FINV - Earnings call transcript Q1 2021

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Operator

Hello, ladies and gentlemen. Thank you for participating in the First Quarter 2021 Earnings Conference Call for FinVolution Group. At this time, all participants are in a 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 online. earlier everyone XXXX posted and conference earnings and first are The via issued quarter results newswire services company welcome

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

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

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

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

Forward-looking statements risks involve uncertainties. inherent and

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

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

Feng Zhang

for Hello, everyone and much joining today. us Jimmy. Thank thank you you, so

increase billion, in all our XX.X across volume the high with while quarter to delivering for origination remarkable pleased RMB further a year-over-year high-quality the board. improvement XXX%. business growth start metrics aspects across first of progress, our representing to Notably, loan risk a achieving also We total reached quarter, in XXXX of the record are

is volume rapid billion. Our generating quarter-over-quarter during fourth loan RMB increased up the RMB approximately origination continuing volume from XX% its Mainland for China of XX% to of business growth XXXX. origination million quarter the XX loan international our Also quarter XXX

growth pandemic economic achieving a delinquencies volume the testament transition continued Our from to is successful quarter, sequential following sequential to historical execution. of quality the improved the benefit and our growth. our our our from the recovery low borrowers. We in lows, effectiveness we quarterly Also in while toward higher continued strong to strategies

around compared the Our recent day was X.X% year. May in same to period X.X% one last delinquency in rate

was Our quarter, days X.XX% to our period year. the compared vertical XX to from previous past improved while due delinquency that rate the delinquency rate in was XX last X.XX% plus days X.XX% in XX-day X.XX% same to further

expect stabilize continued XXXX. delinquency the quarter, fall at collection key to rate recovery for Our around. stable and We X.X% rate in historical to to loan risk vintage first further to XX% remain metrics lows, the around

number quarter. able further one XXXX, quarter of new Going acquisition XXX,XXX borrowers for capabilities the as technological forward, year, last our to continuing By previous to same efficiency, exceeded million a XXX% cost representing improve compared borrowers acquisition in we to the the from increase. period our were total reduce Notably, we credit build and risk we our framework. new growth first continued see quality opportunity the of our management strong acquired in

serve As small we grew for the at quarter, stabilized this for XX% business business loan average loan XXXX, IRR part owners and financial We to XXX,XXX origination accounting quarter, Since small originated as business this China Mainland billion with to XXX,XXX our the owners in around RMBX.X in rapidly by full loan presented opportunity period. we facilitation origination capitalize total operational to quarter inclusion, unique services funds. In owners year compared for national China's on their our XXXX. for economic of volume rebound our continue is in for need to efforts first been believe versus the around volume XX.X%. diversifying pursue of have RMBX.X billion our of of served line this reached policies. The the small the for total we business segment XXXX, throughout supports year of number full to

of volume will of total XXXX Going small serving -- account in our expect in around portion focused loan remain we on this forward, for business and origination business to owners, XXXX. we XX%

Indonesia, Philippines been strategy exploring online facilitation we different other market, localization Asia be in have and loan leveraging Southeast selective key a established differentiator optimistic and established our markets, as remain first-mover also online expansion We to and Singapore. currently international continues expertise a operations Our the have where with Apart have concepts in emerging we penetrating loan in in South competitive strategy. we services, on business Asian services from for partners our advantage. us

and the customer a long-term mission framework are principles our and both on enhancing technology, a with transition some of FinVolution Southeast as presence capabilities variety will conditions, different to get expanding in successful being and our generate make advancement well our year capabilities healthy to financial expansion steady a thus next streams, funding as several bolstering China operational technology revenue and multiple these that establish sources, strategy businesses years. long-term as a we digitalization of in company. empower business we With to all overseas and domestically conclusion, industry-leading to over base inclusive start, these In user are globalization international believe pursuing in our stemming approach Asia, successfully on uncertainties, strategy. the new off while our industries. territories base diversifying we focused believe position our across said, We evolving the expansion help scenarios Based process and accessible execute with in with significant pandemic-related record excited and strong to our we from more in drive our I for our can internationally. further our of markets and in will Mainland economic assessment We top-notch our In product ongoing diversification, track both as for remain our management our business light confident growth risk initiatives borrowers. ability services the diversify prudent

for We quarter. which now are shareholders. for our confident market, maximize China's well-established position to Xu, of in in With unlock micro will as Jiayuan our consumer markets, digital that, tremendous discuss who Asia's, our I booming as ability our call turn enterprise to South the finance and the over value results will all will financial well

