LX - Earnings call transcript Q4 2023 | LexinFintech Holdings Ltd.

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Operator

Good day, and thank you for standing by. Welcome to LexinFintech Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mandy Dong, IR Director. Please go ahead.

Mandy Dong

Hello, everyone. Quarter Year Fourth Call. Earnings Lexin's to and XXXX Full Conference Welcome

results and IR today issued be Our earlier our can were found on website.

Arvin are Xiao; James today CEO, ] [ Zheng. me CFO, Qiao; Joining and our CRO, Jay

we of safe you press which harbor to this to earnings our also our get applies started, in call. Before like release, remind I'd statement

update materially, plans, in During and any our results are based progress. which will forward-looking and forward-looking the an will statements, actual mentioned obligation no call, we undertake The our statements. Last, ] we unless may otherwise management on stated, RMB. In first all figures estimates current overall update Jay to Arvin refer risk are performance. [ may projections. today's call, to differ business discuss outlook provide and on

cover financial now remarks will more detail. I will call to English James and follow. Chinese in the translation Jay. will over results will be His the turn Lastly, in

Jay Xiao

X-X-point-X the by XXX.X good our we challenges the quarter, a give full environment strategy and steady and a weak the year business was billion recovery fourth due adhere CNY the prudent demand driven of face origination to X.X competition. XX% increase. We of revenue a industry loan a for the was our year-on-year CNY morning. current pleased XXX year-on-year was year-on-year Total risk the XX.X% increased CNY intensified year-over-year the XX.X QX, billion, evening, a and XXXX. of increase. a the of challenges, industry credit Revenue for increase. slow Good in increase. macroeconomic, to quarter faced and billion, performance fourth [Interpreted] CNY for year increase. In In year-over-year the Total full I'm balance X% regarding new XX.X%, in billion, the XX.X% engine, adopted macroeconomic growth update an management, Loan quarter. strategy grew achieving QX volume origination percent, CNY development. Total business billion, loan to reached in data fourth XX.X

level specific, faced industry momentum risk the while series traffic. same the refined for number we improving the pressure our result, QX, risk we took across the a year-over-year. on performance up, quality. stabilized and in growth and nearly metrics in low-end mitigate of an platforms went new to asset measures short-term improving and significantly This the management active such and based of customer decrease The In effectively we improve segmentation of on users impact. bolster customers, As by customers with jointly finance issued increased developed operation the loans RTA identification profitability. collaboration compared to risk in overall To the In number capabilities of a response, growth QX, terms the the remained XX% some inflow model with risk entered December. new system be online of and built high-quality the of newly X-X, will risk in as registered users newly new early-stage XX.X%

in upgrading and on management credit sector, super operation accumulating granting the prime satisfaction, of customer and competitiveness overall XX% enterprise loan X-X fluctuations of previous leveraging and the compared strategy the customer stable. entered percent, and in accounts loans customer activate this improving prime reoffers compared never improve further remained the whole by proportion percent, across quarter. X.X improve, of WeChat the not but before used potential our stabilize of and We terms existing compared facilitation service activate to quality and system, further to customers rates quarter lines, previously the by risk a long the December, previous half of who the are rate the to new month efficiency X portfolio rates measures, The in enhancing Since XXXX our asset in level by quality focused and targeted top-tier refined issued over quality second that, loans resulting XX%, increase the asset million despite made will to customers over a their followers. Through to risk new we time risk delinquency decreased in performance groups to transactions and existing we collection X-X XX%, continued started dropped well. with offers. asset X% conversion for customers, or products of pricing In issue overall the as indicators increased has QX, of trading to third XXXX, day gradually of

improve and clear us Qiao risk following of the management overall upgraded language we CRO, ], gained differentiated for sources his management we risk will $XXX [ full X management customer the intentions main our work join create customers; multiple to management implement are us the and Arvin risk confident new understanding segmentation goals allowing existing a customer us advanced forward. In This system, cycle identify experience. strategies. In Accordingly, CRO. of collection. our year the personalized have key Every repayment million will elaborate work experience experience down research QX, year large risk [ invested measures. In and our planned team risk aspects: other risk than in framework laboring life and and set leadership, affiliations, Qiao capability and Mr. ], can Mr. have level Ant developing this in training, we application and has our invited of the We down information. customer have implement ahead, later. we as assets risk industry single years relevant enables to and and specific model deeper users, operations improving analyze customers Under space. Through data of automatically XXXX, managing focus we our data-driven will and extensive and we our on system. out precise bringing loan assets enhancing to profitability. going Zhanwen XX Our first, of development, models Group, bringing large to efficiency level and in advancing trillions in over on language further assets in recently AI areas: more profiles

