2024ChinaNPLMarketReport

Contents

1NoticetoReaders

2Chapter1:NPLMarketUpdate

3Chapter2:OverviewofRecentNPLTransactions

3NPLBid&TransactionTrendOverview

4BreakdownofNPLTransactionVolumebyMarket

6NPLBid&TransactionVolumeDistribution

7OnlineNPLAuctionOverview

9Chapter3:OverviewofPersonalNPLMarket

13Chapter4:OverviewofCollateralJudicialAuctions

13OverallJudicialAuctionSummary

15JudicialAuctionsbyAssetType

17JudicialAuctionOverviewinZhejiang&GuangdongProvince

19AboutUs

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NoticetoReaders

ThisReport,undertakenbyZheshangAssetResearchInstituteprovidesreaderswithabetterscopetounderstandthedynamicsandrecentactivitieswithinChina’sNPLmarket.ThefirsteditionwasreleasedinAugust2020andwillbepublishedonanannualbasistofocusonrecentindustryactivities,insightsintotheprimaryandsecondaryNPLmarketsandtheonlinejudicialauctionmarket.

GeneralManagerofZheshangAMC

CSOofZheshangAMC

DeanofZheshangAssetResearchInstitute

Page|2

Chapter1:NPLMarketUpdate

Exhibit1-1NPLBalanceinChinaCommercialBanks

■NPLBalance——NPLRatio%

Balance(RMBtrillion)

3.5

3.0

2.5

2.0

1.5

1.0

19'20'21'22'23'24'

2.0%

1.9%

1.8%

1.7%

1.6%

1.5%

1.4%

Source:NationalAdministrationofFinancialRegulation(NAFR)

In2024,theoverallassetqualityofChina’sbankingsectorremainedstable,withmajorfinancialinstitutionscontinuingtheireffortstodisposeofnon-performingassetsandactivelyadoptingvariousmeasurestopreventandresolvefinancialrisks.

AttheendofQ12024,theNPLratioofcommercialbanksstoodat1.59%,unchangedfromtheendofQ42023,reflectingastabletrend.MovingintoQ2,theNPLratiodeclinedby3bpsquarter-on-quarter,highlightingapositivedownwardtrajectoryandrepresentingthebankingindustry’sprogressinriskmanagement.

BytheendofQ3,theNPLratioremainedflatquarter-on-quarter,buttheabsoluteNPLbalancerosetoRMB3.38trillion(US$469billion),upRMB37.1billionfromthepreviousquarter.Asoftheendof2024,theNPLratiofurtherdeclinedby6bps,whiletheNPLbalancedroppedbyRMB97.7billiontoRMB3.28trillion.

Forthefullyear,China’scommercialbankingsectorexperiencedanincreaseinNPLbalancealongsideadeclineinNPLratio,withagraduallyslowingpaceofreduction.Thistrendindicatesprogressinassetqualitymanagementbutalsounderscorestheneedforcontinuedvigilance.FinancialinstitutionsareencouragedtorefinetheirNPLdisposalstrategiestopreservethestabilityofassetquality.

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Chapter2:OverviewofRecentNPLTransactions

NPLBid&TransactionTrendOverview

Exhibit2-1NPLBid&TransactionTrend

30-dayAverage(RMBbillion)

NPLbidvolumeNPLtranscationvolume

14

12

10

8

6

4

2

0

Note:Datainchartisgenerateddailybycalculatingthelatest30-daymovingaverageofthevolumeofbidortransactioncases

Source:PublicInformation,ZheshangAssetResearchInstitute

Exhibit2-2LicensedInstitutions–BiddingVolumeTrend

30-dayAverage(RMBbillion)

400

350

300

250

200

150

100

50

--

NPLbidvolume

348

264

239

206

180

208

172

165

144

136

132

146

95103107

115119

8189

89

2834

59

25

Source:PublicInformation,ZheshangAssetResearchInstitute

In2024,theNPLbidvolumeslightlydeclinedcomparedto2023,whiletransactionvolumeexperiencedanotabledrop,reflectingreducedmarketliquidity.

