FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the fourth quarter and full year 2024 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 capital markets for the company. Jimmy, please go ahead.

Hello everyone and welcome to our fourth quarter and full year 2024 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. Kie Jun 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 certain 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 harbour provisions of the US 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 US 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 running call. This is Tia-Jeng Lee, CEO of Vimolution Group. We are happy to speak with you today. 2024 marked another strong year of growth and progress for the company. Despite the persistent uncertainties over the micro economy in China, our operations in Indonesia and the Philippines have experienced favorable micro supported by strong growth in a stable foreign exchange environment. Through strong execution of our local excellence, global outlook, our legal strategy, we successfully navigated through 2024's challenges and continued to deliver progressive growth in the China market and rapid expansion in the international market. For example, in terms of transaction volume, we have achieved 5% growth in China and a rapid growth of around 28% in our international market. Both our total transaction volume and outstanding loan balance also reached new records highs for the full year, rising to 206 billion RMB and 72 billion RMB respectively, both up by 6% year over year. Cumulatively, we have served around 34 million borrowers across China, Indonesia, and the Philippines, representing a net increase of around 4 million new borrowers in 2024. Achieving growth in all of these metrics amid 2024's soft consumer environment is a strong testament to our business resilience, our outstanding technology, innovation, and our overall operational excellence. It's worth noting that while the industry's transaction volume was generally shrinking in 2024, we continue to deliver growth in our business at stable risk levels. In line with our strategy, we have expanded our regulatory license portfolio in our key market, including micro-lending license in China, multi-finance license in Indonesia, and non-banking financial companies license in Pakistan. These additional licenses help us expand our customers' outreach and product offerings. We have also further expanded our customer acquisition channels. In China, we have established customer acquisition collaborations with leading internet platforms through API connections. In Indonesia, we are expanding beyond online into providing consumption loans in offline settings. In the Philippines, we have been growing our BuyNowPayLater product with various partnerships with leading e-commerce platforms as well. Boasted by our robust operational results, total revenue for 2024 reached 30.1 billion RMB, up 4% year-over-year. Revenue from international operations rose 19% year-over-year to 2.5 billion RMB, representing close to 20% of total revenue for full year 2024. We also improved our funding costs by over 200 basis points during the year. Thanks to our ample liquidity and validated track record, in risk performance. By maintaining our long-term development trajectory and enhancing operational efficiency, we've laid a solid foundation for continued growth in 2025 and beyond. Our commitment to innovation is a primary driver for these positive outcomes. In 2024, we invested approximately 500 million in R&D, bringing our cumulative R&D investment over the last five years to 2.3 billion. As of December 31, 2024, we employed a dedicated R&D team of around 700 skilled professionals, and we've built a comprehensive IP portfolio comprising 287 registered software copyrights and a successful filing of 196 patent applications. with 58 invention patents already granted. Let me walk you through a few R&D highlights over the past year. In 2024, we have completed a significant upgrade in AI by integrating the full version of DeepSeq R1 into our technologies, which already incorporates 17 years of credit data and domain knowledge. With this upgrade, we are now able to further automate some of the processes in marketing content creation, customer acquisition, and servicing, resulting in better productivity. For example, our internal pilot testing indicated AI-facilitated content can generate 60% potential reduction in advertising production costs. AI-powered customer service and acquisition can more accurately identify customer demand and concerns, leading to 9% increase in borrowers conversion rate. On the risk management front, the enhanced AI model enables us to better identify fraud from deep fake technology with an accuracy of up to 99%. We are also proud to share that we have completed the general AI service registration with the Cyberspace Administration of China for our Red Seed Large Language Model, not only validating regulatory recognition, but also allow wider potential to consumer applications, which we will explore in the future. To date, we have published and presented more than 25 papers at top-tier international artificial intelligence conferences, These three of these papers were recognized as the best papers at top tier conferences, demonstrating our leadership in this field. As we have mentioned previously, we have set a target of reaching 50% of revenue from international markets by 2030 under our legal strategy. I'm pleased to say that our strong strategic execution has paid off over the years. and our international operations have come a long way since 2018. Revenue contributions from international markets have increased rapidly, rising from 3.7% in 2020 to 10.3% in 2022 to around 20% in 2024. Looking ahead, we expect international business to play an even greater role in our company. supported by our validated successes in Indonesia and the Philippines. We plan to accelerate our international expansion efforts this year for 2025. We anticipate the total revenue will increase between 10% to 15%, and the international revenue contribution will further increase to around 25%. Let's move on to ESG. In line with our social responsibility goals, We deepened our commitment to financial inclusion in 2024, particularly with respect to small business owners. We believe three things. Small businesses are the heart of a healthy economy. That's why we constantly supported their efforts to create jobs and foster hyper-local economic prosperity. In 2024, we empowered 826 small businesses 1,000 small business owners with loans totaling 58 billion RMB, up 2% and 23%, respectively, year over year. We also published our first Consumer Protection Annual Report in 2024. One of the many ways we integrated our consumer protection into the group's ESG strategy. This initiative aims to enhance borrowers' financial literacy, promote financial inclusion, and consistently deliver exceptional consumer experiences, contributing to our outstanding borrower satisfaction rate of 98.9%. I'm proud to report that our ESG efforts continue to win accolades from leading international rating agencies. In 2024, Morningstar and S&P, among others, ranked us as a top-tier ESG performer within the diversified financial industry. In summary, we successfully leveraged and expanded our strengths in technology, customer acquisition, and retention to deliver solid results and made a challenging environment in 2024. Through firm execution of our local excellence, global outlook strategy, a sharp focus on AI innovation, and deep dedication to our mission of financial inclusion, We continue to advance and accelerate our progress and sustain our long-term growth trajectory. Our accomplishments in 2024 has bolstered our confidence in achieving our vision for 2025 and beyond to become the leading fintech player across the Pan-Haitian region. We will continue to work tirelessly towards that goal. and look forward to sharing our successes with our customers, shareholders, and the communities in the regions where we operate. With that, I will now turn the call over to our CFO, Jiaoyan Xu, who will discuss our operational and financial results.

