FinVolution Group

Hello, ladies and gentlemen. Thank you for participating in the second quarter 2026 earnings conference call for Finvolution Group. At this time, all participants are in a listen-only mode. After management prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I'll now turn the call over to your host, Yam Cheng, Head of Capital Market for the company. Yam, please go ahead. Yes, Min.

Hi all, thank you for joining our call. Welcome to our second quarter 2026 earnings conference call. The company's results were issued through 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 IR section of our website. Mr. Tim Lee, our Chief Executive Officer, and Mr. Alexis Xu, We will start the call with the prepared remarks and conclude with a Q&A section. 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 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 conditions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's 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. Finally, we posted a presentation on our IR website providing details of our results. Before I turn over to our CEO, we are dialing in from multiple locations, so if there is any delay in connection, please bear with us. I will now turn over to our CEO team. Team, please go ahead.

Thanks, Yam, and thanks everyone for joining us. Let me start with the big picture. For years, we have pursued one clear strategy. Internationalization. In a word, this volatile, that strategy matters more than ever. It let us take what we have learned and put it to work in markets that are ready for FinTech. And it helps us diversify away from any single market. That strategy served us well this quarter, and it is exactly where we are headed. Overall, the second quarter was a solid one. In China, a stable risk backdrop, together with the preemptive actions we took in early quarters, gave us a constructive environment to operate in. Overseas, momentum in Indonesia and Australia more than offset a deliberate temporary pullback in the Philippines. That is our diversification strategy working as a design. Let me turn to the results. Given the results in China in the fourth quarter of last year, the sequential trend is the most telling measure. Group volume rose 5% sequentially to 45 billion RMB and the revenue moved instead up 6% to 3.4 billion RMB. Net profit was 427 million RMB up 1%. But the finger we are most encouraged by is overseas. 54 million RMB in operating profit, up 17% sequentially. Overseas now account for roughly 27% of group revenue, and that share will keep rising for the rest of the year. Now let me dive into the two segments, starting with our Chinese mainland. At a high level, we booked 41 billion RMB in loan volume, up 6.5% quarter over quarter, a healthy continuation of the recovery that began at the beginning of 2026. That said, the industry was rattled by an isolated credit incident, which adversely impacted the risk and funding dynamics. I will walk you through in a bit. Right now, we are watching three priorities closely. I said quality, fundings, and regulation. First, I said quality. Coming into 2026, we expected a gradual recovery following the regulatory reset in the fourth quarter of last year. Two quarters in that played out as we expected through the first half. This continued to ease through the second quarter. C2M2 came down again from 0.68% to 0.56%. So we grew the book selectively focusing on the high quality repeat borrowers as we know well. The strategies generated 6% sequential growth in unique borrowers while keeping credit quality firm. Vintage credit cost was steady at roughly 2.7%. The environment has since turned. In July, an isolated credit event led institutional funding partners to reduce funding for loan facilitation. Many smaller platforms either excited or sharply cut loan origination. Separately, a regulation campaign around the collection industry has tightened the collection capacity across the industry. This creates a risk headwind for us in the coming quarters. While it is in the early stage, we are staying cautious on the risk of our portfolio. On funding, let me be direct. The same tightening sits behind our funding outlook. Our own funding held up well in the second quarter, but beginning in July, We are seeing the industry as a whole titan. As an institution, turn more cautious. For us, that could mean meaningfully lower origination volume and some upward pressure on funding costs. Here is how we are managing it. Our balance sheet and liquidity give us room. And our asset quality and compliance record matter more when funding partners get selected. We've already began allocating liquidity towards our China funding base, and we'll prioritize funding stability over near-term growth until the environment normalizes. On regulation, the new fee disclosure requirements took effect on August 1st, and we are compliant The online marketing rules take effect at the end of September and we are ready working with our partners to be ready. Now let's move on to the overseas segment. Our overseas segment is performing well. Volume rose 19% year-over-year and revenue reached 930 million RMB, up 18%. More important, These numbers are backed by real demand. Our unique borrowers more than doubled from a year ago to 5.3 million. Over the past two years, we have reached several important milestones. We have built a diversified portfolio of markets where temporary weakness in any one country can be offset by strength in the others. Last year, We absorbed an interest rate camp in Indonesia on the strength of the Philippines. This quarter, we deliberately dialed back origination as a new rate camp took effect in the Philippines. And that gap was fueled by structural growth in Indonesia and the progress we keep making in our newest market, Australia. As the country's growth is more balanced, and as we add more profitable markets, our growth trajectory would be increasingly predictable and certain. Our playbook remains the same, products expansion and customer upgrade. We use broad portfolio of easy-to-use financing products to attract customers to try out, and progressively cross-sell. and other credit solutions to build better unit economics over time. In Indonesia, Offline Buy Now Pay Later continues to lead the growth. Our partnership in various offline consumption scenarios continues to proliferate. Offline Buy Now Pay Later is now around 25% of the volume, comparing to single-digit contribution a year ago. In the Philippines, The rate camp took effect this quarter. We slowed down deliberately to protect quality. The same approach we have taken through past transition. And growth has typically returned once the new pricing settles in. In Australia, we further expanded our offerings to large ticket size. Lower interest rate products to attract consumers with strong credit profiles. for higher credit limit. While this is still preliminary, we plan to continue to pursue customer upgrade as core strategy. We also made further investment in building the opening banking infrastructure, giving us direct access to bank statement data and a far sharper grade on each borrower. Finally, ESG. In our business, trust is everything. In June, we published our eighth annual ESG report. On fraud prevention, we made 60 upgrades to our anti-fraud system, flagged more than 9,000 suspicious activities each day, and blocked over 17,000 fraud attempts. We also launched our own consumer protection system, Golden Satin Nail. It systematically integrates early risk warnings, complaint analysts, compliance users, and data dashboards to drive consumer protection governance from post-incidence handling towards proactive warning. And this resolves 74.5% of cases on first contact, with customer satisfaction at 98.5%. With that, let me hand it to Alexis for a closer look at the numbers.