LexinFintech Q4 2023 Earnings Call Transcript

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Provided by Quartr
March 20, 2024

There are 6 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to Leasing Fintech Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mandy Dong, IR Director.

Operator

Please go ahead.

Speaker 1

Hello, everyone. Welcome to Lexin's 4th quarter and full year 2023 earnings conference call. All results were issued earlier today and can be found on our IR website. Joining me today are our CEO, Jay Xiao CRO, Arvind Chao and CFO, James Zheng. Before we get started, I'd like to remind you of our Safe Harbor statements in our earnings press release, which also applies to this call.

Speaker 1

During the call, we may refer to business outlook and forward looking statements, which are based on our current plans, estimates and projections. The actual results may differ materially, and we undertake no obligation to update any forward looking statements. But unless otherwise stated, all figures mentioned are in RMB. In today's call, Jay will first provide an update on our overall performance. Arvind will discuss risk management progress.

Speaker 1

Lastly, James will cover the financial results in more details. I will now turn the call over to Jay. His remarks will be in Chinese and English translation will follow. Good evening and good morning. I'm pleased to give an update regarding our performance for the Q4 of 2023.

Speaker 1

In the face of the current macroeconomic environment and the challenges, we adopted a prudent business strategy in the Q4. We adhere to our strategy of dual business growth engine, driven by data and risk management, achieving steady developments. Total loan origination in Q4 reached RMB61.2 billion, a 9% year over year increase. Total loan origination volume for the full year was RMB249.5 billion, a 21.9 percent year over year increase. Loan balance grew CNY124 1,000,000,000, a 24.5% year on year increase.

Speaker 1

Revenue was CNY3.5 billion in Q4, a CNY15.1 billion year on year increase. Total revenue for the full year was RMB13.1 billion, a 32% year on year increase. In the 4th quarter, the industry faced increased challenges due to the slow recovery of macroeconomic, weak credit demand and intensified competition. As a result, the risk level across the industry went up and we faced some short term pressure on profitability. In response, we took a series of measures in risk management and refined operation to mitigate the impact.

Speaker 1

To be specific, in terms of new customers, we developed the low end growth risk growth system based on new customer segmentation and jointly built the RTA model in collaboration with platforms such as Binance, significantly improving our risk identification capabilities for online traffic In Q4, while the number of newly registered users remained the same compared to Q3, the number of new active users increased by 51.8% year over year. The early stage risk performance metrics of newly issued loans stabilized and entered an improving momentum with a nearly 15% decrease in December. This will effectively bolster the inflow of high quality customer and improve the overall asset quality. In terms of existing customers, in Q4, we focused on upgrading credit lines granting pricing and trading strategy system, further enhancing the competitiveness of top tier customer offers. The proportion of transactions by super prime and prime customer groups increased by 12% compared to the 3rd quarter and the risk level of new loans issued to existing customers decreased by over 15%, 15% compared to the previous quarter.

Speaker 1

We targeted potential customers who previously used our products, but not activate for a long time or never activate their accounts before and made re offers to that, resulting in a conversion rate increase of over 50%, five-zero percent. Leveraging enterprise WeChat will further improve customer service efficiency and satisfaction, accumulating 1,900,000 followers. Through these risk management and the refined operation measures, despite fluctuations in asset quality in the second half of twenty twenty three across the whole loan facilitation sector. Our overall asset quality started to stabilize in December with day 1 delinquency rates dropped 6% compared to the previous month and collection rate remains stable. Since we entered 2024, the quality of new issue loans has continued to improve and the risk performance indicators of the overall asset portfolio are gradually improving as well.

Speaker 1

Our CFO, Arvind, will elaborate on this later. Each New Year, we are confident bringing down the risk level of our assets going forward. In Q4, we invested RMB136,000,000 in research and development, further advancing the application of AI large language models in our operations to improve work efficiency and customer experience. Through advanced training, our large language model can automatically analyze multiple data source and identify users' industry applications, repayment intentions and other relevant information. This capability enables us to create differentiated and personalized customer profiles and the laboring system, allowing us to implement data driven precise customer segmentation strategies.

Speaker 1

In 2024, we will focus on the following key areas. 1st, bringing down risk level of overall assets and enhancing profitability. We recently upgraded our risk team and invited Mr. Cao Zhang Wen to join us as our COO. Mr.