Thank you, Li, and hello, everyone. Welcome to our fourth quarter and the full year 2024 earnings call. Let's go through our key results for the fourth quarter To be mindful of the length of our earnings call today, I encourage listeners to refer to our fourth quarter and the full year earnings press release for further details. China's recovery was uneven throughout 2024, and the fourth quarter was no exception. While China's GDP expanded by 5% for the full year, various uncertainties persist and the consumption recovery remains low. On a bright note, data from the recent Chinese New Year holiday show that 501 million domestic trips were undertaken, representing a year-over-year increase of 5.9%. Total spending on domestic travels amounted to 677 billion yuan, marking a year-on-year rise of 7%. We successfully navigated this tuberance by capitalizing on our operational and tax strengths to achieve consistent growth throughout 2024 and beyond. Our loan application rate remained strong following the end of September stimulus. As a result, during the fourth quarter, transaction volume and outstanding loan balance further increased to RMB $54 billion and RMB $69.8 billion. up 8% and 6% respectively year-over-year. We continued to drive progress across multiple operational metrics in our China market during the fourth quarter. Cumulatively, we have served 26.8 million borrowers in the China market, with the number of unique borrowers in the fourth quarter remaining steady at 2.1 million. Our consistent investments in R&D led to a further improved daily delinquency rate of 4.7% in recent weeks, while low collection recovery rate remained stable at 89%. Given the ongoing recovery in consumer confidence and our holistic enhancement to technology and operational system, we expect vintage delinquency for the quarter to improve to around 2.4%. Moving on to our second growth driver, our international markets, which continue to grow rapidly and deliver an increased revenue contribution at the group level. As of the end of the fourth quarter, we have cumulatively served around 7 million borrowers in international markets. Notably, we have acquired around 2.2 million new borrowers in 2014 from a variety of channels. up 61% year-over-year. For the first time, international transaction volume exceeded RMB 10 billion for the full year, while outstanding loan balance reached RMB 1.7 billion, up 28% and 31%, respectively, year-over-year. Specifically, for the fourth quarter, international transaction volume reached RMB 2.9 billion, of 26% year-over-year and 7% sequentially. Our strong operational performance drove international revenues contribution for the full year of 2024 to RMB $2.5 billion, up 19% year-over-year and representing close to 20% of the total revenue. Notably, during the fourth quarter, revenue from international markets further expanded to MB 739 million of 23% year-over-year and accounted over 21% of total revenue. Let's look more closely at our first and the largest overseas market, Indonesia. For the full year of 2024, Indonesia's economy grew over 5% compared to 2023. driven primarily by increased household spending and investment. Notably, the consumer confidence index in Indonesia has remained above 120 percent for two consecutive years. In December 2024, expectations of a more favorable macroeconomy and a stabilized regulatory environment following Indonesia's national election boosted Indonesia's manufacturing PMI, to 51.2 points, marking its first return above 50 points since June. For the full year of 2024, motorbike sales in Indonesia increased by 1.5% year-over-year to 6.3 million units. I also want to highlight that in January 2025, Indonesia joined BRICS, a strategic move that will allow the nation to leverage various economic opportunities and partnerships, accelerate its development agenda, diversify trade, and attract crucial investments, empowering its domestic economy and its position in the global trade landscape. Indonesia's interest rate reduction implemented in January 2024 poses some challenges to our business. we quickly adjusted our operations to adapt to the new interest rate cap, successfully completing the transaction within the first five months of the year. During the second half of 2024, our Indonesia transaction volume grew to RMB 3.7 billion, up 11% compared to the first half of the year. We are also proud to share that with the successful transition, We continue to attract new funding partners such as Superbank to support our request for financial inclusion in Indonesia. To date, we have 10 solid and active funding partners in country. With the new business model firmly in place, we are confident of returning to accelerated growth in the country. I also want to highlight that after several quarters of preparation, we have successfully acquired a large majority stake in the local multi-finance company, which will enable us to diversify our product into offline consumption loans with different scenarios such as mobile and electronic devices. This in turn will empower us to expand our presence to serve more borrowers. The completion of this acquisition underscores regulators' trust and confidence in our local operations. The Philippines, our