finvolution-group-reports-first-quarter-2021-unaudited-financial-results

FinVolution Group Reports First Quarter 2021 Unaudited Financial Results

 

FinVolution Group (“FinVolution,” or the “Company”) (NYSE: FINV), a leading fintech platform in China, today announced its unaudited financial results for the first quarter ended March 31, 2021.

For the Three Months Ended

YoY Change

March 31, 2020

March 31, 2021

Total Loan Origination Volume[4] (Bn)

13.1

26.8

104.6%

Loan Volume- Mainland China (Bn)

12.9

26.0

101.6%

Loan Volume- International (Bn)

0.18

0.76

322.2%

Total No. of New Borrowers[3] (‘000)

373

1,005

169.4%

New Borrowers Mainland China (‘000)

258

619

140.0%

New Borrowers International (‘000)

115

386

235.7%

First Quarter 2021 Operational and Financial Highlights

  • Total cumulative registered users[1] reached 125.3 million as of March 31, 2021.
  • Total number of unique borrowers[2] was 3.2 million as of March 31, 2021.
  • Total number of new borrowers[3] was 1,005 thousand, an increase of 169.4% compared to same period of 2020.
  • Loans facilitated for total new borrowers[5] was RMB5.6 billion, an increase of 250% compared to the same period of 2020.
  • Loans facilitated for small business owners were RMB4.4 billion, representing 16.4% of total loan origination volume.
  • 90 day+ delinquency ratio[6] was 1.13% as of March 31, 2021, compared to 7.25% as of March 31, 2020.
  • Average loan size[7] was RMB4,369 for the first quarter of 2021, compared to RMB3,873 in the same period of 2020.
  • Average loan tenor[8] was 8.4 months for the first quarter of 2021.
  • Operating profit was RMB655.7 million (US$100.1 million) for the first quarter of 2021, an increase of 43.9% from the first quarter of 2020.
  • Non-GAAP adjusted operating profit[9], which excludes share-based compensation expenses before tax, was RMB671.2 million (US$102.4 million) for the first quarter of 2021, an increase of 44.7% from the first quarter of 2020.
  • Net profit was RMB592.8 million (US$90.5 million) for the first quarter of 2021, an increase of 41.0% from the first quarter of 2020.

­­­­­­­­­­­­­­­­­

[1] On a cumulative basis, total number of users registered on our platform as of March 31, 2021.

[2] Represents the total number of borrowers whose loans were facilitated on our platform during the period presented.

[3] Represents the total number of new borrowers on our platform during the period presented.

[4] Represents total loan origination volume facilitated on our platform during the period presented.

[5] Represents loan origination volume facilitated for total number of new borrowers on our platform during the period presented.

[6] “90 day+ delinquency ratio” refers to the outstanding principal balance of on- and-off balance sheet loans that were 90 to 179 calendar past due as a percentage of the total outstanding principal balance of on-off balance sheet loans on our platform as of a specific date. Loans that originated outside Mainland China is not included in the calculation.

[7] Represents the average loan size on our platform in Mainland China during the period presented.

[8] Represents the average loan tenor period on our platform in Mainland China during the period presented.

[9] Please refer to “UNAUDITED Reconciliation of GAAP And Non-GAAP Results” for reconciliation between GAAP and Non-GAAP adjusted operating profit.

Mr. Feng Zhang, the Chief Executive Officer of FinVolution, commented, “We are pleased to start 2021 with remarkable progress in delivering high quality growth across all aspects of our business in the first quarter of 2021. Our total loan origination volume reached a record high to RMB26.8 billion, representing an increase of 104.6% year over year. We further benefitted from our successful transition through sophisticated, technology-powered systems, which helped to improve our delinquencies to historical lows while achieving sequential growth.”

