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spk32: good day ladies and gentlemen thank you for standing by and welcome to the giant group's fourth quarter 2022 earnings conference call currently all participants are in a listen only mode later we will conduct a question and answer session and instructions will follow at that time as a reminder we are recording today's call if you have any objections you may disconnect at this time I would now turn the call over to Mr. Shawn Tsang from Investor Relations of Giant Group. Please proceed.
spk05: Good day, everyone. Thank you all for joining us on today's conference call to discuss Giant Group's financial results for the fourth quarter and full year of 2022. We released the results earlier today. The press release is available on the company's website as well as from NewsWare Services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. For the information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese . With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan. Hello, everyone.
spk24: Thank you for joining our fourth quarter 2022 earnings conference call. Then, in December, there was a complete change in the anti-corruption policy. Looking back at the past three years, we have experienced the global political change due to the COVID-19 outbreak, and the resumption of China's financial technology industry and geopolitical conflicts, further suppressing the global economy. However, we are glad to see that despite the constant increase in the number of global economic fluctuations and uncertain growth in the global scope, We have not been seriously affected by the overall implementation of our company's strategy. In 2022, we will continue to focus on improving the core capabilities of company technology innovation and risk management. At the same time, we will continue to improve the efficiency of new plans and innovation capabilities, and use this to better meet the market needs of continuous change. Jiaying's firm implementation of strategic goals has brought the expected growth throughout the year in 2022.
spk05: 2022 has proven to be both challenging and opportunistic for our company. During the year, we faced the strictest quarantine lockdowns in China, followed by the lifting of almost all COVID restrictions in December. Looking back on the last three years now, we witnessed the COVID outbreaks that disrupted businesses worldwide, policy changes that reshaped China's fintech industry, and escalating geopolitical conflicts that further pressed the global economy. If by these macroeconomic disruptions and increasing uncertainties worldwide, we are proud to report that our execution of our growth strategy remains steadfast. Throughout 2022, we maintained our focus on strengthening our core competencies of technology innovation and risk management. We also improved our innovation capabilities and efficiency in refining our operations to better meet the involving market demands. As a result of our solid execution, we delivered growth in line with our expectations and rewarded our shareholders' long-term support with a strong and satisfactory performance in 2022.
spk24: Our primary task is to ensure the development of business and meet the requirements of supervision. We have cooperated with the supervision department and financial institutions as usual to achieve this goal. In the face of the relevant requirements of the Chinese People's Bank on the year-end policy, we have made comprehensive preparations. We are confident that we can work together with financial institutions to complete the system exchange. In addition, we have also seen Many positive policy signals are supporting China's Internet platform companies' further positive and healthy development. To put it bluntly, the commercial bank Internet loan management strategy issued by the Financial Security Commission has been approved and standardized in the form of a bank and Internet platform cooperation loan model. In addition, the supervision department has recently announced that the major Internet platform company's reform is basically over. As we expand, our top priority remains ensuring full compliance with regulatory requirements, and we are actively collaborating with
spk05: policy makers and partner institutions towards that goal. In response to the PBOC's directive to stop direct data connections between internet platforms and financial institutions, we have made significant progress and preparation. We are confident that we can work with our partner financial institutions to complete the system switch over within the required timeframe. And currently, we are also seeing positive regulatory development underway to support the healthy growth of China's internet platform companies. For example, the CPIRC's interim measures for the management of commercial bank internet loan have officially endorsed and regulated partnerships between banks and internet platforms like ours, providing a solid foundation for our operations. Additionally, regulatory authorities recently announced that rectification among major internet platform companies is mostly completed and PBOC's Financial Market Department has also pledged to promote healthy development of the platform economy. Overall, we believe that these regulatory developments indicate that China's policy regulation of Internet platforms is moving towards a period of normalization. In my opinion,
spk24: In 2022, the demand for consumerism in the Chinese market is very high. On the one hand, the 14-5 proposed by 19 government agencies to promote the development and planning of small and medium-sized enterprises, as well as the Yinbao Commission and the Chinese People's Bank jointly published a notice to strengthen the financial services of new citizens, and to further promote the development of financial technology products and services for individuals and small and medium-sized enterprises. On the other hand, The financial institutions and partners we serve can also use more abundant funds to support the needs of the service. According to the statistics of the People's Bank of China, at the end of 2022, 11.1% of the total loan amount of the financial institutions' RMB has increased. The total RMB loan amount has increased by 21.31 trillion yuan a year. It has increased by 1.36 trillion yuan a year. In the context of the 200,000 yuan gap, We are not blindly pursuing a continuous expansion of business size, but have chosen to use this opportunity to further improve the structural improvement of the lending population served by the platform. In terms of asset management, our customer capacity has achieved a simultaneous increase in quantity and value. The number of new lending users per year is about 1.53 million, and the growth rate is about 52.4%. In 2022, the Chinese market experienced a strong demand for consumer credit, driven by several factors.
spk05: Firstly, the insurance of the 14th five-year plan for promoting the development of small and medium-sized enterprises by 19 government agencies, and the joint release of the notice on strengthening financial services for new urban residents by CBIRC and PBOC. have spurred the growth of FinTech products and services for both individual and SMEs. Secondly, our financial institution partners have been able to provide abundant funding to meet the demand for loan facilitation services. In fact, PBOC reported and 11.1% year-over-year increase in the balance of RMB loans by financial institutions in 2022, and the full-year RMB loan volume increased by 21.31 trillion, representing an additional 1.36 trillion increase from 2021. However, rather than bluntly Expanding our business scale, we choose to take this opportunity to improve the structure of our borrower base on our platform. In terms of borrower operations, we focus on enhancing the quality and scale of our borrower acquisition capabilities, adding approximately 1.53 million new borrowers throughout the year. a 52.4% increase from the previous year. We also increased the proportion of loans by borrowers with a credit score of 60 or above from 68% to 88% in 2022. Additionally, we concentrated on exploring borrowing lifetime value and refining our operations. For high-quality new borrowers, we matched them with funding sources offering lower interest rates, promoting a year-over-year increase of 22.1% in the average borrowing amount. The average ratio of repeat borrowers for the four quarters in 2022 remain stable at about 67%. And the average borrowing amount reached about RMB 9,737, a 71.4% increase from the previous year. 这些举措表明了我们希望通过精准有效的利用资金资源来更好地满足平台用户的融资需求,
spk24: Especially in the context of the general face of risk level fluctuations in the industry, we have chosen to further improve the detailed classification of assets to respond to the existing and possible challenges in the future. With the expansion of the business scale, our user group composition also presents healthy and sustainable characteristics overall. Looking forward to 2023, we will continue to strengthen our asset segmentation and Such initiatives reflect our expertise in precisely and effectively leveraging our funding sources to better meet the financing needs of borrowers on our platform.
spk05: This expertise is particularly valuable during industry-wide fluctuations in risk levels. To prepare for current and future risk challenges, we have refined our borrower segmentation. As our business has scaled, our borrower base has consistently demonstrated healthy and sustainable characteristics. Moving forward into 2023, we will continue to refine our borrower segmentation and adjust our borrower acquisition strategies based on market conditions. In the long term, we anticipate that new borrowers will make up 20% to 30% of our borrower base, allowing us to maintain stability and sustainability.
spk24: At that time, a lot of efforts were made to provide a solid foundation for our growth in 2022, especially in the field of precision operation. It has brought us a continuous improvement in capital allocation efficiency and revenue size. In 2022, the total amount of this year's revenue and net profit increased by about 153% and 84% As a result of these efforts, we established a solid foundation to achieve expected growth in 2022.
spk05: Our efforts in fine-tuning our operations have resulted in increased efficiency in funding allocation and consistent improvements in our revenue scale. In 2022, our loan origination volume, net revenue, and net income increased by approximately 153% 84% and 152% respectively. During the year, this exceptional growth demonstrated our solid progress in expanding funding sources, improving asset quality, enhancing risk management capabilities, and refining our operations. 在资金段,2022年市场供应总体上保持充足,
spk24: The capital cost has also dropped, and our real-estate cost, with the change in business size, is gradually stabilizing. In the background of the platform's capital source, the basic plan has become more and more abundant, we choose to continue to expand or deepen the cooperation with key financial institutions. And these key cooperation partners will bring more social benefits to high-quality platform users. As of December 31, 2022, On the funding front, the overall supply of funding in the market remains sufficient during 2022, and the funding cost
spk05: has declined as well. As such, our credit costs are stabilizing while our business scale keeps expanding. Since we have already acquired relatively sufficient funding sources, we continue to expand and deepen our cooperation with key funding partners to effectively leverage them to fulfill the credit needs for high-quality borrowers on our platform. As of December 31, 2022, we have partnered with 53 financial institutions, and we were currently in discussion with another 62. Notably, the funding sources without regional limitations still contributed to the majority of our total loan origination volume in the fourth quarter.
