FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the fourth quarter and full year 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 4th quarter and full year 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.finvigroup.com. Mr. Tianjin Li, 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 U.S. GAAP. For information about these non-GAAP measures and reconciliation of 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. Privacy and Artistic Reformation 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 acquired 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. Tianjin Li. Please go ahead, sir.

Thanks, Jamie. Hello, everyone. and thank you for joining our running call. This is Tiezheng Li, CEO of Finvolution Group. We are happy to speak with you today. When I became CEO one year ago, Finvolution set a clear objective, become a leader in FinTech industry, providing inclusive financial solutions for unserved borrowers and small business owners. In 2023, we advanced towards that goal with continued strong execution of our local focus, global outlook strategy, adapting to the unique situations in different markets. I'm thrilled to report that we delivered exceptional progress on all fronts. Throughout the year, we maintained our robust momentum with progressive expansion in China while pursuing much faster growth internationally, where economic conditions were more favorable. We have achieved leadership positions in both Indonesia and Philippines. We are also fighting our success and high-quality growth in China as we proactively adjust our strategies to suit China's dynamic economy. Performance-wise, we continue to grow our business across the board despite evolving microeconomic challenges. The cumulative number of borrowers we served in China Indonesia, and the Philippines has reached 13 million, growing at an accelerated pace with a net increase of around 3 million new borrowers year over year. For full year 2023, our total transaction volume reached RMB 194 billion, and our outstanding loan balance reached RMB 67 billion. representing year-over-year increases of 11% and 4% respectively. Net revenue for the full year 2023 reached RMB 12.5 billion, up 13% year-over-year. Our international business grew exceptionally well in 2023, propelled by our effective global outlook strategy of pursuing rapid growth in overseas markets. International transaction volume for 2023 soared to RMB 7.9 billion and outstanding loan balance rose to RMB 1.3 billion, up 85% and 58% respectively compared to the prior year. International market revenue increased to RMB 2.1 billion, up 86% from full year 2022 over the past year. International revenue contributions to total revenue increased significantly, rising to 17% in 2023 from 10% in 2022. Meanwhile, with our local focus strategy of pursuing high quality growth in China, we continue to achieve progressive growth domestically. Transaction volume increased to RMB 186 billion while outstanding loan balance reached RMB 6.6 billion, up 9% and 4% respectively, compared to the prior year. Revenue from the China market in 2023 further expanded to RMB 10.4 billion, up 4% compared to the prior year. Another notable improvement was funding cost, which improved by 30 bps on a quarterly basis, and by around 100 bps year-over-year. Our stable borrowing rates coupled with better than industry delinquency rates and enhanced operational efficiency enabled us to sustainability deliver higher ROA compared to the industry. We also strengthened our commitment to small business owners supported by a prudent approach during this fragile and sometimes volatile recovery period. In 2023, we served over 811,000 small business owners and facilitated RMB 47 billion of loans for them, up 80.5% compared with last year and representing 25% of the total transaction volume in China. Finvolution is a FinTech frontrunner with profound expertise across an extensive industry footprint. Part of our commitment to shareholders is to continue propelling the company's sustainable development and industry-wide digital transformation through technology innovation. I'd like to share just a few of the pivotal technological advancements we made throughout the year. We amplified our investment in technological R&D, driving high-quality growth, leveraging cutting-edge technology. We significantly improved and optimized our operational process across all markets in which we operate. This includes increased R&D investment of over RMB 500 million in 2023 to strengthen different aspects of our technologies, such as the automatic speech recognition capabilities, greatly improving its grasp of Chinese dialects while boosting our chatbot's efficiency and accuracy. R&D is critical to our ongoing success, and we continue to invite in our tech and our people. As of December 31, 2023, we proudly employed a dedicated R&D team of around 700 skilled professionals and have built a comprehensive IP portfolio that comprises 239 registered software copyrights and a successful filing of 179 patent applications, including 53 invention patents already granted. Each of our R&D accomplishments enhance our offering to consumers and set new benchmarks for the financial services industry, supporting Finvolution's growth and industry-wide progress. In recognition of these efforts, the Shanghai Municipal Commission of Economy and Information recently honored Finvolution on its Shanghai 2023 Double 100 Leads for Software and IT Service Excellence. We earned prestigious rankings on both lists, securing the 18th and 26th position respectively. These accommodations recognized our contributions to technology innovation and the advancement of the industry. Last but not least, ESG remains a top priority at Finvolution. We diligently enhanced our integrated ESG program throughout 2023 with a focus on inclusion and giving back to society. For example, we have cumulatively offered RMB 120 million of interest-free loans for eligible small business owners to help turn their dreams into reality. Our commitment and efforts have also been recognized by several renowned independent rating agencies with above average industry ratings. We celebrate Femolution's 16th anniversary in 2023, a milestone that affords us a glimpse of our future prospects as an enterprise grounded in sustained long-term growth. Over the past 16 years, our business model and strategy have been validated by success in the face of multiple challenges, such as the P2P transition, shift towards better quality borrowers, and international expansion amid the pandemic. As an independent platform with limited resources, we are proud to have expanded and flourished in all markets in which we operate. Going forward, we will remain committed to serving borrowers in our existing markets while increasing the pace of our international expansion by acquiring more licenses and expanding into additional countries and regions to deliver innovative financial services to more borrowers. Our local focus, global outlook strategy will continue to guide us and drive our healthy and sustainable development as we embark on 2024. By leveraging our peerless technologies, and operational advantages. We are confident to replicate our domestic and international success in new markets, unlocking value and making the company a world-class fintech enterprise, while consistently returning 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.