BreakdownofNPLTransactionVolumebyMarket

Generally,onlylicensedAMCs(nationalAMCsandprovincialAMCs)areallowedtopurchaseNPLsona“bulk”basisfromChinesebanks(3ormoreNPLsperthecurrentdefinitionof“bulk”transfer).TheacquisitionofNPLportfoliosdirectlyfromChinesebanksorotherChinesefinancialinstitutionsisreferredtoasaPrimaryMarketTransaction.

TheacquisitionofNPLportfoliosfromlicensedAMCsbyinvestors(bothdomesticandforeign)andthesubsequenttransferofNPLportfoliosamonginvestorsarereferredtoasSecondaryMarketTransactions.

Thisreportenclosesprimarymarkettransactionsandpartofsecondarymarkettransactions,whichonlyincludestransactiondatafromthetradesmadebylicensedAMCstoinvestors.Itdoesnotincludeanytransactionsbetweentwoprivateinvestors.

Exhibit2-3NPLTransactionVolume–SellerBreakdowninthePrimaryMarket

100

85

60

43

39

3938

39

34

40

28

24

30

21

20

18

17

16

1918

15

10

9

1516

(RMBBillion)

80

60

40

20

--

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

nCityCommercialBanksnJoint-stockBanksRuralCommercialBanks

Big5BanksPolicyBanksOtherBanks

Source:PublicInformation,ZheshangAssetResearchInstitute

Proportionin2024

21%

21%

19%

35%

Intermsoftransactionvolume,thetotalsizeofNPLtransactionsfrombanksin2024wasapproximatelyRMB301.7billion,representingayear-on-yeardecreaseof23.0%.Amongthem,joint-stockcommercialbanksaccountedforRMB105.3billion,or34.9%ofthetotal;citycommercialbanksaccountedforRMB64.8billion(21.5%);theBigFiveBanksaccountedforRMB63.5billion(21.0%);ruralcommercialbanksaccountedforRMB56.0billion(18.6%);otherbanksaccountedforRMB9.0billion(3.0%);andpolicybanksaccountedforRMB3.0billion(1.0%).Joint-stockandcitycommercialbankswerethemajorcontributorstothedisposalvolume.

Proportionin2024

11%

17%

13%

24%

19%

15%

Exhibit2-4NPLTransactionVolume–BuyerBreakdowninthePrimaryMarket

100

85

60

43

39

3938

28

24

39343040

201721

9

18

16

16

15

15

1918

10

Billion)

80

60

40

(RMB

20

--

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

GreatWallOrientCITICFAMCCindaGalaxyProvincialLicensedAMCsOthers*

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Note*:"Others"herereferstoinstitutionswithoutAMClicense,mainlyprivateenterprises,foreigninstitutionsandindividualinvestors.Source:PublicInformation,ZheshangAssetResearchInstitute.

Page|5

AmongthebuyersinChina’sprimaryNPLmarket,approximatelyRMB178.5billion(59.2%)wereacquiredbytheBigFiveAMCs(CITICFAMC,Cinda,Orient,GreatWall,Galaxy),RMB71.9billion(23.8%)byprovinciallicensedAMCsandRMB51.2billion(17.0%)byotherinvestors.Theacquisitionvolumedeclinedacrossallbuyercategoriesyear-on-year,withotherinvestorsrecordingthelargestdeclineof29.7%.

Exhibit2-5NPLTransactionVolume–SellerBreakdownintheSecondaryMarket

(RMBBillion)

50

40

30

20

10

--

44

394040

323435

29

252725

21

23

191918

1515

12

911

4

67

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

GreatWalluOrientuCITICFAMCUCindauGalaxyuProvincialLicensedAMCs

Source:PublicInformation,ZheshangAssetResearchInstitute

Proportionin2024

10%

11%37%

21%

19%

In2024,thetotalNPLsalesfromlicensedAMCsreachedapproximatelyRMB211.2billion,ayear-on-yeardeclineof37.8%.Ofthis,theBigFiveAMCsaccountedfor62.7%andprovinciallicensedAMCsfor37.3%.AmongtheBigFive,CITICFAMCheldthelargestproportion(21.2%)ofNPLtransactions,whileGalaxyAMCaccountedforthesmallestat1.4%.Regardlessofthebidscaleortransactionscale,theBig5AMCs(morespecifically,thepreviousBig4AMCs)stillmaintaintheirpositionasthedominantsellersinthesecondarymarket.

