X Financial
Q4 2020 Earnings Call Transcript

Published: 26 Apr 2021

[Operator:]

Hello and welcome to the X Financial Fourth Quarter 2020 Earnings Conference Call. All participants will in a listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Tanya Wen. Please go ahead.

[Tanya Wen:]

Thank you, operator. Hello, everyone, and thank you for joining us today. The company's results were released earlier and are available on the company's IR website at ir.xiaoyinggroup.com. On the call today from X Financial are, Mr. Simon Cheng, President; and Mr. Frank Zheng, Chief Financial Officer. Mr. Cheng will give a brief overview of the company's business operations and highlights followed by Mr. Zheng, who will go through the financials. They are all available to answer your questions during the Q&A session.

[Simon Cheng:]

Hello, everyone. We're very pleased to close out 2020 with substantial business recovery in the fourth quarter. Our top line saw a year-on-year growth mainly driven by the recovery in the loan facilitation amount which was almost back to the levels of the same period of 2019. With unprecedented challenges due to the impact of COVID-19, I'm very proud of our team in navigating the challenging environment after our business was significantly impacted. We also have successfully completed our business transformation from the P2P model to the loan facilitation model based on 100% institutional funding. In February 2021, the China Banking and Insurance Regulatory Commission finalized guidelines on internet loan businesses by commercial banks with a clarification on capital limits in joint-lending and other requirements. The changes could be favorable for the industry in the long run, along with the Chinese government's work on the Anti-Monopoly Law, we believe all these initiatives will help to build a healthy and sustainable business environment for online lending business and provide more opportunities for qualified loan facilitators of a certain scale. At present, some of our funding partners have been gradually adjusting the way they cooperate with us in order to comply with the new regulations. In the meantime, we will closely monitor regulatory developments and the evolving industry landscape, and adjust our strategies and services in compliance with government policies and market trends.

[Frank Fuya Zheng:]

Thank you, Simon, and hello everyone. We are pleased to announce the solid growth in total net revenue and improved asset quality. Our total net revenue increased 28% quarter-over-quarter and 7.7% year-over-year. Taking advantage of big data, AI-driven technology, we are constantly improving risk control and asset quality, resulting in further improvements in delinquency rates. As of December 31, 2020, the delinquency rates for all outstanding loans that are past due for 31 days to 90 days and 91 to 180 days dropped to 1.5% and 2.53%, respectively, the lowest level in three years. The improvement in our credit loan -- credit risk profile has brought a significant decrease of RMB62 million in the bad debt provisions for the accounts receivable and loans receivable in the fourth quarter when compared with the previous quarter. In addition, we continued to expand our partnerships with third-party financial guarantee companies to further optimize financing costs for borrowers. During the fourth quarter, the proportion of the loan amount we facilitated covered by a third-party financial guarantee companies increased to 38.8% from 25.3% in the previous quarter. We expect to increase the coverage ratio of third-party financial guarantee companies to over 50% in 2021.

[Operator:]

[Tanya Wen:]

Thank you, everyone, for joining us on the call today. If you haven't got a chance to raise your questions, we will be pleased to answer them through follow up contacts. We look forward to speaking with you again in the near future. Thank you.

[Operator:]

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.