high-quality strategy drive volume growth, the Through we increase For especially new assets newcomers, white-collar increase effective credit down the or efforts, the customers, own will dynamic risk the customer we low-end owners. of of groups, acquisition targeting channels, levels. identification continue first workers high-quality development mini aspect, growth and to profile new and strengthen acquisition overall will for micro SME improve of customer our the of customer blue-collar

second strategies strengthen on construction risk different the identification different for underlying customers, widen capabilities price range will will existing Particularly, and match For we segments. of apply aspect, customer differentiated segments. the pricing to customer for we flexible the strategies based

high-quality wallet For Lexin their and registered over we With share risk. has customers, will still growth. users, lower of competitive overall XXX for portfolio ample strengthen capture a simultaneously offer, large million room

aspect third will terms financial legal the with scope collection, loan collaboration institutions, of its the in strengthen we action expand of efficiency. improve For and

and efficiency to user integrated the We recovery. system delinquent development will and in continue to of the recovery loans experience effectively ensure localized advance collection

models as such large AI efficiency. enhance collection strengthen language to loans will routing improve system, technology management and systems loan intelligent to We delinquent leverage

a Language] segment. continue as will differentiated profiling one sharpen Language], segmentation strengthen segments [Foreign customer the and hand, adhering Chinese, customer-oriented we and XXXX, refined on In offer metrics. we Language] in [Foreign customer [Foreign the segment products to we improved such consumer based [Foreign various principle will Secondly, will credit customer on SME high-quality our to On products [Foreign operation customer lending segments. Language], Chinese, and for focus and growing for in customer for for Language] speedy our

offer will and the their of customers' life growth risks needs On life dynamic and at the approach, strategy cycle. cycle. we each we of credit Under able the needs the other serve are grow, drops the appropriate through hand, their throughout phase dynamic to whole this entire system low to manage

work In we to addition our rights front. continue the protection products, customer various on to reinforce will

customer In illegal customer the and the consumer by will formed committee system a demand protection consumer compliance center. around improve effectively of have rights We protection protection we reducing thereby satisfaction mechanism, rights better malicious XXXX, and and group. meet impact governance consumer enhancing

ecosystem consumption our growth for steady business. of starts driving show Lexin our Thirdly, force to

and will further which As for we invest in acquisition growth will customer banks, city more the line, more to commercial commercial scale start expand business tech fuel and empowerment rural the in and banks revenue.

operations in cities and belts offer As on Puhui, competitive for our we micro high-quality conducting in target inclusive SME workers industrial Chinese, and will loan salary off-line business customers, owners, focus business, grid-based that to products. continue located self-employee more low-tier

identification. advantage continue to credit and system, management upgrade acquisition underline and information-based profile first-hand team, will scale force up enhance management team the differentiation our sales customer of the We

that while expand business, advantages more we to the attracts e-commerce youngsters. the goods trendy for As our products, XC SKU in will maintaining

improve strengthen already identification will our profitability. Fourth, risk system, hit expand year, funding differentiated and We rate, further costs. costs and approval will as we uplift user management X%. expect this trading credit have and low issue strategies, risk funding costs, This profile to for reduce we accuracy currently, the management aiming transaction and scale will and funding upgrade ABS

XXXX, prioritize volume transaction we the will into and throughout risk maintain to prudent principles, operation adhere in steady Looking growth ahead year. management

to that further as confident profitability are continue our risk performance scale, improve, and expense will We our increase.

of has dividend return. plan program approved continue the Board distribute shareholders' to dividends per half We our approximately USD cash XXXX. X.XXX recurring of will and for ADS enhance second cash the The

CRO, to management. over Next, to the floor will ] our Arvin I [ hand risk discuss

