FinVolution Group (FINV) 2022 Q4 法說會逐字稿

Hello, ladies and gentlemen, thank you for participating in the Fourth Quarter and Full Year 2022 Earnings Conference Call for FinVolution Group. (Operator Instructions) Today's conference call is being recorded.

女士們，先生們，您好，感謝您參加 FinVolution Group 第四季度和 2022 年全年收益電話會議。 （操作員說明）正在錄製今天的電話會議。

I will now turn the call over to your host, Mr. Jimmy Tan, Head of Investor Relations for the company. Thank you, Jimmy, please go ahead.

我現在將把電話轉給你的東道主，公司投資者關係主管 Jimmy Tan 先生。謝謝你，吉米，請繼續。

Hello, everyone, and welcome to our fourth quarter and full year 2022 earnings conference call. The company results were issued via Newswire services earlier today and are posted online. You can download the earnings release and sign for the company e-mail alerts by visiting the IR section of our website at ir.finvgroup.com. Mr. Tiezheng Li, our Chief Executive Officer, and Mr. Jiayuan Xu, our Chief Financial Officer, will start the call with their prepared remarks and conclude with a Q&A session.

大家好，歡迎來到我們的第四季度和 2022 年全年收益電話會議。公司業績今天早些時候通過 Newswire 服務發布並在線發布。您可以訪問我們網站 ir.finvgroup.com 的 IR 部分，下載收益發布並簽署公司電子郵件提醒。我們的首席執行官李鐵正先生和我們的首席財務官徐佳元先生將以他們準備好的發言開始電話會議，並以問答環節結束。

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.

在本次電話會議中，我們將參考多項非 GAAP 財務指標來審查和評估我們的經營業績。這些非 GAAP 財務措施並非旨在孤立考慮或替代根據美國 GAAP 編制和列報的財務信息。有關這些非 GAAP 措施以及與 GAAP 措施的調節的信息，請參閱我們的收益新聞稿。

Before we continue, please note that today's discussion will contain forward-looking statements, made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company results may be materially different from the view 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.

在我們繼續之前，請注意今天的討論將包含前瞻性陳述，這些陳述是根據 1995 年美國私人證券訴訟改革法案的安全港條款作出的。前瞻性陳述涉及固有的風險和不確定性。因此，公司業績可能與今天表達的觀點存在重大差異。有關這些及其他風險和不確定性的更多信息包含在公司提交給美國證券交易委員會的文件中。公司不承擔任何更新任何前瞻性陳述的義務，除非適用法律要求。

Finally, we post a slide presentation on our IR website, providing details of our results for the quarter. I will now turn the call over to our CEO, Mr. Tiezheng Li. Please go ahead, sir.

最後，我們在 IR 網站上發布了幻燈片演示文稿，提供了本季度業績的詳細信息。我現在將把電話轉給我們的首席執行官李鐵徵先生。請繼續，先生。

Thanks, Jimmy. Hello, everyone, and thank you for joining our earnings call. I'm Tiezheng Li, Co-Founder of the company and it's a pleasure today and speak with all of you today. I'm deeply honored to take on the role of Chief Executive Officer and excited to explore the great opportunities and the prospects ahead for FinVolution.

謝謝，吉米。大家好，感謝您參加我們的財報電話會議。我是公司的聯合創始人李鐵正，今天很高興與大家交談。我很榮幸擔任首席執行官一職，並很高興探索 FinVolution 未來的巨大機遇和前景。

We are happy to speak with you today following the conclusion of another turbulent year on a strong note. 2022 was a complicated year given the complex macro environment. The situation in the domestic market has been very challenging with the pandemic resurgence throughout the year, leading to varying degrees of lockdown across multiple cities. The Shanghai lockdown was particularly difficult for us as most of our core teams are based here. However, despite all these challenges, we continue to build on our priority technologies in industry-leading digital capabilities, delivering resilient growth each quarter and ultimately producing another set of record-breaking operational and financial results to close out the year. We have invested wisely in the technologies throughout the year and are pleased to share that as of December 2022. We have successfully registered 212 software copyrights and filed 162 patents in fintech-related areas.

