Earnings call transcript Q2 2023

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Operator

Hello, ladies and gentlemen. Thank you for participating in the Second Quarter 2023 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, Jimmy Tan, Head of Investor Relations for the company. Jimmy, please go ahead.

Jimmy Tan

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

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

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

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

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

risks inherent involve statements and Forward-looking uncertainties.

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

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

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

Tiezheng Li

everyone, Tiezheng Hello, Jimmy. you joining Group. Li, is Thanks, thank FinVolution This for of earnings our and CEO call.

focus, in to determination. our market with region in to into happy Since XXXX, execute global the have the strategy back speak unwavering Pan-Asian are we We outlook with continued expansion our local today. Indonesian you

our focus Indonesia growth and markets cumulatively leverage an million within served expertise with organization. our to foster our date, and international insights business local our and China, diverse to derived XX To Philippines. drive we perspective, able By we are integrating the innovation in borrowers have from

We into existing further strengthen benefits as produce expand in expect our this markets. we and countries presence additional strategy to our

transitions continue to be era, areas. into recent the As of July certain the our China post-COVID challenging pockets in improvement with macroeconomic data

from reflecting more different However, across Asian which operational pens picture, positive data the we markets a growth currently metrics. operate macroeconomic in

strategy circumstances, we while in the progressive are growth these Given market. adopting pursuing a China of growth market the international in rapid

from While have challenges, recovery been the macro investing R&D. environment the in we we await domestic continuously current

have operate. substantially various improvements our We and our our achieve processes, the enhanced customer streamline across to we which in enabling experience technology, us upgrade markets

total XX% company's our second year-over-year. balance pleased share XX.X XX%, RMB transaction FinVolution's ability the adapt RMB landscape. billion, We the efficiently our to to challenging volume and quarter while economic are to in that growth This respectively, loan to increased billion, up XX.X reached outstanding validates

our meet to in region. the continuing the customers our are We Pan-Asian across markets of needs

Technological Technological mission July, source the primary of innovation our FinVolution the Eighth Competition. In be continues to advantage. hosted and the core we of competitive our

the annual regions. different focused with automatic cultivating technology's recognition, ASR, language, aiming communicating growth customers creativity. chatbot's the to on events and and technological and improve showcasing Chinese development accuracy when talent the of event to This Our from and speech of efficiency [deadlines] are increase year's

Conference, Jiao Tong. whereas to of Artificial commitment recently the innovation University in with World as the was Our XXXX [CCTV] recognized Intelligence cooperation the demand

was Top for nominated award. message, outstanding for Unifying Dropping Networks the Random thesis Graph Neural

risk ago and categories began machine AI R&D years analytics and product services, with across credit learning the assessment. Our different as chatbots, data investment self-health in such spanning

inquiries loan employ all automated have we increased XX% a our of resolves years several process chatbot our model dollars of utilizing past on fully with partners, our customer about We been and the training approval average. automated funding accuracy. their of steadily transaction of billions currently Over data,

days into it chatbots daily deploy personalized We our customer with in consistently use tailored early Along address self-op to providing service for users. delinquencies user process, technologies deliver have operation self-help instant functions response -- collection the the users. and loan the for of by to our more a new and to we experience in automating and and also streamline experience our and embrace upgraded

In into such have leading accuracy TikTok. business, as visibility AITC and campaign Instagram achieving incorporated Facebook, greater increased and media audience our for our addition, platform our we advertisement on overseas targeting social

XXX,XXX, around Facebook XXX,XXX, respectively. during Instagram on result, reached a and XXX,XXX our TikTok followers rose month the of at As while July, to and followers

allow Aligning borrowing practice like governance company's to some our Responsible and in demonstrating business On actions borrowing We Furthermore, advance addressing borrowers. updates to efforts issues this ESG we our progress. in services I to to through ESG our Report, we rate industry. affordable history, strove the for optimized note, commitment social placed our us dedication our showcase share reporting with our and to quarter. XXXX a environmental on accessible related our our the further average China fifth would strong better XX.X%, and to transparency during sustainability. rates, goals ESG are our recently and the our inclusion ensuring financial promoting ESG affecting our our