Zhanwen Qiao

give performance the [Interpreted] to Jay. Thank I'm management you, risk an regarding glad in QX. update

of quality experience involvement to in technologies joined over introduction the work of industry, Ant our recovery macroeconomic that, as with asset I risk extensive Deputy of Prior risk showed of First, consumer General innovative due demand holistic QX, about deep loan years at Chongqing, team, Huabei risk products, Manager finance. words book. collection risk consumer the the myself. consumer the building management mainly consumer loan management credit charge which Consumer in construction I performance with in and with let Jiebei. in slow served for Ant consumer system Lexin credit give in Company existing as risk our of practical XXXX. in the for turmoil the Group some the also management. In in I Ant Finance me credit overseeing few fluctuation management comprehensive the and risk the resulted and served Ant's management Ant such in pressure, and a integration have I management December XX to

taken acquisition. risk have of risk segmentation, impact, customer risk tools and management the enhancing countermeasures to and reclassify We talent accelerating existing timely identification management capabilities, mitigate effective including upgrading customers, strengthening

lowest on overall the and day a monthly its peak by QX half reached middle QX of of quality loans XXXX overall newly pressure its over of been to Looking stabilize at in the second have compared book, has level. in at assets The come month better the XXXX gradually but loan since the to of level been overall improvement month, rate and the recover collection with from to XX% issued of of the and point FPDX The recently the reached of delinquency began basis. January asset level its rate started trending improving X the XXXX, under beginning peak assets reaching peak XXXX.

made let Next, work major progress have regarding stream an in in give QX. the risk me management update we

we QX, strengthened identification our Firstly, further capabilities. risk in

improved in-depth joint greatly front, the massive several of companies. we our leveraging platform-based and data scoring of leading stability data, scenario with conducted models. their Internet we accuracy the amount fully have By On risk modeling

and applied on such graph capabilities algorithm, in and our our ] edge Puhui; as risk we Based models, in our are: upgraded XX%, series have identification finance, performance capabilities e-commerce. risk system the in business comprehensively [ dimension. management models the lines Additionally, consumer risk an of finance; of development iterated The model and effectively improvement X richer X-X core have risk cutting off-line spatial we identification relationship and inclusive that time introduced models, scenario nearly for and seen temporal has data Chinese, percent. expanding the and the of algorithms,

risk using the have line, by to the strategy customer level to categories, X and improved customer that and previous scores this have in finance reconstructed customer customers life assets. a a customer the system dedicated segmentation. new we the the stability precision of into high-quality information, scale consumer subprime. customer customer expanding XX% groups the differentiation our led Compared prime; and segments. near among throughout high-quality enhance various credit approval prime our the business cycle profiles the strategy system segmentation, customer further new leverage super rate for new rate to In classify reconstructed prime; and a customers, growth boost on of targeting increase basic and Secondly, XX% segmentation risk will has we significantly in operational based risk In approach QX, are: customer drawdown credit in credit we loans. decrease customer future, level of high-quality thus and This to

for segment. Fourthly, overall customer the of competitiveness customers, churn existing risk rapid we operational customer enhancing our support systems, process. among X-X refined super risk measures has can recall to orchestrate enhanced the GMV by have between ability system, of asset upgraded loans have of management for system. our significant strategy through different The upgraded The new Furthermore, strategy groups. particularly iteration strategies. percent. customer to and QX, and process and well responsive effectively and input has parts reducing approving, efficiency framework. segments, end-to-end marketing and further transaction risk prime credit link increased by have business greatly our and Thirdly, supporting for pricing existing and improved structure visualized and operation in of prevent compared our the risk volume super effectively the segments refinement have we customers, we lost This risk standardized tool management highly products. different as standardized high-quality and results of established data XX% prime in standardized management This and decision customer launch for in we management the our strategy risk decision complex the of and prime terms prime customers framework loans as improved management and achieved offers retention output, a customer of upgraded risk enables the further our XX%. new for management to management iteration ratio and improving Through

management to senior platform loans. from brought implementation issued a leading industry. In to upgrade accelerate newly talents the strengthen risk X plan the have in further level of the in we following we management risk we group risk the level management as measures, the risk of a decline Lastly, aforementioned in continued also outstanding aspects mid of quarter, next ensure from to the