在又一個動蕩的一年以強烈的基調結束之後，我們今天很高興與您交談。 2022年是複雜的宏觀環境複雜的一年。國內市場形勢嚴峻，全年疫情反复，多個城市出現不同程度的封城。上海的封鎖對我們來說尤其困難，因為我們的大多數核心團隊都在這裡。然而，儘管面臨所有這些挑戰，我們繼續在行業領先的數字能力方面建立我們的優先技術，每個季度都實現了彈性增長，並最終在今年結束時產生了另一組破紀錄的運營和財務業績。我們全年在技術上進行了明智的投資，並很高興與大家分享截至 2022 年 12 月的成果。我們已成功註冊 212 項軟件著作權，並在金融科技相關領域申請了 162 項專利。

For full year 2022, we achieved our total transaction volume target with RMB 175.4 billion in total transactions, representing a year-over-year increase of 28%. Our total transaction volume in the fourth quarter reached RMB 48.6 billion, representing a year-over-year increase of 25% and a sequential increase of 7%. Notably, our full year domestic loan volume grew to RMB 171 billion, a year-over-year increase of 28%, and the fourth quarter volume rose to RMB 47 billion, a year-over-year increase of 24% and a sequential increase of 6%. Thanks to our effective local focus, global outlook strategy. International loan volume for the full year also climbed to RMB 4.3 billion, representing a year-over-year increase of 16% where loan volume for the fourth quarter reached RMB 1.4 billion, representing an increase of 41% year-over-year.

2022 年全年，我們實現了總交易額人民幣 1,754 億元的總交易額目標，同比增長 28%。我們第四季度的總交易額達到人民幣 486 億元，同比增長 25%，環比增長 7%。值得注意的是，我們全年國內貸款量增長至人民幣 1,710 億元，同比增長 28%，第四季度增長至人民幣 470 億元，同比增長 24%，環比增長6%。由於我們有效的本地關注，全球展望戰略。全年國際貸款額也攀升至人民幣43億元，同比增長16%，其中第四季度貸款額達到人民幣14億元，同比增長41%。

Concurrently, our total outstanding loan balance stands at RMB 64.6 billion, a year-over-year increase of 28%. Our outstanding loan finance in China totaled RMB 63.8 billion, an increase of 28% year-over-year. And the international markets, this number has soared to RMB 0.8 billion, representing a year-over-year increase of 167%. Solid management experience as well as excellent [bright spot] execution throughout the year helped us to overcome the year's challenging period, leveraging our cutting-edge technologies such as RTA for new borrowers acquisition. Our Octopus system for operation of advertisement targeting high-quality borrowers, our Magic Mirror for credit risk assessment and our Ming Mirror for fraud detection. We delivered robust operational and financial results, fostered by our prudent approach to risk management and our advanced credit risk assessment model. Our vintage delinquency rates remained stable and healthy between 2.3% to 2.4% throughout 2022.

同時，我們的貸款餘額總額為人民幣646億元，同比增長28%。我們在中國的貸款融資餘額為人民幣 638 億元，同比增長 28%。而在國際市場，這一數字已飆升至8億元人民幣，同比增長167%。紮實的管理經驗以及全年出色的[亮點]執行幫助我們克服了這一年的挑戰時期，利用我們的尖端技術（如RTA）獲取新借款人。我們的 Octopus 系統用於針對優質借款人投放廣告，我們的 Magic Mirror 用於信用風險評估，我們的 Ming Mirror 用於欺詐檢測。在審慎的風險管理方法和先進的信用風險評估模型的推動下，我們取得了穩健的運營和財務業績。整個 2022 年，我們的拖欠率在 2.3% 至 2.4% 之間保持穩定和健康。

In 2023, as China reopens, we expect further improvements in these metrics. We also maintained a strong loan collection recovery rate of approximately 90% in the fourth quarter, even in some turbulence surrounding the easing of Zero COVID policy in December 2022.

2023 年，隨著中國重新開放，我們預計這些指標會進一步改善。我們還在第四季度保持了約 90% 的強勁貸款回收率，即使在 2022 年 12 月圍繞零 COVID 政策放寬的一些動盪中也是如此。

With our ongoing efforts to acquire better quality borrowers, our proportion of category A and B borrowers in the domestic market further increased to 77% of our total borrowers in the fourth quarter from 63% in the same period last year. Coupled with a larger proportion of better quality borrowers, we have also completely paid our price transition. Our average borrowing rate was 23% in the fourth quarter, reaffirming our commitment to financial inclusion where bolstering our compliance level and alignment with regulatory directives.

