Earnings call transcript Q1 2023

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Operator

Hello, ladies and gentlemen. Thank you for participating in the First Quarter 2023 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 first and The via issued quarter results Newswire services company welcome

You the ir.finvgroup.com. at and earnings sign e-mail the company website can by of visiting our download alerts the release for IR section

with will their Mr. Li, remarks Jiayuan Officer; Xu, start our the Financial Chief Tiezheng with call Mr. conclude and Officer, prepared and a Chief our session. Executive Q&A

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

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

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

inherent Forward-looking uncertainties. and statements risks involve

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

for presentation the a post slide our our on quarter. IR details results we Finally, providing website of

Please turn ahead, now over I will Tiezheng our the call go Mr. to sir. CEO, Li.

Tiezheng Li

is joining Hello, everyone, FinVolution. Li, the Tiezheng thank CEO us earnings on of This for you and call.

today. you with speak to happy are We

environment. one domestically, a quarter first the given challenge The complex XXXX was macro of

turbulence created China reopen New Chinese coupled Year the economy. The short-term throughout post-pandemic holiday, with

and we billion. of volume to total with RMBXX.X delivered year-over-year reach the headwinds, total billion outstanding to year-over-year healthy various transaction growth, reach balance loan XX.X% quarter RMBXX.X despite up However, up X.X% the another

our Pan-Asian operate, in also We Outlook which Strategy executed the Global expanding our Indonesia borrower $XX and across million and Focus, cumulatively base Philippines. throughout markets China, successfully steadily to we Local the

of we over innovative finance last to the processing other technology exploring improve our mission drive In remain better, over line AI technologies data cumulatively natural financial invested our as We years. language such tools, services aspects. analysis to make and with committed five data leveraging areas capabilities consumer RMBX holistic multiple technologies billion the digitization of to in across have and

AI their pre-trained As such, integrated we natural strong team opportunity a models our generative experience language have data combined efficiency. business integrated real-time applications. created models our These chatbots have a operational our support and processing to capability our improve into with tremendous platform and developed computing user to for

intelligent an pleased our share and officially the to effectiveness are launched source of to customer model to service operations. aiming plans and open We FinVolution the efficiency also has that improve build platform, marketing

We processing speech-related continue are into and customers. our They that experience algorithms and as the confident to between and our we refine implement will FinVolution conversation natural chatbots. improve greatly language intelligent

Collection system. advertising are our other system XX% approximately Loan service process chatbots, leading our our solved customer driving our system of Further increase learning language we now and the an of through models are inquiries and service of efficiency. in currently CRM Specifically, over of digitization CRM all customer application across Smart XX% ChatGPT metrics, in

XX.X%. we matching. for system further piece quarter the our technologies Octopus our critical loan results. Thanks to inclusion can fourth Magic and propriety cutting-edge outstanding on our rate high-quality another borrower deliver of where is our financial Supporting average borrowing We mission reduced Cube our acquisition in capitalize another for area to and to

loan in algorithm risk acquisition credit efficient accomplishment matching our of higher borrowers, Magic alongside assessment Mirror for updated across quarter. investment a revised quality our enabled for our This fruitful and the and our recognition technology with take improvements X.X% which achieve stable costs, to partners supported of risk process our our gain better-than-expected Furthermore, rate us for with technology metrics. consistent partners funding from institutional

operational share ESG financial efforts. and a metrics, would to we on Before our to update like I brief on move more

business our to In addition for -- finance guided FinVolution’s support to gradually financial reporting we our improve society. value their the borrowers reporting the be the to Initiatives coming goals inclusion, We ESG the as look This our fully be quality financial issued by is help needs Protection our educate borrowers, responsible our our more and on of will This management. customers’ ongoing on Consumer personal as endeavor by Annual well XXXX ESG in months. achievements. recently high-level to benefiting of forward creating professional compassionate our

In short, future consumer innovation will remain finance. of transform we that technological convinced the

the Our our Outlook on sheet Strategy us base Global Local we building technological will to expand customer confidently guide pace Focus, international our leverage capabilities of accelerate XXXX, move as expansion. our on our balance through to strong and

our mind, we continue invent deploy our creative aspects delivering across business enhancing in rapid firmly mission will and lives growth, value our greater With shareholders. to customers’ our empowering while technologies of all and operations, to

turn I CFO, over and to our now that, operational our the Jiayuan results the financial will discuss for call quarter. With Xu, will who

