Yan Dinggui
Hello, everyone. Thank you for joining our fourth quarter 2022 earnings conference call. 2022 has proven to be both challenging and opportunistic for our company. During the year, we faced the strictest quarantine lockdowns in China followed by the lifting of almost all COVID restrictions in December. Looking back on the last 3 years now, we witnessed the COVID outbreaks that disrupted businesses worldwide. Policy changes that reshaped China’s fintech industry and escalating geopolitical conflicts that further pressed the global economy. Despite these macroeconomic disruptions and increasing uncertainties worldwide, we are proud to report that our execution of our growth strategy remains steadfast. Throughout 2022, we maintained our focus on strengthening our core competencies of technology innovation and risk management. We also improved our innovation capabilities and efficiency in refining our operations to better meet the evolving market demands. As a result of our solid execution, we delivered growth in line with our expectations and rewarded our shareholders long-term support with a strong and satisfactory performance in 2022. As we expand, our top priority remains ensuring full compliance with regulatory requirements and we are actively collaborating with policymakers and partner institutions towards that goal. In response to the PBOC’s directive to stop direct data connections between Internet platforms and financial institutions, we have made significant progress and preparation. We are confident that we can work with our partner financial institutions to complete the system switchover within the required timeframe. Encouragingly, we are also seeing positive regulatory development underway to support the healthy growth of China’s Internet platform companies. For example, the CBIRC’s interim measures for the management of commercial bank Internet loans have officially endorsed and regulated partnerships between banks and Internet platforms like ours, providing a solid foundation for our operations. Additionally, regulatory authorities recently announced that ratification among major Internet platform companies is mostly completed and PBOC’s financial market department has also pledged to promote healthy development of the platform economy. Overall, we believe that these regulatory developments indicate that China’s policy regulation of Internet platforms is moving towards a period of normalization. In 2022, the Chinese market experienced a strong demand for consumer credit, driven by several factors. Firstly, the insurance of the 14th 5-year plan for promoting the development of small and medium-sized enterprises by 19 government agencies and the joint release of the notice on strengthening financial services for new urban residents by CBIRC and PBOC have spurred the growth of fintech products and services for both individuals and SMEs. Secondly, our financial institution partners have been able to provide abundant funding to meet the demand for loan facilitation services. In fact, PBOC reported an 11.1% year-over-year increase in the balance of our RMB loans by financial institutions in 2022 and the full year RMB loan volume increased by RMB21.31 trillion, representing an additional RMB1.36 trillion increase from 2021. However, rather than broadly expanding our business scale, we choose to take this opportunity to improve the structure of our borrower base on our platform. In terms of borrower operations, we focus on enhancing the quality and scale of our borrower acquisition capabilities, adding approximately 1.53 million new borrowers throughout the year, a 52.4% increase from the previous year. We also increased the proportion of loans by borrowers with a credit score of 60 or above from 68% to 88% in 2022. Additionally, we concentrated on exploring borrower lifetime value and refining our operations. For high-quality new borrowers, we match them with funding sources, offering lower interest rates promoting a year-over-year increase of 22.1% in the average borrowing amount. The average ratio of repeat borrowers for the four quarters in 2022 remains stable at about 67%. And the average borrowing amount reached about RMB9,737, a 71.4% increase from the previous year. Such initiatives reflect our expertise in precisely and effectively leveraging our funding sources to better meet the financing needs of borrowers on our platform. This expertise is particularly valuable during industry-wide fluctuations in risk levels. To prepare for current and future risk challenges, we have refined our borrower segmentation. As our business has scaled, our borrower base has consistently demonstrated healthy and sustainable characteristics. Moving forward into 2023, we will continue to refine our borrower segmentation and adjust our borrower acquisition strategies based on market conditions. In the long-term, we anticipate that new borrowers will make up 20% to 30% of our borrower base, allowing us to maintain stability and sustainability. As a result of these efforts, we established a solid foundation to achieve expected growth in 2022. In particular, our efforts in fine-tuning our operations have resulted in increased efficiency in funding allocation and consistent improvements in our revenue scale. In 2022, our loan origination volume, net revenue and net income increased by approximately 153%, 84% and 152% respectively. During the year, this exceptional growth demonstrated our solid progress in expanding funding sources, improving asset quality, enhancing risk management capabilities and refining our operations. On the funding front, the overall supply of funding in the market remains sufficient during 2022 and the funding cost has declined as well. As such, our credit costs are stabilizing while our business scale keeps expanding. Since we have already acquired relatively sufficient funding sources, we continue to expand and deepen our core operation with key funding partners to effectively leverage them fulfill the credit needs for high-quality borrowers on our platform. As of December 31, 2022, we have partnered with 53 financial institutions and we were currently in discussion with another 62. Notably, the funding sources without original limitations still contributed to the majority of our total loan origination volume in the fourth quarter. Moreover, we are empowering our partner financial institutions through our technology-enabled services