隨著我們不斷努力獲得更優質的借款人，第四季度我們在國內市場的 A 類和 B 類借款人佔總借款人的比例從去年同期的 63% 進一步增加到 77%。加上更大比例的優質借款人，我們也完全支付了我們的價格過渡。我們在第四季度的平均借貸利率為 23%，重申了我們對普惠金融的承諾，提高了我們的合規水平並與監管指令保持一致。

Looking ahead, we expect borrowing rates to be in the range of 22% to 23% in 2023 due to the increase in the proportion of category A and B borrowers. Notably, the transition to better quality borrowers has also helped us to reduce our funding costs, which dipped below 7% in the fourth quarter of 2022 compared with 7.8% in the same period last year. We have cumulatively incorporated with 75 financial institutions and our pipeline of potential partners remains robust. Looking ahead, we are confident we can achieve progressive improvements in our funding costs as our proportion of category A and B borrowers continue to rise.

展望未來，由於 A 類和 B 類借款人的比例增加，我們預計 2023 年借款利率將在 22% 至 23% 的範圍內。值得注意的是，向更優質借款人的過渡也幫助我們降低了融資成本，2022 年第四季度融資成本降至 7% 以下，而去年同期為 7.8%。我們已累計與 75 家金融機構合作，我們的潛在合作夥伴渠道依然強勁。展望未來，我們有信心隨著 A 類和 B 類借款人的比例繼續上升，我們可以逐步改善融資成本。

Moving on to our second growth driver, our international expansion. We are thrilled to report that during the fourth quarter, improvement across multiple operational fronts led to a revenue contribution of RMB 395 million from this segment, representing a 13% contribution to total revenue as well as an increase of 122% from the same period last year and a sequential increase of 13% from the previous year -- quarter. For full year 2022, revenue from the international segment was RMB 1.15 billion or 10.3% of total revenue, a remarkable accomplishment given the international contribution to total revenue just reached a double-digit level for the first time in the third quarter.

繼續我們的第二個增長動力，即我們的國際擴張。我們很高興地報告，在第四季度，多個運營方面的改善導致該部門的收入貢獻為人民幣 3.95 億元，佔總收入的 13%，比去年同期增長 122%年，比上年環比增長 13%——季度。 2022 年全年，國際業務收入為人民幣 11.5 億元，佔總收入的 10.3%，這是一個了不起的成就，因為國際業務對總收入的貢獻在第三季度首次達到兩位數水平。

Indonesia continued to be the major international market in 2022, although pandemic-related rules and restrictions have relaxed in many countries. We remain cautious and we'll adjust our strategy according to suite local circumstances. Since 2021, we have been targeting better quality borrowers with attractive interest rates in Indonesia. And our efforts have been recognized by well-known local financial institutions such as Bank Jago, Bank Permata and the OCBC NISP. Among others, growing fruitful collaboration with these local partners have led to a rapid increase in our proportion of loan funded by local banks to 63% in the fourth quarter of 2022 compared to 48% in the previous quarter and merely 10% in the same period last year.

印度尼西亞在 2022 年仍然是主要的國際市場，儘管許多國家放寬了與流行病相關的規則和限制。我們保持謹慎，我們會根據當地情況調整我們的策略。自 2021 年以來，我們一直以印度尼西亞具有吸引力的利率瞄準更優質的借款人。我們的努力得到了本地知名金融機構的認可，例如 Bank Jago、Bank Permata 和 OCBC NISP。其中，與這些本地合作夥伴的合作日益富有成效，導致我們在 2022 年第四季度由本地銀行提供的貸款比例迅速增加至 63%，而上一季度為 48%，同期僅為 10%去年。

Our success in Indonesian market is sparing and has strengthened our confidence as we expand into additional countries. For example, our outstanding loan financing in the Philippines during the fourth quarter grew over 110% year-over-year. Going forward, we plan to accelerate our pace of penetration in Indonesia and the Philippines, while evaluating other potential opportunities in the region. Based on our current assessment, we believe revenue contributions from the international markets will continue to climb in 2023, rising to between 15% to 20% of total revenue, further diversifying our revenue sales.

我們在印尼市場的成功保留了我們的信心，並增強了我們向更多國家擴張的信心。例如，第四季度我們在菲律賓的未償還貸款融資同比增長超過 110%。展望未來，我們計劃加快在印度尼西亞和菲律賓的滲透步伐，同時評估該地區的其他潛在機會。根據我們目前的評估，我們認為來自國際市場的收入貢獻將在 2023 年繼續攀升，上升至總收入的 15% 至 20%，從而使我們的收入銷售進一步多元化。

Last but not least, I'd like to briefly update you on our ESG performance. We published our fourth annual ESG report in 2022, providing a snapshot of our forward-looking thinking efforts and initiatives aimed at driving sustainability and enhancing value creation for our stakeholders. We also joined the United Nations Global Compact program, a voluntary initiative to implement universal sustainability practice, demonstrating our corporate value and the long-standing dedication of fulfilling our social responsibilities.

