FINV - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello ladies and gentlemen. Thank you for participating in the Third Quarter 2020 Earnings Conference Call for FinVolution Group. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. the Investor to Relations turn Tan, host now of Head for will call your over Jimmy I the company. ahead. go please Jimmy,

Jimmy Tan

Hello were our call. to posted online. earlier everyone XXXX are and conference earnings today third and The via issued quarter results newswire services company welcome

Chief You the our Simon at Q&A website ir.finvgroup.com. with session. and Feng Zhang, earnings Officer; conclude sign company and Mr. for the Financial our can alerts section with by Jiayuan prepared their Finance our Senior of Executive Mr. download Chief Ho, Officer; President e-mail a remarks Vice call visiting will release Xu, up the and IR Mr. the start our for

review are presented and financial with substitute our These call, non-GAAP intended as isolation information performance. not prepared assess this and in will to we certain to During operating measures be referring the financial a or accordance be considered to for in GAAP. non-GAAP measures U.S. financial

about and information non-GAAP measures press GAAP our to reconciliation earnings these measures, refer release. For please to

continue, discussion Reform statements Safe will the under the contain provisions we please today's of made XXXX. Private of Harbor Securities note Act U.S. Litigation forward-looking Before that

inherent statements and Forward-looking uncertainties. risks involve

to company views regarding Commission. uncertainties The the be such U.S. from any Exchange and applicable the does statements the Further update Securities law. other are forward-looking required these under company's risks company may assume in the As different included expressed materially and except results obligation any information today. and as filings not with

over Feng go will now our sir. on to Finally, call we I for website results a the our providing IR the Mr. ahead quarter. Zhang. CEO, our of presentation slide Please post turn details

Feng Zhang

conference you everyone XXXX Hello our today. and Jimmy. call joining quarter for you, Thank thank third earnings

quality report to higher customers. are operations We to continued progress a our shift with in pleased

financial testament of a and and the capabilities. results our core quarter the expected in to than robustness were further third operational better agility Our XXXX, the

declined between to average period to XX%. October, August IRR our the For three-month

China business aftermath gathering of COVID-XX, As loan the gradually our been has recovery from emerges momentum.

for China of quarter and representing guidance RMBXXX exceeding XX% Our by a loan top income end range. increase More RMBXX operating billion, million. third quarter-over-quarter to reached our XX% Mainland volume origination quarter-over-quarter encouragingly our increased in the

on to management, assessment improvement operating risk metrics across prudent our the Our in ways. coupled with credit technology, focus the risk support proprietary in third quarter continue following multiple

below for the loans second originated the we the is third vintage going expect forward, around to to year and by lower delinquency this of rate vintage in the delinquency the end quarter further X%. in First, expected X.X% to year. of And come rate

vertical the days show XX sequential level Next, the delinquency to stage X.X%. delinquency due rates are have XX disclosed buckets. company. continued historically improvement early the past for fallen that to It's a all-time in low Notably, to

our improvements despite paid these that borrowers with demonstrate of bolstered Finally, COVID-XX-induced continued efforts all economic as technology off enhanced in serving to synergies the build diligent targeting capabilities and greater partners. our our challenges quality better by

were able quality shift With we steadily the funding year. better demand As to from continue on experience the partners strong expected, assets. quality the to of our past platform our lower cost strategic towards over for one borrowers, we

X%. cost is quarter. even institutional to platform glad at the funding the partners of on in on X.X% platform funds are funds report of to new third We cost the average decline lower of below The

quarter. capabilities strong the to and of fourth dynamics environment, RMBXX our domestic our billion and be market to a aftermath healthy an operations evolving X% billion, our This corporate the strategies of loan technological powered market performance and for remained volume third in the of better-than-expected regulatory higher-quality with COVID-XX the adjust execution to was by increase We representing the third between borrowers. business between expect Given our and in towards a to profitable transition quarter. quarter in now XX% RMBXX over faster

initiatives long to other like our you as we on growth continue in the run. Now, leverage update to our to I'd strategic drive technological our capabilities

are in platforms in the the expansion, particular, we registered our making which license business international issued today under X market In forms of strides Indonesia impressive we users. that with leading one the in our million business. are we operate lending international bulk First, and OJK over Indonesia, by of fintech now in

well significant times operations second quarter the business gaining implemented. Loan from Indonesia were levels strong rebound origination measures during, in we Our in a X are loan volume depressed and began increase strong response XXXX to quarter-over-quarter. at operating which traction. in momentum Indonesia or origination The them. Indonesia since levels the continuing and COVID-XX the pre-COVID we to XX% expect nationwide Loan lockdown in above now in is volumes experienced of another highest many so level is

