FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the first quarter 2021 earnings conference call for FinFolution Group. At this time, all participants are in the listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Jimmy Tan, Head of Investor Relations for the company, Jimmy, please go ahead.

Hello, everyone, and welcome to our first quarter 2021 earnings conference call. The company results were issued via newswire services earlier and are posted online. You can download the earnings release and sign up for the company's email alerts by visiting the IR section of our website at ir.pnvgroup.com. Mr. Feng Zhang, our Chief Executive Officer, and Mr. Jia Yuan Xu, our Chief Financial Officer, will start the call with their prepared remarks. and conclude with a Q&A session. During this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For information about these non-GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release 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 Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company filings with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Finally, we post a slide presentation on our IR website providing details of our results for the quarter. I will now turn the call over to our CEO, Mr. Feng Zhang. Please go ahead, sir.

Thank you, Jimmy. Hello, everyone, and thank you so much for joining us today. We are pleased to start 2021 with remarkable progress. delivering high-quality growth across all aspects of our business in the first quarter, while also achieving further improvements in risk metrics across the board. Notably, our total loan origination volume for the quarter reached a record high to 26.8 billion RMB, representing a year-over-year increase of 105%. Our loan origination volume for mainland China increased 24% quarter-over-quarter to 26 billion RMB, Also, our international business is continuing its rapid growth, generating approximately 760 million IMB of loan origination volume during the quarter, up 42% from the fourth quarter of 2020. Our sequential quarter growth in low volume following the continued economic recovery from the pandemic is a testament to the effectiveness of our strategies and our strong execution. Also in the quarter, we continue to benefit from our successful transition toward higher quality borrowers. We improved our delinquencies to historical lows while achieving sequential growth. Our recent day one delinquency rate in May was around 5.4% compared to 9.7% in the same period last year. Our vertical delinquency rate that was 15 to 89 days past due further improved to 1.24% from 1.38% in the previous quarter, while our 90-day-plus delinquency rate was 1.13% compared to 7.25% in the same period last year. Our loan collection recovery rate continued to stabilize at 90% around. We further expect We further expect vintage delinquency rate to fall to historical lows around 2.5% in the first quarter and key risk metrics to remain stable for 2021. Going forward, we see continued opportunities for quality growth as we further build our strong technological capabilities and credit risk management framework, notably our total number of new acquired borrowers in the first quarter of 2021 exceeded 1 million, compared to 373,000 new borrowers in the same period last year, representing a 169% increase. By continuing to improve our acquisition efficiency, we were able to reduce our acquisition costs from the previous quarter. As part of our efforts to pursue financial inclusion, our average IRR for this quarter stabilized at around 26.8%. Since 2020, we have been diversifying our loan facilitation services to serve small business owners in mainland China as we continue to capitalize on this unique opportunity presented by the need for operational funds. In the first quarter, loan origination volume for small business owners grew rapidly to 4.4 billion RMB. versus 3.7 billion RMB originated throughout the full year of 2020, accounting for 16% of total loan origination volume for the period. The total number of small business owners we served in the quarter reached around 305,000 compared to 220,000 for the full year 2020. We believe this segment of our business supports China's economic rebound and is in line with national policies. Going forward, we will remain focused on serving small business owners, and we expect this portion of our business to account for around 20% of total loan origination volume in 2021. Our international expansion strategy continues to be a key competitive differentiator for us as we remain optimistic and selective in penetrating Southeast Asia emerging markets, where we have established first-mover advantages. We currently have established operations in Indonesia, Philippines and Singapore. Apart from our online loan facilitation services, we have also been exploring other business concepts with different partners in the South Asia market. Leveraging on our expertise in online loan services and the localization strategy, we are confident in our globalization process and our long-term mission to make financial services more accessible and inclusive for our borrowers. In light of the ongoing uncertainties stemming from pandemic-related economic conditions, our international expansion strategy will help diversify both user base and revenue streams, thus bolstering our ability to generate a steady long-term growth for the company. We remain focused on evolving our risk assessment and management framework with prudent principles, enhancing top-notch technology advancement capabilities while pursuing a healthy approach to diversifying our customer base, as well as expanding funding sources, both domestically and internationally. With all that being said, as we drive our industry-leading position further with these initiatives in technology, overseas markets, and product diversification, I believe Finvail Ocean will establish a significant presence in some of these new territories over the next several years. Based on our track record with our successful business transition in mainland China and our expansion in Southeast Asia, we believe our digitalization and operational capabilities can empower a variety of businesses across multiple scenarios in different industries. In conclusion, we are excited to get the year off to a strong start as we successfully execute our business strategy. We are confident in our ability to maximize our well-established position in China's consumer and micro-enterprise markets, as well as South Asia's booming digital finance market, which will unlock tremendous value for all of our shareholders. With that, I will now turn the call to Mr. Jia Yuanxu, who will discuss our financial results for the quarter.