Exhibit2-6NPLTransactionVolume–BuyerBreakdownintheSecondaryMarket

(RMBBillion)

50

45

40

35

30

25

20

15

10

5

--

44

394040

323435

29

191918

2527252123

12

1515

11

7

9

4

6

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

nBig5AMCsnProvincialLicensedAMCsOtherInvestors

Source:PublicInformation,ZheshangAssetResearchInstitute

Proportionin2024

15%

84%

Page|6

RegardingNPLssoldbylicensedAMCsinthesecondarymarket,approximatelyRMB177.9billion,or84.2%,wereacquiredbyinvestorsotherthanlicensedAMCs.ProvinciallicensedAMCsacquiredapproximatelyRMB31.9billion,accountingfor15.1%.CindaAMC,ChinaOrientAMCandGreatWallAMCacquiredRMB1.2billion,RMB0.1billionandRMB0.1billionrespectively,togethermakingup0.7%ofthetotal.

Thesecondarymarketremainsaprimarilynon-licensed-AMCinvestorsmarket,wherethelackofpolicyandgovernmentguidanceinthesecondarymarketcreatesamorecompetitiveandprice-sensitivemarketdynamic.

NPLBid&TransactionVolumeDistribution

IntermsofNPLbiddingvolumeacrossprovincesin2024,theconcentrationeffecthasweakenedslightly,withthetopfiveprovincesaccountingforapproximately41.6%ofthetotalNPLbids.

4

2

3

5

1

Exhibit2-7NPLBidVolumeDistribution

RankProvince

BiddingVolume

(RMBbillion)

OfTotal%

1

Guangdong

202.5

11.25%

2

Henan

151.4

8.41%

3

Jiangsu

149.5

8.31%

4

Shandong

126.8

7.05%

5

Zhejiang

118.8

6.60%

OtherProvinceBiddingVolume(RMBbillion)

60-100

30-60

0-30

Notdisclosed

Note:Excepttop5provinces,gradationofgreyinmapindicatesbidvolumerange,thedeepercolour,thehighervolume,sameforbelow.Source:PublicInformation,ZheshangAssetResearchInstitute

Theconcentrationeffectinthenationaldebtmarket’stotaltransactionvolumealsoweakenedin2024,withthetopfiveprovincescontributingapproximately51.8%ofthetotalNPLtransactions.

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Exhibit2-8NPLTransactionVolumeDistribution

t

2

5

4

1

3

Transaction

Rank

Province

Volume

(RMBbillion)

OfTotal

1

Zhejiang

92.63

13.85%

2

Shandong

84.97

12.70%

3

Guangdong

75.85

11.34%

4

Jiangsu

48.61

7.27%

5

Henan

44.43

6.64%

OtherProvinceTransactionValue(RMBbillion)

20-40

10-20

0-10

Notdisclosed

Source:Publicinformation,ZheshangAssetResearchInstitute

ConsideringthescaleofNPLbidsandtransactions,theNPLmarketactivitiesintheYangtzeRiverDelta(JiangsuProvince,ZhejiangProvince)andthePearlRiverDelta(GuangdongProvince)arestillrobustandstableastheNPLmarketismoreactiveanddevelopedinthesetworegions.InHenanProvinceandShandongProvince,theNPLbidand/ortransactionvolumeisalsoquitelarge,likelyduetolocalpolicyrequirementsonbanksandlicensedAMCstodisposeofNPLsofacertainsize.

OnlineNPLAuctionsOverview

WhileonlineNPLauctionsoccurredinallprovincesacrossChina,mostoftheprovincesonlyhostedarelativelysmallnumberofonlineauctions,leavingthemajorityconcentratedinafewprovinces.In2024,therewereatotalof10,719NPLtransactionsontheTaobaoplatformnationwide,amongwhichGuangdongProvincehadthelargestnumberwith2,095transactioncases,followedbyJiangsuProvincewith1,165,ShandongProvincewith717andSichuanProvincewith571.

