FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the second 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 second 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 IRR section of our website at irr.finvigroup.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's followings 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-Jeng Lee. Please go ahead, sir.

Thanks, Jamie. Hello, everyone, and thank you for joining our earnings call. This is Tia-Jeng Lee, CEO of Evolution Group. We are happy to speak with you today. Since our expansion into the Indonesian market back in 2018, we have continued to execute our local focus global outlook strategy in the Pan-Asian region with under-weaving determination. Today, we have cumulatively served over 28 million borrowers in China, Indonesia, and the Philippines. By integrating our local business focus with an international perspective, we are able to leverage our expertise and insights derived from diverse markets to drive growth and foster innovation within our organization. We expect this strategy to produce further benefits as we expand into additional countries and strengthen our presence in our existing markets. As China transitions into the post-COVID era, recent July microeconomic data continue to be challenging with pockets of improvement in certain areas. However, microeconomic data from the ASEAN markets in which we operate currently paints a more positive picture, reflecting growth across different operational metrics. Given these circumstances, we are adopting a strategy of progressive growth in the China market while pursuing rapid growth in the international market. while we await the domestic micro-environments in recovery from the current challenges. We have been continuously investing in R&D. We have substantially enhanced our technology, enabling us to streamline our processes, upgrade our customer experience, and achieve improvements across the various markets in which we operate. We are pleased to share that Finvolution's total transaction volume in the second quarter increased to RMB 47.3 billion, while our outstanding loan balance reached RMB 63.7 billion, up 14% and 13% respectively year over year. This growth validates our company's ability to efficiently adapt to the challenging economic landscape, while continuing to meet the needs of our customers across our market. in the Pan-Asian region. Technological innovation continues to be the core of our mission and the primary source of our competitive advantage. In July, we hosted the eighth Femolution Technology Cup competition. Our annual event showcasing and cultivating technological talent and creativity. This year's event focused on the development of automatic speech recognition, ASR, to improve the technology's grasp of Chinese dialects and language, aiming to increase chatbot's efficiency and accuracy when communicating with customers from different regions. Our commitment to innovation was recently recognized as the 2023 World Artificial Intelligence Conference, where the thesis we developed in the cooperation with the University of Zhejiang. DropMessage, unifying random dropping for graph neural networks, was nominated for the outstanding thesis award. Our investment in AI and machine learning began years ago with R&D spanning across different product categories such as self-help services, chatbots, data analytics, and credit risk assessments. Over the past several years, we have been training our model utilizing billions of dollars of transaction data, steadily increasing their accuracy. We currently employ a fully automated loan approval process with all of our funding partners, and our automated chatbot resolves about 80% of customer inquiries on average. We consistently embrace new technologies and deploy them into our daily operation to deliver a more personalized and tailored experience for our users. along with the use of chatbots in customer service and to address early days delinquencies in the loan collection process. We have also upgraded to a streamlined user experience by automating self-help functions and providing instant response for our users. In addition, we have incorporated AIGC into our advertisements for our overseas business. increase our campaign's audience targeting accuracy and achieving greater visibility on leading social media platforms such as Facebook, Instagram, and TikTok. As a result, during the month of July, our followers on TikTok grew to around 700,000, while followers on Facebook and Instagram reached 967,220, respectively. Furthermore, we strove to advance our commitment to promoting financial inclusion during the quarter, aligning our ESG efforts with this business goal through better borrowing rates. We further optimized our average borrowing rate in China to 22.3%, ensuring our service accessible and affordable for our borrowers. On a related note, I would like to share some updates on our ESG progress. We recently published our 2022 ESG report, the fifth in our company's history, demonstrating our dedication to transparency and sustainability. Responsible ESG reporting allow us to showcase our strong governance practice and our actions addressing the environmental and social issue affecting our industry. They are also empowering us to design effective future initiatives. For instance, since the launch of our entry-free loan for eligible small business owners in China, we have cumulatively supported over 11,000 small business owners in pursuit of their dreams. Our subsidiaries in the Indonesian and Philippine markets are also proactively engaging in ESG work, such as conducting cost management workshop to educate borrowers and launching a large-scale micro-tree planting project to improve people's livelihoods in their local community, along other activities. We firmly believe that aligning our ESG and the business goal will ultimately create long-term value for our stakeholders while achieving a positive societal impact. Before we move on to additional operational and financial metrics with our CFO, I'd like to share that Finvolution celebrated its 16th anniversary during the second quarter. A milestone that affords us a glimpse of our future outlook as an enterprise with sustainable growth. As we have grown and built the business throughout the years, we have accumulated a suite of technologies, skill sets, and capabilities that enable us to navigate and succeed in all the markets in which we operate. We will remain committed to our vision of leveraging innovative technology to make financial services better, propelling Finvolution's long-term sustainable growth along the way. With that, I will now turn the call over to our CFO, Jiayuan Xu, who will discuss our operational and financial results for ER.