X Financial (XYF) 11 Aug 212021 Q2 Earnings call transcript

Hello, and welcome to the X Financial Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tanya Wen. ahead. go Please

Hello, today. operator. and thank for at you available Thank company’s everyone, results us ir.xiaoyinggroup.com. website IR The the today were joining on you, company’s and released are earlier

current X from Frank followed a financials. section. by Zheng, and Mr. Financial brief questions today call the expectations current operating Reform beyond to that and or which factors, of control, They Chief and the Litigation remind Financial Mr. events in go and company’s all which who and many President; the relate are your Zheng, from materially of statements. conditions of of call Q&A Securities other will Kan Li the cause actual known difficult through uncertainties Mr. highlights, to the predict statements and Mr. those forward-looking are which the Act harbor Officer. company’s to risks, overview provisions and this statements during to differ company’s Li, company’s give or available are unknown that are of operations the involve Such market results, On forward-looking the under I Private are safe all the you answer XXXX. may contain will achievements may the based on performance business

Commission. introduce Li, ahead. is Securities except to now result Mr. information, Exchange to and included obligation otherwise, events law. in new future is It of required any and as pleasure factors company the undertake Mr. as please Li. Kan regarding a uncertainties with information forward-looking statements go or my risks, the filings the other For U.S. and risks does update company’s any The not under

Hello, everyone.

and quarter, and a another strong inception We are and quarter-over-quarter high bottom second line in indent with financial on strong amount of quarter results. both line year-over-year our loan momentum guidance. growth pleased since to facilitation hit our the historical our continue In to a total operational very basis, deliver

loan During reduced as which the average we matches institutional retain quarter, to the well our loan partners total the borrowing borrowers our we funding as and lower borrowers. attract weighted charge facilitation service, for for cost products fees with

management of of maintain growth. we the policy, continue effective to cost strong our control profitable With momentum

regulatory the National On protection. comments, People’s Standing Protection Law the April, public Information second front, released draft strengthen Congress in and demonstrating government a Chinese The that user privacy Personal Committee security determined data the to for is of

continue internal always high have and mechanisms. We our improve user protection a self-regulated placed data to value on

our We regulatory closely in and continue with trends. monitor developments, policies adjust to market evolving compliance strategy government and and services

loan quarter facilitation the XX.X% total XX.X% XXX% and quarter-over-quarter. During Xiaoying first second in contributed loan quarter-over-quarter. by of an our the of facilitating since total increase increased amount driven Loan year-over-year facilitation Card Xiaoying amount Card strong of amount loan quarter, the Loan, which growth XXX.X% This of the XXXX. RMBXX.X billion, has our mainly was XXX.X% year-over-year reached and

which our the billion, quarter. revenue. lower an rates has balance XXXX, of lending to compared market outstanding on introducing Loan RMBXX.X economic previous increase pressure the Xiaoying June the XX, of for the loan principles Card put Chinese stimulate As gradually XX.X% reached guiding expected Recently, total to with been of to some growth, government is

with active mitigate funding will we strategy continue institutional continue our to solid by encouraged to For feasible remain the but to solutions the half control. fully sustainable pressures partners In the and costs, proactive proven taking of we year, At the long-term funding management half first second to negotiations policy we conclusion, of will measures continues be the by reduce improve our our on during devising risk growth. driving our the in compliant, progress team we’ll to are same we capability funding existing year, made execute partners. cost on and time, with and

We confidence upward of finance we demand expect in China’s to commence continued operation Consumer in solutions. of our in trend as to has see economy rise quarter Microcredit for the business third consumer XXXX.

are technology service vast us confident shareholders. capability the returns bring opportunities to We capture of ahead our leveraging and our valuable more and to

will to turn Now I financials. the will our call who Frank, go through

Kan, hello, Thank and you, everyone.

the RMBXXX.X continue period million net million. during effective income control of economics total in the RMBXXX.X scale, income year, of previous second million combination last second and the The of year-over-year loss XXX.X% deliver increased financial quarter. further strong revenue improved cost a and quarter. to With from We the performance increased a to net of a our million net RMBXXX.X net RMBXXX.X in to of

to experience improvement asset continue steady quality. in We our

of a and XXXX, the for June X.X% X.XXX% days of of XX our the were XX, for as XXXX, March delinquency base. risk As and June decrease outstanding past XX, all that X.XX% clear from are management borrower rates of as capabilities XXXX, to XX XX, loans due demonstration a premier and

with of that strengthen was by those covered third-party the amount companies quarter. financial guarantee loan in the previous continued quarter. during XX.X% financial Thereby increased XX.X% facility our cooperation guarantee also from companies We to to the proportion

funding we further of expand partners. to forward, capabilities, operational institution development our collaboration will and improve with more the technology invest continue Moving efficiency the in