Theaveragediscountrateonclaimoutstandingprincipalbalance(OPB)forNPLtransactionsdeclinedyear-on-year,withthenationalaveragefor2024atapproximately48%oftheprincipalamount.

NPLslistedononlineauctionplatformsonlyaccountforasmallfractionofChina’sNPLmarketandarenotaproxyforthebroaderNPLmarket.However,changesinthedirectionofonlineNPLauctionpricesappeartobeshapedbythesamemacroeconomictrendsthatdeterminehowthebroadermarketpricesNPLs.Therefore,thisdatacouldbeusedasareferencebasisformarketpricingtrendswhilethemarketpricesforspecificregionswouldstillrequireon-siteinvestigation.

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Exhibit2-9NPLAuctionTransactionCases-DiscountRateonClaimOPB%

70%

65%

60%

55%

50%

45%

40%

35%

Source:Publicinformation,ZheshangAssetResearchInstitute

Withrespecttothesize(OPB)distributionofonlineNPLauctioncasesin2024,95.3%ofbothbiddingandtransactioncasesweresizedbelowRMB10millionfromwhichwecanseethatsmall-sizeNPLswerethemainassetssoldononlineplatforms,targetinglocalindividualbuyersandsmall-scaleinstitutionalbuyers.Asforlarge-sizeNPLssizedaboveRMB100million,therewere453biddingcaseswhichclosedatonly165transactioncases.Amongthebiddingcases,thelargestonewasRMB3.40billion,whilethelargestoneamongthetransactioncaseswasRMB1.60billion.

Table2-1Size(OPB)DistributionofAuctionedNPLsin2024

Amount(million)

Tendering

transaction

Under10

52737

9268

10-20

597

311

20-30

311

177

30-40

184

99

40-50

219

145

50-60

98

44

60-70

51

30

70-80

57

24

80-90

40

20

90-100

24

12

Above100

453

165

Source:Publicinformation,ZheshangAssetResearchInstitute

Chapter3:OverviewofPersonalNPLMarket

In2024,markingthesecondyearsincetheNationalAdministrationofFinancialRegulation’s(formerlytheChinaBankingandInsuranceRegulatoryCommission)issuedthe"NoticeonLaunchingtheSecondBatchofNPLTransferPilotProject".Buildinguponanddrawingfromtheprevioussuccessfulpracticesandexperiences,variousmarketentities,includingbanks,non-bankfinancialinstitutionsandAMCs,haveactivelyengagedintheinitiativewithclosecoordination.ThisseriesofproactivemeasureshasledtoanexplosivegrowthinthepersonalNPLmarketin2024,withsubstantialbreakthroughintransactionvolume,thenumberofparticipatingentitiesandmarketactivity.

Intermsoftransactionperformance,thepersonalNPLmarketdemonstratedrobustgrowthin2024.Atotalof573personalNPLportfoliosweretransactedthroughouttheyear,whichrepresentedayear-on-yearincreaseof46.9%comparedto2023.Thebusinessscale(claimoutstandingprincipalbalance(OPB)andgrossloanbalance(GLB))totalingRMB158.35billion,markingasubstantial64.0%year-over-yeargrowth.Thesefiguresclearlyindicatethatboththetransactionvolumesandthetotaltransactionvaluein2024significantlylargerthanthatin2023,reflectingaclearupwardtrendintheoverallmarketandhighlightingitssubstantialdevelopmentpotential.Fromatemporalperspective,transactionactivitywasmarkedlyhigherinthesecondhalfoftheyear.Twofactorscontributedtothissurge:

Firstly,agreaternumberoffinancialinstitutions,includingstate-ownedbanks,joint-stockcommercialbanks,consumerfinancecompaniesandlocalbanks,activelyparticipatedinthesecondhalfoftheyear,substantiallyincreasingthesupplyofpersonalNPLportfoliosavailablefortransfer.

Secondly,astheendoftheyearapproached,financialinstitutionsfacedstricterregulatoryassessments,particularlywithrespecttokeyindicatorssuchastheNPLratioandtheprovisioncoverageratio.TooptimizetheirbalancesheetsandreduceNPLratios,financialinstitutionsintensifiedtheireffortstodisposeofnon-performingassetsinthesecondhalfoftheyear.

