X Financial (XYF) 23 Nov 212021 Q3 Earnings call transcript

Hello, and welcome to the X Financial Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tanya Wen. Please go ahead.

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

the Mr. except otherwise, is Mr. Kan forward-looking as or introduce a statements under go Commission. all risks, difficult company's actual the the results, Li, uncertainties your Kan the of differ available this business Frank Act will The new financials. that call involve other statements may during any Financial is give Securities this and statements. Q&A and Officer. company's are you may update the future other Further which Zheng, the call questions my a to please ahead. the cause unknown expectations current from who in in of Li, and go to company's highlights, or factors that will Mr. company required U.S. known President; other Reform events They now control, the current Exchange with statements followed information the which achievements session. beyond overview those I company's of Securities Mr. conditions safe many relate remind and to On Mr. market Li based to contain law. forward-looking the factors company's any and result and filings and are operating to does Zheng, materially Fuya Li. risks, performance on to today are and uncertainties of forward-looking and Litigation not the Mr. answer brief Chief pleasure and operations which all predict events of obligation from Financial through are under XXXX. undertake included as Such information, provisions the X harbor Private It of regarding are and by the

everyone. Hello, you. Thank

our line high profitability, with At Both the amount pleased third in We new costs. for strategic total facilitation efficiency are enhance net execution our increase the our to loan amount our with The boost a quarter. very hit loan second same were the and straight guidance. reduce income in net income operational the has in ability and time, the demonstrated our facilitation quarter.

subject to end adjusted the cap XX% consumption. internal in of During loan IRR, we to XX% XX% to rate the and we amount of for regulatory is structure IRR support And expect The third year. loan economy real this approximately the grow improved We growth this the to quarter, total believe pricing comply further of proportion XX% to stimulate return, with facilitation government's XX% and healthy and private between amount cap. our to initiative our the SMEs it the of September. facilitation our by

Beyond the demand attract help us more initiative quality increases. regulatory solutions the requirements, compliance we as personal can financing believe for this borrowers that

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

decline XX.X% there funding Card will XX, increase partners' to volume quarter, loan a due fourth Xiaoying in the outstanding our an outstanding of of loan the RMB compared requirements. In total XX.X Loan As reached institutional our quarter. loan billion, the September balance previous of be XXXX, year-end moderate balance with

our efforts capabilities. management continued to risk improve We our

are of and all that the rate delinquency largest X.XX% XXXX, a X.XX% XXXX, June our be transfer Baihang assessment-related Despite data with its Credit, personal a are directly and the compared our best conducted for restricted institutions, of agency. facilitation of history. within we historical with credit was the bureau range submitting past to According financial such to to XXXX. China, for license China, as data the September XX, to to outstanding from licensed platforms September quarter-over-quarter through XX credit to bureau operating PBOC, quality due in regulation, still in in the with been a closely individual as XX, XX response, asset As fluctuations, notes the addition days credit second comply of X.XX% have of People's credit XX, must working is new loan Bank regulation. execute plan In new

noticed the top plan list waiting have approval. a large either for on for rectification that We regulator's on or working XX the companies are

ready comply getting with are regulation. new the fully and We will

our cost the minimal expect and to We changes structure. daily operational activities

the efforts offerings. we our diversify continued to service quarter, During our

third business officially the in quarter. commenced microcredit operation Our

We also and business our groups services a important for which and growth. small to individuals, self-employed made progress future in solid are target micro our

believe a and favorable testing validation certain the and we our goals track regulatory have on policies to We efforts in bearing helping drive fiercely our up and are adjusting are sustainable all loan competitive us and We strongly long-term fruit qualification and this for are these group speed growth and towards process. systems to industry.

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

with Thank Kan, and revenue increased million. and the our year-over-year to expectations. quarter, for set you, of XXX.X third everyone. financial in hello, robust another XX.X% Total delivered We results RMB line net

net a income line with also of last compared adjusted period non-GAAP net XXX adjusted of RMB with non-GAAP million year. RMB bottom in strong million XXX.X Our same the loss show growth of

technology-empowered evolving to identify more the and capabilities. acquire data-driven analysis quality Moving our asset IRR we XX in ahead, adapt high-quality strategy and leveraging cap, improve to response to credit borrowers will by our

We serve partners better borrowers' our will to funding with institutional also needs. deepen cooperation

and to we to demonstrates We positioned of more macroeconomic challenges. are are we that valuable well Our record believe navigating opportunities proven bringing our through capable ahead, track capture shareholders. regulatory returns