operations We have also elsewhere Asia. in Southeast

promising Fortune, its and capitalize offerings these a to know-hows continue example continued growth the in with quarter-over-quarter. in explore and experience we in remains management on investments manner cumulative product increase an of emerging potential XX% countries. Philippines, RMBX.X For Liang technology-driven is in tech capabilities on of representing track service our initiative the services the billion facilities dynamic wealth highly in fintech where financial in industry and around a expanding technological will to ecosystem our growth

progress currently of successfully record challenges responsible summary, of management development to steady to operations. navigate -- measures effective cycles of taken We our financial responsive we'll our to have making and we speaking transformation more continue and risk regulatory economic across institutions consumer finance to our recent addition digital credit their and in have our manage allowed in discussion pipeline been in us healthy the exporting of to proven empowering banks track years. in In the financial and various technology-as-a-service, spearhead technologies implement institutions have a In innovation technology strategy other through institutions. in

quality lower significantly lending financial to customer and segment transitioned has repositioned PXP have our fundings on borrowers the higher business. in We for credit risk stronger institutions from base our All resulting the rates and towards much core have profiles. platform shifted

know-how. We strategic our in invest and continue leveraging to technology new initiatives

momentum initiatives Indonesia as and starting these gaining pay-off. are such of to some And are

We solid generate consumer the financially and in and the finance growth are to China sustainable vast and in potential abroad. unlock well-positioned

I new Lastly, contributions Simon like of over our continued will for to his thank take during his to would look financial forward the opportunity results now Board. Director the discuss turn would time, extend our to will that, At I tenure. we and With remarkable this new a join Xu Jiayuan Board into company to our forward the Simon like will to his the welcome We who Mr. for warm his contributions same as Simon contributions as a to role. I the call to quarter. the CFO. to look

Simon Ho

and XX% a RMBXXX hello, profit the the profitability sequential Feng you, environment of million, third everyone. sustained amid we recovering quarter increase our COVID-XX of a in Mainland model. representing Thank further In non-GAAP operating delivered of China, demonstrating business core

remained Our billion business balance liquidity. we sheet short-term strong strong liquidity and unrestricted Leveraging with new expand technology, partners. our with cash RMBX.X our look on in opportunities capture relationships and and to

million RMB our the line XXXX refer the origination of loan release third the not walk year. for line volume interest interest period XXX XX% in the the the quarter of of primarily in interest RMB from deferred from for the period primarily XXX million million RMB quarter a in to will time, on third at average fees. Loan balances decline decreased XXX for serviced of Guarantee third financial the transaction the outstanding service of increased RMB each the due Post revenue and of RMBX.X XXXX by XXX by XXX billion in the fees the RMB XXXX, XXXX XX% to in and of of XX of due in for Net turning XXX of of the the million decreased loan to outstanding by through facilitation to the item a to XXX RMB earnings for same of the ASC adoption million quarter. million decline to I of In in fees. was XX% due XXXX, income call. quarter company details. ASC third-party Now third same by increased the results the XXXX, decreased due transaction rate this fees of service quarter customer XX% period RMBX.X period the the to from decrease XXX. the providers. third in in same income from quarter to rolling of the through by quarter XXXX to more for same XXX% the XXX due income RMB for XXXX decrease beginning billion referral facilitation XXXX fees primarily period approximately same to RMB XXXX, to Net XXX third XXXX to million mainly mainly adoption for increased third of Other from by trusts. of the impact in RMB loans service by million million of due revenue to from reduction consolidated Please

profit XX% on we by RMB to adjusted million RMB of expenses an million which same of compared quarter requirements not platforms. of million gains third period third for quarter of XXXX the shifted XXX from the RMB XXXX primarily the consists for increase meet XXXX do borrowers was period the to have same million in we RMB of decreased income As our that quarter third-party compensation increased investment. of our third Net the same of XX towards XX Other XXX before period XXXX. operating higher-quality XXXX. share-based RMB which compared income Non-GAAP in excludes platform, million profit borrowers of million of the for with have in XXX to referral XXXX, from XXX the tax representing RMB was other X%

company consultation I do want co-lending does than funding materially lending. accounts short, rely loans the micro-lending platform. on have We micro-lending recent our on micro before is affect with We we paper but through us. this the regulator's X% not Now outstanding less on of to and nor I micro-lending a company not small do have our do close, loans our partners. In disbursed company, arrangements for address