spk24: In addition, we continue to develop the ability of self-sufficiency model through technical services to cooperate with financial institutions. Since the end of 2022, we have helped five financial institutions realize the digitalization of self-sufficiency business. We are in contact with two other financial institutions. At the same time, we are also in contact with six institutions to carry out economic planning and explore potential cooperation opportunities. Moreover, we are empowering our partner financial institutions through
spk05: Our technology enables services to develop their own self-operated business models. As of 2022, we have already empowered five financial institutions to digitize their own online business, and we are now interfacing with another two financial institutions while actively negotiating with six more institutions. to explore potential collaborations. As the COVID control measures ease towards the end of the year, we will be able to further expand our business and improve our efficiency in engaging with new funding partners or implementing new partnership models.
spk24: the risk level fluctuation on the market is relatively obvious for the entire industry. Our risk indicators have also been affected to a certain extent. However, as of December 31, 2022, we have seen that all risk indicators have returned to normal. The 61st and 90th dates continue to remain stable. This is because the specific applications of artificial intelligence technology in financial technology have helped us to quickly deal with In the future, we plan to continue to invest in the application of financial technology and artificial intelligence to further strengthen our risk management capabilities. Specifically, we will use voice recognition and language recognition, user identity recognition, asset quality control, and other artificial intelligence modules to improve our efficiency and risk management capabilities and optimize user experience.
spk05: In late 2022, the whole industry experienced significant risk volatility, which affected our risk metrics to a certain extent. However, I'm pleased to report that our risk profiles have already stabilized as our 61 to 90-day delinquency rate has remained stable as of December 31, 2022. The application of AI technology in FinTech has been instrumental in quickly addressing challenges posed by market volatility. Going forward, we plan to continue our investments in FinTech AI applications to further strengthen our risk management capabilities. Specifically, we will leverage voice and semantic recognition user identification as a quality control and anti-fraud AI modules to enhance our efficiency and risk management while improving users' experience. 除了促成個人消費貸款類業務以外,
spk24: We also continue to expand the number of services provided to small and medium-sized enterprises. As we all know, the COVID-19 pandemic has had a serious impact on global enterprises, especially small and medium-sized enterprises. The People's Bank of China and other government institutions have also proposed a series of policies to call on financial institutions to provide support to small and medium-sized enterprises that are facing difficulties in production and operation. The financial technology tools and business experience accumulated over the long term has given us the ability to work together with financial institutions and partners to serve small and medium-sized enterprises. In this context, we actively responded to the calls and expanded our special service plan to help small and medium-sized enterprises overcome financial difficulties. Throughout 2022, we have seen that the size and ratio of small and medium-sized enterprises' loan services is steadily growing. In the near future, we will continue to fully support these enterprise users
spk05: In addition to facilitating consumer loans for individuals, we also continue to expand the scale of our services for small and micro business owners. We all know that The COVID-19 pandemic has a severe impact on businesses around the world, particularly small and micro businesses. In response, the People's Bank of China and other government agencies issued a number of policies calling for financial institutions to increase support for small businesses facing difficulties in production and operations. Our extensive experience in FinTech services and business operations enabled us to collaborate with financial institution partners to better serve micro and small business owners. As such, we actively responded to this call and expanded our specialized loan program to help small business owners overcome financial hardships. Throughout 2022, we saw a steady increase in the scope and proportion of loan facilitation volume from small and micro business owners. Looking ahead, we remain fully committed to providing financial support and helping these businesses thrive in the face of challenges, ultimately creating value for our borrowers and the society.
spk24: In addition, our globalized business has also made good progress. In terms of the Indonesian market, we have continued to invest in this market for the past period of time. and plan to continue to pay attention to the development potential of the area. By increasing our lending and distribution capabilities, the Nilea market has also continued the business scale and revenue growth of the last quarter. In comparison, the revenue growth of Nilea is also significantly higher than last year. This is because we see that the business operation and risk management level of the family business has also been fully utilized and verified in international business. This will help the local business in different areas In the future, we will strive to develop innovative cooperation models and add product development and penetration to strengthen our overseas business profitability. By taking advantage of these regional business opportunities, our global business has shown that it can be a long-term, sustainable growth of the company.
spk05: Moreover, we also made excellent progress in our global expansion efforts. In Indonesia, we have continued our former investment and closely monitored the region's growth potential. In Nigeria, we have achieved significant business and revenue growth by boosting our loan origination capabilities in the local market. Our revenue growth in Nigeria was substantially faster in this quarter year over year. We are pleased to know that our successful business operations and risk management capabilities have been replicated and validated on a global scale, enabling us to mitigate potential uncertainties in any local markets as we expand internationally. Moving forward, we remain focused on enhancing the profitability of our overseas operations by developing innovative partnerships models and accelerating our product development and penetration in local markets. By tapping into diverse business opportunities in these regions, We expect our global operations to become a meaningful driver of sustainable growth for our company in the long term.
spk24: I am very happy to report to you the progress we have made in the field of corporate social responsibility. We have always been committed to the financial spectrum driven by technology. In August 2022, We published the company's first environment, social and company governance report. To integrate social responsibility into the company's business operation, we established a framework foundation. In September, we and the Shanghai Song Qilin Foundation launched a mental smile, young people's mental health care project. Co-operate with the family business education activities, provide materials and spirit to children in remote areas. In December, we and Yunnan local government cooperation to support the training of the whole county of Yongjia County for the development of psychological health. At the same time, we donated computer, books, school uniforms, and other learning and daily necessities to the Central High School of Xiu Tang in Guizhou Province to ensure that children with disabilities can obtain educational resources. We invite psychological experts to conduct psychological health training for all teachers in Xiu Tang. Last but not least, I'm glad to report on our recent strides in cooperate social responsibility.
spk05: our commitment to empowering others through technological-driven financial inclusion is at the core of our philosophy. In August 2022, we published our first environmental, social, and governance report, which set the tone for incorporating social responsibility into our business operations. Throughout 2022, we demonstrated our commitment to making a positive impact on society through various initiatives. In September, for example, we partnered with the Shanghai Song Qingling Foundation to launch the Let Children Smile Youth Mental Health Care Program. This program, in addition to our ongoing charity education campaign, aims to provide comprehensive support to underprivileged children, focusing on both their physical and mental well-being. Later in December, we collaborated with local governments in Yunnan Province to provide mental health care training to teachers and students. Furthermore, We donated school supplies to the central primary school in the town of Xiu Town in Guizhou Province, including computers, books, and school uniforms to ensure that left behind children have access to better educational resources. We also invited psychology experts to conduct mental health training for all teachers in Showtown, enabling them to better attend to our psychological needs of their students while fulfilling their educational duties. Our unwavering commitment to ESG principles underscored our pledge to make a positive impact on society and we look forward to continuing our efforts in this direction.
spk24: Looking back at the past year of 2022, we have achieved the expected growth by optimizing the management strategy of financial institutions, optimizing the risk management strategy, increasing technology capabilities, and promoting global business expansion. In the future, we will continue to pursue sustainable growth and increase high-quality profits. To conclude,
spk05: We achieved robust growth as we expected in 2022 as a result of our efforts in strengthening our partnership network, improving our risk management strategies, evaluating our technology capabilities, and expediting our global business expansion. Looking ahead, we remain resolute in our pursuit of sustainable growth and emerging expansion. As the regulatory environment stabilizes and the COVID pandemic becomes a thing of the past, we are confident that our proven strategies will continue to drive our success in the years to come. In line with this expectation, We are pleased to forecast that our loan facilitation volume for the full year of 2023 will be around RMB 70 billion, with RMB 19 billion from the first quarter of 2023.
spk24: Based on our strong growth expectations and sufficient cash reserves, Our board of directors has authorized and announced the company's first incentive policy since then. We expect to issue two incentives each year in cash under the condition of satisfying the fund. The annual share is 15% of the final profit of the last accounting year. Since then, the announcement of the policy once again tells us that
spk05: based on this strong operational outlook and our robust capital position our board of directors has authorized and declared our first ever dividend policy we expect to pay dividends twice a year in cash, subject to some conditions. The annual total dividend distribution shall be no less than 15% of our net income after tax in the previous fiscal year. This declaration underscores our commitment to creating value for our shareholders and our confidence in the long-term growth prospects of Giant Group. With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.