最後但並非最不重要的一點是，我想向您簡要介紹一下我們的 ESG 表現。我們在 2022 年發布了第四份年度 ESG 報告，簡要介紹了我們旨在推動可持續發展和為利益相關者創造價值的前瞻性思維努力和舉措。我們還加入了聯合國全球契約計劃，這是一項實施普遍可持續發展實踐的自願倡議，體現了我們的企業價值和履行社會責任的長期奉獻精神。

Furthermore, we were proud to receive a low-risk ESG rating from Sustainalytics for the second consecutive year, a powerful testament to our vision for the future of ESG as well as our current accessibility policies and practices. Going forward, we will strive to promote our aspects of ESG in our operations, including corporate governance and behavior, data privacy and security, human capital development, environment protection and corporate social responsibility. To ensure alignment with the international best practice and enhance our holistic approach to ESG, we plan to expand to our cooperation with additional independent ESG rating platforms in 2023.

此外，我們很自豪連續第二年獲得 Sustainalytics 的低風險 ESG 評級，這有力地證明了我們對 ESG 未來的願景以及我們當前的可訪問性政策和實踐。展望未來，我們將努力在我們的運營中推廣我們的 ESG 方面，包括公司治理和行為、數據隱私和安全、人力資本開發、環境保護和企業社會責任。為確保與國際最佳實踐保持一致並加強我們對 ESG 的整體方法，我們計劃在 2023 年擴大與更多獨立 ESG 評級平台的合作。

In summary, our outstanding overall performance in 2022 underscores our strength and stability as well as our team's ability to overcome challenges. We have built a firm foundation that will empower us to drive long-term sustainable quality growth as we forge ahead in 2023, we will continue to embrace our local focus, global outlook strategy, building on our domestic strength and success with an emphasis on serving better quality borrowers while evaluating more countries and regions to advance our global expansion. Meanwhile, we will remain dedicated to expanding our healthy customer base, optimizing our product mix and leveraging our technology or logical capabilities to further refine our risk assessment and management framework. With these advantages, we believe that we are well situated the capital life and on the massive opportunities that lie at a height and create greater value for our customers, shareholders and all of our stakeholders.

總而言之，我們在2022年出色的整體表現凸顯了我們的實力和穩定性以及我們團隊克服挑戰的能力。我們已經建立了一個堅實的基礎，這將使我們能夠在 2023 年奮進的同時推動長期可持續的高質量增長，我們將繼續接受我們的本地聚焦、全球展望戰略，建立我們的國內實力和成功，重點是服務更優質的借款人，同時評估更多國家和地區以推進我們的全球擴張。同時，我們將繼續致力於擴大我們健康的客戶群，優化我們的產品組合，並利用我們的技術或邏輯能力進一步完善我們的風險評估和管理框架。憑藉這些優勢，我們相信我們能夠很好地把握資本生活和巨大的機遇，為我們的客戶、股東和所有利益相關者創造更大的價值。

Next, I would like to say a few words about the management transition we announced today. Zhang is stepping down as our CEO to pursue other interests after 8 years with the company. On behalf of the Board, I would like to take this opportunity to express my sincerest gratitude to Zhang Feng for his outstanding contributions to the company throughout the year. Concurrently, the Board has selected Mr. Yuxiang Wang to serve as the company's Chief Operating Officer, while retaining his current role as Chief Technology Officer, a role he has held since 2019. From June 2015 to March 2023, Mr. Wang also served as the Chief Product Officer. Together with the rest of the Board and the team, Mr. Wang and I look forward to propelling the company to even greater heads.

接下來，我想就我們今天宣布的管理層換屆說幾句話。在公司工作 8 年後，張將辭去我們的首席執行官一職，以追求其他利益。藉此機會，本人謹代表董事會對張峰一年來為公司做出的傑出貢獻表示最誠摯的謝意。同時，董事會選擇王宇翔先生擔任公司首席運營官，同時保留他自 2019 年以來擔任的首席技術官一職。從 2015 年 6 月到 2023 年 3 月，王先生還擔任首席產品官。與董事會其他成員和團隊一起，王先生和我期待著將公司推向更高的高度。

With that, I will now turn the call over to our CFO, Jiayuan Xu, who will discuss our financial results for the quarter.

