Lexinfintech ((LX)) has held its Q4 earnings call. Read on for the main highlights of the call.
LexinFintech’s recent earnings call painted a picture of optimism, underscored by notable profit growth and strategic investments in technology. The company demonstrated robust improvements in risk management, although challenges with legacy loans and stable GMV suggest areas that require ongoing attention. The decision to increase the dividend payout ratio further reflects confidence in future performance.
Consistent Profit Growth
LexinFintech reported a remarkable 17% increase in net income quarter-over-quarter, reaching RMB363 million. This growth was primarily driven by a reduction in credit costs and enhanced asset quality, showcasing the company’s effective financial strategies.
Improved Risk Management
The company has made significant strides in risk management, evidenced by a 4% decline in the day one delinquency ratio and a 3% decrease in the 90-day delinquency ratio. These improvements highlight LexinFintech’s commitment to maintaining a healthy financial ecosystem.
Technological Advancements
Investing RMB151 million in research and development, LexinFintech focused on AI and big models, leading to a 35% boost in coding efficiency. This investment underscores the company’s dedication to leveraging technology for operational excellence.
Increased Dividend Payout
Reflecting its confidence in future profit growth, LexinFintech announced an increase in its dividend payout ratio to 25% of net profit starting in 2025. This move signals a strong belief in the company’s continued financial success.
Stable GMV
The company’s GMV remained stable, indicating potential challenges in expanding its customer base or market penetration. This stability suggests that while other areas are improving, market expansion remains a key focus.
Challenges with Legacy Loans
Legacy loans continue to impact overall performance, though improvements in new loan quality are expected to alleviate this issue over time. This ongoing challenge highlights the need for strategic management of existing financial obligations.
Forward-Looking Guidance
Looking ahead to 2025, LexinFintech aims for significant profit growth while maintaining a prudent operating strategy. The company plans to increase its dividend payout ratio to 25% of net profit, reflecting its optimistic outlook. With improvements in risk management and data analytics, LexinFintech is poised for continued success.
In conclusion, LexinFintech’s earnings call reveals a company on a positive trajectory, with substantial profit growth and strategic technological investments. While challenges with legacy loans and stable GMV persist, the company’s confidence in future performance is evident through its increased dividend payout. Investors and market watchers will be keen to see how LexinFintech navigates these challenges and capitalizes on its strengths in the coming quarters.