second international market, achieved an economic growth rate of 5.6% for 2024, positioning it as one of the farthest growing economies in the Asia-Pacific region. Its manufacturing PMI has remained above 50 points for three consecutive years, and unemployment rate declined by 80 bps from 3.9% in October to 3.1% in December 2024. Reflecting sustained individual activity, heightened production and healthy job creation, a youthful and growing population, stable inflation, and consistent remittance from overseas Filipino workers are also following consumer demand. Also, final consumption expenditure recorded the highest year-on-year growth rate at 9.7% in 2024. Together, these conditions create a solid foundation for sustained economic growth. Our operations in the Philippines continue to grow rapidly in 2024, with transaction volume reaching RMB 3.1 billion for the year, 138% year-over-year. We are the first platform in the country to introduce the concept of institutional funding through our loan facilitation model in 2024, with a list of reliable trusted partners. We are also proud to share that the percentage of the loan facilitated by local financial institutions has grown from merely 10% in the first quarter of 2024 to around 70% in the first quarter of 2024. Going forward, we are confident of maintaining high double-digit growth in the Philippines as we cement our roots in the country. First, expand our funding sources and diversify our business models. As part of our strategy to translate to better quality borrowers, Our exciting initiative we have undertaken in the Philippines is our cooperation with mainstream e-commerce players such as TT and other leading players to promote buy-now-pay-later model. By directly embedding Fivolution's FinTech capabilities in the e-commerce platform's payment interface, we greatly broaden our reach while also facilitating financial inclusion for more Philippines consumers. In 2024, the final palliative model contributed 19% of Philippines' transaction volume, and we expect further contribution from this segment in 2025. Now, turning to our financial metrics. This quarter's operational excellence resulted in a solid financial performance. Net revenue for the quarter reached $3.5 billion, marking a 7% increase year-over-year and a 6% increase sequentially. Net income was RMB $681 million, representing a 29% increase year-over-year and a 9% sequentially increase. Meanwhile, sales and marketing expenses rose by 8% year-over-year to RMB $532 million as we continued to stress efforts to acquire new borrowers of high quality in both China and international markets. Furthermore, our leverage ratio defined as risk-bearing loans divided by shareholders' equity improved to around three times, reflecting potential growth opportunities as the microeconomic environment stabilized. Our total liquidity position consisting of cash and cash equivalent plus short-term investments remains strong at $7.5 billion, showcasing a robust balance sheet that is well able to support our business growth across multiple countries while consistently increasing shareholder returns. Before I conclude, a few words about our ongoing efforts to increase shareholders' value. Since 2018, we have continuously returned value to our shareholders in the form of share repurchase and dividends. Recently, our Board of Directors approved our seventh annual dividend in the amount of US $0.277 per ADS, reflecting a DPS increase of 17% year-over-year. After thoughtful consideration, our Board of Directors have also approved the revision of dividend policy from no less than 10% of net income to between 20% to 30% of net income for 2025 onwards, validating the company's commitment to enhancing shareholders' value. In addition, our board of directors have also approved a 5.4% share repurchase program of up to US$150 million. We believe the current environment presents an opportunity to further increase shareholder value and shares repurchase as an effective capital management tool to achieve our goal. For full year 2024, we returned a total of over US$160 million to our shareholders, consisting of US$70 million in dividends and US$19 million through shared repurchase, representing a total payout of 49% of 2024 net income. As of December 31, 2024, the company has cumulatively returned US$765 million to our shareholders, demonstrating our consistent commitment to enhancing shareholder value In summary, our business continued to grow and thrive in 2024 through firm execution of our local excellence global outlook strategy Despite an uneven microenvironment for 2025, we will remain committed to expanding our international presence and diversifying our product offerings by providing outstanding service to a growing consumer base at home and abroad. As shared previously, we have established a target of achieving 50 percent revenue contribution from international markets by 2030. In lieu of this, we would like to introduce our revenue guidance for 2025 to be in the range of around 14.4 billion to 15 billion, representing an increase of between 10% to 15% year-over-year. So that concludes my preparatory remarks. We will now open the call to questions. Operator, please continue.

