Consumer finance companies are overwhelmed by massive non-performing assets.

Consumer finance companies are going through a real stress test, and the gap in disposal capability will widen the survival gap between different institutions.

In 2026, the "protagonist" of non-performing asset transfers on the Yindeng Center has quietly changed: consumer finance companies have taken over the baton from commercial banks and become the most high-profile large supplier of non-performing assets.

In the first quarter, the share of non-performing loan transfers by consumer finance companies on the Yindeng Center non-performing loan trading market (full-caliber) soared to 42%, pushing joint-stock banks out of the top position for the first time and making them the largest non-performing loan transferor across the whole market. (Data source: Guotai Haitong Securities)

In the second quarter, the supply rhythm of the transfer market was adjusted, the transfer scale of joint-stock banks rebounded, and the share of consumer finance companies fell accordingly, but their position as the main market player has always been stable.

If we focus on the main battlefield of consumer finance companies — the bulk transfer market for non-performing personal loan assets, in the first half of the year, consumer finance companies firmly ranked first among all types of institutions with a transfer scale of nearly 53 billion yuan.

The speed of this change far exceeded market expectations.

In 2024, consumer finance companies were only "small players" accounting for less than 20% of this market. It took only more than two years for them to go from supporting roles to reaching the top position in stages.

What has expanded accordingly is the participation of the entire industry.

From the initial tentative moves by a few leading institutions, now 24 licensed consumer finance companies have entered the market for listing, accounting for nearly 80% of the 31 institutions in the whole industry.

Is this a blessing or a curse for consumer finance institutions?

In the view of many people, the fact that consumer finance companies have reached the top of the non-performing transfer list is just the beginning — the non-performing pressure has not yet peaked, and the peak of asset clearing may not have arrived yet.

But at the same time, this may also mean that market-based clearing is becoming a conventional path for the industry's metabolism, and the industry has become more and more skilled in coexisting with risks.

"Relief Support" on the Rise, Pressure Spillovers

How great is the non-performing pressure on consumer finance companies?

The fact that their non-performing transfer scale has reached the top is the result after they have tightened their access gates and digested non-performing assets internally to the extreme.

According to the latest *China Consumer Finance Companies Development Report (2026)* (hereinafter referred to as the "Report") released by the China Banking Association, in 2025, consumer finance companies reduced or exempted interest and fees by 3.928 billion yuan for 2.253 million person-times, and handled loan deferment or extension for 308,200 person-times, involving an amount of 8.382 billion yuan.

What does this mean?

Interest and fee reduction, deferment and extended repayment in the consumer finance industry are mainly products of special periods — when the society faces external shocks of force majeure, the whole industry takes collective actions in coordination with policies.

According to the previously disclosed industry report, in 2022 when the market pressure was relatively high, the whole industry reduced or exempted interest and fees by 5.36 billion yuan, and provided deferred repayment of 5.89 billion yuan.

However, after the external environment returned to normal, although these two special "cost curves" once fell back, they rose rapidly again in 2025 — the total scale of "relief support" of the two items exceeded the high point in 2022, and the number of participating person-times hit a record high.

Interest and fee reduction and loan extension are certainly the embodiment of consumer finance companies fulfilling their social responsibilities. But this also means that borrowers' current repayment pressure is only increasing.

Of course, the market pressure does not only fall on consumer finance companies.

In 2025, the scale of bulk transfer of personal non-performing loans on the Yindeng Center increased by 85% year on year.

Among them, the proportion of personal consumer loans rose from 32.3% in 2024 to 38.2%. In the first quarter of 2026, this proportion further soared to 53.3%.

Over the past period of time, the asset quality of all types of personal loans including credit cards, bank personal loans, operating loans... has been under pressure. The leverage ratio of the household sector has been consolidating at a high level, the recovery of income expectation is slow, and tight repayment capacity is a common problem.

But the customer groups of consumer finance companies are at the forefront of risk transmission — long-tail customer groups, young borrowers, multi-platform co-debtors... who have the thinnest cash flow buffer.

In the economic downward cycle, their repayment capacity is the first to collapse.

In addition, the supervision of loan-assisted lending continues to tighten, and the existing stock risks are also accelerating their exposure.

The risk control space for high-risk customer groups has been compressed, so borrowers can no longer relieve pressure by borrowing new loans to repay old ones, and institutions can no longer cover up non-performing assets by issuing new loans and expanding the denominator.

