FINV - Earnings call transcript Q4 2021

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Operator

Good morning, ladies and gentlemen. Thank you for participating in the Fourth Quarter and Full Year 2021 Earnings Conference Call for FinVolution Group. [Operator Instructions]. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Investor the of Head Tan, Relations company. for Jimmy Mr. please go ahead. Jimmy,

Jimmy Tan

via fourth and The full issued today welcome everyone, online. quarter are company services posted and to were call. Hello, conference our and earlier earnings year results news XXXX

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

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

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

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

inherent and uncertainties. Forward-looking statements involve risks

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

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

Feng Zhang

the operating rapidly call. consistent a you We're strategic cap amidst our transition to process, you challenging market thank and evolving with industry-leading joining we digital our of borrowers our to throughout and XXXX deliver us completion set in-house fluctuating off better-quality with and another over but happy the following a stellar in environment, strong several We was the results year. year By note. of positions the technologies speak past robust to across on capabilities complicated given another macro everyone, achieved business quarters earnings towards our leveraging success metrics. multiple year today dynamics. for quarter record-breaking Hello, Jimmy. the Thanks, fourth growth continue developed performance for

As effectively growth expanding volume over strategy, execute and borrower supported vigorously quarters. we our several our past global transaction our the base strong fast

with Generally range XXX For We operational of which increasing quarter, and our quarter. billion we screening surpassed appropriate end volume reached advanced fourth our new habits. all-time the the the target billion primarily RMB gives RMB benchmark RTA XXXX, efficient technology, for enables to success XXX%, the insight XX%. borrowing an during our us speaking, make adjustments, strategically X by acquired across efficiency consecutive and monitoring borrowers of globe into in proactive transaction real-time million to application newly XX% of RMB a between high by efficiency and XXX Furthermore, increase us borrowers customers' guidance of the acquiring volume total transaction at exceeding our upper billion. year-over-year XXX our attribute

momentum we share capabilities in patents core rolling that XXXX, fintech-related our registered we also that areas. and on as are XXXX. keep to December XXX will filed execution our software We into have pleased technology copyrights XXX we confident are strength, Building successfully of and growth

and up XX% Total major growth fourth year-over-year for achievements volume me solid quarter. quarter, reaching on RMB sequentially. transaction XX the let share its billion, in our X.X% the Now trajectory continued

are macro XX% of a sequentially. underpins technology, XXXX, an our As challenging which in our outstanding These balance to representing loan total XX testament of competencies XX% core year-over-year results the XX, increased strong our rock-solid December RMB billion, to and environment. increase

loans our below in of borrowing As and further at from reduced IRR XX% we we previous pursue the increased to the continue to XX% XX% efforts relentless to reflecting directives. Also, with or facilitated inclusion to align average financial in quarter regulatory quarter. borrowers, by percentage cost acquire our our fourth XX.X%, quarter-over-quarter better-quality X%

shift based to progressively enhancements risk management we to management risk As borrowers, our our better-quality used approach advanced through towards our be data, predict neural model. credit risk can innovate fraud past coupled future effectively our which in continue models possible assessment we and detection prudent with artificial networks, and to trends on

performance stable. has remained Our risk credit

quarter be delinquency plus fourth the remained delinquency X.XX% period at low for expected and compared rate XX-day in rate X.X%. vintage to around X.XX% with Our XXXX, the is the same of

we strong growth structure. and achieving our While quality earning also in funding metrics, improved key progressively operational overall

our of is we in become mix ample. our optimize constraints. funding partners, quarter to platform continue liquidity and augment and imposes on sources from remaining weak funding increasingly stable institution funding the calendar diversified and Historically, while fourth typically financial As

firm transaction the during and we of XXXX, volume established partners. strong validating our of funding However, relationships growth, fourth have the quarter-over-quarter the we institutional foundation with trust achieved quarter

cumulatively fortify quarter. a have institutional pipeline and relationships different transaction place. in our over robust We in institutions with contributed XX% of Furthermore, total reflected volume by capital-light in partners, cooperated which in financial transaction regions we have volume model, higher XX with the our continue to

growth small business, consumer steady addition operations owners momentum. In maintained finance our their aimed business our empowering at also to

