Jack Ma’s fintech giant Ant Group Co incurred a steeper profit decline in the three months that ended in June as the fintech giant molded itself to appease Chinese regulators, EuroJournal reported.
The Hangzhou-based company contributed CNY2.4 billion ($335 million) to Alibaba Group Holding Limited BABA earnings.
Based on Alibaba’s one-third stake in Ant, that translates to an estimated CNY7.3 billion yuan of profit for Ant’s June quarter, down 63% from a year earlier.
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Ant’s earnings lag a quarter behind Alibaba’s. It expanded in Southeast Asia while seeking to become a financial holding company at home.
Ant restructured its operations, including beefing up capital, curbing consumer lending, and shuffling management. Its consumer finance unit raised CNY10.5 billion in a scaled-down capital boost from investors after China Cinda Asset Management Co unexpectedly backed out.
Read: The Ant Financial IPO Is Xi Jinping’s Latest Battle With Big Business
Sunny Optical Technology Group Co. subsidiary will take CNY1.1 billion of Chongqing Ant Consumer Finance Co.’s capital for a 6% stake. Jiangsu Yuyue Medical Equipment & Supply Co. plans to add CNY524 million, taking a 4.99% stake.
Ant Group will contribute CNY5.25 billion to retain its 50% holding, while other backers are also investing.
Ant leveraged the payments network it built for Alipay to service the different local wallets in Asia for cross-border payments. Another budding source of revenue comes from Alipay+ D-store.
The company plans to generate income from servicing brands like Burger King that want an online presence in various apps. Ant’s Singapore digital wholesale bank also started offering loans to small and medium-sized businesses this month.
Price Action: BABA shares are down by 7.89% at $84.33 on the last check Thursday.