expand comprehensively and preference will core identification we Firstly, to customer more risk our utilize profiling, sources improve and identification stability identification, capabilities. data

management ] system, the building we up [ our Secondly, risk the will standardization continue of to of enhance modernization improving strategies. risk

from income responsive and management module, modules, inputs as module, module, strategies. This core cetera. multiple different transform standardized will further platform We dimensions the will et into such enhance risk standardization consistency of

by of management we management robots will the capabilities multiple as the strategy product-light will such precision Thirdly, management develop the risk tools platforms. These risk risk further tools, work. efficiency product experimentation enhance intelligent strategy and creating and

and we continue into of will XXXX, management operations. prudent to ahead the priority uphold Looking principles risk

tools framework, our risk aspects, and strategies, data various comprehensively capabilities risk risk infrastructure, upgrade talent will source, models, We management in management including teams. management

segments. for Our is our significantly customer risk goal capabilities identification to enhance different

specialized life multiple our including and customer manage refine delinquent cycle, to entire risk to servicing ability origination, throughout of the strengthen and expedite loan management. loans implementation will their initiatives management loan We risk

and to to identify measures loans improve such continue various risk our with asset growth line as quality, reduction credit interception on steady account a achieve effective in quarterly profitability and and customers aim will level to reduce generation transaction We closure, a method, support confidence, enhance a the and high-risk gradual we to ability basis, margins. of delinquent amount refined capability employ decline

Next, financial hand our James, updates. the will to over I CFO, call for

Xigui Zheng

the financial positive XXXX results. our our unless details industry-wide landscape, financial upgrading, has related points financial on a the a and RMB, consumer challenging modest operational our all stated. In business the optimization to progress results. I'd Despite [ you, to that over and provide on more commendable I our from quarter. by volatility, economic increase achieving to the management, note, QX, and risk few targets. fortified profitability volume business will Please recorded in refinement are numbers and highlight growth and a to loan spending a otherwise ]. Despite economic Thank profitability like rigorous year. we marked last risk commitment now Arvin loan risks pillars, cost growth. have positive framework origination note controlled our and portion, in strategic customer response yielded operations closed recovery segmentation and Loan in industry we

billion a investment-related balance XX.X Our impairment by reached sequential billion, surged Annual spiked XX.X%, tightened standards revenue by up loan CNY QX losses. excluding to growth. reflecting credit net XX.X%. quarterly with X.X% income loan on The focus GMV XXX.X decline, annual CNY grew XX.X% XX% and our by and outstanding origination

the revenue only for revenue and have of demonstrated Second, the outpaced In Despite capabilities. a from year-over-year. a QX, year-over-year borrowing to lower resilient We growth in therefore, growth our year we X.X% costs continued generating to XX have at APR XX.X% pricing. QX, the decline and XX.X% average by growth in GMV X.X% XX.X% weighted in ago, we strong users. QX cut in resulting basis

positive marginal in QX package shortened overall XX.X and risk due point of revenue the take X.XX% XX ago. months. revenue a loan along did not a from in basis have This from basis continued the of fluctuation uplifting the effect general to the as impact tenor, year rate. We we to dip from payoff. early revenue X.XX% significantly funding the new pricing, points only reduce a average shortened of decline exposure, with XX.X risk industry-wide to rate the The to customer take improvement lower saw XX Additionally, the tenor months is costs strong

financial in downward institutions. February, level QX, funding a historically partnerships to low continue below cost record through funding The expect X.XX% we new in X% this trend forward. down hit ample going and of funding XX with cost national year-over-year. points We this We achieved basis have recorded a and cost-efficient low

to proactive taken the borrowers' early The level reduce peak repayment XXXX. measures some repayment. of lowered to ratio in only XX% We have the

in we down processing to expense, and cost. per the loan XXXX, We and average G&A thanks including from service, acquisition savings QX acquisition the to offerings. cost optimization have our Thirdly, total sales the XXXX X.XX% our in marketing the structure. QX as substantially big user is One RTA cost on optimized marketing, loan thanks a execution in a model project. user percentage attractive R&D We X.XX% cost realized of amount more such upgraded example trimmed to and of QX,

which Our bit acquired at quarter, compared approved XX.X% users lines new XX% fluctuation to faster fluctuation and users risk XX% year did and and X.X% has of sales its cost of our the indicates our grew and a by new with during much unit half impact. expense credit to us industry-wide marketing last savings, acquisition as while a second the ascended peers. The and a they active respectively. Fourth, XX.X%, risk last rate impacted

