Finvolution Group ((FINV)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Finvolution Group painted a mixed picture, with notable achievements in international markets and technological advancements being overshadowed by challenges in the Chinese regulatory environment and rising delinquency rates. The overall sentiment was cautiously optimistic, acknowledging both the growth potential and the hurdles ahead.
Revenue Growth
Finvolution Group reported a solid revenue growth of 6.4% year-over-year, reaching RMB 3.5 billion. The net profit also saw a modest increase of 2.7% year-over-year, totaling RMB 641 million. This growth reflects the company’s ability to navigate a challenging economic landscape while maintaining profitability.
International Business Expansion
The company’s international business segment demonstrated impressive growth, with transaction volume increasing by 33% year-over-year and revenue rising by 37%. This segment now accounts for 25% of the total revenue, up from 19% the previous year, indicating a successful expansion strategy beyond the domestic market.
Operational Strength in Southeast Asia
Finvolution Group showed significant operational strength in Southeast Asia, particularly in Indonesia and the Philippines. In Indonesia, transaction volume increased by 14% year-over-year, with loan balances up by 21%. The Philippines experienced even more remarkable growth, with transaction volume surging by 86% and loan balances doubling, highlighting the region’s strategic importance.
Technological Advancements and Partnerships
The company continued to leverage technology to enhance its operations, hosting the annual FinVolution Global Data Science Competition and utilizing AI to improve customer service. These initiatives resulted in over 1 million service interactions, showcasing the company’s commitment to innovation and customer satisfaction.
Regulatory Challenges in China
The introduction of a new consumer finance regulation framework in China posed challenges, creating transitional effects and potential short-term uncertainties in volume, revenue, and risk metrics. This regulatory environment remains a critical area of concern for the company’s domestic operations.
Increased Delinquency Rates
The earnings call highlighted a rise in delinquency rates, with the Day 1 delinquency rate increasing by 30 basis points quarter-over-quarter to 5%. Additionally, the 30-day loan collection rate softened to 88%, indicating potential risks in credit quality.
Sequential Decline in Net Income
Finvolution Group experienced a sequential decline in net income by 14.7%, partly attributed to one-off government subsidies received in the previous quarter. This decline underscores the challenges faced in maintaining consistent profitability amid varying external factors.
Forward-Looking Guidance
Looking ahead, Finvolution Group remains optimistic about its long-term strategy despite short-term uncertainties due to new consumer finance regulations in China. The company projects full-year 2025 revenue to range between RMB 13.1 billion and RMB 13.7 billion, reflecting a potential growth of 0% to 5%. This guidance underscores the company’s confidence in its international expansion and operational resilience.
In conclusion, the earnings call of Finvolution Group highlighted a blend of growth and challenges. While international markets and technological advancements offer promising opportunities, regulatory hurdles and rising delinquency rates present significant challenges. The company remains focused on leveraging its strengths to navigate these complexities and achieve sustainable growth.