Jiayuan Xu

a million. hello a recovery quarter, steady operational XX% multiple and fronts Feng, profit strong GAAP in the and everyone. in across to you first XXX increase Thank operating RMB With we delivered

the transaction high model We successful towards are borrowers. of business quality our affirming

Our risk balance strong remained management our capabilities. empowering technology strong sheet RMB short-term and X.X with and investments, in billion unrestricted cash

explore new models continue into new to opportunities, internationally. will and We business tap both domestically and

in RMBXXX operating adjusted increase before of RMB million the increased to quality. offset of of quarter and from the of RMB the outstanding billion, for profit, XXX% XXX period result to Now, XXXX, XXX impact to and XXXX. primarily fees partially compensation XX an reduction for volume, transaction by the in quarter XXXX, Guarantee increased for turning origination to increase of loan the to to origination decreased XXXX quarter the period the Please same period line a due which RMB XX% million, XXXX, the to improved earnings I for as quality. by trusts representing the XXXX, income RMB period RMB of the share-based the serviced first due the rate for RMBXXX of RMB origination in to XXX Net financial the million in by first million was loan other XXXX to loan in in of of excludes XX%, XXX the China. period by from Loan asset details. transaction XXXX, an outstanding by quarter to XXXX, was each partially RMB company million representing due XXXX stabilized of XXX X.XX increase RMB first the the increase asset for in quarter origination XX% our for balances primarily of of of income of XXXX, originated million XXXX rolling the to XX% increase million not increased the a platforms. income, X,XXX period from million to by of revenue from refer around due first tax, at the was same first to of the third-party first In revenue Non-GAAP first the more XXXX. the volume same line of same customer quarter referral fees million first XXX partially interest through by volume mainly guaranteed same XXX results XXX loan RMB Net of compared as of for of decrease consolidated fees. million go the release XXXX mainland offset increase item result Net average RMB decrease quarter. RMB in service interest will million on which was service improved million RMB higher of by Other due same primarily the of period first for by XXX quarter same quarter expenses for of to Post-facilitation time, the the compared in XXX% the the outside this in deferred fees in million fees. in offset RMBXXX profit from million mainly XXXX, call. in

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

If by end cash our you equity, billion And RMBX.X our our position times. as our the shareholder on outstanding only remains platform leverage strong of divided business and of loans of investments, across March short-term unrestricted ratio with total RMBXX.X the at liquidity was XXXX. a, X.X billion

gives operating flexibility. Our positions sheet us well strong and the in significant us current balance environment,

gradually will improvements experiencing agile, across of to operations. monitor continue its COVID-XX pandemic the situation China's The has As recovers and numerous environment business company aftermath from the the globally the in closely of company economic metrics. remain been operational outbreak, progressive

is in holds to and continue growth quarter buybacks. to operations but of the XXXX, company value a view in not range our optimistic As Last which on through cautiously its to RMBXX to such, billion. share a expected of in volume return least, second anticipate the shareholders, loan billion and RMBXX be origination dividends the we steady

As of will remarks. March for conclude prepared deployed million distributions. With XX, my XXXX, we million, for US$XXX dividend US$XXX buybacks and have that, cumulatively I

please to now Session continue. the Question-and-Answer will call We questions. open Operator,

Operator

We [Operator with go comes from Thomas will question Instructions] now The first begin session. Please the ahead. Chong question-and-answer Jefferies.

Thomas Chong

as economics unit management for in as Thanks well question. Can Language] you about, [Foreign my Thanks. quarters? the taking trend comment coming

Jiayuan Xu

Thomas. Yeah. Language] [Foreign economics. Unit Hi.

Feng Zhang

Economics.