spk08: Thank you, Mr. Yan. And hello, everyone, for joining our call today. I will now review our financial highlights for this quarter. Please note that all numbers will be in RMB, and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yin mentioned, we delivered record growth in 2022, particularly in the fourth quarter. Our loan origination volume grew by 249.2% to $18.9 billion as we defined our partnership operations and improved our funding efficiency. Our net revenue was $1.1 billion, up 186.4%, driven by a 149.2% increase in our revenue from loan facilitation services Other revenue grew significantly to $154.7 million from $7.1 million in the same period last year, mainly driven by incremental revenues from individual investor referral services and post-facilitation services. Moving on to cost, origination and servicing expenses were $195.1 million, up 130.1%, in line with our loan origination volume growth. Allowance for uncredible receivables, contract assets, loans receivable, and others reduced by 12.2% to $15.1 million, compared to $17.2 million in the same period last year. Sales and marketing expenses increased by 138.4% to $374 million, mainly reflecting higher borrower acquisition expenses. As a percentage of net revenue, SM expenses decreased to 35.5% from 42.6% in the same period last year. G&A expenses were $59.3 million, up 26.7%, primarily driven by an increase in staff costs in the quarter. As a percentage of net revenue, G&E expenses reduced to 5.6% from 12.7% in the same period last year. R&D expenses were $64.4 million compared to $46.6 million in the same period last year. We recorded higher employee compensations and benefits as well as increased fees for professional services in the quarter. As we prudently managed our expenses and grew our revenues at a much faster pace, we were able to further expand our profit scale in the fourth quarter. Our net income for the fourth quarter increased to $533.7 million from $122.5 million in the same period last year. Our basic and diluted net income per share was RMB 2.49 compared to RMB 0.57 in the same period last year. Basic and diluted net income per ADF was RMB 9.97. We ended this quarter with $291 million in cash and cash equivalents, up from $217.5 million as of September 30, 2022. As of December 31st, 2022, we have repurchased approximately 1.5 million of our ADSs for US dollar 3.5 million and our US dollar 10 million share repurchase plan we announced in June 2022. Before I wrap up, I will briefly review our four-year financial highlights as well. In 2022, our loan volume grew by 153.4% to 55.5 billion, while net revenue increased by 83.7% to 3.3 billion. Net income grew by 152.3% to 1.2 billion, while net margin expanded to 36.1%. Net income per ordinary share and per ADS were RMB 5.48, and RMB 21.92, respectively. With that, we can open the call for questions. Ms. Xu, our chief risk officer and I will answer your questions. Operator, please proceed.
spk32: Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you prefer to ask your questions in Chinese, please repeat your question in English immediately after the convenience for everyone on the call. Please stand by while we compile the Q&A roster. We will take our first question. Our first question comes from the line of Lin Yao from Fufu Securities. Please go ahead, your line is open.
spk02: And I will do the translation for myself.
spk08: I'm Lin Yao from Hafu Securities. My first question is about your first-ever dividend policy. Since you are buying back shares and paying dividends, does that mean you don't need that much cash? Would you be better off investing the cash to expand your borrower base and funding partnership networks for stronger growth? Thanks. Okay, thank you, Hafu Securities. Let me answer this question. I will answer in Chinese, and then Xiao Yang will help me translate. The company is really, as we have mentioned in our material, our business is very stable. The performance of these companies has grown very fast. Business indicators and financial indicators have been continuously improved. Our new cash flow performance is also very good. Our financial statements are also getting stronger and stronger. As you can see, the company's share price has been increasing in the long term. We consider the growth potential of the company's performance and its strong profitability. The management thinks that the company's share price does not really reflect the company's internal value. Last June, the board of directors passed a return plan of US$10 million in stocks. Okay, this is Shawn Zhang from the Investor Relations, and I'll do the corresponding translations in English. So, thank you Lingyao.
spk05: for your question. And it is true that the company's current condition of operation is sound and stable. Probably you can see that our performance shows a very fast growth in these years. And our operational and financial indicators are significantly improved. And also, the company's operational cash flow is nice and solid. And our balance sheet is pretty strong. But at the same time, you can see that the PE ratio of our companies is still very low, which is below two times. So the management believes that the current price of our company's ADS failed to reflect our inherent value. Or you may say that we are actually undervalued. In June 2022, the board approved the 10 million repurchase plan, and in addition to that, our board just approved our dividend policy in order to further protect the interest of our investors.
spk08: OK.
spk05: So as you know, cash is the king nowadays. So the company will always consider the necessary cash reserves for our long-term development as our first priority. We made the $10 million repurchase plan and the dividend policy based on our precise cash flow measurements. The board and the management have fully considered in the cash required for the company's operation and strategic development. And there is way enough room left after that.
spk08: Director Yan just gave us the whole year's guidance of 700 billion. This also fully released a very clear signal. So Mr. Yen just gave out our yearly loan facilitation volume guidance of 2023 at a level of RMB 70 billion, which made it pretty clear that the company will keep
spk05: a sustainable growth in the long run, and the management is very confident to that. Thank you.
spk07: Okay, I don't know if I have answered this question.
spk08: Okay, thank you for your answer. I have a second question here. Just now, the CEO mentioned that the market demand is very strong throughout 2022. Do you think this trend will change in 2023? Again, I will do the translation myself. Thanks for your answer. Okay.
spk24: This is the new customer's customer investment. Every year, we have to grow according to an appropriate proportion. The main purpose is still based on budget management. And then, the new customer in the structure of the entire asset can effectively balance the overall asset value. Because the uncertainty of the new customer will be more than the old customer. uh uh uh We can look at our budget and target management more carefully. These goals are mainly based on our budget and the steady growth of our new customers. And it is based on our overall asset quality for the customer. Okay, I will do the translation for Mr. Yan. So Mr. Yan just give out two.
spk05: probably two reasons. So the first reason is that we will definitely keep investing the new borrower acquisition, but we do have a plan for that. We all know that the new borrowers, if you compare with the repeat borrowers, there are usually more uncertainties. We really need to avoid some risk of during this process. So the second reason will be that we didn't really meet the goal of 2023 probably based on our goal of 2022. And we can see that this is a goal made very carefully So the main reason is that we need to keep the asset quality at a very healthy level and to avoid probably some risk in it. So Mr. Yao, can you please provide the translation of your questions, please? Sorry about that.
spk27: Yeah, sure.
spk08: Yes, Joe. The translation for my question is, my second question is about the robust market demand throughout 2022 that the CEO just mentioned. Are you expecting that to change in 2023? Your outlook only reflects 26% loan facilitation volume growth in 2023 compared to your 153% loan facilitation volume growth in 2022. Why are you forecasting such a deceleration in the growth? Thanks.
spk30: Mr. Ling.
spk04: Thank you for the translation. Yeah.
