FinVolution Group

Ladies and gentlemen, thank you for participating in the third quarter 2021 earnings conference call for Thin Volution Group. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Jimmy Tan, head of investor relations for the company. Jimmy, please go ahead.

Thank you, Andrew. Hello, everyone, and welcome to our third quarter 2021 earnings conference call. The company results were issued via newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's email alerts by visiting the IRR section of our website at irr.fimpigroup.com. Mr. Feng Zhang, our Chief Executive Officer, and Mr. Jiang Yuan Xu, our Chief Financial Officer, We'll 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 this video or as a substitute for financial information prepared and presented in accordance with US GAAP. For information about these non-GAAP measures and reconsideration 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 Security Implication 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's 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. Additionally, 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.

Thanks, Jimmy. Hello, everyone, and thank you for joining us today. I hope you and your families remain safe and healthy in the new non-COVID-19 environment. Thanks to our advanced technologies, industry-leading digital capabilities, and a strong corporate strategy execution, we continue to expand our business with robust momentum across each of our segments, both domestically and internationally. Given our stronger than expected results, greater confidence in business trends, and successful strategy execution, we have raised our total transaction volume outlook for 2021. We now expect transaction volume for the year to reach between 130 billion RMB and 135 billion RMB, representing a year-over-year increase of 103% to 111%, above our prior guidance of 100 billion RMB to 120 billion RMB. Let me now outline some of our third quarter highlights. Total transaction volume maintained its strong growth trajectory, reaching a new record high of 38.1 billion RMB, representing an increase of 120% year-over-year and 14% sequentially. Notably, our total outstanding loan balance expanded to 45 billion RMB in the quarter, representing an increase of 101% compared with the same period last year. This growth was primarily driven by a new, fast-growing, and higher-quality customer base. we gained over 1.18 million new individual customers in Q3, making the third consecutive quarter during which we've exceeded 1 million new borrowers globally. Our domestic business demonstrated progressive growth under clear regulatory guideline. Looking at our transaction volume composition, China accounted for 37.1 billion RMB, up 118% year-over-year and 14% sequentially. We are also pleased to share that in October, as we continue to acquire better quality borrowers, our percentage of loans facilitated at or below IRR 24 further increased to 80% compared with just 29% in Q2, while our average IRR borrowing cost further reduced to 24.3% compared with 26.2% in Q2. indicating a higher compliance level and reflects our commitment towards greater financial inclusion for the society. Our take rate for the third quarter remains stable at 4.2%, and we are confident that the cap rate's future impact on our financials will be minimal. Our high-quality borrower base is expanding rapidly with 827,000 new customers acquired during the quarter. Our diversified borrower acquisition strategy is working efficiently and we are well positioned to leverage this strategy for further business expansion. We have established partnerships with multiple leading traffic platforms and expect to further diversify our online acquisition channels. Our offline customer acquisition team also expanded to over 700 employees in 20 different cities, covering around 80% of China's provinces. We expect our offline team to reach around 1,000 employees by the end of this year. As we refine our risk management systems and enhance our asset quality, our 90-day-plus delinquency rate remains low at 1.04%, and the vintage delinquency rate for the third quarter is expected to decrease to below 2.3%. Moving to our operations for small business owners, During the quarter, transaction volume for small business owners grew rapidly to 7.9 billion RMB, accounting for 21% of total transaction volume for the period. The total number of small business owners we served grew to 488,000, an increase of 20% from the previous quarter. With huge market potential and a more supportive regulatory environment, we believe small business owners present a very promising opportunity for our long-term growth. Going forward, we expect transaction volume for small business owners alone will comprise approximately 20% of total transaction volume for the full year. With respect to our global expansion, we are thrilled to explore new product offerings and have made impressive strides in strengthening our international partnerships. For example, we entered into a strategic cooperation with PT Bank Jago in Indonesia. which increase our local loan facilitation capabilities and broaden our presence across different market segments in the country, including retail, mass market, and others, opening up new potential areas for cooperation. In addition to our facilitation business, we teamed up with local e-commerce and e-wallet partners, such as JD Indonesia and Dana, to launch operations in the buy now, pay later sector. Our customers and partners' initial feedback has been overwhelmingly positive, and we are confident we can achieve greater success in this area. Along with our venture into the BNPL sector, we are also shifting towards better quality customers as to achieve high-quality growth. With this objective in mind, we have also been increasing our investment in areas such as technologies, talent development, and customer acquisition for our global expansion. We have also taken the initiative to groom local talents for management duties, reflecting our long-term commitment and confidence in this business. Despite the recent resurgence of COVID-19 cases in Southeast Asia, we were still able to generate over 1.05 billion RMB in transaction volume, up 233% year-over-year and 12% sequentially. Concurrently, our outstanding low balance for the quarter was 480 million RMB, up 269% year-over-year and 17% sequentially. Going forward, we will continue to leverage our technological capabilities to strengthen our foothold in countries where we have established a presence while exploring potential cooperation with local financial institutions, e-commerce platforms, and other players. Using our multi-level approach, we believe we can acquire better quality customers and further diversify our business models, making financial services more accessible and inclusive for borrowers from around the world. The global financial technology industry is evolving rapidly, and over the past several years, we have successfully demonstrated our capabilities and achieved tremendous growth in this dynamic industry. We have advanced multiple strategic initiatives, grown our customer base while improving the quality of our customers. Looking ahead, we will continue to pursue premium quality growth in China while capturing massive growth opportunities in international markets. Last but not least, I would like to highlight some of our successful corporate social responsibility initiatives. Since 2016, we have performed our duty diligently as a responsible corporate citizen as we supported various social welfare organizations, donated school supplies to children and built kindergartens in rural mountain areas, and donated cumulatively over 80 million RMB to regions in need. Also, together with our founding partners, we have provided low-interest loans for small business owners, increasing access to quality financial services for the underserved segment of business society. To build on our effort to help small business owners as they recover from the pandemic, Simvolution will provide over 100 million RMB of interest-free loans for small business owners. We are proud to support the backbone of China's economy and do our part for society during this challenging time. With that, I will now turn the call over to Jia Yuanxu, who will discuss our financial results for the quarter.