Thank you. If you would like to ask a question, please press star then 1 on your telephone. If you would like to withdraw your question, please press star then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, we ask that you please kindly repeat your question in English. Today's first question comes from Alex Yee with UBS. Please go ahead.

Thank you for the opportunity to ask me this question. I have two questions. The first one is about overseas business. I am very happy to hear that there is a lot of progress overseas, and there is also a goal to reach 50% of revenue contribution by 2030. I would like to ask about some details about the cost. For example, we have seen that the overall revenue of overseas companies currently accounts for about 20%. But how big is the overall scale of these operating costs? And how do we look at the expansion of overseas costs in 2025? And how much contribution do they make to our company's profits? how to look at it. The second question is about shareholder returns. If I look forward to 2024, the entire shareholder return is about 50% of the rate of return, including a share of nearly 20% and a return of 30%. Of course, we also see that the rate of return So I'll translate for my question. First question is about your international business. So we are glad to see the company's target of international revenue contribution to raising to 50% of the group by 2030. So just want to have some more color in terms of the cost base, operating cost base for the overseas segment. For example, what's the total OPEC for this and then the expected growth for this year and down to the bottom line contribution for this year. Second question is about your shareholder's return policy. So we have noticed the company has ended up paying about 50% total payout in last year, consisting of about 20% in cash and 30% via the buyback. And we have noticed that the payback has accelerated visibly from previous year. So how should we think about the total payout going forward for this year and then the split between cash and buyback? Thank you.

Okay, thanks, X. I will take your questions. Your first question is about our overseas business. Okay. Thanks for your attention for our ambitious target by 2030. Okay. And you have seen we have shifted our guidance from the large nation to revenue. This adjustment is closely aligned with our long-term strategic goal by 2030. So the revenue guidance not only demonstrates our confidence in the future development of our international business, but also it provides the shareholders with a more transparent and specific roadmap in understanding the company's long-term strategic goals. And in terms of the overseas operation costs and the profit contributions Well, they were subject to the different stages of the business. So, the population of the operation costs were decreased when our business operations entered the mature stage, and then the unit economics will improve as well. I will give you some examples. In 1994, we achieved a profit of $5 million in Indonesia. And in 2005, we expect that the profit from Indonesia will be at least double. And for our Philippines market, it was at loss in 2004. And we expect it will begin to make profit gradually from 2005. So the population of profit from these two countries will increase significantly in 2025. Also, you know, we will accelerate our overseas expansion, so it will require initial investment in the early stage, and they will have some, you know, impact on our borderline. But generally speaking, if we are looking ahead to 2030, the percentage of the international profit contribution is sure to rise, and the pace of the increase should be should be tied to the development of our base. And your second question is about our shareholder return. We are committed to delivering the long-term, sustainable returns to our shareholders. We aim to create the value for our shareholders primarily through the sustainable and rapid growth of our base. And also, we are exploring to utilize the capital tools to reward our shareholders. As we have mentioned, since 2018, we have consecutively distributed dividends and conducted the share buybacks for seven years. That has made us one of the earliest in the industry to do so. So, over the past seven years, we have returned a total of $760 billion. 65 million dollars to our shareholders by these two measures. It's almost close to the 40% of our market cap. And in 2024, we deployed 19 million for share repurchase and distribute 17 million U.S. in dividend. It's a result in the total capital return of 160 million dollars for shareholders, and it represents almost 49 percent of the net profit. It's in line with our long-term capital return strategy. And as we have mentioned, we have revised our dividend policy to raise the payout ratio for at least 10 percent to the range of 20 percent to 30 percent of net profit. Okay, the revision reflects our strong commitment to rewarding our shareholders. And for 2024, the dividend per share reached US 0.277, representing a 17% increase compared to the previous year. And this marks the fifth consecutive year of DPS growth, with a five-year CAGR of 18%. And at the same time, Our Board of Directors has approved a fourth share repurchase program of an allocation of $115 million with a duration of two years. Basically, the specific execution will depend on market condition, liquidity, and the regulator's requirements. The new repurchase plan and the strengthened dividend policy Demonstrates that we are not only delivering the returns to our shareholders through business growth, but also consistently utilizing the capital tools to reward our shareholders. And supported by the strong cash flow and the solid profitability, even during the, you know, we accelerated the phrase of global expansion, we are capable of balancing the long-term strategic investments with the increasing shareholder return. And also I want to draw attention is the revision of our given policy indicates the company will have the flexibility to create the value for our shareholders. Okay, thanks.