Data shows that the year-on-year growth rate of loan balance of the consumer finance industry in 2025 was 6.85%, hitting the lowest level since 2021.

At the same time, since last year, the supervision of debt collection has been fully tightened, and the daily frequency and time period of debt collection are strictly restricted.

Since the beginning of this year, many licensed consumer finance companies have successively received regulatory notices, which prohibit outsourced debt collection at the M1 and M2 stages.

In other words, the self-operated debt collection cost of institutions has risen sharply, but the effect may be much worse than before.

What is more tricky is that commercial banks still have profit maneuvering space and capital replenishment channels, while the toolbox of consumer finance companies is much narrower. The rising non-performing assets and provision accrual will erode profits more directly and fiercely.

Under the superposition of various factors, clearing non-performing assets through the Yindeng Center has almost become an inevitable choice for consumer finance companies to optimize asset quality and release capital occupation.

The Market Enters the "Buyer Era"

As more and more consumer finance companies enter the market quickly, the supply and demand pattern of personal loan transfers has also gradually reversed.

The market is rapidly entering the "buyer era".

The latest annual report on non-performing loan transfer business disclosed by the Yindeng Center shows that in 2025, the transaction completion rate of bulk personal business transfers remained flat with that of last year, but the transfer price further decreased, the core reason being that the supply volume increased significantly in the second half of the year, and the discourse power of buyers increased.

Not only the price, buyers' valuation of asset packages has entered a refined stage.

From the transaction results, assets with larger average principal and interest per household in personal business, average overdue time of more than 4 years, and older average age of borrowers have a relatively high asset auction failure rate.

Conversely, assets with small average scale per household, borrowers concentrated in the age group of 30-50, underlying pure consumer loans, shorter account age, and no litigation involved are more favored by buyers.

The trend of credit card non-performing assets is the best reference.

In 2025, credit card non-performing assets were still the incremental main force in the personal loan transfer market, accounting for 32.2% for the whole year. In the first quarter of 2026, its transfer share dropped sharply to 4.1%; it rebounded to 23.4% in the second quarter, still down 8.6 percentage points from the same period of last year.

The decline in the trading volume of credit card non-performing assets may be related to the resolution of sellers' stock pressure, but from the perspective of buyers, there is another non-negligible variable — account age.

Data from Guotai Haitong Securities shows that as of the first quarter of 2026, the disposal cycle of credit card non-performing assets is relatively long, with a weighted average overdue days of about 5.1 years, while that of corporate loans and consumer loans is about 2.9 years and 2 years respectively.

Early transfer and quick disposal are becoming the consensus of the industry.

The longer the overdue time, the higher the probability of borrowers losing contact, the higher the marginal cost of debt collection, and the faster the recovery probability drops. Instead of getting nothing in the end, it is better to transfer the assets as early as possible to recover funds.

At the same time, the structure of buyers is also iterating.

The institutions that have opened accounts at the Yindeng Center include 127 financial asset management companies, 57 local AMCs and 5 financial asset investment companies (AIC), and the competition pattern has evolved from "dominated by several major AMCs" to multi-party competition.

A number of leading local AMCs have taken non-performing personal loans as their core business strategy, with continuously improved pricing capability and increasingly accurate quotation strategies.

All these put forward higher requirements for the post-loan management of consumer finance companies.

In the past, packaging non-performing assets and concentrating on clearing them at the end of the year was regarded as completing the task. Now, timing, structure, and pricing, every link determines the level of recovery rate:

Which assets are more cost-effective to collect by themselves, and which are suitable for early transfer;

Assets with short account age and long account age should be formulated with respective disposal strategies;

It is also necessary to avoid the window of concentrated package pushing at the end of the year, so as to avoid passive discount when buyers have strong bargaining power.

Non-performing asset disposal has gradually changed from a financial write-off tool to a core part of operational capability.

This will also accelerate industry differentiation.

Leading institutions have low capital cost and rich data accumulation, and are capable of carrying out full-cycle refined disposal, with more controllable transfer discount rate. Small and medium-sized institutions have weak risk control foundation and poor self-operated capability, so they can only sell assets passively, and their profits are further compressed.

Consumer finance companies are going through a real stress test, and the gap in disposal capability will also widen the survival gap between different institutions.

This article is from the WeChat Official Account "Xin Finance" (ID: Xinfinance), written by Paozhuoyinyu, authorized for release by 36Kr.