We in performance momentum maintain the quarter. the operational in our third expect growth to

compared XXXX, financial compared the XXXX period in the Now default Please second I with the this Provision decrease total income period XXXX, from net increase the amount net receivable to of in to was XXXX XXXX partially adjusted Net RMBXXX.X loss RMBXX.X same of the of and was would as delinquency in amount compared of the RMBXXX.X note RMBXX.X million Non-GAAP resulting quarter collection increase in decrease in Origination X non-GAAP of in shareholders June result in compared the million million, period to increased of accounts RMBX,XXX.X to by Financial as the from million facilitation quarter period loan contract of and million net the same by with total total RMBXXX.X in same the Cash quarter million period from adjusted quarter estimated primarily million loans period an of all receivable with the quarter like primarily from of income The revenue Financial facilitation RMBXXX.X with RMBXXX.X a loss net income XX, operation a second March same amount RMBXXX.X was in offset same the RMBXXX.X XXXX, compared to Financial the expenses XXXX. was same to of shareholders adjusted of rate compared increase due XXXX in and RMBXXX.X the quarter servicing operations in by Loan increased to this receivable estimated for period same X Xiaoying income Card the net period loan the in provision to cash XXXX. period same equivalent RMBXXX.X average in XXXX with and XXXX. quarter second for of primarily as the the total provision RMB. quarter the same by the attributable attributable average with in in receivable the RMBXXX.X the to million, of quarter in second XXX.X% Non-GAAP shareholders commission period RMBX.X of million XXXX. period in compared numbers XXXX, was from loan XXXX, in second in due attributable million, XXXX compared the the are X.X% compared quarter The default services the in to X XXXX, second rate. resulting XXXX. in million period XXXX that compared of million increase amount due X from in of in facilitation to decline due of million primarily with XX, Financial of second Financial shareholders XXXX. of of brief loss assets RMBXXX.X XXXX. the partially the second same attributable million increased of same a offset in of loans million the with an the RMBXXX.X of to for increase income from stated and expenses performance. shareholders of was of fees Reversal facilitation XXXX. RMBXXX.X million with the with X of some in of million the of rate in attributable

our for outlook. business Now

million. This to billion Financial preliminary income be we of of facilitation reflects For XXXX, views, current attributable to our total RMBXX.X range in are expect the X be subject than to amount the no changes. less RMBXXX to third which shareholders RMBXX.X and net billion loan to and forecast quarter

the this Now remarks, to would and we our questions. call prepared concludes Operator, the to please. like open

the And question Instructions] Bourne go AWH with from Capital. [Operator first ahead. Mason Please comes

Good morning, questions. for taking thanks

plan You then opportunities mentioned And license that opens you that maybe new – that credit obtain QX. the steps your took you? that using you start up describe in to Microcredit Could license? you to for what

we repay – our got to we first obtain think batch opaque And was there’s it’s long investment we but really to on and been – – investors process overall successfully got the who we guidelines our application After this I submitted first all license. BXB because – a the XXXX. how it. the able progress, has their no The of and fixed but Sure. the is very finally, in are and license, fairly late

about asked opportunities. You

the that is is still strategy moment, this of And early best the think, license. determining I is at team in fairly to utilizing in management the difficult evaluate. the opportunity what process

through we the use to of we just just began to – As offer began now, license. loans

growing high Okay. from on your XXX% facilitation I appears now your total forward. going then and also of guidance based And up loan QX on up was then Thanks. to to that, kind volume year-over-year be over follow and guess, teens

view that you So are with market the do of growth? driving large what’s guess, that, what I And opportunity? your – how kind

in it’s since terms own in growth very volume around of And COVID-XX. our has severely then, last largely a year, to due the in other different And our loan COVID-XX the result, compared countries last worst our to as year from are basically I recovering choices. the we which difficult withheld, was is been world. compare think the the Last the to of because year situation China, stage.

not So the growth right market very future benefit – fairly the in strong will such Chinese has China to qualified you operations. since be. than a business. has we of that have that maintain in our the our are people Chinese been are closely growth. It’s say But has forecast a the basically That exit supervisional I the – now what able the those are market will why market. to if to economy market following to they long persuaded you Chinese we company in passed that notice because to the so able committee maintain leading COVID-XX continuous the difficult who the gradually as would And been the are we is

to think opportunities. the is the good. management opportunity dependent on really It’s So of advantage I the team take

Great. of up morning. a little thing roughly earnings, per my so annual per now had, $X.XX on an is in ADS And book Shares have then guidance, I the your run $X.XX bit by roughly and [ph] now, rate this you value trading ADS ADS. then [ph]. But $X.XX [ph] last based for cash math is are

back capital to you returning in about and shareholders how shares? that think do mind, with capital So buying potentially or allocation

Yes.

lower think, – temporary the are about but actually the think – another is requirement this and we we in our issues – original to – period ruling that in I the billion growth license, put for And RMBX we still than stage the RMBXXX into need November, require capital. for I still at micro the – license. the is million the

capital use – will the the they some for case So aside case funding in we need for purpose – another also. the license put

near future, of question – we answer for So or future something kind your for thing forceable have that the don’t have buyback we directly. to the like a stock

Okay.

a tied just correctly? would to that be just was to saying speaking be I restricted that allocated new that of – more equivalents, but And you’re license. more as will I cash going would this that understanding be and from guess cash due up So the Am that balance. I cash

Yes. Yes.

for Thanks questions. all my I it that’s well I on. pass Okay, had. taking

Okay.

remarks. I question-and-answer Wen the turn [Operator Instructions] over any like our closing conference to session. concludes back to Tanya This would for

Thank you everyone for joining the us call. on today

near raise If haven’t your We future. you you to pleased chance them through you. forward Thank got to in to the questions, will we a again follow-up answer speaking be with look contact.

attending for you now presentation. concluded. is conference The today’s Thank

You may now disconnect.