spk30: Mr. Yang. This is Yifan Xu. I'm going to just add on a little bit on your question to the answers to your question in addition to what Mr. Yang has provided so far. On your first part of the questions, you asked about overall outlook. As just Mr. Yen has mentioned in his opening remarks, there were several factors pointing us towards we will remain positive and healthy expectation throughout 2023. These couple factors including on the regulatory front, we're seeing positive developments as well as the official endorsement towards the partnerships between internet platforms like us and financial institutions. While such improvements warrant financial institutions to pursue further interest or deepen their partnership with us, therefore to guarantee our healthy funding sources going into 2023 and forward. Similarly, on the consumer demand side, we are seeing the growth on the consumer loans on the nationwide, as well as the requests and funding resource supplies from the partners, from the institutions that we are already in partner with. In addition to that, you asked about adjusted percentage growth rate in 2023. But let's first go back looking at the absolute numbers, looking at these numbers in absolute terms. In 2021, overall transactions is around $22 billion. In 2022, this number we just reported is $55.5 billion. So with a little over $30 billion growth, primarily coming from China has been in this market for over 10 years. We have harvested low-hanging fruits in 2022 by focusing on our repeated borrowers. We focused on exploring and maximizing their borrowing needs and having their needs matched with competitive products offered through our platforms in partnership with our financial institutions. Going pretty much in the fourth quarter of 2022, we have changing gears into more of our organic growth. As you probably have noticed, in Q4 2022, our total transactions around $18 billion, and our outlook for Q1 2023 is slightly improved to $19 billion. So we are focusing on organic growth at this point. by introducing higher credit quality customers through more competitive acquisition channels and bundled with more competitive product offerings through these channels to these new customers in helping that to grow our overall customer portfolios as well as to deliver a healthy risk metrics. So with that, then you are looking at our growth in 23 outlook. It's going to be from $55 billion to $70 billion so far. But as you can also notice, that $70 billion is relatively conservative view. by in considering the seasonality change and in slightly uncertainties in the second half of 2023, regarding to the overall landscape in this industry, we are pretty confident in delivering such numbers, but we also have the flexibility adjusting upwards when the time we feel it's comfortable to do so. I will answer your question in Chinese. Your first question is, in 2023, do we still maintain confidence and strong demand for the market? As Mr. Yan said in the opening introduction, we think there are several factors that keep us confident in the development of the market in 2023. This is mainly due to the attitude of the management. In 2022, the development of the management will be more focused on supporting the cooperation of commercial banks and Internet platforms. The financial institutions that we cooperate with will have a stronger will to improve our cooperation. On the other hand, from the perspective of customer demand, the entire development of the economy in 2023 and the current demand for consumers, whether it is from the economic aspect of the whole Hongguan, or from the basic requirements of the financial cooperation institutions we have collaborated with, we have all seen such a need for growth. This is the first question. The second question is about the direction of growth, which is the percentage of growth in 2023. I think we still need to look at the actual figures. In 2021, our total turnover was about 2.2 billion yuan. In 2022, the total turnover will be 5.5 billion yuan. The growth of more than 3 billion is mainly due to the increase in price in the market over the past decade. The big part of this growth comes from the mining of value for our customers. For us, we can classify it as a low-hanging fruit. Q1 to Q2 and Q3 in 2022, we saw an increase in the rate of growth. Q4 in 2022 and Q1 in 2023, we saw an increase in the rate of growth, which is the organic growth. At this stage, we are focusing on how to use competitive products to introduce customers with better quality to ensure the stable development of our platform. At the same time, we do not make any sacrifices in terms of risk. I hope this answers your question.
spk05: Okay, so operator, I think we can move to the next participant who wants to ask a question.
spk31: Of course, thank you. One moment, please.
spk32: Your next question comes from the line of Sam Lee, who is an individual investor. Please go ahead. Your line is open.
spk06: I will translate for myself as well. Thank you for taking my question. My first question is that you have recorded a higher net margin in Q4 compared to some of your peers. Would you like to share some possible reasons for that? Thank you.
spk08: Okay, thank you for the question, Sam. Q4 is a very good quarter. Our profit margin has reached nearly 33%, right? Of course, in 2022, we will be around 36% in the whole year, right? This figure is indeed slightly higher than some of the companies that have revealed their full-year performance in 2022. We think the main reason may be the following points. First of all, I think it's a scale effect, right? Because our volume is relatively small, and then our transaction volume grows rapidly, which brings a very significant scale effect. Our performance has increased by 250% on the basis of 2021, right? And then the fixed cost of the company is relatively stable, right? Our management cost in 2022, compared to 2021, actually only increased by more than 17%, right? The total number of employees in the company The proportion of growth is also far lower than the growth of my performance. The efficiency of the people and the army has been significantly increased. Moreover, my capital cost is stable and has dropped. This is the first. The second is that our detailed operation has indeed brought about further efficiency improvement. Our division and control, the continuous improvement of technical capabilities, make our asset quality continue to improve. I will stop here.
spk05: So this is and I will do the translation in English. So thank you, Sam, for your question. So from the perspective of our performance in the financial indicators, Q4 is an excellent quarter with very nice profitability. And it is true that if you look into the margin, probably slightly higher than our peers. So in Q4, our operating margin reached nearly 33%. And for the full year of 2021, it is about 36.1%. And I think there will be two reasons for that. The first reason is that the scale effect generated by our rapid growth in the performance and the second reason is probably because our fixed cost is stable and our funding cost is stable and at the same time it is going down as well. At the same time, it is also a result of our refining our operation. So... 另外我想稍微解释一下 我们这个第四季度啊 这个净利润率的这么一个情况 因为第四季度呢 我们的净利润率这个你们也可以看到 也是这个比较偏高的 那么其实主要是一些非经常性的事项 带来的影响啊 那么最主要的呢 就是这个我们几个核心的运营主体啊 都在我们2022年Q4的时候
spk08: Okay, so the
spk05: net margin is slightly higher, it is true. So our net margin of Q4 reached more than 50%, which was higher than the operational margin, mainly because of the impact of some extraordinary reasons. For example, some of our core entities for our businesses just obtained the qualification of high-tech enterprises, which benefit us that our applicable income tax rate is now adjusted to 15%. And as you know that it is, which can be traced back to 2021.
spk08: And that will be one reason of that. In the future, we will further increase our take rate. So in the future, we will further cut down the take rate of our platform. And we will also increase our R&D investment
spk05: and to improve our efficiency and maintain the overall operational margin at a healthy level. Okay, I hope I was able to answer your question.
spk06: Thank you very much. Thank you for your answer. My second question is about the demand rate curve. I noticed that although the company's turnover is growing very fast, the company's control ability is still at a relatively good level in the industry. My second question is about the vintage curves. While the loan volume accelerated and grew significantly, you have managed to keep your risk performance at an industry-leading level. If your loan growth decelerates as you have forecasted, Can we expect your vintage rates to improve even further in 2023? Thank you.
spk30: This is Yifeng Xu. I'm going to take on your question. First, I will answer your question in English, then I will transfer myself in Chinese. So first of all, I will continue to focus on improving our risk metrics throughout 2023 and forward, just as a industry and as a company focusing on the in the lending business having a good control over our risk metrics and practice prudent risk management philosophy is intrinsic inside within our company's philosophy philosophy and policy however I will not connect the growth rate and the loss rate in the way you presented. So even though the growth rate has increased in 2023 from three-digit percentage growth rate to double-digit growth rate, we're still expecting a pretty significant growth from $55 billion to over $70 billion. As we continue to grow our platform by over $20 billion, almost $20 billion, throughout the course of 2023, our key focus of the risk factors are going to be primarily focusing on two firms. One's from the new customer acquisitions. So as we continue to practice constraints on number of new customers and the new online organizations as part of a portfolio in our total new organizations, we also want to focus on choosing the right acquisition channel mix and the product offerings. So both the decisions on acquisition channel mix and the product offerings are solely based on focus to improve our overall customer credit risk profiles. Going forward, as we have started probably over a year ago, we want to focus on improving our customers' credit risk profiles, and we'll continue to do so by choosing acquisition channels that gave us a broader and greater access to better customers. Similarly, in the product offerings, We are going to match the product specifically to the loan interest rates from our financial institution partners with lower interest rates products to our new customers in order to attract the right customer segments to our platforms. So that's on our new customer acquisition side, how we are going to continue to drive over $20 billion overall growth and still continue to improve upon our vintage rates. So now on repeated customer borrowers, our focus will be enhancing the customer level risk modeling and decision, you know, in addition to what you see that typical on the loan level risk decision models and the decision frameworks. So that allows us to really focus on the high value customers, making sure that we are extending our credits to them without overextending, overexpanding their risk appetite. So in addition to the modeling focus, we will be also exploring external third-party data, along with our internal customer behavioral data. And through focusing such data mining on more complex, complicated, the customer level data will allow us to improve upon all the models over the entire life cycles of the customers. So next, I'm going to just say my answers in Chinese. First of all, I would like to answer this question. In 2023, we will focus on the overall level of our project as a financial integration platform. This problem will not change because of the growth and speed of the platform. There is no special connection between the two. uh uh to ensure the health of our risk indicators. As a risk management organization, we will mainly make the following choices in two directions. The first is from the introduction of new customers. Since two years ago, we have been focusing on how to improve the risk level of our entire client's credit system. The choice of channels for our new customers and our products for new customers are all based on the new customers' focus on bringing better new customers. from the perspective of better quality customers. It won't be simply based on cost and quantity. By focusing on prices that may be higher, but from the quality of the customers and the quantity of the customers, it will be a broader channel. We will also focus on uh uh uh uh The quality of our customers' overall performance on our platform and the quality of their application is not too high. This is something that we are very concerned about. On the other hand, in terms of data, we will work with the three platforms to do some data digging and to work with our customers Thank you. No more questions from you.
spk32: Thank you. We've reached the end of the call. I will return the call back to Sean for closing remarks. Please go ahead.
spk05: Thank you, operator, and thank you all for participating on today's call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.
