Tencent aims to work with regulator on online financial services market
Mainland's largest listed internet company pledges to work with central bank to ensure online financial services are better regulated
Tencent, which posted fourth-quarter net profit below analysts' estimates, plans to closely engage with regulators to help ensure that safeguards can be established for the mainland's nascent internet financial services market and help it expand.
The conciliatory and pragmatic approach taken by Tencent over recent efforts by the People's Bank of China to strictly supervise online financial services differs sharply from that of Jack Ma Yun, the executive chairman at rival Alibaba, who apparently saw the central bank's action as a barrier to innovation.
Pony Ma Huateng, the chairman and chief executive at Tencent, the country's largest listed internet company, said: "We want to see the internet industry grow and have more players. The more, the merrier."
President Martin Lau Chi-ping said the online financial services market was a new industry segment which the regulator wanted to better understand. He described mobile payments on the mainland as "a dynamic area with plenty of room to manoeuvre and grow".
The PBOC recently ordered a temporary halt of various online payment services and virtual credit cards to be offered by Tencent and Alibaba.
Both companies also have thriving online "wealth management" platforms, Licaitong for Tencent and Yu E Bao for Alibaba.
Alicia Yap, the head of China investment research at Barclays, said in a report there could remain "an overhang" to Tencent's share price in the near term "until we have better clarity on any potential new regulations to be enforced by the government to better regulate and supervise various online payment methods".
Shares of Tencent, which reported its financial results after the market close, dropped 1.82 per cent to HK$567.50 yesterday.
Tencent plans to step up investments this year in digital content, mobile utilities, online payment and international expansion of popular messaging platform WeChat, the domestic operation of which is known as Weixin.
The combined number of domestic Weixin and international WeChat users reached 355 million at the end of December.
The company also proposes a 1-to-5 stock split to facilitate ownership by small investors.
Tencent's fourth-quarter net profit rose 13 per cent to 3.91 billion yuan (HK$4.89 billion) on the back of growth in its online and smartphone games. That result, however, missed the 4.1 billion yuan average of 17 analyst estimates compiled by Bloomberg.
Revenue jumped 40 per cent to 16.97 billion yuan.
Net profit last year grew 22 per cent to 15.5 billion yuan on revenue 38 per cent higher at 60.44 billion yuan.