Jiayuan Xu

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

Index industries to despite towards variety service, transportation, challenges recovery the retail, As tourism. the we a macro business the in acceleration present as of domestic first across Managers’ and environment quarter, the dining reflected in during improvements such by end continues of Purchasing quarter the mentioned, the the

the that recovery in expansion, fell index in the economic from Below to early separates the construction However, that indicating and April. threshold still is friendly XX.X% stage.

the as items competition lagged ticket real larger [ph]. telecommunication, and to estate of of Sales recovery slow also due equipment such the automobiles, global

first the by amount grew total the During quarter, trillion. financing social RMBXX.X

was which by However, way trillion, financing amount below expectations. social RMBX.X market April’s total grew only

trend in overall Although data, near-term remains there fluctuations are some the positive. recovery the macro

first to and quarter during brighter we May, sequential in the application of demand the experienced note, half month in first of increase user a our the also grade April. a and loan On compared

As optimistic. cautiously such, our remains outlook

will monitor of half growth progress expect XXXX. second of accelerate the We and closely recovery the in the will

Domestically, increase representing XX% our quarter of X%. rose transaction first balance billion, our year-over-year. up RMBXXX.X outstanding an at Meanwhile, to billion, volume loan total year-over-year stands RMBXX.X

our and lingering The delinquency around in showed domestic day the quarter in be parts sluggishness vintage the recent Given during to also of maintained economic, we X.X%. the one X.X%. risk first approach delinquency management April to expect to improvement prudent

quarter. in to a achieved We we share loan rate the collection are first pleased strong recovery that of also XX%

deepened to our we towards in transaction borrowers significantly ago. quality financial from and a year through in towards funding the subsequent As inclusion our bad the our improvements X.X% quarter X.X% optimized commitment cost first we borrowing rates,

average our around grew ticket number an RMBX,XXX, average with new X.X size stable tenure also We months. partners of to cumulative a of financial of maintaining XX while loan institutions,

attract Going of forward, partners. pool of with that high-quality our an borrowers, area confident are potential we we

note, we to downturn. the continued owners have a support throughout business more recent On related domestic economic

macro quarter, volume. in XXX,XXX XX% segment’s around China’s our for first hence gradually the small quarter, we origination and with improvements noted that our of the during business we As served the metrics, the maintained risk total owners volume momentum economy transaction during accounting recovered

our slowdown. Now X.X% of projecting high additional mild GDP market Confidence I’d some Indonesia, in share Consumer like growth despite largest Index international overseas at still details a The Bank, over is to and XXXX expect from and activities strong. Indonesia’s points policies on our XXX XX GDP is Coupled monetary more with we contributed XX% fiscal than Central years the construction have of consumption the [ph]. remain domestic to last cautious expansion.

progress unique for made [Inaudible] in XX% quarter number our borrowers of borrowers markets, we million the to financial increased operational X.X we by our overseas markets and Cumulatively, across served overseas year-over-year $XXX,XXX. while metrics. our in have multiple

balance reach the and loan slowed while metrics, the year-over-year International RMBXXX RMBXXX.X Alongside grew increase first contribute of million, billion, revenue to billion. in operational quarter RMBX.XX around year-over-year XXX% XX% the total quarter. XX% to an robust during volume revenue RMBX.XX reached of first international year-over-year outstanding by

revenue to and markets relationships local expansion with Permata to Jago, and to revenue XXXX. our our Bank NISP. and OCBC encouraged expect we presence the its financial expand of by We of strengthen partnerships XX% the for are with Indonesia, Bank In increase where pace institutions continue international local contribution in about

quarter, of bettering this mission company new a that lives established the strongly also own. we with During cooperation consumers farmers whose tech-based banking SeABank, in our aligns and Indonesia with of an technologies with region the

banks in our local in Outlook have to loan by The quarter XX% the compared Local period of to the achievements just effectiveness Strategy. XX% carry Global empowered XXXX, reflects in funded driving These relationships year. the last the Indonesia proportion increase same with of of Focus, us first

first the the quarter that encouraged in quality towards amid our financial technology serving by are quarter’s consistent Driven XX% shift respectable first to of FinVolution investments our up and net borrowers, delivered challenges. all revenues year-over-year. billion, for RMBX.X strategic performance bad rose We

Furthermore, performance, reached risk and diluted for million, was of assessment given year-over-year prudent net sequentially. operational Meanwhile, first income year-over-year efficiency, profit of better-than-expected net credit credit XX% ADS the well RMBX.XX, an RMBXXX XX% per our risk our and attitude towards increase due as provision as XX% XX% to the quarter write-back and up sequentially.