Speaker 1

Chao has over 10 years of experience in Ant Group, managing more than 1,000,000,000,000 of assets and has extensive experience in risk management space. Under his leadership, we have gained deeper understanding and set clear goals for improving our risk management framework and developing a full life cycle risk management system. Accordingly, we have planned out specific measures. In the year ahead, we will implement risk management work in 3 main aspects: new customers, existing customers and loan collections. For the first aspect, for new customers, we will continue to increase customer acquisition efforts, strengthen the development of our own customer acquisition channels, especially targeting white collar newcomers, blue collar workers and mini or micro SME owners.

Speaker 1

Through the effective dynamic growth strategy of low end growth, we will improve credit profile identification of high quality customer groups, increase the volume of high quality new assets and the drive down the overall risk levels. For the second aspect, for existing customers, we will strengthen the construction of underlying identification capabilities and the match differentiated risk strategies based on different customer segments. Particularly, we will apply flexible pricing strategies to widen the price range for different customer segments. For high quality customers, we will strengthen competitive offer, capture a large share of their wallets and simultaneously lower overall portfolio risk. With over 200,000,000 registered users, Lexin still has ample room for growth.

Speaker 1

For the 3rd aspect, in terms of loan collection, We will strengthen collaboration with financial institutions, expand the scope of legal action and improve its efficiency. We will continue to advance the development of the localized traction and recovery integrated system to effectively ensure user experience and efficiency in delinquent loans recovery. We will strengthen AI technology to enhance delinquent loans management system, such as intelligent routing systems and leverage large language models to improve loan caption efficiency. Secondly, we will continue adhering to the customer oriented principle and improve our operation base on our refined customer segmentation matrix. On one hand, we will strengthen customer credit profiling to offer differentiated products for various customer segments.

Speaker 1

In 2024, we will sharpen our focus on the leuzhoujuan in Chinese, leuzhoujuan for SME customer segments and leuzhoujian for high quality consumer segments and products such as Leu Huaka and the Speedy Lending in Chinese, Jisu Jie Tian for growing customer segment. On the other hand, through the dynamic growth strategy system of low end growth, we will serve the customers' needs and manage their risk throughout the entire lifecycle. Under this dynamic approach, we are able to offer appropriate drops to their credit needs at each phase of the whole life cycle. In addition to various products, we will continue to reinforce our work on the customer rights protection front. We have formed a consumer rights protection committee and a consumer rights protection center.

Speaker 1

In 2024, we will better meet customer demands and effectively improve customer satisfaction by enhancing consumer protection, governance system and the mechanism, thereby reducing the impact of malicious compliance around illegal groups. Thirdly, our Lexin consumption ecosystem starts to show driving force for steady growth of our business. At VorTeq Empowerment SaaS business line, we will invest more in customer acquisition and expand to more city commercial banks and the rural commercial banks, which will further fuel the growth in scale and revenue. As for our offline inclusive loan business in Chinese, we will continue to focus on low tier cities that locate in industrial belt conducting grid based operations and target micro SME customers, self employed business owners, high quality salary workers and offer more competitive products. We will continue to scale up our team, upgrade sales force management system, enhance the team management and the underlying the differentiation advantage of customer acquisition and the first hand information based credit profile identification.

Speaker 1

As for the e commerce business, while maintaining our advantages in 3C products, we will expand to more trendy goods SKU that attracts the youngsters. We'll strengthen differentiated trading and risk management strategies, upgrade risk management system, improve user credit profile identification accuracy and uplift approval and the transaction rates aiming to expand scale and profitability. 4th, as for funding cost, currently our funding costs have already hit low 6%. This year, we will issue ABS and we expect this will further reduce funding cost. Looking ahead into 2024, we will appeal to prudent operation principles, prioritize risk management and to maintain steady growth in transaction volume throughout the year.

Speaker 1

We are confident that as our scale expense and risk performance continue to improve, our profitability will further increase. We will continue our recurring cash dividend program and enhance shareholders' return. The Board has approved the plan to distribute cash dividends of approximately US0.066 dollars per ADS for the second half of twenty twenty three. Next, I will hand over the floor to our CFO, Arwin, to discuss risk management. Thank you, Jay.

Speaker 1

I'm glad to give an update regarding the risk management performance in Q4. First, let me give a few words introduction about myself. I joined Lexi in December 2023. Prior to that, I served at AN Group for over 10 years, in charge of the holistic risk management work of consumer credit products such as ANS Huawei and DFA. I also served as the Deputy General Manager of Ant Consumer Finance Company in Chongqing, overseeing comprehensive risk management for consumer finance.