MX Asset stress, days the a of rate have collection rate. signs quality rate, DX and metrics shown delinquency XX-plus including delinquency

Our versus XX-plus moved last X.X% X.XX% delinquency quarter. to rate days in

change pressure of basis for due guarantee a quarter-over-quarter are We increased on sequentially our and contingent have The costs. Total cost fair is loans part and enacted risk year for contract X.X% on growth receivables, the in financial provision-related of guarantee asset financing value end receivables, to impact provision the of at through quality provisioning the financial the value in revenue provision of for immediate the mitigation QX. almost items, strategies early QX and provision and flat this the assets the year. stabilizing situation impairment the including increased derivatives in by that increased credit fair as liabilities

coverage bit highlights, loans. Apart provision approximately to divided staying debt as a the a I We are amount specific XX-plus on an the X items from provisions, total principal elaborate defined of XXX%, days little above operation-related from ample is like a the bad robust statements. more which would [ of delinquent amount by maintaining ratio ] financial

a The losses. major to bank. impairment a of the came domestic from on investment-related earnings First, impact impairment investment investment private related

investment-related XXX net margin quarter fourth for impairment a losses, the net impact million profit the with of Excluding of after-tax of was CNY XXX CNY X.X%. million

quarter-over-quarter to on empowerment grew line and book. reduced last Tech continuing due and to by fell items. XX% releasing on from on last business. from year-over-year from basis loan quarter XX% Guarantee a a some year, services basis existing volume tech primarily empowerment due in notes increased the Second, X% revenue steadily XX.X% income

items. some of significantly generation, costs notes to due XX.X% by dropped Funding our a cost and by XX.X% which year-over-year our related QX. line Third, maturity statement, trust funding the quarter-over-quarter on on-balance loan income in to portion on of sheet

XX.X% quarter management in sheet by due XX.X% the QX Additionally, initiatives to compared processing of rose from the management to talent. Fourth, administrative and to General increased quarter due the risk projects. expenses last and increased items. in risk and by on-balance servicing cost QX the addition more previous

quarter X.X of and billion. cash a CNY with is ending in X.X equity the strong, position billion Our position around CNY solid hand

XX.X We recurring XX% of for total declared payout continued to half roughly roughly year-end second based yield and cash our combined amounting XXXX net dividend about closing our a cash for The the equivalent per total is dividend plan XXXX, XXXX. of ADS cash of the half at million, with USD a of the -- profit on around USD dividend price second X.XXX dividend XXXX. XX%

dividend to market ahead, the shareholders improves. will when the we to increase or Looking payout ratio either maintain our condition continue

user capitalize well. In year upgrading our a with line and driven Operator, you. We less floor annual growth grow full cost our and the as XXXX, growth prepared XXXX the ready opportunities. That prudent rebound a as Thank emerging to remain concludes year the risk we operational questions. Please by top business and on of than in that forward as strategy. improving open focused for expect bottom peers, of remarks. many for now management of are be surpassing a Looking groups, the session. the last focused management optimization to remain year was our core our both GMV on strong capabilities, excellence enhancement to top Q&A we to no XXXX economic for summary, risk approach, from and profit of the year uncertainty priority, due last the will we net amount

Operator

Alex first UBS. [Operator Ye of from question Instructions] comes Our

Xiaoxiong Ye

now, in of have trillion I loans. several main Mr. the consumer as to platform Qiao, was challenges opportunity the and we who you the seen learn have that and for since for to led $X joining. to management question Lexin as of choose well Ant would have like [Interpreted] risk with reasons firstly, key for about Group been balance you join the months charge Since the you have

Zhanwen Qiao

[Interpreted] Okay. Alex, this is Mandy.