We sales placed strategy. acquisition now offline well strategically expand further our employees to over which boasts customer team, X,XXX continue is our complement to and

the beverage increased XXXX, we X.X an transaction in and the volume business aftermath especially aligned promote quarter, from period. manufacturers multiple financing pandemic. government's small XX% representing same owners needs to Serving small is across of volume. as the small RMB facilitated loans, XXX% wholesale, the of for quality empowered In transaction service strongly owners for food, while such billion we the total retail, of XXX,XXX, of contributing sectors the number XX to objective period RMB and total transaction last access with billion, of year, representing global business the XXX,XXX business business small financing During grew the increase SMEs, XX% of small to segment volume

vitality injecting commitment citizen. small as new strategy China's corporate another the Our corporate FinVolution's is and into supporting for responsible a to economy business of testament backbones

on in of duplicated international we international in loan XX% COVID-XX our borrowers, Despite of our representing RMB XXX% in to customer Asia, new accounted can of our borrowers XXXX, geographic markets resurgence in X.X Southeast into billion transaction achieved from Moving an that to the XXXX expansion. International be volume demonstrating new for total suite increase year-over-year. technologies markets. acquisition further spanning of collection seamlessly new of

operations. with across develop different our region. redoubled mix. noting our Jago we players our with as countries. on Bank to partners, our Meanwhile, international have out better-quality to deepen Also, improving with remain potential renowned is we risk installment the and and worth our and efforts in we broadening rolling It offering metrics we continue increased Additionally, more innovative partnership proportion partnerships loans shift that of significantly in we towards business additional focused actively strategically explore to other enhance services further products cooperations the presence our borrowers,

the performance sustainable the summary, run. solid to long players we for We a in XXXX quality will have stellar drive in great confidence emerge as us foundation leading laid our region. in In one growth that the of

risk advanced into to acquiring remain mix framework enter technologies, towards our our ongoing improvement management XXXX, better-quality assessment metrics product risk dedicated principles refining optimizing with customers. and we and we and As prudent

ESG of system ahead risk overall tremendous leadership and and We stakeholders the value but outstanding which our us and position believe committed that remain well Our us on execution years come value drives our with I'd strong further in to not to all capitalize provide quality. industry. management opportunities we to update market shareholders we strengthen growth scale to an enable a leads and returning greater and to are will like on business better the customers, to our believe to positioned long-term creation. for least, performance, Last

a to rates commending risk research, proud a strong across ESG opportunities ESG of rating Sustainalytics independent assessed all and risks business. leading broad Sustainalytics, We from range relentless are our our metrics across the a global performance and us to ESG in management as risk, low low received data. and commitment ESG of provider material robust our rating have

long-term and to new convinced governance will FinVolution firmly strategic our social as guide including heights. financial are goals, as well plan, environmental, that We

encourage take Jiayuan results this we to technology in leveraging of services mission quarter. make critical our all the will for on turn our organized of to better. financial now part discuss our innovative I financial people call are will plan, As Xu, who over that, our to efforts With the

Jiayuan Xu

for further this Thank you, through earnings not line XXXX call. items quarter Welcome all to and will call. the time, Feng, to refer and fourth of go financial full on our release I In earnings year our Please interest the hello, of details. everyone.

mentioned, along report closed of a with note another with Feng XXXX we on delighted are As profitability. to record we quarter strong that

rose transaction Our robust million our borrowers, for volume in quarters by fourth capabilities to deployment net substantial of well XX% both of and X accomplishments Driven and increase X.X optimize reflecting diversification across and internationally. X.X as a for our of revenues capabilities ongoing our market year-over-year. quarter domestically funding share, efforts execution growth to our as strategy skillful operations, of by continually individual sources the XXXX were business, gain our technological up billion, RMB to highlighted overall consecutive our

in a profit billion sheet operating solid non-GAAP maintained RMB X.X with billion healthy a total shareholders' delivered equity. also We of RMB XX.X balance and

this ago. XX.X% During quarter quarter, XX.X% average XXXX cost a reached third of and compared with year the in borrowing our XX.X%

our the certain overall our we rising on rate on the are X% and facilitate the are rates, cap all regulatory of model XX%. borrowing be around to successfully contribution with We in below at the compared QX. we and maintained have have or track at capability, from Despite X.X% that take capital-light we to loans

support are our throughout the will the model on be in first operational impact capital-light partner efforts proportion grown quarter ongoing the while has quarter. financials efficiency, year our from our in Given borrowing X.X% we to confident XX% fourth our the enhance cap's minimal, to and that