funding core in borrowers. to access XXX% of as partners, Our based the provide value-added a partners the institutional to services business to model, as is providing on needed borrowers. loan platform credit model provide well role funding whereby facilitation And our funds is to by

well-capitalized sheet leverage is We have a our conservative. and balance

in by total strong was our leverage shareholders' of the If billion our you remains RMB cash our platform divide business X.Xx. investments at position billion the approximately the end with equity And RMB X.X XXXX. ratio across of September and short-term unrestricted liquidity as XX the outstanding loans of only

back buy are we last our shares. means us the On have environment our positioned shares well $XX sheet shares. deployed began to we deployed we continued balance $XXX flexibility. in Since current gives have we significant we strong XXXX million cumulatively to in our million buybacks, call buybacks. Since buy our Our earnings have on repurchasing and back

Finally well adapt which that Jiayuan management continue well years. remarks. I shareholders. to my I am the several and partnership to excited the over is I value With technology wanted to very and the our to in and the to you Feng has thank to serve positioned new I to and long-term over support strong prepared environment role to evolving and team and who Xu my Board for past and capabilities all deliver the company conclude all will to FinVolution as on Alexis hand is lead will prepared

We will questions. call please now Operator open continue. the to

Operator

Thank you.

And begin and Daphne now question-and-answer ahead. will Poon comes Citi. gentlemen, today's Instructions] first from session. question go ladies Please [Operator We the with

Daphne Poon

for question. management evening, my Thanks taking Good Hi. team.

three I questions So, here. have

the side. So first is regarding, on -- financial just your

there to So, new intra-quarter that be credit seems meaningful we the in noticed loans. cost decline a on

take your X.X%. credit loan the like if volume, sheet quality for divided it's assurance So I off-balance only by loss

behind, So write-back whether there quarter? reason regarding any just wondering in the is there, And is what's outlook. second your economic the

credit the sector government rule, to you I apart And cost, loan do can sector. we et guess the check, see So, regulatory this want break overall just the on after adjust tone to like Seems down cetera? the the cost online guess lending you outlook? funding I And from if side. possible, long-term from the this side is on quite I FinTech your lastly, average it APR now a economic XX%. more below new number is or all and online officials. into pricing sustainable Also, micro-lending statements tightening consumer towards of what

that your can you thoughts So front? this from regulatory hearing management on your you. Thank direction like regulators funding the on or have future share the what partners been or from maybe

Simon Ho

your for much thank I'll one. you Daphne, right. All by questions. take very them one

the there about third were the experience so expected provisioning Yes, quarter, The and were in first throughout as credit they been than earlier. and why because low. the of have we question is write-backs cost highlighting risk the levels credit better commentary

to economics, quarter there been rates trends, write-back than quarter, of loan third quarter. second question continues are we have are prior in guarantee the write-back growing okay? expect loss ahead lower So, Funding to said, the only okay? the improving during to a of Because your of slightly loans as that decline lending were we XXX the compared and sort this fourth for RMB expected. we profitability credit was and second our have is million, regards our of take faster our for Particularly included the transition to to Delinquency And million favorable of about XXX these the to roughly unit rate With expectations. volume. write-back figure the the outstanding quarter. cost in RMB rates decline

rate in in QX, third to of between the take quarter. Our range And X.X%. mostly X.X% perhaps think will -- X.X% take will we come-in rate the the was mostly

the expect optimize to third been we borrowers cost, to fees, from free has to level stabilize a side rate other quarter, improve quality these of credit referrals. our quality we shifted we an standards to or forward, new the credit and drive as from note, to about take continue credit as there customer better million increase going completely Such these and standards amounted this even meet in our RMB down as Now, and borrowers, referral our new to also fees risks. in been have okay? platforms. XX These don't are have Now referred

and continue will of and long is costs. confident gains improve we expands to to optimize efficiency And we are as room to delivering volume for work So, continuously as profitability, sustainable work profitability. we and healthy there

final question the make outlook, can a question outlook. regulatory of profitability I comments. on – your And So, sort I look, hope that the we – think address helps government your few on I think

efficiency. I think table, to consistent access management. and And companies banks, comments bring and servicing, I in complements to technology value risk regulators customer such credit And out. think been regulations have all fintech the as in clearly that acquisition – I government the the this benefits has industry expands that traditional and the online recognizes come data, fintech the increases think in

think is all this I positive. very

larger us, I more personally, monopolization, us. July. banks, companies in I and commercial online model think strong the proven on for only rely recognized think rules to like has the track not think And to recent aimed know, And I which CBIRC's you rules officially with micro-lending, that be was we record primarily rely positive this been at for co-lending recently in impact this lending stringent seems model. a loan released in as prevent requirements moves should primarily the – do be some companies. as And on not of does we facilitation the co-lending

the hand, smaller Internet entry On it – companies. on should hand, raises barriers And larger the from major the for it players. the competition major other the limit one