Exhibit3-1OverviewofPersonalNPLPortfoliosTransactedinYinDengCenter

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

268

300

250

200

150

100

50

0

9.0

34.9

47.5

27.9

54.7

71.5

182

170

107

89

92

41

27

28

25

7

13

2022Q12022Q22022Q32022Q42023Q12023Q22023Q32023Q42024Q12024Q22024Q32024Q4

TotalTransactionVolume(RMBBillion)No.ofTransactedPortfolios

Source:YinDengCenter,ZheshangAssetResearchInstitute

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LoantypesofpersonalNPLstransferredwerestillcontainingpersonalconsumptionloans,personaloperationloansandcreditcardoverdrafts.

Thetransactionsizesofallthreeloantypesgrewsignificantlyin2024.Consumptionloansandbusinessloansdemonstratedsteadygrowthacrossallquarters,whilecreditcardoverdrafttransactionspeakedinQ3anddeclinedinQ4.Thedeclinemaybeattributedtodecreasedconsumeractivityandreduceddemandforcredit,aswellasstricterriskcontrolsimplementedbybanksoncreditcardissuanceandapprovalinQ4.

Exhibit3-2NPLTypeBreakdownofPersonalNPLPortfoliosTransactedinYinDengCenter(RMBBillion)

CreditCardNPLs

71.6

PersonalOperationNPLs

54.7

PersonalConsumptionNPLs

47.534.9

27.9

9.0

5.2

4.3

2023Q1

2023Q2

2023Q3

2023Q4

2024Q1

2024Q2

2024Q3

2024Q4

Source:YinDengCenter,ZheshangAssetResearchInstitute

Table3-1Top10InstitutionsbyNumberandVolumeofPersonalNPLPackageTransfersin2024

Rank

ByNumberofPackages

ByTransactionVolume

1

PingAnBankCo.,Ltd.

PingAnBankCo.,Ltd.

2

BOCConsumerFinanceCo.,Ltd.

BankofJiangsuCo.,Ltd.

3

ChinaConstructionBankCo.,Ltd.

HuaxiaBankCo.,Ltd.

4

ChinaCITICBankCo.,Ltd.

BOCConsumerFinanceCo.,Ltd.

5

MerchantsUnionConsumerFinanceCo.,Ltd.

ChinaMinshengBankCo.,Ltd.

6

ChinaMinshengBankCo.,Ltd.

ChinaEverbrightBankCo.,Ltd.

7

BankofBeijingConsumerFinanceCo.,Ltd.

ChinaConstructionBankCo.,Ltd.

8

HuaxiaBankCo.,Ltd.

ChinaCITICBankCo.,Ltd.

9

ShanghaiPudongDevelopmentBankCo.,Ltd.

PSBCConsumerFinanceCo.,Ltd.

10

BankofJiangsuCo.,Ltd.

MerchantsUnionConsumerFinanceCo.,Ltd.

Source:YinDengCenter,ZheshangAssetResearchInstitute

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Table3-2Top10InstitutionsbyPersonalNPLAcquisitioninQ3andQ4of2024(UnrankedOrder)