有了這個，我現在將把電話轉給我們的首席財務官 Jiayuan Xu，他將討論我們本季度的財務業績。

Thank you, Tiezheng, and hello, everyone. Welcome to our fourth quarter and full year 2022 earnings call. In the interest of time, I will not go through all of the financial line items on this call. Please refer to our earnings release for further details.

謝謝鐵正，大家好。歡迎來到我們的第四季度和 2022 年全年財報電話會議。為了節省時間，我不會在本次電話會議上詳細介紹所有財務項目。有關詳細信息，請參閱我們的收益發布。

As Tiezheng mentioned, we are heartened by the strong financial results we achieved in 2022 despite the unique challenges we encountered. Even more encouragingly, our second growth driver, the International segment, continued to gain progressive momentum and contribute over 10% of our total revenue in 2022. Notably, net revenues in the fourth quarter reached around RMB 3 billion, up 25% year-over-year, with full year net revenues exceeding the RMB 10 billion mark for the first time to reach RMB 11 billion, up 17% year-over-year. Thanks to our ongoing investment in research and development, skill for deployment of our technological capabilities across business and the robust execution of our overall strategy. We also delivered a healthy non-GAAP operating profit of RMB 638 million in the fourth quarter and maintained a solid balance sheet with RMB 12 billion in total shareholders' equity.

正如鐵政所說，儘管我們遇到了獨特的挑戰，但我們對 2022 年取得的強勁財務業績感到鼓舞。更令人鼓舞的是，我們的第二個增長動力，即國際業務，繼續獲得進步勢頭，並在 2022 年貢獻了我們總收入的 10% 以上。值得注意的是，第四季度的淨收入達到人民幣 30 億元左右，同比增長 25%年，全年淨收入首次突破百億元大關，達到110億元，同比增長17%。得益於我們對研發的持續投資、跨業務部署技術能力的技能以及我們整體戰略的穩健執行。我們還在第四季度實現了 6.38 億元人民幣的健康非美國通用會計準則營業利潤，並保持了穩健的資產負債表，股東權益總額為 120 億元人民幣。

We are very comfortable with our balance sheet and liquidity position. In particular, our cash position remains strong with over RMB 7 billion of cash and short-term liquidity as of the end of December 2022, an increase of 26% year-over-year. Our leverage ratio, which we define as risk-bearing loan balance divided by the shareholders' equity remained stable at 4.5x, indicating future growth potential. During these times of uncertainty, our strong capital and liquidity position, coupled with our low leverage ratio is an important source of confidence for all our shareholders, including our employees, institutional partners and suppliers.

我們對我們的資產負債表和流動性狀況感到非常滿意。特別是，截至 2022 年 12 月，我們的現金狀況依然強勁，現金和短期流動資金超過 70 億元人民幣，同比增長 26%。我們的槓桿率（我們定義為承擔風險的貸款餘額除以股東權益）穩定在 4.5 倍，表明未來增長潛力。在這些不確定時期，我們強大的資本和流動性狀況，加上我們的低杠桿率，是我們所有股東（包括我們的員工、機構合作夥伴和供應商）信心的重要來源。

We also continued to return value to our shareholders through share buybacks throughout the year. In full year 2022, we deployed around [USD 21 million] to buy back our shares in the public market. As of December 31, 2022, the company has cumulatively deployed around USD 182 million for its share repurchase programs. Our Board has also declared a dividend for our shareholders of USD 0.215 per ADS with the payout ratio increasing to 18.5% of net income after tax for fiscal year 2022. This is our fifth consecutive annual dividend declaration, which reaffirms our confidence in our core capabilities, business growth and long-term market potential. The historical trend of the company's average dividend payout ratio for fiscal year 2018 to 2021 worth about 15% of the company's net income after tax in the same period. Between 2018 and 2022, we cumulatively deployed around USD 263 million for dividend distributions. In total, we have returned USD 445 million to our shareholders and our share repurchase programs and the dividend policy.