We future to empowering effective us are also initiatives. design

XX,XXX small business over the of pursuit cumulatively China, in business have entry-free instance, of in for For since owners launch loan our small owners dreams. we their supported eligible

works, a stakeholders to value impact. societal Philippine other and believe our ESG educate activities. while planting will the for project livelihoods and local goal achieving improve along ESG aligning in in that also in -- create the launching cost social business to integral trade community We subsidiaries and large-scale their our positive firmly ultimately markets engaging a Indonesian as conducting such workshop are borrowers proactively people's Our management long-term

our celebrated of a enterprise with during us outlook I'd move Before to and metrics a milestone to that CFO, quarter, operational affords anniversary future additional on glimpse to financial with growth. that we XXth FinVolution as the second our like share sustainable its an

that skill we suite accumulated years, all enable the to technologies, in operate. throughout the markets in us business succeed the navigate a and capabilities have grown have of we which we As the and and built sets

growth services propelling better, FinVolution's to will of long-term vision way. We innovative financial to remain sustainable along committed leveraging our the make technology

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

Jiayuan Xu

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

expectation. by Statistics at Meanwhile, continued retail July XX.X according July points environment in by released of As data the compared be Bureau the billion, by May, XX, National official July improvements XXX increased data increased only to June, macro XXXX. certain X.X% of Purchasing to in challenging in below XX last mentioned, financing points in in with market on areas. and total manufacturing Li domestic RMB in July year. the came compared in pockets with XX.X points Index Managers' The to period consumption Total just same social

financial we the quarter the XXXX. despite operational are delivered challenging and by encouraged we results the second in However, environment, strong macro of

or served Driven China unique sequentially. by in quarter number base, borrower with in borrowers our metrics the we stable and of Cumulatively, operational better the solid China, the around million XX X% have million over in we borrowers at X.X market. quality second achieved

to while reached our a up XX, year-over-year volume to of June balance transaction XX% Bolstered XXXX, by China prudent loan outstanding on billion, XX.X risk as RMB XX.X basis. reached our management both Additionally, approach technologies, expected our billion RMB detection with and In second delinquency XXXX, of is maintained day be for vintage quarter. rate rate a we was the stable X.X%, fraud X level. X.X% the have proven the quarter risk delinquency our around around

loan our collection XX%. impressive collection to team's maintained stable our loan at recovery rate thanks Finally, efforts, around

to As proportion the last category in to and China second strategy serving our costs XX% in borrowers market further borrowers further our in bad the of B we Furthermore, the quality period continue to funding same us our with borrowers, tune quality optimize compared to help our our XX% of total the A year. quarter. during borrowers fine of transaction quarter bad expanded

remains and improvements during All of maintain us of have XX take partners robust. expanded number institutions operational these second also funding We a financial pipeline X.X% around enable of our potential quarter. our cumulative rate partners the healthy to to

support deeply challenging period. responsibility, to committed owners a business during to social this As we continue company small

noticed Business pace. borrowers We wholesale, recovering retail, and food has industry. at of a this segment our also Most healthy been Owners beverage focusing on have that are Small from segment

last During loans of year the sequentially. business we period served quarter, up for and them, owners of around billion small increase XXX,XXX RMB XX% around with and same the XX.X an XX% compared representing facilitated

XX%. reached points business the during PMI over growth XX.X Now and to second I'd of macro our largest Indonesia, to our the Indonesia continued on on a robust market, its basis, like maintained the growth details X.X index monthly additional in international the remain continued expansion share points, quarter second quarter. Notably, past in the overseas confidence efforts. manufacturing economy economy and recorded some several quarters. has grew X% by to

maintain around economy forward, expected Indonesia Going of X% in XXXX. growth is to

We anticipate domestic will robust. remain its that consumption

continue financial X Philippines we served significant markets made over overseas Indonesia demonstrate in we in Cumulatively, about have and growth We excited operational the multiple the our countries. progress to metrics. are across in and and million have these borrowers

XXX% this billion, set period reaching XXX,XXX, With X.X at the year-over-year International RMB XXX% X.X quarter, new a transaction record a last XX% borrowers while same RMB balance number we second quarter, the of outstanding year. from during our reaching at by the up sold served unique year-over-year. high loan billion, up new during in volumes

the of international in million, and contributed by Philippines robust these revenue operating XXX% and volume metrics. compared last period of RMB quarter. basis, with year-over-year stronger-than-expected impressive borrowers, the Alongside times an increase the its number Our loan On balance total numerous across year. XX% a of in unique metrics, growth the all exhibited maintained trajectory operations grew transaction second reaching revenue year-over-year growth several around operational XXX outstanding have also same

