LOANS RECOGNIZED AS A RESULT OF PAYMENTS UNDER THE GUARANTEES

12 Months Ended

Mar. 31, 2022

LOAN RECOGNIZED AS A RESULT OF PAYMENT UNDER THE GUARANTEE

LOANS RECOGNIZED AS A RESULT OF PAYMENTS UNDER THE GUARANTEES

4. LOANS RECOGNIZED AS A RESULT OF PAYMENTS UNDER GUARANTEES

The Group used to provide loan facilitation related guarantee service. The third-party financing partners offer financing solutions to the Borrowers and the Group is required to provide a guarantee. In the event of a payment default from the Borrower, the Group is required to repay the monthly installment or full amount of outstanding loan to the financing partner as the guarantor. As such, the Group recognized loan receivables as a result of payment under the guarantee deducted by an allowance to its expected recoverable amounts in the consolidated balance sheets.

	March 31, 2021			March 31, 2022
	RMB			RMB
Loans recognized as a result of payments under guarantees		1,362,556			379,259
Less: provision for credit losses		(1,182,609	)		(324,371	)
		179,947			54,888

An aging analysis of loans recognized as result of payments under guarantees was as follows:

	March 31, 2021		March 31, 2022
	RMB		RMB
Up to 6 months		145,639		70,188
6 months to 12 months		307,224		7,555
Over 12 months		909,693		301,516
		1,362,556		379,259

The Group relies on the consumers’ credit history, loan-to-value ratio and other certain application information to evaluate and rank their risk on an ongoing basis. The credit grades represent the relative likelihood of repayment. Customers assigned a grade of “Normal” are determined to have the highest probability of repayment, customers assigned a grade of “Attention” are determined to have a lower probability of repayment, and customers assigned a grade of “Secondary” are determined to have a lowest probability of repayment. Loan performance is reviewed on a recurring basis to identify whether the assigned grades adequately reflect the customers’ likelihood of repayment.

The balance of loans recognized as result of payments under guarantees by grade of monitored credit risk quality indicator as of March 31, 2021 and 2022 were listed as below:

	March 31, 2021		March 31, 2022
	RMB		RMB
Normal		66,924		10,267
Attention		252,572		121,209
Secondary		1,043,060		247,783
		1,362,556		379,259

The movement of provision for credit losses for the year ended December 31, 2019, the three months ended March 31, 2020, the fiscal years ended March 31, 2021 and 2022 was as follows:

	For the year ended December 31,			For the three months ended March 31,			For the fiscal years ended March 31,
	2019			2020			2021			2022
	RMB			RMB			RMB			RMB
Beginning balance of the period		(256,639	)		(763,122	)		(2,190,575	)		(1,182,609	)
Changes on initial application of ASU 2016-13 (i)		—			(172,843	)		—			—
Additions		(398,167	)		(326,204	)		(68,578	)		—
Provision for credit losses (i)		(255,105	)		(1,039,367	)		(29,272	)		(94	)
Write-off		—			48,908			252,508			13,093
Bought out by certain non-bank financing institutions    without recourse		—			—			845,305			821,496
Payments from the borrowers or other recoveries		146,789			62,053			8,003			23,743
Ending balance of the period		(763,122	)		(2,190,575	)		(1,182,609	)		(324,371	)

(i) Due to the impact of a series of regulations governing lending and debt collection promulgated by relevant authorities in the three months ended December 31, 2019, the performance of the loans recognized as a result of payments under guarantees has been adversely affected, and significant provision for additional credit losses was incurred in the fourth quarter of 2019, taking into the consideration of credit grades, vehicle collateral repossession and residual value of vehicle collateral. Due to the COVID-19 pandemic, the performance of the loans recognized as a result of payments under guarantees has been adversely affected further, which resulted in further provision for credit losses in the three months ended March 31, 2020.

The following table explains the changes in the provision of credit losses by grade of monitored credit risk quality indicator as of March 31, 2022:

	Normal			Attention			Secondary			Total
	RMB			RMB			RMB			RMB
Beginning balance of the period		(11,787	)		(149,220	)		(1,021,602	)		(1,182,609	)
Reversal of/ (Provision for) credit losses		6,483			49,903			(56,480	)		(94	)
Write-off		36			1,589			11,468			13,093
Bought out by certain non-bank financing institutions    without recourse		1,286			38,599			781,611			821,496
Payments from the borrowers or other recoveries		14			6,105			17,624			23,743
Transfer from Normal to Attention		2,358			(2,358	)		—			—
Transfer from Normal to Secondary		514			—			(514	)		—
Transfer from Attention to Secondary		—			22,040			(22,040	)		—
Transfer from Attention to Normal		(343	)		343			—			—
Transfer from Secondary to Attention		—			(41,784	)		41,784			—
Transfer from Secondary to Normal		(366	)		—			366			—
Ending balance of the period		(1,805	)		(74,783	)		(247,783	)		(324,371	)