我們還通過全年的股票回購繼續為股東回報價值。在 2022 年全年，我們部署了約 [2100 萬美元] 在公開市場回購我們的股票。截至 2022 年 12 月 31 日，公司已累計為其股票回購計劃部署約 1.82 億美元。我們的董事會還宣布向我們的股東派發每股 ADS 0.215 美元的股息，派息率增加到 2022 財年稅後淨收入的 18.5%。這是我們連續第五次宣布年度股息，重申了我們對我們核心能力的信心、業務增長和長期市場潛力。公司2018-2021財年平均派息率歷史趨勢約為公司同期稅後淨利潤的15%。 2018 年至 2022 年，我們累計部署約 2.63 億美元用於股息分配。總的來說，我們已經向股東返還了 4.45 億美元以及我們的股票回購計劃和股息政策。

Last but not least, I would like to thank all our employees and partners for their actually matters, efforts in keeping our company strong throughout the COVID breakout of 2022. Our culture is stronger than ever, and we will continue to innovate as we broadly grow our business both domestically and internationally.

最後但同樣重要的是，我要感謝我們所有的員工和合作夥伴，感謝他們所做的實際工作，感謝他們在 2022 年 COVID 爆發期間為保持公司強大所做的努力。我們的文化比以往任何時候都更加強大，我們將在廣泛發展的同時繼續創新我們在國內和國際的業務。

Before I conclude my remarks, let me provide some additional color on our business outlook for 2023. Although we review the reversal of the Zero COVID policy in China as a positive driver for 2023, we still plan to adopt an optimistic yet prudent approach for the first half of the year in the domestic market, while pursuing a more aggressive strategy internationally. The company will continue to closely monitor the situation and reassess our strategy accordingly.

在我結束髮言之前，讓我對我們 2023 年的業務前景提供一些額外的色彩。儘管我們將中國零 COVID 政策的逆轉視為 2023 年的積極驅動力，但我們仍計劃對 2023 年採取樂觀而審慎的態度上半年在國內市場，同時在國際上奉行更積極的戰略。公司將繼續密切關注形勢，並相應地重新評估我們的戰略。

Despite the challenging macro environment, our business continues to grow and gain momentum as we focus on our efforts on strengthening our international initiatives. Preparing technological innovation and the constant acquisition of higher-quality borrowers, as a result, we expect our transaction volume in the China market for full year 2023 to be in the range of RMB 189 billion to RMB 205 billion, representing an increase of around 10% to 20% year-over-year. We also expect our transaction volume in international market for full year 2023 to be around RMB 6.4 billion, representing an increase of around 15%. We are excited about the progress we have made in 2022 and look forward to continued success in 2023.

儘管宏觀環境充滿挑戰，但隨著我們專注於加強我們的國際舉措，我們的業務繼續增長並獲得動力。準備技術創新和不斷獲得更高質量的借款人，因此，我們預計 2023 年全年我們在中國市場的交易量將在人民幣 1890 億元至人民幣 2050 億元之間，增長約 10 % 至 20%。我們還預計 2023 年全年我們在國際市場的交易額約為人民幣 64 億元，增長約 15%。我們對我們在 2022 年取得的進展感到興奮，並期待在 2023 年繼續取得成功。

With that, I will conclude my prepared remarks. We will now open the call to the questions. Operator, please continue.

至此，我將結束我準備好的發言。我們現在將開始提問。接線員，請繼續。

(Operator Instructions) Your first question comes from Alex Ye from UBS.

（操作員說明）您的第一個問題來自瑞銀的 Alex Ye。

So my first question is on your consumer credit demand trend so far in Q1. So how is the underlining demand you have been observing? And how is the loan volume run rate you are doing in Q1 versus, say, last quarter? Secondly, on the asset quality trend, could you give us an update about the earlier security indicators in recent months, February and March? Or how does it compare to your historical level?

所以我的第一個問題是你在第一季度到目前為止的消費信貸需求趨勢。那麼您一直在觀察的強調需求如何？你在第一季度的貸款量運行率與上一季度相比如何？其次，關於資產質量走勢，能否介紹一下近幾個月、2月和3月的前期安全指標？或者它與你的歷史水平相比如何？

(foreign language)

（外語）

Okay. Alex, let me do the translation for Mr. Xu. The first question is actually related to user demand. At the end of last year, the macro environment has changed a lot due to the reopening and before Chinese -- the period before Chinese New Year, we have seen that demand has increased a lot, up by around 10% to 20% on a year-over-year basis. And after Chinese New Year, we have seen the trend declining, but the overall trend is still positive. We think that the demand is still growing, and it is mostly due to a compensation recovery. And going forward, we believe that this trend will continue to grow.