I So and in the questions, the long I this this helps development think, encourage to And sustainable will run, for answer hope, industry. Daphne. your healthy

Daphne Poon

you after pricing. Yeah, will Maybe what Simon. quick yeah, be the made all May average follow-up, – Thanks, have just regarding loan adjustments? the I APR the know, sure. one adjust

Simon Ho

XX%. said, so -month at in think in the And been around – August August recent running our – October think months, Feng IRR – or as was to it's And XX%. sorry, average I I between we to period three in about

roughly going that be. we where we want levels the is be This forward want to around we're speaking. to So

Feng Zhang

And is is add. I'll This dynamic. Feng. this

will to we as the observe is funding their how they demand, watch how what and what closely competitors, view regulators the their think what do and very continue I well our right doing our market customers their are pricing. as is

around currently, closely necessary fungible, – So is we will XX%, we all and IRR be I our call just out, will to if is but it factors, want these XX%, accordingly. and adjust would watch pretty

Daphne Poon

Thank Okay. Understood. you.

Operator

go Wang today comes XXResearch. Hanyang question our from And with next Please ahead.

Hanyang Wang

is Thank funding management My the my on questions. for Congratulations you impressive on question side. first quarter. taking

of any of the the the partners? a attitude my partners proportion So recent there in business for funding given question And the about your change breakdown top regulatory few involvement. your is is your institutional environment, of is mainly what fund And partners? funding second model

which So profit risk? what get credit you is do your sharing the progress model for on not

Jiayuan Xu

is Yes. This –

Simon Ho

you. Thank

Xu Alexis have we'll question, answer. first to The

Jiayuan Xu

around Yeah. This the the is in platform. And our want companies can to facilitate begun funding around our say, the on your some you quarter you. such working to in our market gradual as can remaining partners. is loan and I second it I facilitate funding trust question. our consumer update And Hello. profit-sharing about And first take the model, Alexis. for banks question while XX%. tell of institutional with we we volume, costs XX% And already as business to Hopefully, funding there will when companies remain our continue this help partners of question, models the finance this will decline capital-light models progress. supportive have for

Hanyang Wang

following on a you. regulation I Thank the environment. have question

I that LPR institutions rate are financial to PBOC, from full-time still the out such courts basically, as it some lending saw some silent. the So seems turning regulatory cap. interest staying CBIRC local authorities But

color be your new helpful? very will any side So on

Feng Zhang

also Supreme lending LPR Court my applies financial regard to rate all institutions. thoughts. Supreme -- financial licensed don't platform Yes. private in is on decisions, court only I Tian know ruling if This to Bank our cap are bank province. With by And was licensed the financial to Hi. And lenders institutions. the clearly Supreme it not times decision. you was Court I'll and recent involving Zhejiang stated cap a in Feng. Yes, evidenced the Court noticed, share This four

reducing despite to we borrowing providing loan of lowered the our significantly voluntarily better originations strategy this them services all have borrowing customers new also of our sprit of Now August. for in cost line targeting better with rates customers quality the in since

As closely platform watch And August basis, market on to the Court flexible. IRR is months, about in the will XX%. watch XX% I Supreme regulators the an prior And move decision. XX% current August mentioned and that IRR it also to our we borrowing mentioned, in is October average to I last the all our about average the was rate and compared on three

believe we compliant and requirements pricing. with regulations are quality when norms. and with appropriate line to the credit and are the achieve that monitor and fully regulatory in Now we deliver make healthy better current continuing we And are significantly able the under sustainable in necessary profit the development in to and adjustments are industry country, current industry

Hanyang Wang

Thank you. very It's helpful.

Feng Zhang

Thank you.