Thank you. And our next question today comes from Yara Lee at CICC. Please go ahead.

Hello, Mr. Wang. Thank you for giving me this opportunity to ask a question. Today, I have two questions to ask. The first one is about the trend of CQ24 and EQ25. How do we look at the increase in demand for domestic business in 2025? The second question is to ask, as the company has also joined DeepSeq, Then I'll do the translation. Hello, management. Thank you for taking my questions. The first one is about the user demand, and can you elaborate more about whether there's a sense of user demand recovery in 4Q24 and 1Q25? Additionally, how to view the long guidance of domestic business for 2025? And secondly, the question is about the progress of AI development. I was wondering how the AI tools such as DeepSafe utilized to help increase the operational efficiency. And are there any potential for decreasing the overall credit risks and increasing the profitability in future? And that's all. Thank you.

I will take your first question, and Tim will take your second question. For the domestic business, the customer demand in the fourth quarter continues the recovery trend, as we have observed since the last quarter in 2024. In terms of the quarter-on-quarter and the year-on-year basis, the growth rate exceeds So it reflects the gradual recovery of our consumer confidence in the second half of the year. And if we look at the full year of 2024, we have observed the consumer demand exhibit a pattern of being weaker in the first half and stronger in the second half. And the recovery trend in the second half, we believe, will be expected to continue in 2025. And for the first quarter of 2025, it's always the typical late season long period due to the factors such as the Chinese New Year holiday. We have observed the customer demand remains resilient. For example, the application volumes shows high single-digit year-over-year growth So, it will lead a solid foundation for our full-year development. And also, at the national level, the government is actively implementing various measures to boost the consumer confidence. Following the two sessions meetings, the newly proposed action plan to stimulate the consumption through multiple channels. including the increasing household income, ensuring the spending capacity, improving the quality of the service consumption, and the larger ticket size item consumption. So these efforts are designed to comprehensively expand domestic demand. And also, you must have seen the notice from last week. The National Financial Regulator Administration issued the document to encourage the healthy development of consumer finance. So we believe this series of regulatory measures will largely boost the sector's confidence and it will provide support for the continued recovery of consumer sentiment. So looking ahead, we are optimistic to wait and see those detailed implementations for consumer finance from regulatory side. And the consumer credit demanded is expected to receive an additional boost. And it will long-term stable and the positive growth trend in our domestic business.