好的。亞歷克斯，讓我為徐先生翻譯。第一個問題其實和用戶需求有關。去年年底，由於重新開放，宏觀環境發生了很大變化，在中國之前——春節之前，我們看到需求增加了很多，同比增長了 10% 到 20% 左右。按年計算。春節過後，我們看到趨勢有所下降，但總體趨勢仍然是積極的。我們認為需求仍在增長，這主要是由於補償恢復。展望未來，我們相信這種趨勢將繼續增長。

(foreign language)

（外語）

Okay. Alex, let me do the translation for the REIT as well. On the REIT trend, actually similar to the demand trend, both had some fluctuations. During the reopening period, early indicators such as Day 1 delinquency increased rapidly, but it has fallen back to 5.3% right now. And also, we have seen the Day 1 to 30 collection recovery rate has some fluctuation as well, but right now, it expecting 91%. And we have also seen some vintage delinquency remaining stable at 2.3%. Our existing loan books for those loans disbursed during the COVID reopening period has been optimized by 10%. And the current loans disbursed is now below 2.2%.

好的。亞歷克斯，讓我也為房地產投資信託基金做翻譯。在REIT的走勢上，其實和需求走勢類似，都有一些波動。在重新開放期間，第一天拖欠率等早期指標迅速上升，但目前已回落至 5.3%。而且，我們已經看到第 1 天到第 30 天的收集回收率也有一些波動，但目前預計為 91%。我們還看到一些老式拖欠率穩定在 2.3%。我們在 COVID 重新開放期間發放的貸款的現有貸款簿已優化 10%。目前發放的貸款低於 2.2%。

Your next question comes from Yada Li from CICC.

你的下一個問題來自中金公司的李雅達。

Hello, management, this is Yada from CICC. My first question today is, from the perspective of the choice of lending model, what is the trend of capital-light and capital-heavy in the future? And would there be any plans to inject capital into the small loan license? My second question is, during the COVID pandemic, the growth of our SME segment actually slowed down due to the macroeconomic impact. And I was wondering about the positioning of SME business in our overall strategy in 2023 and 2024, and what is the proportion in the future?

管理人員您好，我是中金公司的雅達。我今天的第一個問題是，從貸款模式的選擇來看，未來輕資本和重資本的趨勢是什麼？小額貸款牌照是否有註資計劃？我的第二個問題是，在 COVID 大流行期間，由於宏觀經濟的影響，我們中小企業部門的增長實際上放緩了。我想知道中小企業業務在我們2023年和2024年的整體戰略中的定位，未來的比重是多少？

(foreign language)

（外語）

Yada, let me do the translation for Mr. Xu. Your question is related -- first question is on capital-light versus capital-heavy. And for the full year of (technical difficulty) under the capital-light model was 16%, and we have been making very good progress. And we have been -- the number of funding partners whom has cooperated with us under this business model has reached 17. This validates our capabilities to operate under the capital-light model and also the trust our funding partners have in our credit risk assessment models. We will also monitor the attitude of the regulators towards the capital-light. As right now, we have seen that both models of capital-heavy and light are acceptable to them. We will also consider the attitude of our funding partners and their needs.

雅達，我來替徐老師翻譯吧。你的問題是相關的——第一個問題是關於資本輕與資本重。而輕資本模式下的全年（技術難度）為16%，我們一直在取得很好的進展。而我們已經——在這種商業模式下與我們合作的資金合作夥伴數量已經達到17家。這驗證了我們在輕資本模式下運營的能力，也證明了我們的資金合作夥伴對我們信用風險評估模型的信任.我們也會關注監管部門對輕資本的態度。就目前而言，我們看到重資本和輕資本兩種模式都是他們可以接受的。我們也會考慮資助夥伴的態度和他們的需要。

(foreign language)

（外語）

Yada, let me do the translation for this question as well. Our focus is on individuals with business certificate or license. The loans is for them for their daily necessities. And during the pandemic, the demand for small business owner loans have actually increased. And from the data that we have seen during the pandemic period, the delinquency rate is actually about 10% higher than our consumption loans. And with the reopening of the pandemic, the rest has resumed back to normal levels and with the gradual easing of the COVID policies, we believe the risk for this segment will be further improved and stabilized compared to our consumption loans. And going forward in 2023, we believe our focus on this segment will still be between 20% to 30% of our loan volume.