Operator

Please Our ahead. Instructions] question next Ye go from UBS. [Operator with Alex comes

Alex Ye

question. Hi. for Good evening. a Thanks I taking follow-up. my few have

for is your assurance one loss credit on First commitment. quality

previously, I there it So you take a million, that write-back was right. if of guys mentioned RMBXXX

we making it is essentially X% then off-balance credit your million billion RMBX the sheet the So be company volume. RMBXXX loss into loan equivalent loss quarter, around add for back for the that provision then of if of credit would of

to compared like X.X%. of that your only expected loss to X% So vintage is

take reconcile numbers? the Why second your is So these on we current provisions And quarter? I'm question wondering rate my outlook. for still are you how such making loss two currently should

the where quarter I'm mentioned to to slightly to going next in quarter. is average lower was the XX%, international credit your is unit important it just even your my rate parts And But the lowering factors, take just expansion. savings? are from? is economics close your question IRR earlier question be wondering or the on of is savings economic one of an but for the XX% coming the were this business last from So given other that in Obviously, lower wondering where cost

of So this quarter. we more a lot in have seen details

P&L? how international would I'm where if continue gain that So currently? are to Thanks. impact So your wondering scale, they just at booked those

Simon Ho

questions very good one and I'll Very, insightful. Alex. one. them by take Right,

yes, are think credit guarantee loss, about you I think correct. your question I first the

New provisions around RMBX running at billion. were

think I Now I we'll think we it way. this put --

continue assumptions, trends loan And the we a provision always prudence use I degree future. of certain think our be future. if there's course, could obviously in to improving releases uncertainty of we continue looking delinquency and of given into some too our that in degree obviously assumptions may conservative the provision have some

-- that to I should bear mind. want you in I So think

have better question Secondly, been in and we of and rate, expected been take that a rates think I the and your about declining terms take rate. this better as yes, to mentioned contributed has than steadily delinquency has

second because understated time overestimated. in and third that Now was in risk our rate in credit quarter take was the at hindsight point

our than we would in shown income had been what So perfect credit our take was performance, foresight in quarters the if on statement. other words, rate in higher our previous have

reported these what two the that to sense quarter small. I you. fourth reported take about due question expect to hope And decline in the being we rates So or in be makes Indonesia. relatively then reasons, your to be last will

be a small higher China. Indonesia of small component – profitability I loan the side, our Asia want single-digit is growing the the moment. small to think is And does have the volume volume have loan It's it's it now -- obviously, much to relatively business. in I we to China than faster think will right that sort highlight of to at profitability. on -- but the volume compared general, likely Southeast contribution loan to higher In low

it we And will have should think point, line you. the impacting our not into is and and at next just disclosures appropriate we've the Indonesian international line businesses flag there. make additional that success, momentum I we traction, on And of -- do more bottom update the numbers an going getting to doesn't year impact obviously the bottom wanted this it been the so but

Feng Zhang

rate the a I is This more color economics. -- Feng. and and color about the a the add bit Alex. take on want the add bit to Hi, question P&L unit

quick had like a math. very So XX-XX already just on add Simon said just as what to

FTP X%. is our funding And and this -- about around and Our We're be basis. to expecting IRR vintage rate XX% on balance loss X.X%. to cost that is is original our

So tenor months. loan our given that is eight about

balance translate an basis if IRR X.X% annualized roughly to loss X.X% roughly original So will that basis rate. you be that

you if out XX%. you XX% X.X%, take around roughly X% minus So like the come minus

that take on be So basis. will our rate an IRR

talk a rates loan on amount basis. take per about we original usually Now

translate that our you back, So given eight is tenor loan months. around

that very So recognized percentage Hope this fashion. And X% the is things is fee and gives given because pricing you our like like slight and and X%. all like our facilitation a in you for origination gives given a about very helps. take, simplified model roughly credit our that loan our are rate I is version a roughly But delayed now different versus reasonable. accounting color, hope trust-based current that small of XX%. is current take quality A

Alex Ye

Okay. Thanks.

one I if may follow-up just the on write-back. So,

more any I'm And are visibility So in any consistent fourth that. we we do fourth given quarter the on write-back have now two sort the quarter, quarters? in fourth near expect potential any of we that wondering, we the wondering in color just in past quarter term? been having middle of the do wondering, the because just on write-back – further yes, have I'm

Simon Ho

Alex. Yes,

in the the in sort range rates been the of just range are – has the last moment. been good Feng the two as of expecting below be new X.X% sort down we doing be quarter saying, quarters. X% to delinquency risk vintage that we're pretty obviously versus think in at originations has performance I the fairly to this And

see things metrics direction positive are So heading at. think in the I end to obviously credit end up in of – the at have and we'll the quarter where a

Feng Zhang

Yes.

these been think And environment that be the I the assumed had than benign. better continued credit – in think like if quality the we would has if I what provisioning. trends

think yes. further is have But that moving forward. some possible a release that's I it may we