second the ratio, by during equity times, Our economic potential half for which X.X divided stable loans defined is the indicating leverage the accelerated when year. as growth of remained at the risk-bearing shareholders’ further recovery

as strong our sheet and robust XX% an to position cash liquidity cash March -- particular, all remains RMBX.X XXXX, billion uncertainty, position During such to short-term of representing liquidity our confidence balance share end times provide over In stakeholders. of of increase continues our sequentially. of and the of with

we Along buy share the which around quarter, buybacks with through we we the deployed return quarter dividend, our back XXXX, of consecutive our In million throughout to fifth year. last value continued shareholders our shares the US$XX.X market. public first to in to issued annual also

our repurchase the deployed XXXX, of has share cumulative XX, US$XXX total, have shareholders company March In we of US$XXX returned repurchase to share its the form As for dividend program. million programs. million and in around

let of some the remarks, business outlook on my for XXXX. quarter additional provide color me our conclude I Before second

our to of recovery, and strategy prudent plan remains the we unevenness aggressive approach suing small reassess in Despite optimistic some Given the environment, situation continue economic a domestic monitor solid. accordingly. our the business company strategy our the closely macro yet to will trajectory were The adhere to uncertainties market the domestic in internationally.

the rebounding With to declaring Organization China’s end an economy. COVID-XX health emergency global Health World and

international We of in domestic year. the half and prospects the our both are optimistic in markets excited our second about and

on technological attract partners will lending and Going accelerating forward, our and driving focus high-quality international borrowers alike. we expansion innovation to

RMBXX result, the an transaction second around of volume year-over-year. increase our to be quarter we expect a China XXXX representing As XX% billion, around in for of

year-over-year. international second transaction XX% in expect billion, RMBX.X an We around volume for our of be markets increase the also to quarter representing around

prepared my conclude will remarks. I that, With

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

Operator

you. Please [Operator comes Your Yada Instructions] question with from Li first Thank CICC. ahead. go

Yada Li

translation. and [Foreign Language] from This I thanks management. taking do Then for CICC Hello, my questions. the Yada is

the pricing on first further and the the decline be and on is in about the relatively and the pricing was The there vintage still any improvements funding significant I there lately? our of side, pressure Thank you. wondering trend is, for the future? delinquency price And from is one what will second loan question room is the and is all. That’s regulation stable when

Tiezheng Li

Language] hi. [Foreign

rate quarter, for shared loans Let [ph]. XX%, are the the fully China on we which originated pricing, XX.X% means previous borrowing compliance. all that in me the first under Alexis. in translation platform And average that the do and our XX% already In for quarter was the had

benefits. In quality this better multiple there of are borrowers, category

better funding in For cost IGC as is in these leverage our And actually and to the first also reduction expectation. customers on high-quality in such there technology opportunities Funding actually ChatGPT, the cost. partners the funding than significant value quarter funding future, our are there example, optimize was actually cost. a to

between pricing and the the our attract eventually they on provide the This Our attractive borrowers order have to to to positive are to a and intention will higher stickiness able quality credit performance have able more in companies risk greater more who is borrowers lead cycle are borrowers. have loyalty and platforms. better to with

around take rate is X.X%. range future be rate stabilized the And rate we going -- the the take be was range expect we the and to XX% IR, borrowing to forward, to the to between In X.X% of XX%. in quarter, of X.X% at the expect funding the expected first

Okay. Language] [Foreign

let Now, do me translation. the

given in the delinquency level. the to vintage at remained stable situation, our confident X.X% we stable first and macro cohort the maintain and Our delinquency quarter are current at vintage this current

realized And better during last I the the our looking that was expectation back year. we vintage And our below to during lockdown at share performance than lockdown right would now, X.X%. actually like period the have of vintage the performance also performance the of

can keep consecutive done we And delinquency various such work order as successfully managed our prudent have And navigate level. quarters, this also and validates assessment eight lot economic over the optimizing to our in proven have vintage low of also to achieve of say this risk last our we attitude operation we a capabilities and different credit through that cycles. our to metrics towards

Jimmy Tan

that is you? okay for Yada, Okay.

Yada Li

Language] [Foreign

Tiezheng Li

Thank you, Yada.