Going forward, we see continued opportunity for quality growth as we further build on our strong technological capabilities and credit risk management framework. Notably, our total number of new borrowers acquired in the first quarter of 2021 exceeded one million, representing an increase of 169.4% year over year. Our small business loans initiatives grew rapidly with loan origination volume increasing to RMB4.4 billion, serving 305 thousand small business owners in the first quarter of 2021, compared to RMB3.7 billion and 220 thousand small business owners for the full year of 2020.

We are confident in leveraging our well-established position in China’s consumer and micro enterprise markets and Southeast Asian booming digital finance market will unlock tremendous value for all stakeholders,” concluded Mr. Zhang.

Mr. Jiayuan Xu, the Chief Financial Officer of FinVolution, commented, “With a strong recovery across multiple operation metrics in the first quarter, we delivered non-GAAP operating profit[9] of RMB671.2 million representing an increase of 44.7% year over year, reaffirming the successful transition of our business model towards higher quality borrowers. Supported by a solid balance sheet with cash and short-term liquidity of RMB5.1 billion, our leverage ratio remains low at 3.7 times. FinVolution is well positioned to explore new business models and tap into new opportunities both domestically and internationally, ” concluded Mr. Xu.

First Quarter 2021 Financial Results

Net revenue for the first quarter of 2021 increased by 0.3% to RMB2,112.9 million (US$322.5 million) from RMB2,106.3 million in the same period of 2020, primarily due to the increase in loan origination volume and partially offset by the decrease in guarantee income as a result of improved asset quality.

Loan facilitation service fees increased by 103.4% to RMB761.6 million (US$116.2 million) for the first quarter of 2021 from RMB374.5 million in the same period of 2020, primarily due to the increase in loan origination volume which was partially offset by the decrease in average rate of transaction fees.

Post-facilitation service fees increased by 23.9% to RMB226.4 million (US$34.6 million) for the first quarter of 2021 from RMB182.7 million in the same period of 2020, primarily due to the increase in outstanding loans serviced by the Company and the rolling impact of deferred transaction fees.

Guarantee income was RMB659.2 million (US$100.6 million) for the first quarter of 2021 compared to RMB1,150.3 million in the same period of 2020, as a result of improved asset quality. The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. As we transitioned our business towards quality borrowers, the fair value of quality assurance commitment upon loan origination decreased due to better asset quality which results in the decrease in guarantee income.

Net interest income decreased by 11.0% to RMB280.4 million (US$42.8 million) for the first quarter of 2021, from RMB315.0 million in the same period of 2020, primarily due to the reduction in the outstanding loan balances of consolidated trusts partially offset by the higher loan origination volume originated outside mainland China.

Other revenue increased by 121.0% to RMB185.2 million (US$28.3 million) for the first quarter of 2021 from RMB83.8 million in the same period of 2020, primarily due to increase customer referral fees to other third-party platforms.

Origination and servicing expenses increased by 65.6% to RMB413.1 million (US$63.0 million) for the first quarter of 2021 from RMB249.5 million in the same period of 2020, primarily due to the increases in employees expenditures and fees paid to third party service providers.

Sales and marketing expenses increased by 266.4% to RMB334.2 million (US$51.0 million) for the first quarter of 2021 from RMB91.2 million in the same period of 2020, primarily due to the increase in online customer acquisition expenses as a result of the increase in newly registered users on the Company’s platform.

General and administrative expenses increased by 16.8% to RMB112.6 million (US$17.2 million) for the first quarter of 2021 compared to RMB96.4 million in the same period of 2020, due to increased expenditures in employees benefits.

Research and development expenses increased by 7.1% to RMB93.8 million (US$14.3 million) for the first quarter of 2021, compared to RMB87.6 million in the same period of 2020, due to increased investments into technology development.

Credit losses for quality assurance commitment were RMB444.9 million (US$67.9 million) for the first quarter of 2021 compared to RMB796.8 million in the same period of 2020 due to improved asset quality partially offset by the increase in loan origination volume.

Provision for loans receivables was RMB18.8 million (US$2.9 million) for the first quarter of 2021, compared with RMB295.9 million in the same period of 2020, primarily due to improved asset quality as well as the decrease in loan receivables during the quarter.