Operator

[Operator Jacky Renaissance. from question with China Zuo ahead. Please Today's next Instructions] comes go

Jacky Zuo

in past Congrats solid and for results on the for congrats the and Alexis new yes the all thanks years. Simon role. Hi. Simon help And the [ph] and Many thanks.

my increased. So volume third the just and one that the size of – questions I solid two is, the from also drivers side. Number loan observed ticket behind the recovery in the quarter

to And on be So how ticket will the regulation much is how would much to customer acquisition again. attribute especially any borrowers? helpful. Any color attribute borrowers of you the larger you the And strategy? change the increase second new will volume to size? our high-quality loan question And

online micro-lending into get quite an just that the the rules. can't the the national all high new to if end you bit is of Thanks. will players capital So requirement license business, it's so Since micro-lending affect the get looking and listed for your details license? license, at a difficult online

Simon Ho

Yes Jacky, just me of let quickly some address those questions.

we're higher down in the as of from you sort shift moment X%. think quality, borrower expected a think X.X%, metrics showing in terms delinquency to increase, quality of rates the it's the ticket I segment because that better size I at and normal we as can see the credit

don't borrow these they – Our larger to used than segments a give in to borrowers out. bit we tend what just

edging in So actually upwards. RMB the the of RMB roughly – But first-time for is is sort the quarter XX,XXX sizes now about X,XXX. for was borrower ticket uncommon. speaking borrowers size are X,XXX, first-time typically It average ticket RMB third not

area of last we So operating the at that's ongoing are actually the And is quarters. in been this several this sort process moment. an over

quarter. just it number That a the third an is average big So suddenly for bump. isn't

of and sort lower volume of we've better-than-expected lending in had the rate the quarter So environment. – a to related is loan to course, better-than-expected transition third

saw numbers performance as to confidence the the book, to grow the actually expand come to had of sort we've and in. the So we

better ongoing successful been think which than – it's expected. – than transition said that's as I – it's more So and consistently it's we been hard faster but to ticket It's sizes we has been expected. separate. It's an

the as media feeds will target of and effectively to changed in mainly And key are Douyin. And optimizations, of changed information expand closely our rely I with platforms we acquisition that the very accurately it types think terms reach and out we our technology on improving. we but WeChat, channels and range customers build customer segment. a Toutiao, such message, of the the channel to strategy, social Now advertising continuously that haven't significantly. the to And hasn't We channels optimize channels deploy more these to continue we seek. models customer work can much,

to: of adjustment And of the quite that than licenses it has your simple. time said. and doing. smoother B, A, the capital the I is technology-driven. But ought in previous as consultation what don't micro-lending version paper. are quite moment, Yes, But, seeing on we just higher to assess So this expected. think, are the will have rules; than been just final question and At detailed much for final we requirements point license, the is we overall at the wait we we micro-lending rely the be

model. use loan we'll waiting we obviously, thinking. and Yes. the to We're still, But have So see. facilitation

Jacky Zuo

Thanks Yes. Very again, helpful. Simon.

Simon Ho

Thanks.

Operator

Instructions] Crédit next question with Yiran Please ahead. comes [Operator Our Suisse. Zhong from go

Yiran Zhong

and the Hi. questions side. your Thank you've your quarter. just It have one customer to for I in on the move my follow-up quite curve transformation quality congratulations strong customers. effective you the for that on question up taking seems been

new a in of borrowers, of you to low far? that of It seems versus share So you a percent manage how thoughts at historical unique borrowers so as terms level. XQ can was your level please the in number achieve that

more relying borrower can existing forward you're the read here? from your And quality segment So that way as better Thank you. I the on what's of pool?

Simon Ho

reflection unique loan of that's sort borrowers the is relative origination levels them volumes we still see at of where to that Yes, low are lower, also to be. of want number that a you but Yiran. Sure,

mentioned, where of business ticket reflection a the I yes. and, really it's of the course, larger we sizes so, which just is And mean,

as them course, and borrowers in several borrowers, Number to And, been two, quality we've well good is, think, it discontinued been with better profiles. have of of been have existing combination also we know, segments. relatively increasing been users factors. rates for focus of lending high-risk to previously acquisition higher in transition One customer I as of now. the offering we our a the obviously, And how borrowers done, that you it's lower quite we've successful adjusting quality inactive quality. So three, we've rates lending reactivating are

us, to rates back probably So are interest now because to and coming the attractive they're them. open

So, we over and despite confident quality, to I metrics healthy lower past maintain credit credit the that improving profitability, because of pricing. the think, able we're loss this are sustainable year, pretty

so you want anything if whether don't if -- -- of questions, that's any there's the I sort I've just follow-up what where we've I yes just how your further So, said. know on whether answers have you think -- transition. made to

Yiran Zhong

Thank helpful. That’s you. Yes.