to develop their own self-operated business models. As of 2022, we have already empowered 5 financial institutions to digitize their own online business and we are now interfacing with another 2 financial institutions will actively negotiating with 6 more institutions to explore potential collaborations. As the COVID control measures is towards the end of the year, we will be able to further expand our business and improve our efficiency in engaging with new funding partners or implementing new partnership models. In late 2022, the whole industry experienced significant risk volatility, which affected our risk metrics to a certain extent. However, I am pleased to report that our risk profiles have already stabilized as our 61- to 90-day delinquency rate has remained stable as of December 31, 2022. The application of AI technology in fintech has been instrumental in quickly addressing challenges posed by market volatility. Going forward, we plan to continue our investments in fintech AI applications to further strengthen our risk management capabilities. Specifically, we will leverage voice and semantic regulation, user identification, asset quality control and anti-fraud AI modules to enhance our efficiency and risk management while improving users’ experience. In addition to facilitating consumer loans for individuals, we also continue to expand the scale of our services for small and micro business owners. We all know that the COVID-19 pandemic has a severe impact on businesses around the world, particularly small and micro businesses. In response, the People’s Bank of China and other government agencies issued a number of policies calling for financial institutions to increase support for small businesses facing difficulties in production and operations. Our extensive experience in fin-tech services and business operations enabled us to collaborate with financial institution partners to better serve micro and small business owners. As such, we actively responded to this call and expanded our specialized loan program to help small business owners overcome financial partnerships. Throughout 2022, we saw a steady increase in the score and proportion of loan facilitation volume from small and micro business owners. Looking ahead, we remain fully committed to providing financial support and helping these businesses thrive in the face of challenges ultimately creating value for our borrowers and the society. Moreover, we also made excellent progress in our global expansion efforts. In Indonesia, we have continued our former investment and closely monitor the region’s growth potential. In Nigeria, we have achieved significant business and revenue growth by boosting our loan origination capabilities in the local market. Our revenue growth in Nigeria was substantially faster in this quarter year-over-year. We are pleased to note that our successful business operations and risk management capabilities have been replicated and validated on a global scale, enabling us to mitigate potential uncertainties in any local markets as we expand internationally. Moving forward, we remain focused on enhancing the profitability of our overseas operations by developing innovative partnership models and accelerating our product development and penetration in local markets. By tapping into diverse business opportunities in these regions, we expect our global operations to become a meaningful driver of sustainable growth for our company in the long-term. Last but not least, I’m glad to report on our recent strides in corporate social responsibility. Our commitment to empowering others through technological driven financial inclusion is at the core of our philosophy. In August 2022, we published our first environmental, social and governance report, which set the tone for incorporating social responsibility into our business operations. Throughout 2022, we demonstrated our commitment to making a positive impact on society through various initiatives. In September, for example, we partnered with the Shanghai Soong Ching Ling Foundation to launch the last Children Smile youth mental healthcare program. This program, in addition to our ongoing charity education campaign, aims to provide comprehensive support to underprivileged children focusing on both their physical and mental well-being. Later in December, we collaborated with local governments in [indiscernible] province to provide mental healthcare training to teachers and students. Furthermore, we donated school supplies to the central primary school in the town of Shuitong in Guizhou province, including computers, books, and school uniforms to ensure that left behind children have access to better educational resources. We also invited psychology experts to conduct mental health training for all teachers in Shuitong, enabling them to better attend to our psychological needs of their students while fulfilling their educational duties. Our unwavering commitment to ESG principles underscored our pledge to make a positive impact on society and we look forward to continuing our efforts in this direction. To conclude, we have achieved robust growth as we expected in 2022 as a result of our efforts in strengthening our partnership network, improving our risk management strategies, evaluating our technology capabilities and expediting our global business expansion. Looking ahead, we remain resolute to in our pursuit of sustainable growth and margin expansion as the regulatory environment stabilize and the COVID pandemic becomes a thing of the past, we are confident that our proven strategies will continue to drive our success in the years to come. In line with this expectation, we are pleased to forecast that our loan facilitation volume for the full year of 2023 will be around RMB70 billion with RMB19 billion from the first quarter of 2023. Based on this strong operational outlook, and our robust capital position our Board of Directors has authorized and declared our first ever dividend policy. We expect to pay dividends twice a year in cash, subject to some conditions. The annual total dividend distribution shall be no less than 15% of our net income after tax in the previous fiscal year. These declaration underscores our commitment to creating value for our shareholders and our confidence in the long-term growth prospects of Jiayin Group. With that, I will now turn the call over to our CFO, Mr. Fan Chunlin, please go ahead.
