Ant Group’s profit slips 37% amid China’s regulatory crackdown

Fintech behemoth Ant Group’s profits have slipped to US$2.1 billion in the March quarter of 2021, falling 37% from the previous quarter. This comes amid China’s regulatory crackdowns on the country’s technology industry, a Bloomberg report noted.

Photo credit: Ant Group

Ant Group contributed nearly US$696 million to Alibaba Group’s June quarter earnings, according to a company statement. Since Jack Ma-founded Alibaba holds one-third of Ant stake, that means Ant posted a profit of US$2.1 billion for the quarter. Ant reports it’s earnings one quarter behind Alibaba, which means that Ant’s profit contribution is from the previous March-ended quarter.

The decline in Ant’s profits comes after the stringent measures of Chinese authorities, who have asked Ant to overhaul its operations into a financial holding company. In February, the company struck a deal with the regulators to become a financial holding firm that could be regulated like a bank.

Last year, the Shanghai Exchange suspended Ant’s IPO less than 48 hours before it was slated to list, saying the company failed to meet listing qualifications.

Overall, ecommerce giant Alibaba posted a 34% year-on-year increase in revenue at about US$3.2 billion during the June quarter despite being slapped with a US$2.8 billion fine by China following a monopoly probe in April. Meanwhile, the firm’s net income fell 11% year on year during the period primarily due to investments in strategic areas, it said.

Alibaba will be investing its excess profits and additional capital to support merchants and invest in strategic areas to better serve customers and expand into new addressable markets, according to Maggie Wu, chief financial officer of Alibaba Group.

“We are increasing our share repurchase program from US$10 billion to US$15 billion, the largest share repurchase program in the company’s history, because we are confident of our long-term growth prospects,” added Wu.

See also: Q and A with a former Alibaba executive: Every crisis presents opportunities

The user base of the Alibaba ecosystem across the world reached almost 1.2 billion for the 12 months ended June 2021, an increase of 45 million from the March quarter, said the company. This includes 912 million consumers in China and 265 million consumers overseas that use services like Lazada, AliExpress, Trendyol, and Daraz.

Several tech giants from food delivery and edtech to social media and ride-hailing have come under scrutiny as China continues to put companies such as Didi Chuxing, Tencent, and Meituan in a tight spot citing antitrust issues and national security concerns.