Speaker 1

I have deep involvement in the construction and integration of Ant's consumer credit risk management system with extensive practical experience in building risk management team, innovative risk management technologies and the consumer credit risk management. In Q4, our asset quality showed some pressure, mainly due to the slow macroeconomic recovery with consumer demand and the turmoil in the loan collection industry, which resulted in fluctuation in the risk performance of our existing loan book. We have taken timely and effective countermeasures to mitigate the impact, including strengthening risk identification capabilities, reclassify customer segmentation, enhancing risk management of existing customers, upgrading risk management tools and accelerating talent acquisition. Looking at the asset quality of overall loan book, the FPD 7 of newly issued loans reached its peak level at the beginning of Q4 2023 and has since been gradually trending better on a monthly basis. The day 1 delinquency rate of the overall assets reached its peak level in the middle of Q4 2023 and has been improving month by month, reaching its lowest point recently with over 10% improvement compared to the peak level.

Speaker 1

The collection rate of the overall assets started to come under pressure in the second half of twenty twenty three, but began to stabilize and recover from January 2024. Next, let me give an update regarding the major progress we have made in risk management work streams in Q4. Firstly, in Q4, we further strengthened our risk identification capabilities. On the data front, we conducted in-depth joint modeling with several leading platform based Internet companies. By fully leveraging their massive amounts of scenario data, we have greatly improved accuracy and the stability of our risk scoring models.

Speaker 1

Additionally, in the development of risk models, we have introduced and applied cutting edge algorithms such as time series models and relationship graph models, effectively expanding our risk identification capabilities in the temporal and spatial dimensions. Based on richer scenario data and the model algorithm, We have comprehensively iterated and upgraded the risk management system for our 3 core business lines that are consumer finance, offline includes finance in Chinese, Puhui and e commerce. The performance of our risk identification capabilities has seen an improvement of nearly 30%, three-0%. Secondly, in Q4, we reconstructed our customer segmentation by using customer basic information, credit profiles and the customer credit scores to classify customers into 4 categories that are super prime, prime, near prime and subprime. Compared to the previous customer segmentation, this new approach has significantly improved risk level differentiation and the stability among various customer segments.

Speaker 1

In the consumer finance business line, we have a reconstruct the risk strategy and operational system throughout the customer lifecycle based on the new customer segmentation. This has led to a 35% increase in credit approval rate and a 10% decrease in risk level for new customer loans. In the future, we will further enhance our precision targeting of high quality customer groups and the leverage of dedicated growth strategy system to boost the drawdown rate of high quality customers, thus expanding the scale of high quality assets. Thirdly, in terms of risk management for existing customers, we have upgraded and improved the overall credit approving, pricing and transaction strategy system Through refined risk management for different customer segments, we have enhanced the competitiveness of offers for our super prime and prime customer groups. The ratio of GMV loans volume for our super prime and prime customer segments has increased by 12% compared to Q3, effectively improving our asset structure and reducing the risk of new loans to existing customers by 15%, 15%.

Speaker 1

Furthermore, we have achieved significant results in customer retention through measures in prevent churn and recall lost customers, particularly for our high quality customer segment. Fourthly, we have further upgraded our risk management tool and established a standardized risk strategy management process and framework. This enables standardized data input and decision output as well as the ability to orchestrate highly visualized and complex decision strategies. This has greatly improved operational efficiency of risk management system, supporting rapid strategy iteration and the launch of new business products. The upgraded risk management framework can effectively support end to end standardized the link between risk management and marketing systems, further enhancing the responsive iteration and refinement among different parts of our operation process.

Speaker 1

Lastly, as we accelerate the implementation of the aforementioned risk management upgrade measures, we have also brought in a group of outstanding mid to senior level risk management talents from leading platform in the industry. In the next quarter, we plan to further strengthen risk management from the following three aspects to ensure a continued decline in the risk level of newly issued loans. Firstly, we will expand and utilize more core data sources to comprehensively improve our risk identification, customer profiling, preference identification and the stability identification capabilities. Secondly, we will continue to enhance the modularization building up of our risk management system, improving the standardization of risk strategies. We'll transform core inputs from different dimensions into standardized modules such as income module, multiple platform module, responsive module, etcetera.

Speaker 1

This will further enhance the standardization and the consistency of risk management strategies. Thirdly, we will develop intelligent risk management product capabilities by creating multiple product like risk management tools such as strategy robots and the strategy experimentation platforms. These tools will further enhance the efficiency and precision of risk management work. Looking ahead into 2024, we will continue to uphold the principles of risk management priority and prudent operations. We will comprehensively upgrade our risk management capabilities in various aspects, including infrastructure, risk management framework, risk management data source, models, strategies, tools and talent teams.