spk32: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you. Thank you. Thank you. Thank you. good day ladies and gentlemen thank you for standing by and welcome to the giant group's fourth quarter 2022 earnings conference call currently all participants are in a listen only mode later we will conduct a question and answer session and instructions will follow at that time as a reminder we are recording today's call if you have any objections you may disconnect at this time I would now turn the call over to Mr. Shawn Tsang from Investor Relations of Giant Group. Please proceed.
spk05: Good day, everyone. Thank you all for joining us on today's conference call to discuss Giant Group's financial results for the fourth quarter and full year of 2022. We released the results earlier today. The press release is available on the company's website as well as from NewsWare Services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. For the information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese . With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan. Hello, everyone.
spk24: Thank you for joining our fourth quarter 2022 earnings conference call. Then, in December, there was a complete change in the anti-corruption policy. Looking back at the past three years, we have experienced the global political change due to the COVID-19 pandemic, and the resumption of China's financial technology industry and the escalation of geopolitical conflicts, further suppressing the global economy. However, we are glad to see that despite the constant increase in the global economic fluctuation and uncertainty around the world, We have not been seriously affected by the overall implementation of our company's strategy. In 2022, we will continue to focus on improving the core capabilities of company technology innovation and risk management. At the same time, we will continue to improve the efficiency of precision operation and innovation capabilities, and use this to better meet the market demand for continuous change. Jiaying's firm implementation of strategic goals has brought the expected growth throughout 2022.
spk05: 2022 has proven to be both challenging and opportunistic for our company. During the year, we faced the strictest quarantine lockdowns in China, followed by the lifting of almost all COVID restrictions in December. Looking back on the last three years now, we witnessed the COVID outbreaks that disrupted businesses worldwide, policy changes that reshaped China's fintech industry, and escalating geopolitical conflicts that further pressed the global economy. If by these macroeconomic disruptions and increasing uncertainties worldwide, we are proud to report that our execution of our growth strategy remains steadfast. Throughout 2022, we maintained our focus on strengthening our core competencies of technology innovation and risk management. We also improved our innovation capabilities and efficiency in refining our operations to better meet the involving market demands. As a result of our solid execution, we delivered growth in line with our expectations and rewarded our shareholders' long-term support with a strong and satisfactory performance in 2022.
spk24: Our primary task is to ensure that the business is developed and meet the requirements of supervision. We have also cooperated with the supervision department and financial institutions as usual to achieve this goal. In the face of the relevant requirements of the Chinese People's Bank on the year-end policy, we have already made comprehensive preparations. We are confident that we can work together with financial institutions to complete the system exchange. In addition, we have also seen Many positive policy signals are supporting the further positive and healthy development of Chinese Internet platform companies. To put it bluntly, the commercial bank Internet loan management strategy issued by the Financial Security Commission has been approved and standardized in the form of a bank and Internet platform cooperation loan model. In addition, the supervision department has recently announced that the modification of the main Internet platform company is basically over. As we expand, our top priority remains ensuring full compliance with regulatory requirements, and we are actively collaborating with
spk05: policymakers and partner institutions towards that goal. In response to the PBOC's directive to stop direct data connections between Internet platforms and financial institutions, we have made significant progress and preparation. We are confident that we can work with our partner financial institutions to complete the system switch over within the required timeframe. And currently, we are also seeing positive regulatory development underway to support the healthy growth of China's internet platform companies. For example, the CBIRC's interim measures for the management of commercial bank internet loan have officially endorsed and regulated partnerships between banks and internet platforms like ours, providing a solid foundation for our operations. Additionally, regulatory authorities recently announced that rectification among major internet platform companies is mostly completed and PBOC's Financial Market Department has also pledged to promote healthy development of the platform economy. Overall, we believe that these regulatory developments indicate that China's policy regulation of Internet platforms is moving towards a period of normalization. 本体看来,
spk24: In 2022, the demand for consumerism in China is very high. On the one hand, the 14-5 proposed by 19 government institutions to promote the development of small and medium-sized enterprises, and the China People's Bank of China's joint proposal to strengthen the funding of new citizens' financial services has further promoted the development of financial technology products and services for individuals and small and medium-sized enterprises. On the other hand, The financial institutions and partners we serve can also use more abundant funds to support the needs of the service. According to the statistics of the People's Bank of China, at the end of 2022, the loan amount of RMB of the financial institutions increased by 11.1 percent. The total annual loan amount of RMB increased by 21.31 trillion yuan, which increased by 1.36 trillion yuan. In the context of the 200,000 yuan supply, We did not blindly pursue continuous expansion of business size, but chose to use this opportunity to further improve the structural improvement of the lending population served by the platform. In terms of asset management, our customer capacity has achieved a simultaneous increase in quantity and value. The number of new lending users per year is about 1.53 million, and the growth rate is about 52.4%. In 2022, the Chinese market experienced a strong demand for consumer credit, driven by several factors.
spk05: Firstly, the insurance of the 14th five-year plan for promoting the development of small and medium-sized enterprises by 19 government agencies, and the joint release of the notice on strengthening financial services for new urban residents by CBIRC and PBOC. have spurred the growth of FinTech products and services for both individual and SMEs. Secondly, our financial institution partners have been able to provide abundant funding to meet the demand for loan facilitation services. In fact, PBOC reported and an 11.1% year-over-year increase in the balance of RMB loans by financial institutions in 2022, and the full-year RMB loan volume increase by 21.31 trillion, representing an additional 1.36 trillion increase from 2021. However, rather than bluntly Expanding our business scale, we choose to take this opportunity to improve the structure of our borrower base on our platform. In terms of borrower operations, we focus on enhancing the quality and scale of our borrower acquisition capabilities, adding approximately 1.53 million new borrowers throughout the year. a 52.4% increase from the previous year. We also increased the proportion of loans by borrowers with a credit score of 60 or above from 68% to 88% in 2022. Additionally, we concentrated on exploring borrower lifetime value and refining our operations. For high-quality new borrowers, we matched them with funding sources offering lower interest rates, promoting a year-over-year increase of 22.1% in the average borrowing amount. The average ratio of repeat borrowers for the four quarters in 2022 remained stable at about 67%. And the average borrowing amount reached about RMB 9,737, a 71.4% increase from the previous year. These points show that we hope to better meet the needs of platform users by using funds and resources.
spk24: This means that in the context of the general face of risk level fluctuations in the industry, we have chosen to further improve the detailed classification of assets to respond to existing and possible challenges in the future. With the expansion of the business scale, our user group composition also presents healthy and sustainable characteristics overall. By 2023, we will continue to strengthen our asset segmentation and such initiatives reflect our expertise in precisely and effectively leveraging our funding sources to better meet the financing needs of borrowers on our platform.
spk05: This expertise is particularly valuable during industry-wide fluctuations in risk levels. To prepare for current and future risk challenges, we have refined our borrower segmentation. As our business has scaled, our borrower base has consistently demonstrated healthy and sustainable characteristics. Moving forward into 2023, we will continue to refine our borrower segmentation and adjust our borrower acquisition strategies based on market conditions. In the long term, we anticipate that new borrowers will make up 20% to 30% of our borrower base, allowing us to maintain stability and sustainability.
spk24: At that time, a lot of efforts were made to provide a solid foundation for the growth expected in 2022, especially in the field of precision operation. It has brought us a continuous improvement in capital allocation efficiency and revenue size. In 2022, the total amount of borrowings, revenue and net profit per year increased by about 153% to 84%, As a result of these efforts, we established a solid foundation to achieve expected growth in 2022. In particular,
spk05: Our efforts in fine-tuning our operations have resulted in increased efficiency in funding allocation and consistent improvements in our revenue scale. In 2022, our loan origination volume, net revenue, and net income increased by approximately 153% 84% and 152% respectively. During the year, this exceptional growth demonstrated our solid progress in expanding funding sources, improving asset quality, enhancing risk management capabilities, and refining our operations. 在资金段,2022年市场供应总体上保持充足,
spk24: The capital costs have also dropped, and our real-estate costs, with the change in business size, have also gradually stabilized. In the background of the platform's capital source, the basic plan has become more and more abundant, we choose to continue to expand or deepen the cooperation with key financial institution partners, and these key cooperation partners will bring more social benefits to high-quality platform users. As of December 31, 2022, On the funding front, the overall supply of funding in the market remains sufficient during 2022, and the funding cost
spk05: has declined as well. As such, our credit costs are stabilizing while our business scale keeps expanding. Since we have already acquired relatively sufficient funding sources, we continue to expand and deepen our cooperation with key funding partners to effectively leverage them to fulfill the credit needs for high-quality borrowers on our platform. As of December 31, 2022, we have partnered with 53 financial institutions, and we were currently in discussion with another 62. Notably, the funding sources without regional limitations still contributed to the majority of our total loan origination volume in the fourth quarter.
