(Yicai Global) Dec. 6 -- Shares of Lufax Holding dropped after the fintech arm of Ping An Insurance Group said it will stop offering services to retail investors in Hong Kong early next year amid sliding profits.

The stock price of the wealth management platform [NYSE: LU] rebounded 1.1 percent in after-hours trading at 2.16 p.m. Beijing time after falling by 4.1 percent in New York yesterday. The equity has tanked over 60 percent this year.

Lufax’s Hong Kong-based subsidiary Lu International will stop offering consumer-facing services on Jan. 6, 2023, suspending registration, account opening, product subscription, automatic investment plans, and application for other new products or services for an indefinite period, the Shanghai-headquartered firm said in a statement on its mobile application yesterday. After that, the fintech platform will only provide asset transfer, asset realization, cash withdrawal, and currency exchange services, it added.

The company decided to withdraw to integrate its resources and optimize its business focus, Lufax told Yicai Global. Next, Lu International will zoom in on empowering financial institutions via technology, it added.

The move is a change of direction as the mainland firm said in June 2020 that it has gained three types of licenses to provide securities brokerage, advisory, and asset management services in Hong Kong. The offshore app was launched in August 2020 to serve residents of the special administrative region.

Lu International cut its consumer-facing business for concerns about profit, industry insiders said. Lufax recently reported some of its most dismal earnings since going public in October 2021.

In the third quarter, Lufax earned USD1.9 billion in total income, down 17 percent from a year earlier, as retail credit facilitation revenue dropped nearly 31 percent, the firm said in its latest financial report. Its net profit plummeted nearly 67 percent to around USD190 million.

Meanwhile, Lufax’s credit impairment losses more than doubled to USD556 million due to a decline in loan quality. Evidently, an enlarging group of clients was not repaying on time as some 3.6 percent of all loans were overdue more than 30 days as of Sept. 30, up from 3.1 percent a quarter earlier, as Covid-19 outbreaks impacted small business owners' finances.

Lufax is not optimistic about its earnings this year. New loans facilitated in 2022 could fall by 23 or 24 percent to CNY495 billion (USD71.1 billion), it predicted. The annual income may decrease by 6 to 8 percent to CNY58 billion (USD8.3 billion), and net profit could drop by 47 to 49 percent to CNY8.9 billion (USD1.3 billion).

Editor: Emmi Laine, Xiao Yi