Provision for accounts receivables and other receivables increased by 20.2% to RMB39.8 million (US$6.1 million) for the first quarter of 2021, compared with RMB33.1 million in the same period of 2020 as a result of increase in loan origination volume.

Operating profit increased by 43.9% to RMB655.7 million (US$100.1 million) for the first quarter of 2021 from RMB455.8 million in the same period of 2020.

Non-GAAP adjusted operating profit, which excludes share-based compensation expenses before tax, was RMB671.2 million (US$102.4 million) for the first quarter of 2021, representing an increase of 44.7% from RMB463.8 million in the same period of 2020.

Other income decreased by 20.6% to RMB42.7 million (US$6.5 million) for the first quarter of 2021 from RMB53.8 million in the same period of 2020, mainly due to the decrease in government subsidies.

Income tax expenses were RMB105.7 million (US$16.1 million) for the first quarter of 2021, compared with RMB89.2 million in the same period of 2020, mainly due to the increase in pre-tax profit and change in revenue contribution from different subsidiaries with different tax rates.

Net profit was RMB592.8 million (US$90.5 million) for the first quarter of 2021, compared with RMB420.4 million in the same period of 2020.

Net profit attributable to ordinary shareholders of the Company was RMB590.4 million (US$90.1 million) for the first quarter of 2021, compared with RMB419.4 million in the same period of 2020.

As of March 31, 2021, the Company had cash and cash equivalents of RMB2,559.8 million (US$390.7 million) and short-term investments mainly in wealth management products of RMB2,538.7 million (US$387.5 million).

The following table provides the delinquency rates for all outstanding loans on the Company’s platform in mainland China as of the respective dates indicated.

As of

15-29
days

30-59
days

60-89
days

90-119 days

120-149 days

150-179 days

September 30, 2017

0.89%

1.40%

1.15%

1.02%

0.79%

0.60%

December 31, 2017

2.27%

2.21%

1.72%

1.63%

1.36%

1.20%

March 31, 2018

0.87%

2.11%

2.43%

3.83%

2.29%

1.89%

June 30, 2018                  

0.83%

1.21%

1.05%

0.98%

1.60%

2.03%

September 30, 2018                  

1.03%

1.77%

1.49%

1.29%

1.06%

1.02%

December 31, 2018                  

0.92%

1.63%

1.41%

1.45%

1.44%

1.34%

March 31, 2019

0.80%

1.61%

1.45%

1.29%

1.31%

1.20%

June 30, 2019

0.86%

1.42%

1.37%

1.19%

1.26%

1.21%

September 30, 2019

0.90%

1.50%

1.35%

1.31%

1.17%

1.20%

December 31, 2019                  

1.34%

2.40%

1.86%

1.76%

1.62%

1.53%

March 31, 2020

1.34%

3.03%

2.33%

2.44%

2.64%

2.17%

June 30, 2020

0.71%

1.36%

1.70%

2.00%

2.75%

2.38%

September 30,2020

0.46%

0.72%

0.74%

0.90%

1.07%

1.43%

December 31, 2020

0.35%

0.55%

0.48%

0.52%

0.49%

0.55%

March 31, 2021

0.29%

0.52%

0.43%

0.39%

0.38%

0.36%

The following chart and table display the historical cumulative 30-day plus past due delinquency rates by loan origination vintage in mainland China for all loan products facilitated through the Company’s online marketplace as of March 31, 2021:

Click here to view the chart.