the defined balance generated as billion in period and QX, quarter last Our of from at XX% X.X we sheet. the risk-bearing the year. in to billion RMB X.X equity, divided further increased billion RMB and cash balance operations X.X of robustness remains flow year, same same our from compared QX by Globally, the a loan shareholders' leverage in the up ratio, RMB our which unrestricted period in to with billion stable X.X cash Xx. testament liquidity We position is RMB last short-term

attractive continued ongoing quarter, with During the borrowing customer our high-quality to part of strategy. fourth rates as acquisition borrowers to target we refinements

shareholders diversified across sales team direct online channels supporting customer and cost. engines our acquisition information sources. XX, Our referrals the to More stable are excitingly, search value able stores from XXXX app December continue shares Between healthy buy to dividend strong and share and we deployed offline payout XXXX, March a million mobile acquisition market. to offline customer internet to customer about and through online we back being return our in to remained buybacks. Range and X USD and public our

million of deployed As XXXX, our have March cumulatively programs. USD for XX, we buyback XXX

shareholders dividend X.XXX million with deployed fiscal market declared tax of about fiscal capabilities, long-term same confidence obtained around around fourth The our also XXXX income a of a period. has for year XX% payout dividend Board Between XXX Our dividend and which for our business in net ratio trend for cumulatively the ADS consecutive and our declaration, potential. ratio was income after company's XXXX payout USD XXXX core company's to year distributions. of our XXXX. annual XX% the dividend reaffirms in USD net XXXX, historical growth per for is we average This

an Going share net previous company than to approved shareholders. has will dividend and of Board Directors cash dividend the distribute XXXX, company's in returned amount fiscal the the annual policy have forward, which we at no our our Since cumulatively after less year. dividend company's we around income an USD a in initiatives tax recurring declare in of the and cash began million the XXX buyback XX% of

facilitation the recurring Despite our conclude business higher-quality me business give I grow for let borrowers. momentum outbreaks our and and small some efforts Before we increasing challenging continues and on business outlook to for successful on macro owners to remarks, you transition our international reinforcing environment, our strengthening COVID-XX as XXXX. my our gather color initiatives, focus

conclude XX% now expect transaction XXXX XXX range an volume XXX operate RMB be to representing remarks. the in continuing of multiple forward year-over-year. of RMB that, XXXX off As a increase to will we prepared with billion, to billion XX% We in I success to accomplishments my look in and With result, XXXX. our to top

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

Operator

[Operator Instructions].

The first with question comes from CICC. Yada Li

Yada Li

the Okay. Then translation. I'll do

one please product international at first will you more we've The are is going and business strategy? shifting one pricing regarding to with end what of our the second acquisition and XXXX? contribute much is when revenue about international before, the what compared -- And transaction the we been downward, is Could our is how doing our volume metrics how future elaborate our business. customer

Jiayuan Xu

me for translate Let my CFO.

Okay.

all, while international business for our have XXXX. tremendous of progress First we made in

RMB X.X volume an of XXX%. million borrowers, year transaction reached we for year-over-year our X.X representing loan are increase year-over-year. And for the XXXX, confident billion, Our XXX% looking balance. increase to increase international new a acquired we of forward, international And

USD have facility. cooperation, capabilities, players million Bank have credit and with such recognized In an X stage as agreement of also we of the our partners example, local local our our Jago. Our cooperated for have reached as we X

we loan borrowers to well would better-quality should Okay. are our In heights thinking the on same to borrowers, business. our also we achieved level. in At forward. would on scale growth of the And think order business higher international that to a experience international better-quality the have as based we how strategic volume greater time, XXXX, international a transiting priority be business our business strong China for our on transition going for move to we

Okay.

for right, loans increase shift focus to higher-quality Our facilitated the proportion international would for be borrowers them. to also and business, of

of expect XXXX. XX%, the to it of proportion For end by this and XX% example, the QX was in increase to XXXX, we about

the the loan million, around these XXXX. by of longer XXX XX And the RMB would loan confident higher-quality outstanding fourth of it it and some ticket borrowers million, was balance which include higher size tenure. a And by -- be for to and increase the around was we traits XXX% quarter, USD of are end in

Okay.

in new X of million quarters. has consecutive borrowers numbers Our exceeded X

that And current based than Tencent, acquisition to TikTok, be strategy effective results information XX to namely more we one Our from can customers feed efficient. on China. the of feed has right, And proved these customer cetera. channel our And see are customer different and China, -- the effective acquisition information forward, us. confident more is acquire strategy we have for in better-quality going we et the in