Yada，這個問題也讓我來翻譯吧。我們的重點是擁有商業證書或執照的個人。這些貸款是為他們提供日常必需品。在大流行期間，對小企業主貸款的需求實際上有所增加。而且從疫情期間我們看到的數據來看，拖欠率其實比我們的消費貸款高出10%左右。而隨著疫情的重啟，其餘部分已經恢復到正常水平，隨著 COVID 政策的逐步放鬆，我們相信與我們的消費貸款相比，該部分的風險將進一步改善和穩定。展望 2023 年，我們相信我們對這一領域的關注仍將占我們貸款量的 20% 至 30%。

(Operator Instructions) Your next question comes from Thomas Chong from Jefferies.

（操作員說明）您的下一個問題來自 Jefferies 的 Thomas Chong。

(foreign language)

（外語）

My question is about our international business. Given the progress that we are making in Indonesia and Philippines, which other countries should we expect we are going to further explore the opportunities into the future? And another question is on the spending in overseas business. How much more spending should we expect for this year? And would that affect the bottom line?

我的問題是關於我們的國際業務。鑑於我們在印度尼西亞和菲律賓取得的進展，我們應該期待哪些其他國家將進一步探索未來的機會？另一個問題是關於海外業務的支出。我們預計今年會有多少支出？這會影響底線嗎？

(foreign language)

（外語）

Hello, Thomas, let me do the explanation -- translation for Mr. Xu. We are actually expanding very fast in the international markets, as you can see. We have -- in Indonesia, we have actually completed the transition to better quality borrowers and this is actually much faster than our expectation. And after the transition completion, we have been growing -- our growth has actually resumed above 20% Q-over-Q since the third quarter, and our outstanding loan balance has grown to RMB 800 million by the end of December, growing 167% year-over-year. And this has actually led to a larger revenue contribution. For example, it has contributed 13% of total revenue in the fourth quarter. And for the full year of 2022, it has contributed more than 10%.

你好，Thomas，讓我來為徐先生做解釋——翻譯。正如您所看到的，我們實際上在國際市場上擴張得非常快。我們 - 在印度尼西亞，我們實際上已經完成了向更優質借款人的過渡，這實際上比我們預期的要快得多。轉型完成後，我們一直在增長——自第三季度以來，我們的增長實際上已經恢復了 20% 以上的環比增長，截至 12 月底，我們的未償貸款餘額已增長到 8 億元人民幣，增長了 167%一年又一年。而這實際上帶來了更大的收入貢獻。例如，它在第四季度貢獻了總收入的13%。而2022年全年，更是貢獻了10%以上。

Apart from Indonesia, we are also focusing our efforts in the Philippines, which is also growing very rapidly and we believe we will continue to contribute more to our revenue and other operational metrics. In the meantime, we will continue to evaluate most of these issue countries, and we believe we are able to duplicate our successful Indonesia business model into more countries.

除印度尼西亞外，我們還將重點放在菲律賓，該國的增長也非常迅速，我們相信我們將繼續為我們的收入和其他運營指標做出更多貢獻。與此同時，我們將繼續評估大多數這些問題國家，我們相信我們能夠將我們成功的印度尼西亞商業模式複製到更多國家。

(foreign language)

（外語）

Let me translate for Mr. Xu. As you can see, international expansion is a long-term strategy for our company. We have started our investment in Indonesia 5 to 6 years ago and you can see that with all these international investments actually need some to bear fruit. And also, we will not sacrifice our short-term earnings for short-term gains, but also look for more longer-term investment, and we will constantly keep a balance between our investment and our earnings on a longer-term basis.

讓我為徐先生翻譯。如您所見，國際擴張是我們公司的一項長期戰略。我們在 5 到 6 年前就開始了在印度尼西亞的投資，您可以看到所有這些國際投資實際上需要一些成果。而且，我們不會為了短期利益而犧牲短期收益，而是尋求更長期的投資，我們會在長期的基礎上不斷保持投資和收益之間的平衡。

If there are no further questions, now I would like to turn the call back over to the management team for closing remarks.

如果沒有其他問題，現在我想將電話轉回給管理團隊以作結束語。

Thank you all for joining our Q4 and 2022 earnings conference call. If you have any further questions, please feel free to reach out to the IR team at FinVolution. Thank you very much.

感謝大家參加我們的第四季度和 2022 年收益電話會議。如果您有任何其他問題，請隨時聯繫 FinVolution 的 IR 團隊。非常感謝。

This concludes this conference call. You may now disconnect your lines, please. Thank you.

本次電話會議到此結束。請斷開您的線路。謝謝。