equivalents XX.X% brief in for amount servicing the XXXX, decline third accounts quarter numbers period commission same Provision with of loans facilitation operations revenue resulting XXXX, primarily from and compared same a receivable compared and the in attributed by decrease XXXX. RMB for with in same the due million to to X with same primarily contract to Please million period third decreased increased in from balances XXX.X and X million average a XX.X RMB in financial shareholders of period quarter. RMB. Income are as of in Non-GAAP collection of loss XX.X X was all third RMB quarter of performance September XXX.X that loss an period XXXX some the decrease a RMB XXXX, XXX.X Net the from partially compared delinquency attributed third period XXXX. RMB expenses operation net average XXXX, as of in Now attributable income of an in shareholders shareholders quarter of adjusted million of receivable the RMB decline same XXX due held SME same the June the primarily was the this the Xiaoying RMB to XXX.X in X increase the period I in to third the million to like million due due facilitation quarter accounts in of services in of was in of of partially Financial to the million average XXXX in the loan with total Financial facilitation RMB XX.X% with XXXX the Provision attributable X.XXXX quarter XX, by of compared million default the increased Loan the Total the compared was XXXX for XXXX. XX.X RMB the in total in rates offset a million same of the would Financial the to XXXX result from to to in increase with decrease million cash fees XXXX. compared expenses, RMB from of adjusted expenses in the as XXXX, same XXXX, of of quarter same note stated third the the decrease net the resulting total the income billion interest XXX million with with the XXX.X with the compared RMB XX, of third loss same by compared and increase XXX.X receivable in in in increase million to amount the related default XXX.X company, from amount XXXX. by in of and loan of period the was from quarter this assets rate RMB of the same loan in compared by RMB XXXX quarter primarily period. third shareholders of non-GAAP Financial with XX.X net period offset million rate XXXX. million RMB in compared the in Origination Cash in million Card of quarter the the the about period to period facilitation quarter XXXX. the was XXX.X estimated loan RMB XXX.X net third RMB

business our for Now outlook.

We for loan XX.X XX makes billion be and RMB to billion be between which RMB XX fourth billion. billion, amount expect RMB RMB of the total facilitation between for total loan amount facilitation XX.X quarter XXXX the to and XXXX

adjusted than XXX subject of adjusted RMB which attributable income net RMB are shareholders forecast to no X be to million, Financial be for our current preliminary quarter non-GAAP non-GAAP fourth XXXX This expect and income shareholders net Financial We million. XXXX the changes. than makes less attributable no less which to reflects to XXX views, X for to

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

from first Instructions] Equinox of [Operator Capital. Heinz The Boyd is question

more a then you're lastly, capital to funding allocation buybacks, and and have your your a the year-end? give start stock? are at balance discuss capital I like reducing color about the how partners company I'd their -- of And us in quarter. just cost Could about X institutional loan thinking address with. share perhaps of why requirements little out you management and at bit please purchases questions And about talk the then

Okay.

first think the year. past pattern or compared last volume little the always, years, a about with except bit few I Last grow. it's it's for flat cost the QX, for the the year, for the for for one usually -- normal the down. for is exception it's -- usually, still That's quarter past

back normal QX this to is in are, QX the we just pattern think and to regarding volume. general, I

of are working For our finished KPI -- quarters all have They -- requirements. us, they their finish fine. think they are partners I doing funding some whatever. those for for Most they or

they requirement, don't Deeply, just know have that. I have they that. have some So balance

okay. general the the first is see, than same or QX So peers, volume even in our probably if be you though is, less pattern. they -- which That's they will pattern with equal compare give what still, QX. The I

of you cost the capital from selling cost the partner. -- of -- think what we I is I our funding believe fund the get mean our

is higher about about our We than higher bit to about between that. X%, are than around which a somewhere around peers, little X.X% X%

so talk year, X% funding regarding will our maybe we over the loan. X we middle -- from this lower As next we here will starting move from cost going months next from and like XX%, year. profile year, we on, road, on. of least far, doing we're so that's accumulate as We from this funding the can starting around to our about a have of the sometime quarter basically partner at down are start starting for believe we And we down time, customer have risk

we the shareholder to some stock loss dividend policy, Regarding or last buyback have year.

in kind place. -- consider earn plan know be or share dividend, peers, that But some almost with and buyback But we capital. plan accumulate total dividend much. all this have I we now, quite then for a will stock, I they you, some maybe to We least And plan their next for sometime not it's year. our it's help buyback story. are a at We and in do the of our this different some money. definitely buyback must policy valuation So very frank year,

of few years We a price it's will bankrupt this almost kind in be valuation. a time, basically a at are almost -- --

know. So something we maybe -- we market don't the know

dramatic us, frustrating believe necessarily a So we in for but or that fashion. it's quickly buyback plan so-called will quite the dividend not change policy very or

next -- that to say, will but -- I consider sometime we as -- will definitely still we So do we year. will

loan you for say ‘XX. about Okay. you sounds of originations, expecting address outlook It talk like your anything high-level next growth helpful. of discuss could kind fiscal continued Can any just fiscal in you’re what to year or you about that year, be sort would think but

color far very Still, – funding fantastic not more I feel. on. so But maybe QX, like a years, they think industry. – okay, our growth we a It’s great last will of We year, okay. lot when think regulatory the for But – – next on. like come. relatively year think to all level, front, we next connected high and need for the next relationship have will year new still clarity not XXXX have up XX% quite it relatively do having things we with also, partners as to but have this regarding year a year. the will they that’s so is what – and so be your be the year next regulation seeing we’ll requirement But we a few think you players, down. coming so from still And and as more I far still and with have be reach

are questions Tanya time. to conference back at no this the session. concludes I [Operator for like closing Instructions] over to This more would question-and-answer turn There remarks. our Wen

joining you, today. on Thank the everyone, for us call

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

for conference today's The presentation. attending Thank concluded. now you has

may disconnect. now You