Speaker 1

Our goal is to significantly enhance our risk identification capabilities for different customer segments. We will expedite the implementation of multiple specialized initiatives to strengthen risk management and refine our ability to manage customer risk throughout their entire lifecycle, including loan origination, loan servicing and delinquent loans management. We will continue to enhance our ability to identify high risk customers and employ various measures such as account closure, credit line amount reduction and transaction interception to reduce the generation of delinquent loans. With confidence, capability and the effective method, we aim to achieve a gradual decline in risk level on a quarterly basis, refine asset quality, support a steady growth and improve profitability margins. Next, I will hand over the call to our CFO, James, for financial updates.

Speaker 2

Thank you, Albert. I will now provide more details on our financial results. Please note that all numbers are in RMB unless otherwise stated. In a challenging economic landscape, marked by a modest economic recovery and consumer spending portion, we closed 2023 on a positive note, achieving our business target. Despite industry wide risk volatility, our commitment to strategic pillars, rigorous risk management, customer segmentation and upgrading, operational refinement and cost optimization has fortified our financial framework and yielded positive business results.

Speaker 2

I'd like to highlight a few points related to our operations and the financial progress from last quarter. 1st, Loan origination and profitability growth. Despite the controlled loan growth in response to the industry risks in Q4, We have recorded commendable loan volume and probability increase over the year. Our Q4 GMV reached RMB61.2 billion, a 3.3 percent sequential decline, reflecting our talented credit standards and focus on quality growth. The annual loan origination grew by 21.9 percent to RMB249.5 billion with outstanding loan balance up 34.5%.

Speaker 2

Annual revenue surged by 32% and the net income spiked by 56.2%, excluding investment related impairment losses. 2nd, we have demonstrated strong and resilient revenue generating and growth capability. Despite the GMV year over year growth of only 9.2% in Q4, the revenue growth outpaced at 15.1% year over year. In Q4, we have continued to lower borrowing costs for our users. We cut the weighted average APR by 0.4% to 23.7% from 24.1% in Q4 a year ago, therefore, resulting a 40 basis decline in pricing.

Speaker 2

Additionally, as a general practice to reduce the risk exposure, we have shortened the new loan tenure from average of 13.9 months to 12.3 months. The 40 basis point decline in pricing, the shortened tenor along with the industry wide risk fluctuation did not significantly impact the overall Q4 revenue take rate. We only saw a marginal revenue take rate dip of 25 basis points to 2.47 percent from 2.72% of a year ago. This is due to the strong positive revenue uplifting effect from lower funding costs and the continued improvement in customer early pay off. We have recorded a historically low funding cost of 6.18% in Q4, down 63 basis points year over year.

Speaker 2

We achieved this through ample funding and partnerships with cost efficient national financial institutions. The funding cost hit a new record low level below 6% in February and we expect this downward trend to continue going forward. We have taken some proactive measures to reduce the borrowers' early repayment. The repayment ratio lowered to only 87% of the peak level in 2023. Thirdly, we have substantially optimized our cost structure.

Speaker 2

We trimmed down the total expense including the processing service, sales and marketing, R and D and G and A as a percentage of average loan amount from 4.51% in Q4 2022 to 3.88% in Q4 2023, thanks to the execution of cost optimization project. One such example is the user acquisition cost. We realized a big saving on acquisition cost per user in Q4, thanks to our upgraded RTA marketing model and more attractive loan offerings. Our sales and marketing expense ascended a bit by 4.6% compared to last quarter, while our new acquired users with approved credit lines and new active users grew much faster at a rate of 21.5% 25.7%, which indicates a 14% 17% unit acquisition cost saving, respectively. 4th, the risk fluctuation and its impact.

Speaker 2

The industry wide risk fluctuation during the second half of last year have impacted us as they did to our peers. Asset quality metrics have shown signs of stress, including the D1 delinquency rate, M1 collection rate and the 90 plus days delinquency rate. Our 90 plus days delinquency rate moved to 2.9% versus 2.67% in last quarter. We have enacted risk mitigation strategies that are stabilizing the situation both through the end of the year and early part of this year. The immediate financial impact is the sequentially almost flat revenue in Q4 and the increased provisionings of credit impairment costs.