spk24: In addition, we continue to develop the ability of self-sufficiency model through technical services to cooperate with financial institutions. Since the end of 2022, we have helped five financial institutions realize the digitalization of self-sufficiency business. We are in contact with two other financial institutions. At the same time, we are also actively negotiating with six institutions to explore potential cooperation opportunities. Moreover, we are empowering our partner financial institutions through
spk05: Our technology enables services to develop their own self-operated business models. As of 2022, we have already empowered five financial institutions to digitize their own online business, and we are now interfacing with another two financial institutions while actively negotiating with six more institutions. to explore potential collaborations. As the COVID control measures ease towards the end of the year, we will be able to further expand our business and improve our efficiency in engaging with new funding partners or implementing new partnership models.
spk24: At least the risk level fluctuation is relatively obvious for the entire industry. Our risk indicators have also been affected to a certain extent. However, as of December 31, 2022, we have seen that all risk indicators have returned to normal. The 61st and 90th dates continue to remain stable. This is because the specific applications of artificial intelligence technology in financial technology have helped us to quickly deal with In the future, we plan to continue to invest in the application of financial technology and artificial intelligence to further strengthen our risk management capabilities. Specifically, we will take advantage of voice recognition and language recognition, user identity recognition, asset quality control, and anti-fraud artificial intelligence modules to improve our efficiency and risk management capabilities and optimize user experience.
spk05: In late 2022, the whole industry experienced significant risk volatility, which affected our risk metrics to a certain extent. However, I'm pleased to report that our risk profiles have already stabilized as our 61 to 90-day delinquency rate has remained stable as of December 31st, 2022. The application of AI technology in FinTech has been instrumental in quickly addressing challenges posed by market volatility. Going forward, we plan to continue our investments in FinTech AI applications to further strengthen our risk management capabilities. Specifically, we will leverage voice and semantic recognition user identification as a quality control and anti-fraud AI modules to enhance our efficiency and risk management while improving users' experience. 除了促成個人消費貸款類業務以外,
spk24: We also continue to expand the size of services provided to small and medium-sized enterprises. As we all know, the COVID-19 pandemic has had a serious impact on global enterprises, especially small and medium-sized enterprises. The People's Bank of China and other government institutions have also proposed a series of policies to call on financial institutions to provide support to small and medium-sized enterprises that are facing difficulties in production and operation. Since long-term financial technology tools and business experience have been accumulated, has given us the ability to work together with financial institutions and partners to serve small and medium-sized enterprises. Under this background, we actively responded to the calls and expanded our specialized service plan to help small and medium-sized enterprises overcome financial difficulties. Throughout 2022, we have seen that the loan service size and ratio of small and medium-sized enterprises is growing steadily. In the near future, we will continue to fully support these enterprises and users
spk05: In addition to facilitating consumer loans for individuals, we also continue to expand the scale of our services for small and micro business owners. We all know that The COVID-19 pandemic has a severe impact on businesses around the world, particularly small and micro businesses. In response, the People's Bank of China and other government agencies issued a number of policies calling for financial institutions to increase support for small businesses facing difficulties in production and operations. Our extensive experience in FinTech services and business operations enabled us to collaborate with financial institution partners to better serve micro and small business owners. As such, we actively responded to this call and expanded our specialized loan program to help small business owners overcome financial hardships. Throughout 2022, we saw a steady increase in the scope and proportion of loan facilitation volume from small and micro business owners. Looking ahead, We remain fully committed to providing financial support and helping these businesses thrive in the face of challenges, ultimately creating value for our borrowers and the society.
spk24: In addition, our globalized business has also made good progress. In terms of the Indonesian market, we have continued to invest in this market for the past period of time. and plan to continue to pay attention to the development potential of the area. By increasing our lending and distribution capabilities, the Nilea market has also continued the business scale and revenue growth of the last quarter. In comparison, the revenue growth of Nilea is also higher than that of last year. What we are concerned about is that we see that the business operation and risk management level of the family business has also been fully utilized and verified in domestic business. This will lead to the development of the local uncertainty Our global business has shown that it can be a long-term, sustainable, and important driving force for the company.
spk05: Moreover, we also made excellent progress in our global expansion efforts. In Indonesia, we have continued our former investment and closely monitored the region's growth potential. In Nigeria, we have achieved significant business and revenue growth by boosting our loan origination capabilities in the local market. Our revenue growth in Nigeria was substantially faster in this quarter year over year. We are pleased to know that our successful business operations and risk management capabilities have been replicated and validated on a global scale, enabling us to mitigate potential uncertainties in any local markets as we expand internationally. Moving forward, we remain focused on enhancing the profitability of our overseas operations by developing innovative partnerships models and accelerating our product development and penetration in local markets. By tapping into diverse business opportunities in these regions, We expect our global operations to become a meaningful driver of sustainable growth for our company in the long term.
spk24: I am very happy to report to you the progress we have made in the field of corporate social responsibility. We have always been committed to the financial spectrum driven by technology. In August 2022, We published the company's first environment, social and company governance report. In order to integrate social responsibility into the company's business operations, we established a framework foundation. In September, we and the Shanghai Song Qilin Foundation launched the Mental Smile Youth Mental Health Care Project, which cooperated with Jiayin Technology for learning activities. In December, we and Yunnan and local government cooperation for the training of the whole county of Yongjia County to develop psychological health. At the same time, we donated computer, books, school uniforms, and other learning and daily necessities to the central elementary school in Xiu Tang, Guizhou Province, to ensure that children with disabilities can obtain educational resources. We invite psychological experts to develop psychological health training for all teachers in Xiu Tang, Last but not least, I'm glad to report on our recent strides in cooperate social responsibility.
spk05: our commitment to empowering others through technological driven financial inclusion is at the core of our philosophy. In August 2022, we published our first environmental, social, and governance report, which set the tone for incorporating social responsibility into our business operations. Throughout 2022, we demonstrated our commitment to making a positive impact on society through various initiatives. In September, for example, we partnered with the Shanghai Song Qingling Foundation to launch the Let Children Smile Youth Mental Health Care Program. This program, in addition to our ongoing charity education campaign, aims to provide comprehensive support to underprivileged children, focusing on both their physical and mental well-being. Later in December, we collaborated with local governments in Yunnan Province to provide mental health care training to teachers and students. Furthermore, We donated school supplies to the central primary school in the town of Xiu Town in Guizhou Province, including computers, books, and school uniforms to ensure that left behind children have access to better educational resources. We also invited psychology experts to conduct mental health training for all teachers in Showtown, enabling them to better attend to our psychological needs of their students while fulfilling their educational duties. Our unwavering commitment to ESG principles underscored our pledge to make a positive impact on society and we look forward to continuing our efforts in this direction.
spk24: Looking back at the past year of 2022, we have achieved the expected growth by enhancing the management strategy of financial institutions, optimizing risk management, increasing technology capabilities, and promoting global business expansion. In the future, we will continue to pursue sustainable growth and increase high-quality profits. To conclude,
spk05: We achieved robust growth as we expected in 2022 as a result of our efforts in strengthening our partnership network, improving our risk management strategies, evaluating our technology capabilities, and expediting our global business expansion. Looking ahead, we remain resolute in our pursuit of sustainable growth and emerging expansion. As the regulatory environment stabilizes and the COVID pandemic becomes a thing of the past, we are confident that our proven strategies will continue to drive our success in the years to come. In line with this expectation, we are pleased to forecast that our loan facilitation volume for the full year of 2023 will be around RMB 70 billion with RMB 19 billion from the first quarter of 2023.
spk24: We intend to issue two incentives in cash each year under the condition that we will be able to meet the price of the fund. Each year, we will distribute 15% of the net profit of the last accounting year. Since the announcement of the policy, it has told us again that we insist on creating a value commitment as shareholders.
spk05: Based on this strong operational outlook and our robust capital position, our board of directors has authorized and declared our first-ever dividend policy. We expect to pay dividends twice a year in cash, subject to some conditions. The annual total dividend distribution shall be no less than 15% of our net income after tax in the previous fiscal year. These declaration underscores our commitment to creating value for our shareholders and our confidence in the long-term growth prospects of Giant Group. With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.