Operator

next our CMBI. comes today question ahead. go Sun Terry Please And from at

Terry Sun

you taking call. Thank management. Hi, for my

trend. about to So cost just the wanted ask funding

we've have down XQ. You're understand saying I the just seen the it logic been the marginal cost behind tightening want bit. liquidity rising funding costs interbank because, some yield coming in of actually and to a

So, why funding down? the costs coming still are

Simon Ho

Sure.

I it's question. a Great think question. fascinating very

angles couple to a this. I probably there's think, of

not one is, think we're large I a very player.

pretty So, the the particularly in overall liquidity small, market, in the relative to terms we're of banking system.

And actually obviously that, in changes all is the nine of come lending off credit for demand concerns a very a this because a attractive and of perspective, from have to do we six than for mind Secondly And our environment. the for assets they bank's I is sorts in past in. our have to think over volumes months want still quite period, bit segment COVID, themselves. the also bear have be we more assets risk

very If at a you very, low for they whether X%, X% below it's to return them. business are X% getting, good returns it's the or that still look

This day, Yes, our costs the end at can levels. believe. confident is I with pretty assets. business -- the system. familiar that the that improve I a current source very banks be continue continue wouldn't to to I and would you're So, with funding all so banking the to work from yes, think, these banks continue surprised And for quality attractive borrowers we're very us, they and of

Terry Sun

Thank That’s Okay. great. you.

Operator

from Steven Our next comes Instructions] [Operator with ahead. go Chan question Haitong. Please

Steven Chan

follow-up. Good a evening half questions, retirement management, and role a congrats that hope your for few new is quick Anyway, life. Simon. a for I quick

in estimated average and that costs acquisition First it in of per the half. if customer I first all, use sales XQ seems a with expenses rise marketing you acquisition there compared so-called cost, was customer

partners not second just caused to first and customer the cost? rise consumer trust it and That's are mentioned company question, just funding like? is of one. company. clarify, about the looking you And whether And forward the I what is wanted correct in just So, to it how know, or that it acquisition XX% one-off? has Is finance XX%

my are that, saying that have areas case to bank? is of Court is And High that, apply question companies recently finance in there none court lending the from some may consumer So, different the for ceiling.

second the your question So, one. about what rate loss. if companies, that follow-up you are in abide And credit think finally, the just lending you finance I worrying to the partners that's Alex most consumer assumptions of expected have cap? So your funding to about are to

in relax little improving going have the assumption forward Do made X you next will you So, some that, because QX you in bit and think in write-back. maybe year vintage? QX of RMB billion your a

Simon Ho

Steven, Yes, questions. your for thanks

I second is your question very simple. think

think, for response. misheard The our combined. probably I banks companies figure XX% is consumer finance you and

maybe or banks two-thirds is majority. the that. probably book. finance to is just below probably large XX% of fact, large, around In about Consumer about It's XX%, a roughly XX% XX% or

huge don't problem a So, we for us. think that's

of bulk in many the you in And the the as the many, banks. than the funding market, know, think, I end and day. at from companies finance more come the liquidity banks consumer are there of system the

think, right. terms yes, the in acquisition In customer cost, your increase I of you're

first quality are correct. past as increase we've significant should the general I in think mind and the and few also the the of acquisition. are mainly for in the year calls normal a And -- and had that stronger your And because to ticket quarters. better customer trends customer calculations flagging the have has acquisition and were back sizes. borrowers shift environments risk second the in been each that is of profiles bear customer There everyone quarter not on acquisition, COVID you of have credit accurate half was borrow they holding they because and larger in fairly of this cost been we

increased a to bounce as QX growth. resume we back not looked but activity, acquisition ourselves market customer in we also saw So only

in are main acquisition and push think in segment, It's I in shift the our So the pickup these customer our reasons quarter. activity costs behind the customers. But a within is firstly, mind should typical bear internally highlight I new the more first do active the want customer points XX also breakeven -- bounce obviously third a to in we do you back the months. in few borrower estimate acquire estimate, to will XX that to we

healthy comes for present our and volume loan XX% any at do of repeat of XX% acquisition. new account the acquired And they cost net acquisition borrowers today newly So where not we deliver value only borrowers NPV, the higher cost from still about secondly, despite our customers pay all.