Okay. direct time acquiring At sales strengthening customers we our offline our the team. online, same of are also

in employees from our to about XXX For offline sales covers for And different example, and we the these -- of from quarter. about fourth offline we increased cities, these XX employees direct have from team XX% X,XXX employees acquired customers our China.

risk acquisition models been these have our principles customer and We upgrading strategies. and -- models constantly regarding sorry, acquisition

a has building the we that customer feedback refine are feedback our will different cost. further constantly strategy feed consolidating in efficiency segment doing we long us help be acquisition and are increase to for for is our This something acquisition customer mid will term. This customer we to Also, example, For categories. there these from China. -- building adopting segment been information strategy

Operator

Zheng next Credit with question Our Suisse. comes from Frank

Frank Zheng

Frank I from Suisse. have Credit is questions. X This

volume the The the XXXX. bit one share XX% on what robust COVID that resurgence around behind provide guidance is view color of the this is, are a indicates growth preparation front? micro-lending acquisition, kind national management potential The of the cetera? in for year-over-year. regarding guidance growth license? drivers of slowdown, work macro Could And second color more loan could first example, et new for and down on Any management license question some on

Jiayuan Xu

in is environment complicated. macro The China

the COVID, remain loan impact risk minimal. our from manageable. actually would country's which government our only under metrics. the X%, opportunities and and is you And with volume But while and both GDP for affects more to these tremendous drive overall future. factors The If economy operations the our growth provides operation, the consumption challenges the in the local observe pressure encourage economy. this on was perspective, our relevant in affecting it's central be QX the And also us

Okay.

Let me translate.

a structural can we it view point is that second from The perspective.

example, has regulate from multiple to a more eventually stage, the be have platforms. measures and These is we years, to XXXX. market and regulators compliance since focus past the issued cost internet under played and been the regulator And perspective. much for compliance. X role diversified The during is For protection third giant balanced the fintech some regulatory on obvious. the the point reaching more ensure a future, And In positive think consumer restrictions more structure opportunities enterprises. more even can industry be the documents increased the for providing credit midsized industry the in consumer the likely in of

is weaker development origination will for potential huge a we And of stable As the the is future, in companies between edge, also coupled market especially unlikely -- hence, better a the credit the guidance lags, will which give generally of those amidst regulated, with the competitive industry lastly, loan a the and companies, be with the to -- remaining and potential rate environment, eliminated. future. to confidence policy increase And consumer us monetary XX%. becomes a more have gives us of in to XX% it interest there fluctuation. And to of are finance the XX% confident experience

Jiayuan Xu

know I a guys believe we in Anhui. have you license already micro-lending that

are we explore nationwide all, to available Regardless micro license conducting of we and routes doing. our license micro-lending right, -- more in and billion registered other X achieve license, -- are to in are license to the operations. when we operations. our many -- parts confident an that choose we achieve micro-lending the us, And have look also, other increase to million can a order to of we like flexibility acquire country micro business for a of explore insurance can of X the capital what -- can can to our First other peers explore

Operator

Hanyang The next comes Wang XXResearch. with from question

Hanyang Wang

guidance. is our first my regarding question So

can Second us out buyback help Hong amount in the accelerate current users, and position And market So question comes initiative we any return China to pay new Any for new international share proportion share So from primary condition, current given plan? our what's retention borrower existing will dividends? that will is loan Kong listing? QX? plan the of the continue break management rate we the and repurchase? So in the down users? markets

Jiayuan Xu

Okay.

me translate. Let

and business state whenever XX% our customers As to a needed adjustment fluctuation This in to borrowers. very Hanyang, our new the has borrowers are our been stable be we know, XX% need -- are with you trend repeat likely with is about going operations. is of adjust

we new more the to example, and For good, facing about we will market going more acquire tend will will some before tend when believe to is a stickiness as repeat on the when forward. challenges. And on customers market it we be is level, borrowers the focus same

Okay.