Speaker 2

Total provision related to cost items, including the provision for financing receivables, provision for contract assets and receivables, provision for contingent guarantee liabilities and the change in fair value of financial guarantee derivatives and loans at a fair value increased by 7.1% on a quarter over quarter basis due to the increased pressure on our asset quality in Q4. We are maintaining an ample bad debt provisions, playing a robust coverage ratio of approximately 3 17%, which is defined as the total provision amount divided by the principal amount of 90 plus days delinquent loans. Apart from the above, 4 operation related highlights, I would like to elaborate a little bit more on the specific items from financial statements. 1st, investment related impairment losses. The major impact on earnings came from the investment impairment related to a domestic investment of a private bank.

Speaker 2

Excluding after tax impact of RMB224 1,000,000 of investment related impairment losses, The net profit for the Q4 was RMB236 1,000,000 with a net margin of 6.7%. 2nd, some notes on revenue line items. Guaranty income grew steadily by 11% on a quarter over quarter basis and 42% on a year over year basis due to continuing releasing from existing loan book. Tech and Power and Services fell 6% from last quarter and increased 3.4% from last year, primarily due to the reduced volume in tech empowerment business. 3rd, some notes on cost line items.

Speaker 2

Funding costs on our income statement, which related to our own balance sheet loan generation, dropped significantly by 40 2.1% quarter over quarter and by 47.9% year over year due to the maturity of a portion of trust funding in Q4. Additionally, the processing and servicing costs increased by 15.3% in Q4 compared to the previous quarter due to the increased risk management initiatives and projects. General and administrative expenses rose by 26.6% in Q4 from last quarter due to the addition of more risk management talents. 4th, our balance sheet items. Our cash position is strong, ending the quarter with around RMB 4,400,000,000 in 10 and a solid equity position of RMB9.7 billion.

Speaker 2

We continued our cash recurring cash dividend plan and declared a cash dividend for the second half of twenty twenty three, amounting around US10.8 million dollars equivalent to roughly 20% of total net profit for the second half of twenty twenty three. The total 2023 combined dividend payout is about US0.182 dollars per UDS ADS, with a dividend yield at roughly 10% based on the year end currency price of 2022. Looking ahead, we will continue to either maintain or increase the dividend payout ratio to our shareholders when the market condition improves. Looking forward to 2024, due to the uncertainty of the economic growth and our prudent business approach, we expect the annual GMV amount for the full year 2024 to be no less than that of last year as we remain focused on the enhancement of risk management as a top priority. And net profit will grow from last year as well.

Speaker 2

In summary, 2023 was a year of rebound with a strong growth in both top and bottom line surpassing many peers, driven by our core strategy. We remain focused on improving risk management capabilities, upgrading user groups, operational excellence and cost optimization to capitalize on emerging opportunities. That concludes our prepared remarks. Operator, we are now ready for the Q and A session. Please open the floor for questions.

Speaker 2

Thank you.

Operator

Thank you very much. We will now conduct the question and answer session. Our first question comes from Alex Yee of UBS. Please go ahead.

Speaker 3

I have the question for Mr. Chao, who firstly was in charge of the risk management for ungood $1,000,000,000,000 balance of consumer loans. Since you have been with Lexin for several months now, we would like to learn about the key reasons that I'd like you to choose to join the platform and as well as demand challenges and opportunity you have seen since joining? Thank you.

Speaker 1

Okay. Alex, this is Mandy. Let me do the translation for Mr. Arwin. When I made my decision to join LoeXin Fintech, there are several key considerations.

Speaker 1

Firstly, Lexin Fintech is one of the earliest established consumer finance platform in China. It has accumulated over 200,000,000 registered users with immense growth potential and Lexin has built its unique Lexin consumption ecosystem that consists of various business lines including consumer finance, offline inclusive finance, Puhui, e commerce and SaaS tech products. While we see there are tremendous synergy potential among these business lines. So in my perspective, Lexin has a very solid foundation and a strong customer base. For the second point, the risk you can see the risk level of Lexin's assets nowadays stands at relatively higher level when we compare to other industry peers.

Speaker 1

However, I'm very confident that by implementing a proven quantitative risk management system and enhancing further refined risk management, we can bring down the risk level of our losing assets to match industry average level. And in the future, furthermore, we can gradually improve to the leading level of the industry. In addition, the company current PE ratio is quite low. That may indicate ample room for returns as in the future we can gradually bring down the risk level and the profitability will increase. Well, after the past few months of my work in the risk management space, I see there may be further room in following points.