Jago both operational financial as consistently as flourishing and Bank, ] banks local have such Thanks this validation such to institutions as strengthened our OCBC partnerships technologies [ SeaBank. Bank Internet Bank with and well capabilities. innovative and of our traditional as Permata partners We and our relationships

of quarter facilitated in in loans with institutions XX% compared period percentage same by reached the second these year. the Our last XX%

Going increase facilitation local network institutions by forward, of these to region. our with we the in expand institutions and deepen of partners local proportion will further relationships our our

our year-over-year. towards our borrowers, second strategy technology the ongoing RMB Net investments revenues rose quarter shift our XXX billion, and year-over-year. up serving income by X% second RMB net X.X quality bad for quarter to up reached in the for million, Driven XX%

and position remained Our our the the uncertainty, sheet our the leverage shareholders' and provide and robust growth liquidity business with year-over-year balance markets. our for an at RMB equity Recent all of stable all representing as strong to support as billion defined cash is cash of short-term XXXX, liquidity our stakeholders X.Xx. by risk-bearing remains loans June increase position confidence ratio, quarter-over-quarter. divided In of of over X% continued X.X times end XX% which of and particular, to

also shareholder million believe annual opportunity attractive to We committed market. remain And to secondary environment to stock macro such, value a year, the value from shareholders. repurchase dividend policy the share an our and we first the during repurchase of return to deployed current policy. around as XX offers the We optimizing our half through USD

million As of through returned the XXX repurchase have our XXXX, programs. to stock dividend June and cumulatively our XX, shareholders we USD

approved repurchase to USD reflecting has our In Directors of commitment XXX a Board enhancing of strong also program our new value. shareholder share million, addition,

expressed and CEO repurchase their other half personal On senior XXX,XXX management the Chairman, a confidence ADS first also in in around through have share the XXXX. of related totaling our company note,

conditions company's representing current XXX representing its remains to growth Taking RMB China for macroeconomics year international at transaction unchanged billion, billion, has favorable the environment XX%. between XXXX metrics volume around in macro growth numerous into company XXX operational across of our to billion China of Given the XX%. X.X markets increased RMB have the market guidance we year-over-year for year-over-year guidance and progress consideration, RMB full the for our international its to international XX% business, the made of XXXX between

additional some in uncertainties for on the solid. quarter Before Despite I some our the business trajectory biggest remains provide outlook environment, of XXXX. color our my remarks, conclude let macro me third

be expect of China transaction billion, volume third representing an RMB increase We around for to XX our in of XX.X% XXXX year-over-year. around the quarter

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

healthy business customer and dynamic refining our and second assessment summary, XXXX, half our focused in expanding outstanding model, of our international In product advancing to on the risk initiatives. base into our quarter framework, management performance our Entering underscores the the mix. know-how technological second and we our XXXX dedication remain of optimizing

on China well believe all capitalize creating massive we international while ahead, are in value customers, greater driving Looking that our opportunities growth stakeholders. of shareholders to for and markets, and both the our we positioned

will remarks. I that, my conclude With prepared

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

Operator

Our from of Li come Instructions] will question CICC. [Operator Yada first

Yada Li

I'll expect business and how and long-term model progress you related international is in provision translation. This like more the about our focus? and color my question is Yada Considering strategic today then countries, of can going question delinquency is vintage CICC. indicators in the conditions, quality trend now forward please day as us do the affect is And what trend. first give strategies? updates July the latest current my to my we X macroeconomic August, leading the with And what of business could and on business. asset new such to And the expansion second

Jiayuan Xu

[Foreign Language]

Jimmy Tan

Jimmy. This is

do me Alexis. for the translation Let

is performance. first to risk Your our question related assessment

X.XX%, we stable with From vintage observation, okay, As vertical stable level. years, at expect always going observation, credit our is levels performance has collection from the this around environment X.X% XX-day at and delinquency few has doing macro performance it the relatively rate last has And metric delinquencies staying our is stable. below few And forward, is been And the -- recovery around is current past that X.X% quarters, market well. XX%. which mentioned, over low expectation. a risk it been and loan around and maintain our is relatively going weak over is the is with to as at also recovery

and these through proved all navigated successfully that We including after have lockdowns, we and cycles and the throughout multiple been COVID credit we the cycles, have cycles. succeed these all have them