Let ]. [ the LexinFintech, Mr. made several are, translation join decision me Arvin do When for to key there considerations. my I well,

of Firstly, the consists established that in including consumer finance potential products. registered and synergy earliest ecosystem LexinFintech million potential is various are its XXX business lines. inclusive Lexin see our SaaS platform Lexin lines, off-line and Well, has tech one of there business China. tremendous users among finance, built It has we unique finance, e-commerce over consumer these accumulated growth immense consumption with Puhui,

So solid foundation base. in very a my a strong perspective, and Lexin customer has

second compare other risk stands when level the nowadays point, at For you we peers. relatively can level to a see industrial Lexin the higher assets of

system level I'm However, of match refined industry and the to down management the to by confident industry. can future, risk for further Lexin furthermore, our leading the level level. implementing enhancing we that risk bring gradually improve the average very quantitative assets proven a risk can in And we management,

few future, space, we of months level in as down see for is may the In there the rooms in risk the the and company low. past management quite further gradually risk room I in indicate addition, my ratio P/E profitability the be the bring will increase. Well, work returns may following points. current can after That ample

a more lot stability and the First, of third-party may and Lexin the future, in identification in improved the risk lack source data source model has data but accuracy. improve In we future. models, utilized will introduce quality

of mainly There management still type. room more credit we models, improvement in including still a for tools. robust risk rating, management which risk more responsiveness there sufficient a type, and is credit the the array Secondly, variety. thirdly, profile lack -- building a risk different scoring future, credit also, In room model system type more of for of of types is shows include nowadays, the the will

quality the system, management above-mentioned months, we risk the established upgrading management full risk identification made to notable that measures, tool cycle Over in past have life progress intelligent few system, a already achieve risk see level last already monthly the point asset we address can risk declining the question. I with on issued a a your year-end showed of since basis. Alex, hope newly that turning loans

Operator

comes question of next Li from Our Yada CICC.

Yada Li

fourth From improvement do quarter we results, credit efficiency X%. could Q-o-Q, went some efforts sales XX% marketing I'll I Then the with share by customer and users lines the moves while more think grew it [Interpreted] up And new observed the management significant by the a acquisition roughly translation. in the only and customer on indicates and expenses recent acquisition.

Jay Xiao

[Interpreted] I Well, translation the for will Jay. do Yada,

credit and see drawdown capability, and we resulted quality increased QX, line a by a drawdown. further identification consistently credit you in basis. XX%, Firstly, Based X-X by line low issued in the our risk on newly increased with risk RTA level and of good model monthly we and enhanced approval strategy adopted upgraded XX% loans strategy. notable of percent, users user by decreased grow, on growth This on the improvement credit those

diversify to on in channels customer relying solely put of our rather Secondly, than like acquisition online efforts we previous in channel. advertising more terms have the

micro segments. products users, customer tailored to service prime, we Well, diverse and a different graduates, and needs catered So SME metrics. fresh the developed specific we By for products. super be customer and more acquisition also customer approach owners, we differentiated for that, achieved acquisition and prime

Operator

comes Zou question of CLSA. from next Yuying Our

Yuying Zou

translation. do the me Let [Interpreted]

has peers plan multiple and launched remarks, more growth Lexin market. to the their in in economic That's XXXX. mentioned the the future? domestic strategy the of in Does the began Jay in Lexin as has So, expand slow internationally. and business domestic recovery his More the similar competition business intensified

Jay Xiao

right. we will overseas strategy. have the ourselves. overseas expand up internationally in had expanding Definitely the the some or are business key business -- growth market. our of running from either And XXXX, we you Yes, selected one nowadays, the In is acquisition in business some already [Interpreted] ground by building markets, way

our of China business overseas. replicate We small. our overseas success relatively are in confident But market volume to business to the is

we more future. We will more in progress once to the update market the achieve

Mandy Dong

operator, questions there of today. no end that come Well, maybe to further are call lying, the if our

Operator

to further I call. no for you. coming conference at all the Thank Thank conference end you this see this call. questions of time. This our is

disconnect. now a everyone. may day, Have You great

Jay Xiao

Thank you.

Xigui Zheng

Bye-bye. Okay.

Jay Xiao

Bye.

Mandy Dong

interpreter transcript Bye. [Portions by the spoken are you. marked on that this live present [Interpreted] an were call.] Thank of

LexinFintech (LX) 21 Mar 242023 Q4 Earnings call transcript