Q32024

Q42024

TianjinBinhaiZhengxinAMCCo.,Ltd

BeijingGuotongAMCCo.,Ltd

JilinShengrongAMCCo.,Ltd

HainanXinchuangjianAMCCo.,Ltd

BeijingGuotongAMCCo.,Ltd

LiaoningFuanFinancialAMCCo.,Ltd

ChangshaXiangjiangAMCCo.,Ltd

ChongqingFortuneAMCCo.,Ltd

BeijingAMCCo.,Ltd

BeijingAMCCo.,Ltd

ZhejiangZheshangAMCCo.,Ltd

KunpengAMCCo.,Ltd

JiangxiRuijingAMCCo.,Ltd

TianjinBinhaiZhengxinAMCCo.,Ltd

HeilongjiangGuoruiAMCCo.,Ltd

JiangxiRuijingAMCCo.,Ltd

KunpengAMCCo.,Ltd

HeilongjiangGreatFinancialAMCCo.,Ltd

ChinaResourcesYukanAMCCo.,Ltd

ZhejiangZheshangAMCCo.,Ltd

Source:YinDengCenter,ZheshangAssetResearchInstitute

AsfarasthesourceofpersonalNPLportfolioswasconcerned,joint-stockbankswerestilltheabsolutemainforce,withPingAnBanklistingpersonalNPLportfoliosinYinDengCenterin2024farexceedingotherbanksbothinnumberandamount.Ontheassetacquisitionside,provincialAMCsplayedadominantroleinthemarket.Concurrently,thefivemajornationalAMCshavebeensteadilyandstrategicallyadvancingtheirmarketpresencethroughcollaborativepartnershipswithprofessionalpersonalNPLdisposalagencies.Byleveragingcomplementarystrengths,theseAMCsparticipatedinthemarketasinvestors,pioneeringdistinctiveandinnovativedevelopmentpathwayswithinthemarket.

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Exhibit3-3PersonalNPLPortfolios–discountrate&recoveryrate%byTransactionDate

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

DiscountRateonClaimOPB%RecoveryRateonClaimOPB%

Source:YinDengCenter,ZheshangAssetResearchInstitute

Fromtheperspectiveofpricetrends,theaveragediscountrateofpersonalNPLportfoliosonOPBwasmaintainedbelow3%in2022.ThisrateincreasedinQ22023butthendecreasedduetomarketstabilizationmechanisms.In2024,theaveragediscountrateofpersonalNPLportfoliosonOPBwaslessthan3%.Meanwhile,therecoveryrateonOPBwasgenerallynear8.5%.ComparedtootherNPLbusinesses,bulktransfersofindividualloanNPLsofferconsiderableprofitmargins.However,itiscrucialtoacknowledgethatduetothelargenumberofdebtorsinvolvedinpersonalloans,thecomplexityoftheirsituations,andthemultifacetedinfluenceonrepaymentcapacityandwillingness,thisbusinesspresentedrelativelygreaterrecoverychallengesinpractice.

Exhibit3-4PersonalNPLPortfolios–discountrate&recoveryrate%byOverdueTime

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

<1y1y-2y2y-3y3y-4y4y-5y>5yDiscountRateonClaimOPB%

DiscountRateonClaimOPB%

Source:YinDengCenter,ZheshangAssetResearchInstitute

FromtheperspectiveoftheoverduetimeofpersonalNPLs,accordingtotheinformationdisclosedbyYinDengCenter,theweightedaverageoverduetimeofpersonalNPLstransferredin2023and2024weremorethan3years,whichwasstillalongoverduetimebuthadbeenshortenedcomparedtonearly4.5yearsin2022’stradeandnearly4yearsin2021’strade.

ThelengthofoverduetimegreatlyaffectstheaveragediscountrateaswellastherecoveryrateforpersonalNPLportfolios.AsshownintheExhibit3-4,forpersonalNPLportfoliostransferredinYinDengCenterin2024,theaveragediscountrateonOPBwithanaverageoverduetimeoflessthanoneyearwasfourtimeshigherthanthatforportfoliosthatwerefiveyearsoverdueandabove,withtherecoveryrateonOPBwasmorethantwotimeshigheraccordingly,highlightingtheclearmarketpreferenceforshorter-termdelinquencies.

Chapter4:OverviewofCollateralJudicialAuctions

OverallJudicialAuctionSummary

Thefollowingdataforcollateral[1]auctionscoversallauctionrecords,including1stauctioncases,2ndauctioncasesandsale-offcases.Thenumberof1stauctionsreflectstheactualnumberofauctionedassets(inotherwords,theassetsin2ndauctionandsale-offstagehavefailedintheircorresponding1stauction)andthechangeinthenumberof1stauctionsrepresentstheactualchangeinthesizeoftheonlinecollateralauctionmarket.Additionally,theproportionof1stauctionstothetotalauctionsreflectsapositivecorrelationintheliquidityoftheonlineauctionmarket.