Jiayuan Xu

Language] [Foreign

Jimmy Tan

the Alexis. do translation me Let for

other in -- know, for as countries, Philippines we X and Indonesia the market. you in these As the Africa and positions And also looking in Asia also already in high-growth such Latin the the are at apart opportunities are at Southeast countries from and leading we in America. opportunities looking countries

Our to only restricted business is model not lending. online

opportunities for the as also consumption. with mobile is looking Indonesia we working borrowers -- looking example, for consumption young, We Indonesia in are at mobile -- brands you in and And Indonesia target off-line know, opportunities mobile we're populations these phone also for market the are in scenarios. leading to phone offline at

Jiayuan Xu

do you any have questions? Yada, Okay, further

Jimmy Tan

add to like more would few lines. CEO Our a

Tiezheng Li

[Foreign Language]

Jimmy Tan

translate for Let me Mr. Tiezheng.

established experienced such with as we FinVolution very models in and know, offline different As was and you very business XX years working have online, ago, are good relationships different partners.

very models Some are work but in might of the not us business China market, when experience for into useful penetrate we countries. these other

all our huge And to success a As but in of and market. base are [indiscernible] you further venture are to able international because leading these and have the with earliest confident capabilities, positions overseas And and capabilities Indonesia Philippines talent going advantages, in operational we tech pools. these And forward, of we overseas are the in expect leverage are markets. our also into company we we our know, we in market, capabilities. also, not the

Operator

from next Frank Our Suisse. of come will Credit Zheng question

Frank Zheng

improve one the is would is well the international a order medium-term international market. market. From risk And to market the question years' we into less expand than volume you further first on prime further perspective, X time, a the for customers second the as domestic plans The in with of on profitability to example, Do XX% as how foresee follow-up APR tap performance? have operations?

Jiayuan Xu

Language] [Foreign

Jimmy Tan

me one, but In for market. our it the by the as already is business do profitability, midterm, is rapid compared it our growth translation There market small profitable in relatively international the regarding is business affected invest second our the international several for this. need Alexis. are China reasons quarter, we to international Number Let too the continuously. for to

XX%. percentage For loans. because And in these has borrowers example, around the it in of Indonesia been deferred are the revenue installment affected our new also, all by loans market is conducted

Jiayuan Xu

[Foreign Language]

Jimmy Tan

second quarter, first in question. In XX.X% this for the pricing further Alexis our for quarter. XX.X% optimized from translate me the Let to we

in us seen, observe, compared trying historical and our in earnings average. reported quality have higher our consider is to funding higher As we and a better our second going pricing if attract will our from explore ROE. to ROE cost of XX was our And X.X%, And pricing you quality forward, borrowers bps to industry quality the quarter, and the the structure helped level and experience, around acquire ROE have our also refunding we we optimized better a by our quarter, continually will better have balance Through lower between bps stickiness about on we -- XX also second also -- you have to borrowers, are borrowers. platform.

Operator

will The Alex from question come UBS. Ye next of

Alex Ye

is my shareholders' the on So question return.

So announced XXX improving management's buyback management see we showcased million shareholder are of happy on which USD to focus plan, value. share

if we your deploying your also, on forward? ratio such buyback? if And track target on as look we any your indicated So consider over be to period? million this to we pace should horizon we $XXX filter take and deployed quota back there Should record into to the both by payout dividend buyback, consider going your how account is authorization your

Jiayuan Xu

[Foreign Language]

Jimmy Tan

Alex. Hello,

do translation. me the Let

to few programs share to payout Our in share buyback our in for the to million our XX%. is shareholders. In record. is about have million have of about calculate returned $XXX we shareholders you track if and form repurchase XX% already and And USD and years XXX a the total, we cumulatively And of repurchases. ratio $XXX million XXXX, it dividend began returned around

ratio payout for dividend amount, In ahead XX.X%. amount our half and $XX peers. buyback our XXXX, of are absolute our close of is we the the was of terms first million, In to annual

our and the conditions as is return shareholders ratio our to So continue historical will be as historical average to our to long is favorable, market years. for likely past allow by XXXX performance. we And the higher validated than payout value as

Operator

And our Jefferies. question will next of Thomas Chong come from

Thomas Chong

My management landscape And the comment question share in Facebook of market. your overseas the competitive you overseas domestic future Can our talk about one is outlook? on marketing cost spending, is versus acquisition about about about we given the can channels, market? customer thoughts in

Jiayuan Xu

[Foreign Language]

Jimmy Tan

Thomas. Hello,

do me the Let translation.