Let me translation, Hanyang. do the

still our still to amount. returned of have March to cumulatively XX, value We dividend we of have regarding have USD to And million stock. about policy, deployed XX since in annual plan XXX currently, million XXXX. to USD our the our about repurchase there share and December our In we million. deployed cumulatively existing or And consecutive our have terms about an of USD buyback, about now, shareholders repurchase of for period consistently dividend, is deployed repurchase XXX we back stock. until XXX the returning our bought been cumulatively fourth USD plan, X XXXX around have And since end shareholders. is And million the we repurchase have repurchase to unutilized our and year. million This total, we until

Operator

with comes Alex Our from Ye next question UBS.

Alex Ye

myself. will I translate for So

and interest outlook. your First rate question is take about rate

QX? our asset pricing versus question do the how asset on And rate? expect what there how We take rate is And quality on slight second QX. your is on far interest revenue downside average target indicated So our we noticed pricing? quality. the still a we is uptick for are much And in

forward? do terms us are improve the delinquency your to And pick ratio color could when asset going X latest behind? you wondering, your you day also I'm quality what of And in So up underlying and reasons some in also, expect QX? give

Jiayuan Xu

we rate target me the In was our the see let do XX%. confident XX.X%. can loans average fourth at translation. are to XX% actually quarter, way, below achieve you the borrowing XX%. or very of the that around by And Alex, are facilitated our And of plus,

our highlight we by tenure, XX% Alex, loan to range going as the take in be going However, the maintain I forward. to would of And year and for several you. impacted of will for degree translation pricing of like funding average the let the remaining such will a XX% do certain that forward. plus, costs. The flexibility me rate risk factors is pricing,

Okay.

has department expected to vintage the maintain For at to example, and funding quarter risk our timely has rate. costs is improve. increased funding we policies. XX%, earnings has further the and this right, And quarter delinquency be our to there for X.X adjustments costs. have a risk and when some mentioned now. X.X to positive XXXX, risk larger able our third our also in improvement translation in we the of do the are previous for quarter take is average around half our with X.X%. we fourth expect that our in loan quarter, uptick fourth room with me first Alex, In tenure X.X% months that in And our for let's in to from made months room metrics let if our in we observed delinquencies, risk take cost some funding assessment the our you call, resulted dropped liquidity risk rate And pricing that have improving assume

working. And we For at and going confident maintain And proves above loan the delinquency October vintage metrics model around X maintained is XX we rate, example, day have for around to was seen X in also now our to our we our X.X%. delinquency at are at X.X%, collection have it that forward, risk XX%. is X.X%. actually This day it

Operator

with Chong Jefferies. comes Our Thomas next question from

Thomas Chong

business. have regarding a question I overseas the

we get popular a we want think areas. my coming we are domestic in and in year about and countries because question strategies about market about management about to Can which the how in Given rate overseas second break full years rate sense allocating in these growth are And resources on? buy should guidance. competitive later overseas? landscape more pay very our days, aggressively the are these I also seeing players just out And the investing is focusing the growth is or now,

Feng Zhang

is Feng. the view. first second leave This BNPL one I'll question take Alex. are for overall, we I and market, for the business, we think exploring, but Yes, think I overseas the the cautious take a

So valuation and market competition we also do in a bit a also that overheated. markets. is the feel the is side, the see in the little it valuation of trend hot also some pretty on of pretty markets we area the But The and in is the some high. other

are little that regard, we So cautious. a bit on

some are opportunities markets, Indonesia including we So exploring and in some Vietnam.

we strike particular have with do this And have taking one very this not some partnerships But or for We high some concrete at local point, a at business. very time. we step partners. target have been

most I -- think like staying country, think and of growth, this. on well that as that as has balance optimistic with to the business Indonesia, the we about. regulatory size are we kind which market market opportunistic we we are also see is and I where the water to environment and is biggest the have which And for readiness the regard just biggest testing best size market

countries about we opportunities South the and already. exploring time, optimistic in as Vietnam as have pretty countries. as are also which also same well Philippines in At we other American countries few a presence We Southeast well, are Asian

Jiayuan Xu

XXXX in market Our around international the loan X.X volume for was billion.

not be the If our market, this actually would XXXX to for transition for our also, high. is you priority markets compare percentage this domestic our And to borrowers. very international better-quality year

mentioned it of USD have in XXX% we end our million XXXX. also balance market year XX was international grow loan to XXXX, outstanding that this We our by by expect and for the around

Operator

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

Jimmy Tan

today. again once for us Thank you joining

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

Operator

The conference concluded. has now

may Thank disconnect You now line. you. your

FinVolution (FINV) 15 Mar 222021 Q4 Earnings call transcript