spk08: Thank you, Mr. Yan. And hello, everyone, for joining our call today. I will now review our financial highlights for this quarter. Please note that all numbers will be in RMB, and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yang mentioned, we delivered record growth in 2022, particularly in the fourth quarter. Our loan origination volume grew by 249.2% to $18.9 billion. as we defined our partnership operations and improved our funding efficiency. Our net revenue was $1.1 billion, up 186.4%, driven by a 149.2% increase in our revenue from loan facilitation services. Other revenue grew significantly to $154.7 million, from $7.1 million in the same period last year, mainly driven by incremental revenues from individual investor referral services and post-facilitation services. Moving on to cost, origination and servicing expenses were $195.1 million, up 130.1%, in line with our loan origination volume growth. Allowance for uncredible receivables, contract assets, loan receivables, and others reduced by 12.2% to $15.1 million compared to $17.2 million in the same period last year. Sales and marketing expenses increased by 138.4% to $374 million. mainly reflecting higher borrower acquisition expenses. As a percentage of net revenue, SM expenses decreased to 35.5% from 42.6% in the same period last year. G&A expenses were 59.3 million, up 26.7%, primarily driven by an increase in staff costs in the quarter. As a percentage of net revenue, G&E expenses reduced to 5.6% from 12.7% in the same period last year. R&D expenses were 64.4 million, compared to 46.6 million in the same period last year. We recorded higher employee compensations and benefits, as well as increased fees for professional services in the quarter. As we prudently managed our expenses, and grew our revenues at a much faster pace. We were able to further expand our profit scale in the fourth quarter. Our net income for the fourth quarter increased to $533.7 million from $122.5 million in the same period last year. Our basic and diluted net income per share was RMB 2.49 compared to RMB 0.57 in the same period last year. Basic and diluted net income per ADF was RMB 9.97. We ended this quarter with 291 million in cash and cash equivalents, up from 217.5 million as of September 30, 2022. As of December 31, 2022, We have repurchased approximately 1.5 million of our ADSs for U.S. dollar 3.5 million and our U.S. dollar 10 million share repurchase plan we announced in June 2022. Before I wrap up, I will briefly review our four-year financial highlights as well. In 2022, our loan volume grew by 153.4%. to 55.5 billion, while net revenue increased by 83.7% to 3.3 billion. Net income grew by 152.3% to 1.2 billion, while net margin expanded to 36.1%. Net income per ordinary share and per ADS were RMB 5.48, and RMB 21.92, respectively. With that, we can open the call for questions. Ms. Xu, our chief risk officer and I will answer your questions. Operator, please proceed.
spk32: Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you prefer to ask your questions in Chinese, please repeat your question in English immediately after the convenience for everyone on the call. Please stand by while we compile the Q&A roster. We will take our first question. Our first question comes from the line of Lin Yao from Fufu Securities. Please go ahead. Your line is open.
spk02: And I will do the translation for myself.
spk08: I'm Lin Yao from Hafu Securities. My first question is about your first ever dividend policy. Since you are buying back shares and paying dividends, does that mean you don't need that much cash? Would you be better off investing the cash to expand your borrower base and funding partnership networks for stronger growth? Thanks. Thank you, Hafu Securities. I will answer this question. I will answer in Chinese, and then Xiao Yang will help me translate. The company is really, as we mentioned in our material, our business is very stable, and the performance of these companies is growing very fast. Business indicators and financial indicators have been continuously improved, and our new cash flow performance is also very good. Our self-employed representatives are also getting stronger and stronger. As you can see, the company's stock price has been in the price range of 1x or 1x more for a long period of time. Considering the growth potential of the company's performance and its strong profitability, the management believes that the company's stock price can no longer truly reflect the company's internal value. Last June, the board of directors passed a return plan of US$10 million in stocks. Okay, this is Shawn Zhang from the Investor Relations, and I'll do the corresponding translations in English. So, thank you, Ling Yao.
spk05: for your question. And it is true that the company's current condition of operation is sound and stable. Probably you can see that our performance shows a very fast growth in these years. And our operational and financial indicators are significantly improved. And also, the company's operational cash flow is nice and solid. And our balance sheet is pretty strong. But at the same time, you can see that the PE ratio of our companies is still very low, which is below two times. So the management believes that the current price of our company's ADS failed to reflect our inherent value. Or you may say that we are actually undervalued. In June 2022, the board approved the 10 million repurchase plan, and in addition to that, our board just approved our dividend policy in order to further protect the interest of our investors.
spk08: OK.
spk05: So as you know that cash is the king nowadays. So the company will always consider the necessary cash reserves for our long-term development as our first priority. We made the 10 million US dollars repurchase plan and the dividend policy based on our precise cash flow measurements. the board and the management have fully considered in the cash required for the company's operation and strategic development. And there is way enough room left after that.
spk08: President Yan just gave us the whole year's guidance, 700 billion transactions. This also fully released a very clear signal, which is that So Mr. Yen just gave out our yearly loan facilitation volume guidance of 2023 at a level of RMB 70 billion, which made it pretty clear that the company will keep
spk05: a sustainable growth in the long run, and the management is very confident to that. Thank you.
spk07: Okay, I don't know if I have answered this question.
spk08: Okay, thank you for your answer. I have a second question here. Just now, the CEO mentioned that the market demand is very strong throughout 2022. Do you think this trend will change in 2023? Again, I will do the translation myself. Thanks for your answer. Okay.
spk24: This is the new customer's customer input. Every year, we have to grow according to an appropriate proportion. The main purpose is still based on budget management. And then, the new customer in the structure of the entire asset can effectively balance the overall asset value. Because the uncertainty of the new customer will be more than the old customer. uh uh uh We can look at our budget and target management more carefully. These goals are mainly based on our budget and the steady growth of our customers and the overall asset quality of our customers. Okay, I will do the translation for Mr. Yan. So Mr. Yan just give out two.
spk05: probably two reasons. So the first reason is that we will definitely keep investing the new borrower acquisition, but we do have a plan for that. We all know that the new borrowers, if you compare with the repeat borrowers, there are usually more uncertainties. We really need to avoid some risk of during this process. So the second reason will be that we didn't really meet the goal of 2023 probably based on our goal of 2022. And we can see that this is a goal made very carefully So the main reason is that we need to keep the asset quality at a very healthy level and to avoid probably some risk in it. So Mr. Yao, can you please provide the translation of your questions, please? Sorry about that.
spk27: Yeah, sure.
spk08: Yes, Joe. The translation for my question is, my second question is about the robust market demand throughout 2022 that the CEO just mentioned. Are you expecting that to change in 2023? Your outlook only reflects 26% loan facilitation volume growth in 2023 compared to your 153% loan facilitation volume growth in 2022. Why are you forecasting such a deceleration in the growth? Thanks.
spk30: Mr. Ling.
spk04: Thank you for the translation. Yeah.