Speaker 1

First, Lexin has utilized a lot of third party data source, but may lacking in quality in the future. In the future, we will improve the models, introduce more data source and improve model stability and risk identification accuracy. Secondly, the risk model nowadays, mainly in the credit rating, credit scoring type, which shows a lack of variety, in the future, we will include more different types of models, including the credit profile type, responsiveness type. There is still room for also thirdly, there is still room for improvement of building a more robust risk management system and a more sufficient area of risk management tools. Over the past few months, we have already made notable progress in upgrading risk identification system, establishing our full life cycle risk management system, building intelligent risk management tool.

Speaker 1

So achieve to the above mentioned measures, we see the asset quality of newly issued loans already showed a turning point since the last year end with risk level declining on monthly basis. Alex, hope that can address your question.

Speaker 3

Thank

Operator

you. Thank you. Our next question comes from Yada Lee of CICC. Please go ahead.

Speaker 4

Then I'll do the translation. From the Q4 results, we observed the new users with credit lines went up by roughly 17% Q o Q, while the sales and marketing expenses grew by only 5%. And I think it indicates a significant improvement in customer acquisition efficiency. And could management share some more recent moves and efforts on the customer acquisition? That's all.

Speaker 4

Thank you.

Speaker 1

Well, yes, Dan, I will do the translation for Jay. First, you see in Q4, we further upgraded our team model and strategy based on our enhanced risk identification capability. We adopted low and grow strategy on the credit line approval and drawdown. This resulted in a notable improvement of user with credit line increased by 40% for 0%, credit drawdown by the good quality users increased by 45% and risk level of those newly issued loans consistently decreased on a monthly basis. Secondly, we have put more effort to diversify our channels in terms of customer acquisition rather than like in previous solely relying on the online advertising channel.

Speaker 1

So we tailored products and service and cater the needs for different customer segments. By that, we achieved a differentiated and diverse customer acquisition matrix. Well, to be more specific for the fresh graduates, micro SME owners, super prime and prime users, we also developed customer acquisition approach and products. Operator, we can see open the question to the next listener.

Operator

Thank you. Our next question comes from Yooying Zhou of CLSA. Please go ahead.

Speaker 5

Let me do the translation. So as Jay mentioned in his remarks, Lexin has launched the multiple growth strategy in 2024. That's the slow recovery of the domestic economic and intensified competition in domestic market. More and more peers began to expand their business internationally. Does Lexin has the similar business plan in the future?

Speaker 5

Thank

Speaker 2

you.

Speaker 1

Yes, you're right. Definitely, expanding internationally is one of the our key growth strategy. And nowadays, we have already have some business running in the overseas market. In 2024, we will expand business in some selected overseas markets either well by acquisition or building the business around the ground up by ourselves. We are confident to replicate our success in China market to overseas.

Speaker 1

But the business volume of our overseas business is relatively small. We will update more to the market once we achieve more progress in the future. Well, operator, if there are no further questions lying, maybe that's come to the end of our call today.

Operator

Thank you. I see no further questions at this time. Thank you all for coming to this conference call. This is the end of our conference call. You may now disconnect.

Operator

Have a great day, everyone.

Speaker 2

Thank you. Okay. Bye bye. Bye.

Speaker 1

Thank you. Bye.

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Key Takeaways

  • In Q4, total loan origination reached RMB61.2 billion (+9% YoY) and full‐year origination was RMB249.5 billion (+21.9% YoY), with revenue up 15.1% to RMB3.5 billion in Q4 and 32% to RMB13.1 billion for 2023.
  • The company implemented enhanced risk management measures—such as a new low‐end growth risk system, refined customer segmentation, and AI‐driven identification models—leading to a 15% drop in early delinquency and improved overall asset quality since December.
  • Active user growth was strong, with new active users up 51.8% YoY, conversion rates for dormant customers rising over 50%, and super prime/prime transaction share increasing 12%, supported by upgraded credit lines and targeted offers.
  • R&D investment of RMB136 million in Q4 advanced the application of AI large language models for automated multi‐source data analysis, enabling precise customer profiling and personalized lending strategies.
  • For 2024, Lexin plans to prioritize risk reduction, maintain or grow GMV above 2023 levels, lower funding costs via ABS issuance, expand in low‐tier cities and overseas markets, and continue the recurring cash dividend program.
A.I. generated. May contain errors.
Earnings Conference Call
LexinFintech Q4 2023
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