In2024,therewereatotalof615,0091stauctioncasesofcollateral(RealEstate)nationwideonmajoronlineplatforms,ayear-on-yearincreaseof32.0%.Theproportionof1stauctioncollateralstothetotalnumberofauctionedcollateralswas49.6%,adecreaseof12.2%comparedtothepreviousyear.Allprovincesandprovince-levelmunicipalities[2]demonstratedyear-over-yeargrowthinthenumberof1stauctioncollaterals.

Exhibit4-1No.ofCollateral1stOnlineAuctionsinMainProvincesandtheYOYchanges%

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

28.5%

55.7%

46.3%

8.3%

33.5%24.9%

35.4%

81.4%

66.3%

48.8%

9.0%

14.0%30.6%

126%

.73.3%9.3%

20232024

Source:Mainonlineauctionplatforms,ZheshangAssetResearchInstitute

Page|13

Note[1]:Notonlycollateral,butsomeseizedpropertiesofNPLwillalsobelistedandauctionedinonlinejudicialauctionplatform.Hereaftercollectivelycalled“collateral”forbetterdescription.

Note[2]:Aprovince-levelmunicipality,formallyamunicipalityunderthedirectadministrationofcentralgovernment,isthehighestlevelofclassificationforcitiesusedbythePeople’sRepublicofChina,currentlyincludingBeijing,Tianjin,ChongqingandShanghai.

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Thejudicialauctionmarketscaleroseyear-on-yearin2024,whilemarketliquidityweakened.Duetothedownwardpressureontheeconomyandtheweakrecoveryperiodinthepostepidemicera,alargenumberofcollateralsofNPLswerepushedintothemarket,leadingtothejudicialauctionmarketscalecontinuedtorise.However,buyercautionhasprevailed,withmostofthemadoptingawait-and-seeapproach,whichresultedincollateraloftenrequiringmultipleauctioncyclestocompletetransactions,shiftingmarketliquidityfromstrongtoweak.Intermsofprovincesandcities,thesizeofthejudicialauctionmarketroseinallprovince-levelmunicipalitiesandmarketliquiditywasweakenedinallprovince-levelmunicipalities.Amongthe16province-levelmunicipalities,SichuanProvincehasthelargestmarketscaleandZhejiangProvincehasthebestliquidity.

Exhibit4-2ProportionofNo.of1stAuctionstoNo.ofAllAuctions%

80.0%

75.0%

70.0%

65.0%

60.0%

55.0%

50.0%

45.0%

40.0%

-16.7%

-29.7%

-19.7%

-19.9%

-17.2%

-25.6%

-20.2%

-32.5%

-13.1%

-16.7%

-14.1%-21.2%

-29.5%

-20.3%

-19.0%

-21.4%

20232024

Source:Mainonlineauctionplatforms,ZheshangAssetResearchInstitute

JudicialAuctionsbyAssetType

Exhibit4-3ResidentialCollateralAuction–discountrate&conversionrate%instatelevel

86.0%

84.0%

82.0%

80.0%

78.0%

76.0%

74.0%

72.0%

70.0%

68.0%

24.0%

19.0%

14.0%

9.0%

4.0%

Auctionconversionrate

Discountrateofstartingprice

Discountrateoftransactionprice

Note:thediscountrateisthestartingpriceortransactionpricetothecollateralvaluationpriceandtheconversionrateisthe#ofsuccessfulauctioncasestoallauctioncases[1]

Source:Mainonlineauctionplatforms,ZheshangAssetResearchInstitute

In2024,theaverageconversionrateforresidentialcollateralauctionsdeclinedcomparedtothepreviousyear.Correspondingly,theaveragediscountrateforrealizedresidentialassetsalsodroppedandthepremiumoverthereservepricenarrowed.

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

Auctionconversionrate

Exhibit4-4CommercialCollateralAuction–discountrate&conversionrate%instatelevel

80.0%

76.0%

72.0%

68.0%

64.0%

60.0%

Discountrateofstartingprice

Discountrateoftransactionprice

Source:Mainonlineauctionplatforms,ZheshangAssetResearchInstitute

Forcommercialcollaterals,theaverageconversionrateroseslightlyyear-on-year,thoughtherealizeddiscountratedecreased.Similartotheresidentialsegment,t