spk30: Mr. Yang. This is Yifan Xu. I'm going to just add on a little bit on your question to the answers to your question in addition to what Mr. Yang has provided so far. On your first part of the questions, you asked about overall outlook. As just Mr. Yen has mentioned in his opening remarks, there were several factors pointing us towards we will remain positive and healthy expectation throughout 2023. These couple factors including on the regulatory front, we're seeing positive developments as well as the official endorsement towards the partnerships between internet platforms like us and financial institutions. While such improvements warrant financial institutions to pursue further interest or deepen their partnership with us, therefore to guarantee our healthy funding sources going into 2023 and forward. Similarly, on the consumer demand side, we are seeing the growth on the consumer loans on the nationwide, as well as the requests and funding resource supplies from the partners, from the institutions that we are already in partner with. In addition to that, you asked about adjusted percentage growth rate in 2023. But let's first go back looking at the absolute numbers, looking at these numbers in absolute terms. In 2021, overall transactions is around $22 billion. In 2022, this number we just reported is $55.5 billion. So with a little over $30 billion growth, primarily coming from China has been in this market for over 10 years. We have harvested low-hanging fruits in 2022 by focusing on our repeated borrowers. We focused on exploring and maximizing their borrowing needs and having their needs to match with competitive products offered through our platforms in partnership with our financial institutions. Going pretty much in the fourth quarter of 2022, we have changing gears into more of an organic growth. As you probably have noticed, in Q4 2022, our total transactions around $18 billion, and our outlook for Q1 2023 is slightly improved to $19 billion. So we are focusing on organic growth at this point. by introducing higher quality, credit quality customers through more competitive acquisition channels and bundled with more competitive product offerings through these channels to these new customers in helping that to grow our overall customer portfolios as well as to deliver a healthy risk metrics. So with that, then you are looking at our growth in 23 outlook. It's going to be from $55 billion to $70 billion so far. But as you can also notice, that $70 billion is relative to conservative view. by in considering the seasonality change and in slightly uncertainties in the second half of 2023, regarding to the overall landscape in this industry, we are pretty confident in delivering such numbers, but we also have the flexibility of adjusting upwards when the time we feel it's comfortable to do so. I will answer your question in Chinese. The first question you asked is, in 2023, do we still maintain confidence and strong demand for the market? As Mr. Yan said in the opening introduction, we think there are several factors that allow us to maintain strong confidence in the development of the market in 2023. This is mainly due to the attitude of our management. In 2022, the development of the management will be more focused on supporting the cooperation of commercial banks and Internet platforms. The financial institutions that we cooperate with will have a stronger will to improve our cooperation. On the other hand, from the perspective of customer demand, the entire development of the economy in 2023 and the current demand for consumers, whether it is from the economic aspect of the whole Hongguan, or from the requirements of the financial cooperation institutions we have cooperated with, we have all seen a need for such growth. This is the first question. The second question is about the direction of growth, which is the percentage of growth in 2023. I think we still need to look at the actual figures. In 2021, our total turnover was about 2.2 billion yuan. In 2022, the total turnover will be 5.5 billion yuan. The growth of more than 3 billion is mainly due to the fact that Ziaoyin has been growing in the market for more than 10 years. Most of this growth comes from the mining of value for our customers. For us, we can classify it as a low-hanging fruit. In Q1 to Q2 and Q3 of 2022, the growth rate has increased. In Q4 of 2022 and Q1 of 2023, the growth rate has increased. At this stage, we are mainly focusing on how to use competitive products to introduce customers with better quality to ensure the stable development of our platform. At the same time, we will not make any sacrifices in terms of risk. Hope this answer your question. Thank you.
spk05: Okay, so operator, I think we can move to the next participant who wants to ask a question.
spk31: Of course, thank you. One moment, please.
spk32: Your next question comes from the line of Sam Lee, who is an individual investor. Please go ahead. Your line is open.
spk06: I will translate for myself as well. Thank you for taking my question. My first question is that you have recorded a higher net margin in Q4 compared to some of your peers. Would you like to share some possible reasons for that? Thank you.
spk08: Thank you for your question, Sam. Q4 is a very good quarter. Our profit margin has reached nearly 33%. Of course, in 2022, we will be around 36% in the whole year. This figure is indeed slightly higher than some of the companies that have revealed their full-year performance in 2022. The main reason is probably because of the following points. First of all, I think it's a scale effect, right? Because our volume is relatively small, and then our transaction volume grows rapidly, which brings a very significant scale effect. Our performance has increased by 250% on the basis of 2021, right? And then the fixed cost of the company is relatively stable, right? Our management cost in 2022, you see, compared to 2021, it actually only increased by more than 17%, right? The total number of employees in the company The proportion of growth is also far lower than the growth of my performance, and the efficiency of the military has been significantly increased. In addition, my capital cost has also been steadily decreasing. This is the first. The second is that our sophisticated operation has indeed brought about further efficiency improvement. Our division and control, the continuous improvement of technical capabilities, make our asset quality continue to improve. I will stop here.
spk05: So this is and I will do the translation in English. So thank you, Sam, for your question. So from the perspective of our performance in the financial indicators, Q4 is an excellent quarter with very nice profitability. And it is true that if you look into the margin, probably slightly higher than our peers. So in Q4, our operating margin reached nearly 33%. And for the full year of 2021, it is about 36.1%. And I think there will be two reasons for that. The first reason is that the scale effect generated by our rapid growth in the performance and the second reason is probably because our fixed cost is stable and our funding cost is stable and at the same time it is going down as well. At the same time it is also a result of our refining our operation. So... 另外我想稍微解释一下 我们这个第四季度啊 这个净利润率的这么一个情况 因为第四季度呢 我们的净利润率这个你们也可以看到 也是这个比较偏高的 那么其实主要是一些非经常性的事项 带来的影响啊 那么最主要的呢 就是这个我们几个核心的运营主体啊 都在我们2022年Q4的时候
spk08: Okay, so the
spk05: net margin is slightly higher, it is true. So our net margin of Q4 reached more than 50%, which was higher than the operational margin, mainly because of the impact of some extraordinary reasons. For example, some of our core entities for our businesses just obtained the qualification of high-tech enterprises, which benefit us that our applicable income tax rate is now adjusted to 15%. And as you know that it is, which can be traced back to 2021.
spk08: And that will be one reason of that. In the future, we will further increase our tax rate. So in the future, we will further cut down the take rate of our platform. And we will also increase our R&D investment
spk05: and to improve our efficiency and maintain the overall operational margin at a healthy level. I hope I was able to answer your question.
spk06: Thank you very much. Thank you for your answer. My second question is about the demand rate curve. I noticed that although the company's turnover has increased rapidly, the company's control capability is still at a relatively good level in the industry. My second question is about the vintage curves. While the loan volume accelerated and grew significantly, you have managed to keep your risk performance at an industry-leading level. If your loan growth decelerates as you have forecasted, Can we expect your vintage rates to improve even further in 2023? Thank you.
spk30: This is Yifeng Xu. I'm going to take on your question. First, I will answer your question in English, then I will transfer myself in Chinese. So, first of all, I will continue to focus on improving our risk metrics throughout 2023 and forward, just as a industry and as a company focusing on the in the lending business having a good control over our risk metrics and practice prudent risk management philosophy is intrinsic inside within our company's philosophy philosophy and policy however I will not connect the growth rate and the loss rate in the way you presented. So even though the growth rate has increased in 2023 from three-digit percentage growth rate to double-digit growth rate, we're still expecting a pretty significant growth from $55 billion to over $70 billion. As we continue to grow our platform by over $20 billion, almost $20 billion, throughout the course of 2023, our key focus of the risk factors are going to be primarily focusing on two firms. One's from the new customer acquisitions. So as we continue to practice constraints on number of new customers and the new online organizations as part of a portfolio in our total new organizations, we also want to focus on choosing the right acquisition channel mix and the product offerings. So both the decisions on acquisition channel mix and the product offerings are solely based on focus to improve our overall customer credit risk profiles. Going forward, as we have started probably over a year ago, we want to focus on improving our customers' credit risk profiles, and we'll continue to do so by choosing acquisition channels that gave us a broader and greater access to better customers. Similarly, in the product offerings, We are going to match the product in terms specifically to the loan interest rates from our institution financial institution partners with a higher lower interest rates products to our new customers in order to attract the right customer segments to our platforms. So that's on our new customer acquisition side how we are going to continue to drive over 20 billion overall growth and still continue to improve upon our vintage rates. So now on our repeated customer borrowers, our focus now will be enhancing the customer level risk modeling and decision, you know, in addition to what you see the typical on the loan level risk decision models and the decision frameworks. So that allows us to really focus on the high-value customers, making sure that we are extending our credits to them without overextending their risk appetite. So in addition to the modeling focus, we will be also exploring external third-party data, along with our internal customer behavioral data. And through focusing such data mining on more complex, complicated, the customer-level data will allow us to improve upon all the models over the entire life cycles of the customers. So next, I'm going to just say my answers in Chinese. First of all, I would like to answer this question. In 2023, we will focus on the overall level of our project as a financial integration platform. This problem will not change because of the speed of the growth of this platform. There is no special connection between the two. uh uh to ensure the health of our risk indicators. As a risk management organization, we will mainly make the following choices in two directions. The first is from the introduction of new customers. Since two years ago, we have been focusing on how to improve the risk level of our customers' credit cards. The choice of channels for our new customers and our products for the new customers are all based on the new customers' focus on bringing better new customers. from the perspective of better quality customers. It won't be simply based on cost and quantity. By focusing on higher-quality products, but from a broader perspective on the quality of the customers and the quantity of the customers, as well as focusing on uh uh We will focus on the overall decision of the customer level. This will help us to pay more attention to the quality of the customer's overall performance on our platform, and the quality of their application is not too low. This is something that we are very concerned about. On the other hand, in terms of data, we will work with the three platforms to do some data digging, and to work with the customers on our platform Thank you. No more questions from you.
spk32: Thank you. We've reached the end of the call. I will return the call back to Sean for closing remarks. Please go ahead.
spk05: Thank you, operator, and thank you all for participating on today's call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.
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