Jiayuan Xu

you. Thank

Operator

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

Alex Ye

[Foreign Language] Okay. first translate My growth. on for question. is I’ll question my China’s

growth current loan the of So QX year year-on-year around volume X%. a and shows decline a

business. So checking year full behind the be to this to for guidance our appear XX% XX% domestic of of

year the below on take expectation So so and would you any is And your second say full is question the for you with seen rate. have is there the bankers recovery -- guidance? [ph] far

that the we be -- mentioned noticed take your rate just you business appear P&L, just So only, could for because improvement. your slightly take is to showing X.X% China some I confirm rate your for

is the -- So from that? credit funding for overseas coming much funding partners, how to you rising many And combined and give have about how that international partners third business. you. you color are is cooperating so Can question some been your business? us on Thank from example, granted that lines the contribution

Tiezheng Li

Language] Okay. [Foreign

slowed me total April. data in you let had down for financing very data, the has this Okay. was fluctuations From do some Alex, in data that the strong April data actually can and translation. was macro April but QX see social the

has And still positive now trend, below that stated the recovery dynamics is it the Bureau recovery that the still Index, is some and see we weak. but XXX%. but Quarterly [ph], And Consumer in according projected can there demand to Confidence interim Meeting the a also economy

basis can period last the rate internal see quarter application considering year. first on the in by same to the user data, data daily X% demand compared we increased perspective, From borrower that a the

first user demand been increasing into with year-over-year basis. year-over-year steadily the by second Entering of these increasing April May, increased half application X.X% a X% quarter, the loan daily has further by in also rate metrics on and

that weak consumption improvements half, share user our guidance. first recovery line We And and can demand. higher the all indicate strong with be the recovery the second which these a half, loans in loan in in of but will is

Alex Ye

Language] [Foreign

Tiezheng Li

rate rate take our business for Your X.X% international reported rate be understanding higher. is and for we only take the is The much will our of correct. that is domestic take

Alex Ye

[Foreign Language]

Tiezheng Li

cooperated for our let me the a Alex, these tech do in for partners, the translation funding and have is mainly international and you questions. to already which With which partner bank fourth Permata, well-known OCBC, SeABank, three Jago, the banks, is we with region. Bank regards Bank

year -- facilitated as And not numbers the online. banks increase. we last calls. have XX% proportion have in better will period will borrowers, We local offline do follow increased quarter to XX% also have up by that later the we you in credit quality loans to the of from the I in first expect last see the XXXX proportion the can you same this with of and continue petition in

Jimmy Tan

Okay. questions? Alex, do other you have

Alex Ye

That’s No. it. Thank you.

Operator

Thank you.

Jimmy Tan

Operator? Okay. Thank you.

Operator

Instructions] Credit Your next ahead. from Please with Zheng [Operator Suisse. comes Frank question go

Frank Zheng

[Foreign you I taking for Language] my Thank management questions. have questions. two

one is first the growth. domestic loan a on The follow-up volume on

perspective, for contribution screening follow-up credit with XX%, volume. the And but international strengthened the The question it the and also softer the rate supply wondering was only a on around And year-on-year markets. X% due on from growth loan mentioned due reduced second approval? criteria was accounts around take the to of topline mild a it than demand. appetite expected to I’m You also credit was also relatively risk

a some has you of it provide But more Thank on you. obviously, in take such high higher color take rate. rate sustainability future? the can the the in So, long-term

Tiezheng Li

[Foreign Frank. Hi, Language] Hello, Frank.

translation the for me do Let you.

For stable year much loans under all you fluctuation. for And we it borrowers, strategy all re-strategy rate is and a this the our our approval of strategy, year, know this without are our loans already Under prudent domestic pricing. remained beginning for XX%. loan should since are this maintaining to related priced -- that,

let [Foreign me Language] the Frank, translation. do

For fluctuations, process might our determine on have it factors, risk shifting funding performance. right take international and pricing, we some now, also are but is it better because costs of line, mainly these depends towards in to hard three also rate All quality borrowers. the

we with pricing markets our would Take rate borrowers, with regulations line optimized can in believe turn in better performance. now to -- We quality which to are to which the be the also say, able situation. when And funding have international risk I we remind costs in that adjust better better all right is compliance. accordingly like to line in leads credit

Jimmy Tan

Okay. any other you do follow-up have Frank, questions?

Frank Zheng

That’s much. very all. Thank you

Tiezheng Li

Frank. you, Thank

Jimmy Tan

Thank you.

Operator

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

Tiezheng Li

all Hello. joining today. the for call Thank you

feel have team. Thank IR you please If any free our you. further questions, to contact

Operator

This concludes call. conference this

your Thank You may now you. disconnect lines.

FinVolution (FINV) 17 May 232023 Q1 Earnings call transcript