FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the first quarter 2023 earnings conference call for Finvolution 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.

Hello, everyone, and welcome to our first quarter 2023 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 email alerts by visiting the IR section of our website at ir.vinpigroup.com. Mr. Tien-Chen Lee, 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. Tia-Cheng Lee. Please go ahead, sir.

Hello, everyone, and thank you for joining our news call. This is Tia-Cheng Lee, CEO of Evolution. We are happy to speak with you today. The first quarter of 2023 was a challenging one domestically, given the complex microenvironment. The Chinese New Year holiday, coupled with China's reopen post-pandemic, created short-term turbulence throughout the economy. However, despite various headwinds, we delivered another quarter of healthy growth, with the total transaction volume up 9.3%. year-over-year to reach RMB 43.4 billion. And the total outstanding loan balance up 15.8% year-over-year to reach RMB 62.3 billion. We also steadily and successfully executed our local focus global outlook strategy throughout the Pan-Asian markets in which we operate expanding our border base to 28 million cumulatively across China, Indonesia and the Philippines. In line with our mission of leveraging innovative technologies to make financial services better, We have cumulatively invested over RMB 2 billion in technology over the last five years. We remain committed to exploring areas such as data tools, natural language processing, and other AI technologies to improve our data analysis capabilities and drive the holistic digitization of consumer finance across multiple aspects. As such, We have integrated our natural language processing models into our chatbots. And our AI team developed a real-time data platform combined with strong integrated computing capability to support their applications. These generative pre-trained models have created a tremendous opportunity for our business to improve user experience and operational efficiency. We are also pleased to share that Finvolution has officially launched plans to build an open source model platform, aiming to improve the efficiency and effectiveness of our intelligent marketing and customer service operations. We are confident that as we continue to refine and implement natural language processing and speech-related algorithms into our intelligent chatbots, They will greatly improve the conversation experience between Finvolution and our customers. Specifically, we are currently pilotizing the application of strategic PT and other language learning models in our CRM system and smart loan collection system. Further driving digitization process across all of our customer service metrics. Approximately 80% of our customer service inquiries are not solved through chatbots, leading an increase of over 50% in our CRM system efficiency. Supporting financial inclusion is another critical piece of our mission and another area where we can capitalize our cutting-edge proprietary technologies to deliver outstanding results. Thanks to our octopus system for high-quality borrower acquisition, and our magic cube for loan matching. We further reduced our average borrowing rate in the fourth quarter to 22.7%. Furthermore, our magic mirror technology for credit risk assessment updated with revised algorithm preferred improvements across our risk metrics. This accomplishment alongside our acquisition of higher quality borrowers our efficient loan matching process with institutional partners and our consistent, fruitful investment in technology enabled us to gain recognition from our partners and achieve better than expected funding costs, which supported a stable take rate of 3.5% for the quarter. Before we move on to more operational and financial metrics, I would like to share a brief update on our ESG efforts. In addition to our ongoing endeavors to support financial inclusion, we recently established Finvolution's consumer protection initiatives, guided by the high-level goals of be responsible and be compassionate. To help educate our borrowers on their personal finance management, This will gradually improve the quality of our borrowers as well as our customers' financial needs, benefiting our business while creating value for the society. We look forward to reporting more fully on our ESG achievements. This is our 2022 annual ESG reporting in the coming months. In short, we remain convinced that technological innovation will transform the future of consumer finance. Our local focus, global outlook strategy, will guide us as we move confidently through 2023, building on our technological capabilities to expand our customer base and leverage on our strong balance sheet to accelerate the pace of our international expansion. With our mission firmly in mind, we will continue to invent and deploy creative technologies across all aspects of our operations, empowering rapid business growth while enhancing our customers' lives and delivering greater value to our shareholders. With that, I will now turn the call over to our CFO, Jia Yuanxu, who will discuss our operational and financial results for the quarter.