Philippines known, countries the mainly in positive. operations macro relatively are are have market and the in you these environment Indonesia As our and

to we GDP over to XXXX, GDP at able capabilities compared of are slower high technology maintain Indonesia top example, The has been growing is quarters. at And For And constantly number to because in these slightly is also we market has growth status reached these Indonesia, expected the we are reason in GDP unique the Philippines the the why and the but our growing into a last new and players. XXX,XXX And at have second our at positions for the is leading quarter, capabilities operational borrowers X market, deployed our around in countries growth X X% in among countries. still X%. growth maintain around X.X%. the the are

huge These are early stages us. markets for at markets, are and and Indonesia Philippines,

invest and supported technologies as So we operational capabilities. by these leading our to into maintain countries will continue and positions

Our efforts and capabilities has financial also been recognized by institutions. local

example, in year. second same in can of only last the the funded loans be from by the XX% validated quarter compared For partners local period the to proportion increase in this by XX%

these apart the our Facebook, marketing, amount RMB We us be invested the also are second believe forward. sales going good will has investing channels and For is fixed we information channels into into marketing XX acquire in new spent from And sales million we and borrowers quarter. to all for around been TikTok.

Jiayuan Xu

questions? other any have you Do

Thomas Chong

is in talked remarks, about we been many for years question. AI Thanks, management, scenario. different we apply My AI. question and my AI for in have second prepared about the investing In taking

seeking people of regard the about such top in our the this LLM, thinking days, own get Internet just a and Given with area, sector I are to LLM, hot players. with LLM topic whether a industry or partnership from want or LLM to thoughts some it's talk we these management are we developing

Tiezheng Li

[Foreign Language]

Jimmy Tan

Thomas. Hello,

huge at model Let needs as data me Mr. not where development. resources our to level a be that the country the do the generative are Honestly, required company of a translation for Tiezheng. it for for is size

is and at our And our with deployment we AI daily partners attempt in consider our operations efficiency. to also, an to the suitable will to focus also we are business on be work our can Our into models specific looking implementation efficiency. for order increase for other where opportunities of operations to that into us in our increase --

Operator

And the Cindy next question will from Wang of China come Renaissance.

Cindy Wang

from Cindy China is This Renaissance.

So I have X questions.

to related The institutional first is the funding. question overseas

testing up the seen we've So institutional going pretty quickly. funding

So what's to institutional provisions. the contribution is will in related the question from percentage The second the contributed funding? be midterm,

we see improving been asset So has in the quarter. the quality second

up. However, first slightly the to provision compared has been quarter

any the the how the the of difference we provision So year? can whether we write-back in have here between talk And second we and this what's about in second foresee half quarter? do

Jiayuan Xu

Language] [Foreign

Jimmy Tan

do me translation. Let the

year. have in we end -- around funded by the by as around XX% have funds mentioned, we XX% was to QX the in quarter, expect the this XX% loans of of second amount -- of We the partners Indonesian and local be

forward, is do Going next on our but that further markets. proportion, will on international need where to focus still increase be us for the opportunity we we funding the to cost funding think for optimization cost some our there this

the need and at because next very take international a provisions. business be the weak a our provisions, recovery still recovery, question, bit The the And look Going the write-back. you when a domestic is China is look is to we to if did at first the below growing In into expectations. rate. international the reason rapid was reason divide is slightly a levels to This higher. domestic now for we main provision there quarter, at and the

opportunities but forward. all there will a we will recovering be -- And there when write-back moment, economy any pace. write at So we these for faster going don't at have the back to is plans change the believe

Operator

the to this Company time over call turn back like I to would for closing the At remarks.

Jimmy Tan

joining Thank today. you again once for us

Thank free feel me you please my Investor so to questions, further Relations have team. you contact If much. or

Operator

call. conference this concludes This

your Thank you. lines. disconnect You now may

FinVolution (FINV) 28 Aug 232023 Q2 Earnings call transcript