the So thoroughly. clarifies our that about, final obviously, we've and addressed quite write-backs I we're I think and and your trend explains assumptions that hope fourth question the quarter in seeing. And this

quite I on forward. commented I don't -- think myself this can think I don't into going assumptions we we've I preempt think can thoroughly. say

I point think situation But, be time. levels the obviously, that we should should that than And in that will would better in better obviously actual -- being at it see yeah releases. credit result and write-backs dangerous. so then expected on loss really depend some

Steven Chan

clear. very It’s you. Thank

Simon Ho

Thanks you. Steven. Thank

Operator

go from Thank you. Dragon. Liang ahead. [Operator question Golden Instructions] Henry next Please comes Our with

Liang Henry

and more players rate share record is it seems the again. struggling fourth loan NPL, period guys to delinquency just most speak the to share is still managing questions gaining of customers do sauce you onwards? of on how would getting quarter One, marketing you still what or to higher new while and kind second Thank channels like while the or quick follow-up. volume of guys quarter your than down Hey, like we it new think on and or are low more the of the good customer onwards. the results. that? Can see in in management momentum two input delinquency question acquiring how And manage like and is what plan can the you the as like you secret you pre-COVID have I plans less ratio again much your congrats Can you you. acquisition, share the and of just industry the expand forward down

Feng Zhang

the take I'll credit about Feng. risk. first is question Hey, This

and active we the culture a the of have it's environment course. our combination of the measures I and risk think the capability management and the philosophy measures, and

accuracy In things improvement -- bureaus the and terms the availability all loan customer of information credit cleanup out of Simon of -- of models, practices. had have we generally lead we in customers, risk generally offers, customers. PBOC and i.e. we better who to our have we environment, better of COVID-XX like a as platforms selection, some only and credit of to has mentioned, have and collection as we in PBOC fintech have coming optimize targeting tighter the with step-up regulations with now. PXP of borrowers course, in generates users dormant to our policies of -- quality continue the observed effort of year. better customer of to last taken also an quality well think And now continuous acquisition, also inactive better but And environment pandemic the new period have shift measures that better period more lot quality optimize in lines. the like acquiring than to we more kind positive pandemic reactivate price, lot work as I a seeing our not Besides slightly the view benign getting say also credit like, technology dormant than a low-risk importantly, use some customers done the better more let's proactive better And continue credit

together, drive we that curves as So in all tables quality continues seen, the factors, loss when as credit loss helps. rate. well in very release vintage new it these rate quarter-by-quarter to clearly we The rate vertical the hope improvements you combine the have lower, in the results in have demonstrates that that loss

Simon Ho

Henry we're Yeah, your question. and about question address marketing, how customer your I'll Henry thinking. the for obviously -- -- thanks second acquisition front the

obviously think grows, we think -- I acquiring and doubt and more our on no to think volume loan have marketing I we -- I customers. as new will targeting as spend

of the sort internally each that's on, trying of the think profitability to assess very comes inevitable. do hard into focus new I platform. user that We

to as paying. So try how profitability, should be out mentioned, do use much an model we model, I we NPV to estimate and

their for the customer. platform, -- generate should to ability return type acquisition cost the should on customer borrowers, So be that the sizes cost and and depending the obviously a ticket appropriate think from I risk of manage every also different

actually that my these very target follow-up details. there how our borrowers at think we target in from I mentioned operational completely on, in probably channel to the models, before, an -- type seek obviously But all, details lot expertise goes of -- terms specifically as of to optimization of we that channels. with be key each final And key hard to it's effective we not of my it's build are comparable. obviously a is to with So partners, ways model the some happy comment about but is, you it's we

So could we could And team I think is think front-end that's of obviously down I aside of call it this more think we from the underappreciated numbers and details, today. could there's effort I amount we which explain a this. the it's think much a been as -- spent don't -- work sit on in follow-up into lot much as lot a very And in these clearly upfront, have but all I of of a huge and you see activities, do. what gone we type

Liang Henry

for awesome Yes. we Congrats Simon. all and the the appreciate And on [indiscernible] efforts Thank that quarter. being you very. again strong

Simon Ho

Henry. you, Thank

Liang Henry

you. Thank

Operator

questions, I'd call the now back remarks. over company further are closing As the to no to for like there turn

Jimmy Tan

us Thank today. again you once for joining

questions, Investor If to night. contact team. Relations you please feel free have FinVolution Good further

Operator

call. conference this concludes This

You may your now disconnect lines. you. Thank

FinVolution (FINV) 17 Nov 202020 Q3 Earnings call transcript