Jiayuan Xu

Language] Okay. [Foreign

me is do The translation for unit economics our pretty Let straightforward. the Alex. Mr. competition for

Our delinquency X%. And X.X% IRR about basis, is on our cost is it's X.X%. XX%. our On average rate XX% is between and around an funding vintage annualized to

So with on to in the it's the average, the X%, of when rate along guiding have we IRR we And quarters. market been a with around convert past XX%. is take few line what

-- more Okay. I in stages, explained be elaborate will next will two our on yeah. we will different development space

loan shown metrics all healthy China has facilitation a -- key Our business loan facilitation our China in in have sign. been business showing our in in

we to customers future. metrics, And our quarter, operation XXX,XXX. to new to provide one is in Language] new billion and In the our quarter, increase all full this we to going year RMBXXX in loan in confident for the RMBXXX in For of expected the RMBXX continuing our key billion. And performance continued expected first billion. use based be the And domestic forward. exit new current our origination of risk end in actually number exit million. metrics guidance has are deliver current the alone, on And loan Okay. growth healthy customers market to situation customers billion of of metric improve. range [Foreign key total the our all And second of to RMBXX show growth example, the are volume our

Asian market, although, very by growth, Southeast the there been of rebounding has still pandemic in impact we the the Asia. rapid the Southeast For are maintaining some

we also we beside are Philippines. also into very In And of begun terms of rapid And have country we Philippines. volume, seeing new growth in metrics. Language] loan customers operations origination these still a penetrated in Indonesia, [Foreign new have both and

Operator

Continuing Okay. Zhong The to there Hey, was with Yiran Chong? a Mr. Suisse. question. follow-up next is next go Credit Please ahead. the questioner

Yiran Zhong

it facilitation, questions. sheet lending management the sets have Hi. of lending been trust questions [Foreign taking and One Language] reducing. the results. loan rapidly have two the I Thank you the congratulations for on-balance seems my structures on by is and to on strong exposure

And And origination meaningful split regulated reference your of the up more under volume? off-balance over comments, it model be loan the on would details Thank forward? following you. up volume the forward? on-balance earlier Any secondly, Southeast when example, a law? make the would going the wonder to a And between regarding so loan expansion? of What's -- and going you overseas up appreciated. there? volume the regulators regulation what's business share sheet on or to assessment feedback business your you related on for can partners expect make under the guidance can the Asia economics facilitation license what share you contribution Any the what's Would latest I from your the funding facilitation, sheet regime credit the personal be volume

Jiayuan Xu

[Foreign Okay. Language]

it's balance sheet on currently than contribution On balance sheet the less the -- that the is XX%. trust

Our loan and with model, sheet. finance cooperate companies is mainly consumer facilitation banks off-balance the which

Jiayuan Xu

[Foreign Language] Okay.

in is data the our observation, process different Let's framework. comprehensive [Foreign the the regulators, protection, one-year-plus, And many understand regulator intentions. is as, funding customer introduced. over to observation to comprehensive From And likely is likely framework it introduced. of to of process for the the privacy [Foreign being last framework, a Language] such The in further from a regulatory Language] any the a regulators, establishing environment much establishing of comprehensive plus regulator's Language] [Foreign aspects network less building the be XXXX any framework framework. March onwards, for reviewed. regulatory based the is process in on future, In new restriction, our regulatory the new be more it seems stable. are is And less be

or still the the aspects such scoring is [Foreign [Foreign loan loan However, consultation on not regulations Language] after as For loan Our modifications institution scores. independent Within customer facilitation business risk we multiple model, not credit consultation acquisition, model, current coverage refer [Foreign believe point being their based stand-alone continue. current of and the cetera. this customers broad. the scoring we from our dependent to And approved not the current whether loan [Foreign is assessment. paper. offer management do our the loan comprehensive on [Foreign partners a We services are Okay. Language] Language] scope facilitation within assessment, the is view will solutions -- financial et from scoring Language] is our we on and very of management, providing credit credit maturing, Language] on

the the the Asia contribution share still we future. -- intend to in small As you updates overall very grew when is portion to business with relatively our bigger will we this of more Southeast business business,

Operator

The next with question XXResearch. from ahead. comes Please Henyang go [ph]

Unidentified Analyst

you on great is let my questions. So, regarding Thank for question questions. on translate Language] [Foreign another protection. Congratulations me my My the management first taking privacy quarter.