Month on Book

Vintage

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

2017Q3

2.22%

3.05%

4.13%

5.18%

6.13%

6.64%

6.88%

7.04%

7.16%

7.22%

7.26%

2017Q4

2.86%

4.24%

5.19%

5.69%

5.98%

6.19%

6.29%

6.39%

6.47%

6.49%

6.50%

2018Q1

1.37%

2.20%

2.99%

3.67%

4.32%

4.86%

5.23%

5.50%

5.66%

5.74%

5.77%

2018Q2

1.87%

3.12%

4.39%

5.46%

6.33%

6.99%

7.47%

7.80%

7.99%

8.08%

8.13%

2018Q3

1.45%

2.51%

3.53%

4.39%

5.09%

5.59%

5.97%

6.28%

6.50%

6.64%

6.72%

2018Q4

1.43%

2.49%

3.55%

4.42%

5.18%

5.76%

6.20%

6.54%

6.81%

7.01%

7.16%

2019Q1

1.34%

2.38%

3.45%

4.36%

5.13%

5.75%

6.22%

6.65%

6.99%

7.25%

7.43%

2019Q2

1.33%

2.34%

3.31%

4.18%

5.05%

5.82%

6.44%

6.98%

7.34%

7.50%

7.52%

2019Q3

1.02%

2.16%

3.42%

4.55%

5.64%

6.45%

6.92%

7.13%

7.20%

7.20%

7.15%

2019Q4

0.83%

2.07%

3.37%

4.45%

5.12%

5.50%

5.68%

5.79%

5.83%

5.80%

5.73%

2020Q1

0.81%

1.73%

2.46%

2.97%

3.35%

3.59%

3.71%

3.78%

3.82%

3.82%

3.80%

2020Q2

0.44%

0.92%

1.34%

1.65%

1.90%

2.08%

2.21%

2.30%

2020Q3

0.41%

0.81%

1.16%

1.47%

1.72%

2020Q4

0.36%

0.70%

Business Outlook

As China’s economic environment gradually recovers from the aftermath of the COVID-19 outbreak, the Company has been experiencing progressive improvements across numerous operational metrics. The Company will continue to closely monitor the situation of global pandemic and remain agile in its business operations. As such, the Company holds a cautiously optimistic view on its operations and anticipates a steady growth in its loan origination volume in the second quarter of 2021, which is expected to be in the range of RMB29.0 billion to RMB30.0 billion.

The above outlook is based on current market conditions and reflects the Company’s preliminary expectations as to market conditions, its regulatory and operating environment, as well as customer and institutional investor demand, all of which are subject to change.

Shares Repurchase Program Update

On March 21, 2018, the Company announced that its board of directors of the Company (the “Board”) had approved share repurchase program whereby the Company is authorized to repurchase its own Class A ordinary shares in the form of American depository shares (“ADS”) with an aggregate value of up to US$60 million during the next twelve-month period. On August 21, 2018, the Board had approved an expansion of such share repurchase program whereby the maximum aggregate value of ADSs that can be repurchase increased from US$60 million to US$120 million. Concurrently, the Board also approved to extend this share repurchase program for another twelve-month period starting from the date which the Board approved such extension and subsequently further extending it to August 20, 2020. The share repurchase program shall be subject to general business conditions and market conditions. At the end of this program, the company has deployed approximately US$111.0 million to repurchase its ADSs.

On August 24, 2020, the Company announced that the Board had approved a new share repurchase program whereby the Company is authorized to repurchase its ADSs with an aggregate value of up to US$60 million till December 31, 2021. The share repurchase program shall be subject to general business conditions and market conditions. As of March 31, 2021, the Company has deployed approximately US$20.3 million to repurchase it ADSs.

Conference Call

The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on May 25, 2021 (8:00 PM Beijing/Hong Kong time on May 25, 2021).

Dial-in details for the earnings conference call are as follows:

United States (toll free):

1-888-346-8982

Canada (toll free):

1-855-669-9657

International:

1-412-902-4272

Hong Kong, China (toll free):

800-905-945

Hong Kong, China:

852-3018-4992

Mainland China:

400-120-1203

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for “FinVolution Group.”

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at https://ir.finvgroup.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until June 1, 2021, by dialing the following telephone numbers:

United States (toll free):

1-877-344-7529

Canada (toll free):                

1-855-669-9658

International:

1-412-317-0088

Replay Access Code:

10156736

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