086 microcredit companies in China, compared to only 1,940 three years ago. Since June 2010, microcredit companies' outstanding loans have multiplied by 5.6 times to $115 billion (RMB 704 billion).
Jiangsu Province has seen the fastest growth of any province in China during this period, with the number of microcredit firms rising 4.3 times to 529, and outstanding loans growing six times to $18 billion (RMB 109 billion). Wujiang City, CCC's base, remains one of the most economically successful cities in China, said Mr. Qin, and is home to an increasing number of the world's leading exporters of electronic equipment, chemicals and textiles -- many of which require microfinance loans.
This growth is primarily due to the Chinese government's 2008 financial reforms to ease the country's reliance on lending by State-owned banks -- which had heavily favored lending to State-owned enterprises and large companies -- and allow the creation of microcredit companies designed to serve the borrowing needs of SMEs, farmers and individuals, a group accounting for eight out of ten jobs in China and comprising 60 percent of that nation's GDP.
Since 2008, microcredit companies have played an increasingly important role in financing SMEs nationwide and especially in Jiangsu Province, said Mr. Qin. And because most State-owned banks in China -- due to higher costs and risks -- are still not willing to lend to SMEs, the growth of the microcredit industry will likely accelerate for the foreseeable future, he added.
Ongoing government measures. Three recent policy changes by the Chinese government will likely spur the growth of the microcredit industry, said Mr. Qin. The first are the credit tightening measures, enacted in June 2013, currently affecting the nation's State-owned banks. These measures, which could last for as much as a year, will likely drive additional loan applicants -- including many State-owned enterprises and larger companies -- into the microcredit sector, said Mr. Qin.
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