IDSA policy like policies, new the So changed privacy Apple. example, by recent its makers smartphone days, some for

affect clarify in necessary So and information borrower for apps. some effectiveness regulators the And will online addition, advertising this our acquisition policy lending cost? personal change

collection this model? My So, adversely data our and second on technical will impact question risk our is service. assessment

the launched month. bus many we on service more you So institutions charge share adopted them? we you. the last color service Thank Can and have how how

Jiayuan Xu

minimum. Language] [Foreign the results, customer Language] have data [Foreign on impact The to belongs regulators the same So increased protection. barrier the privacy current the It and question. actually from is

are you actually Language] a lease, of to our Language] efficiency after we is highlighted services of this various bus providing based notice working partners Regarding our institutional and these And business by will the And to be performance. them being our of actually pass the Our it are our stores services -- Language] know views to Okay. risk-related terms with services. if compliance of not digitalization progress the products to collected -- allow our Language] we years intention our and our company And our partners. technology three many the enhance model. is pass mean as to on during [Foreign The top our are our top we are technology of for As us [Foreign institution permitting the with with priority regulators. a on the such is the of the agree their XX will capabilities, us. be using process more services Language] currently is stage our services [Foreign is actually [Foreign us. you capabilities introduce of results priority sharing in to We compliance bus we of actually also, helping fees financial and... are on time all bus partners more management with problems. increasing solve [Foreign loan have company, of actual we the before As

Unidentified Analyst

Thanks. Very helpful.

Jimmy Tan

Yang. you, Thank

Operator

Alex go The Ye next question with comes Please UBS. from ahead.

Alex Ye

two [Foreign Language] So have questions. I

particular, loan business? of sales specific full terms and contribution share the for us business from First business? license national one I'm your question preparation some the have And expense? what's license? on color that And have some for micro is on -- marketing you earlier you. a applying international is might any that on that of acquisition customer Second front? doing peers you also ramp-up mentioned any is one implications would guidance earlier you on year could in international Thank wondering your any your update updates on the as on cost on wondering with there the international they -- your your And I'm the on business. work such volume if be loan in

Jiayuan Xu

requirement of the process evaluation regulators previous no [Foreign are the there and in license the nationwide understanding to With paper. regards since micro-lending we been from the consultation regulators the has Language] as still Okay. update programs,

information market more regulators. details [Foreign the the share more from when is We there Language] with Okay. will

pandemic times Southeast rebounding year. the are still Asia, Although four to in confident Asia basis Southeast to growth on three is we this in year-on-year a achieve

Okay.

disclosed, over we Indonesia. And our have lending is app acquired customers AdaKami. we have in known As as XXX,XXX new

six Our we between is customer terms March in October cost app to the terms very in last Southeast of And Indonesia popular. fintech ranked from new downloads. relatively The of cost is one XX the ranging quarter, about X as But of debt, is are number in Asia In months acquisition of in previous change, lower. the is a shown has this cost to of acquisition successful and change compared and improvement as the the Mainland, the in to business China well. RMBXXX quarter. situation first expected borrower lending

As you also cooperation we many partnerships. important closer with more leading and these become an have with feed become partner partners standards. And know a has leading to information our strategic

As constantly in also acquisition risk to customer costs. our has led these improved metrics our been have a decrease

Operator

you. from Eric Thank The with Renaissance. China ahead. question go next comes Instructions] Lu [Operator Please

Eric Lu

largely [Foreign thought asset we my improved. is, Language] been quality So question has the

just if change you. want to to Thank So know, any profile? client our there's current

Jiayuan Xu

Okay. Language] [Foreign

has customer a actually Our profile lot. changed

the today color on we borrowers to records. XX% change XX% asset During PXP share over our records. And we about borrowers our like of able our in have how also of more And significant have such era, quality. to gain only PBOC would a PBOC are

largely number two reason and Okay. the due for data digitalization model. one, the us capabilities; accumulation, of two, to upgrade enabling effectiveness our improvement number The constant our of our capabilities: are to

many digitalization be situations. capabilities proven in can Our

expanding These across has multiple acquisitions, we strategic capabilities we during in proven to record last after management management, better the can believe as scenarios. Asia et have seen been also our capabilities. our cetera. years Southeast business our leveraged our And operational And rapidly. capabilities in risk also track digitalization have transition in we PXP these borrowers, business, improvement during where been future, our era. leverage XX have industry example, after and quality For customer loans multiple also metrics, our leveraged is capabilities And be the across non-finance digitalization onto we on