Okay. Hi, Yada. This is Kijun. I will answer the AI question. Generally, we are very excited about the AI opportunities in front of us. And we have explored integrating AI into various parts of our business. And here are some key highlights for our AI strategy. Last November, just as I mentioned, we successfully completed the general AI service, fighting with Cyberspace Administration of China. For ourselves, we were able to see the larger language model. With this qualification, we are now able to integrate a larger laundry model into customer-facing application. This means we could productively gain from AI automation across customer-facing processes, like customer service, user acquisition, and loan collections, et cetera. We have also developed various AI agents and AI automation tools for our operations, from user acquisition customer service, credit risk management, to process automation. Here are some examples. The first example is on our user acquisition and customer service. We use AI to simplify the content production process. In our recent pilot test, we were able to generate 50% of our advertising content with AI. and a lower contention production cost by 60%. We have also implied AI bots for our customer service. The second example is about credit risk. With AI and our domain data, we create AI model that successfully identifies fraud credit application based on deepfake technology in Indonesia. and we are replicating the experience in other countries. On the loan collection front, we are developing AI-powered bots that are capable of calling and interacting with customers for early delinquency, typically with the first three days of overdue. The AI bots is optimized and replicate human-like conversation capabilities from tone, pitch, rhythm, and general ability to react to complex emotion and intention from human conversation. And additionally, by analyzing factors such as repayment timelines mentioned by users, their attitudes, and emotions, and the system comprehensively assesses their willingness to repay and assess timely reminder. And the third example is on our process automation. Now, some of our Automations are progressively implemented across our organization. For example, code generation, AI agents for document review and facilitated booking and management. Overall, we see a lot of opportunities from AI and will continue to explore the potential applications in our business. Thank you, Yada.

Thank you. And our next question comes from Cindy Wong with China Renaissance.

Please go ahead. Thanks for taking my question. My question is related to the international market. So your international market is growing fast, and now you operate not only in Indonesia and Philippines, but also tapping Parkinson's. So could you talk about your international business expansion strategy and outlook in these three markets in 2025? Thank you.

Thanks, Cindy, the team. I will answer the question. First, it's about Indonesia. In the past year, the Indonesia business we achieved two significant milestones. The first one is we successfully completed the transformation to target higher quality customers within six months. After the pricing adjustment, the business returned to healthy growth. The average loan amount per customer increased by 12%, while risk decreased 25%, and the customer acquisition cost improved by low double-digits and with take rate return to pre-adjustment levels. Now, members of our institutional funding partners reached a team, and the business achieved full-year profitability for the first time. And the second milestone is we completed the acquisition of around 84% stake in the multi-finance license and began laying the groundwork for offline business operations combined combining multiple channels and scenarios. And also, in Indonesia, there has been some positive development on the policy front. At the end of 2024, the Indonesia Financial Regulatory Authority, or OGK, issued a new interest rate adjustment inside of the previous plan to reduce fees to 0.2%. The new policy, difference pricing based on loan tenure. The interest rate cap for loan with a tenure of six months or less is set at 0.3%, while loan with a tenure exceeding six months have a cap of 0.2%. Given that our average loan tenure is about three to four months, so the impact on our business is limited. So this policy shift signals a chance in OJ's stance, eliminating long-term regulatory uncertainties and providing strong support for our sustainable growth. And then looking ahead for the year, the Indonesia business is expected to continue its growth trajectory while maintaining healthy profitability. Just as Alexis mentioned, the Indonesia business achieved a net profit of US And it's projected to at least double its net profit in 2025. And the Philippines part. The Philippine business achieved three major milestones in last year. The first one is we have rapid expansion in cash loan business. The transaction volume more than doubled year over year. And the business successfully reached a break even by the year end. And the second one is we broke through in targeting higher-quality customer segments and installment scenarios. We established a strategic partner with TikTok Shop to provide online installment payment service for its users. By 2024, TikTok-related transactions accounted for 19% of total volume. The third one is about institutional funding. We are the first platform in Philippines to introduce institutional fundings. And we saw rapid growth in the number of institutional partners, reaching five by 2024. And the proportion of institutional funding increased significantly, from 10% at the beginning of the year to nearly 7% by year end. Looking ahead, the Philippine business is expected to maintain rapid growth, with the share of buy now, pay later transactions further increasing. At the same time, the Philippine business will begin contributing profits to the group. And the last is for the new market expansion. In terms of new market expansion, we obtained a non-banking financial company, NBFC, license from the Security and Exchange Commission of Pakistan, SCCP. And we plan to accelerate our operations in Pakistan in 2025. We also actively exploring opportunities in other countries. And we will share more updates when appropriate. So thanks, Cindy.

Thank you. Is there no further questions now? I'd like to turn the call back over to the company for closing remarks.

Thank you once again for joining our call today. If you have any further questions, please feel free to contact Pimpilution Group's Vestal Relations team. Thank you.

Thank you, sir. This concludes the conference call. You may now disconnect your lines. Thank you.