factor important very constant accumulation. data the is Another

Jiayuan Xu

digitalization coupled model, hence being are more capabilities accurate double capabilities. the results Constant a as data more data [Foreign increasing Language] the collected accumulations to really our with

in loan As see operational Language] borrowers the business. are improve, platform higher-quality these you positive new of origination driven volume new origination volumes. this growth become confident by have customers number for metrics Language] resulting the as As and increase our in a higher our [Foreign healthy number from all increase quality we higher can risks the transition borrowers to will a of we to with of [Foreign that capabilities key our impact. the And with such are all loan as a able

Eric Lu

Thank you.

Operator

Henry from Please Thank Liang Dragon. go you. The next question Gold ahead. comes with

Henry Liang

just has like Mainland Asia as our and like as competitiveness as all the congrats result. overseas the a kind FinVolution in doing in after be to please Indonesia. successful well Language] market? been And the even peers Thank been like please And would market, you outperforming you a China And over of like larger also has especially such total the very better on [Foreign have Can market we them overseas have share So, plan and on market Southeast who expansion like for we strong local players what or share business of been COVID company. and Asia none core in addressable your you. see lead the our in Southeast long-term? moat to able doing

Feng Zhang

a I'll view on your to Thanks Henry. try Feng. question. This give brief is

question. good really a it's think I

good this tech business past leveraging our company And our main many business particularly, of and the And our business. I data the a improve think I strength really reflecting years, the capability strong we on are think in secondary, system after business -- so loan and in I core a really has are efficiencies value view. the One technology core company to our think is two-folds. been at has really in in process.

strongest a growth, have and things a we look we way. really long-term don't seriously. culture we it respect at very in we for risk and achieving We very very really think it I treat short-term risk with and -- has sacrifice

and downs. So has I the are think I up experienced think these of company, the strengths and core company the two

period enable we due of environment I IPO are company growth. couple regulatory we external environment had to after of of a think very company -- go of I and fundamentals. we market. our the years had tough able a it says, really And tough And but track has the really rapid that the bullish were what's us IPO, really during the Asian period. shift, And fundamentals question, think tough good years a to years, and part your severe I inside think, our about second I before we went Southeast record to the through think been lot are about

it's roughly the size think half I of Mainland, China.

So I think two combined, even are these for Indonesia, we Philippines, countries small. very

early We developing very we fast, are though is market huge. but the we are very stage, think

So this loan take Think presents, we add opportunity improve opportunities not also want cost our there's back I in a actually call that only lot that. coming I company system, of lot but strength leverage to limited to efficiency. loan value leveraging that. fundamentals want And I and to getting It's about I tech. step core model And long-term and very data to like We're based we market, think company. or the like opportunity improve a for just technology us continue a efficiencies, will other right? we strengths think, And into out to when have also the about explore of the markets of is facilitation bullish it's to we of what back we the believe really will to believe there. to

we they of share but share and company. different do market, you, in there Henry. meaningful processes, will capability markets how to enter things the are bunch Thank this more are exploring, the with in core we also businesses, with are incubation we you leverage different stage the skip a so guys and when And

Henry Liang

Yeah.

of share this follow-up, top and our on a end meaningful update expect and of Just contribution bottom-line the business a investors, a the the shall year the contribution both, towards next? to very sort their of quick -- we overseas line also

Feng Zhang

Yeah. -- example, size, new continued feel some business. the first is And until started to because, time this no within internally, very think, very the -- Possibly we comfortable. for the we company, right? disclosed our -- ago, several but more a both think, business the very growth healthy to in, some in information. I well very business And The will business it will the is as start healthy part as we're becomes But of unit Thank becomes our meaningful business. share as have as international meaningful we color, you. stage, bullish careful, business. we we share And of more decide are And namely yeah, insights, the team. more about very the as particularly years grow economics. the I businesses So -- business numbers international the more more business entire no, with and we a we

Henry Liang

Thanks.

Operator

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

Jimmy Tan

today. once you for joining Thank us again

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

Operator

attending The conference today's you has for concluded. Thank now presentation.

now disconnect. You may

FinVolution (FINV) 25 May 212021 Q1 Earnings call transcript