FinVolution Group Q4 2024 Earnings Call Transcript

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Provided by Quartr
March 17, 2025

There are 6 speakers on the call.

Operator

Hello, ladies and gentlemen. Thank you for participating. In the Fourth Quarter and Full Year twenty twenty four Earnings Conference Call for Finvolutions Group. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session.

Operator

Today's conference call is being recorded. I will now turn the call over to your host, Jimmy Tan, Head of Capital Markets for the company. Jimmy, please go ahead.

Speaker 1

Hello, everyone, and welcome to our fourth quarter and full year twenty twenty four 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 up for the Company e mail alerts by visiting the IR section of our website at ir.finvigroup.com. Mr. Tianjin Li, our Chief Executive Officer and Mr.

Speaker 1

Jiawen Xu, our Chief Financial Officer will start the call with GAAP prepared remarks and conclude with a Q and A session. 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.

Speaker 1

For information about these non GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release. 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.

Speaker 1

As such, the company results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company 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.

Speaker 1

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. Tian Zheng Li.

Speaker 2

Please go ahead sir.

Speaker 3

Thanks, Jamie. Hello everyone and thank you for joining our earnings call. This is Tian Zheng Li, CEO of VIMolution Group. We are happy to speak with you today. 2024 marked another strong year of growth and progress for the company.

Speaker 3

Despite the persistent uncertainties over the macro economy in China, our operations in Indonesia and The Philippines have experienced favorable micro supported by strong growth in a stable foreign exchange environment. Through strong execution of our local excellence, global outlook or legal strategy, we successfully navigated through 2024 challenges and continued to deliver progressive growth in the China market and rapid expansion in the international market. For example, in terms of transaction volume, we have achieved 5% growth in China and a rapid growth of around 28% in our international market. Both our total transaction volume and outstanding loan balance also reached new record highs for the full year rising to RMB206 billion and RMB72 billion respectively, both up by 6% year over year. Cumulatively, we have served around 34,000,000 borrowers across China, Indonesia and The Philippines, representing a net increase of around 4,000,000 new borrowers in 2024.

Speaker 3

Achieving growth in all of these metrics amid 2024 soft consumer environment is a strong testament to our business resilience, our outstanding technology, innovation and our overall operational excellence. It's worth noting that while the industry's transaction volume was generally shrinking in 2024, We continue to deliver growth in our business at stable risk levels. In line with our strategy, we have expanded our regulatory license portfolio in our key markets, including micro lending license in China, multi finance license in Indonesia and a non banking financial company's license in Pakistan. This additional license helped us expand our customers' outreach and product offerings. We have also further expanded our customer acquisition channels.

Speaker 3

In China, we have established customer acquisition collaborations with the leading Internet platform through API connections. In Indonesia. We are expanding beyond online into providing consumption loans in offline settings. In The Philippines, we have been growing our Buy Now Pay Later product with various partnerships with leading e commerce platforms as well. Both started by our robust operational results, total revenue for 2024 reached RMB30.1 billion, up 4% year over year.

Speaker 3

Revenue from international operations rose 19% year over year to RMB2.5 billion, representing close to 20% of total revenue for full year 2024. We also improved our funding costs by over 200 basis points during the year, thanks to our ample liquidity and validated track record in risk performance. By maintaining our long term development trajectory and enhancing operational efficiency, we've laid a solid foundation for continued growth in 2025 and beyond. Our commitment to innovation is a primary driver for these positive outcomes. In 2024, we invested approximately R500 million in R and D, bringing our cumulative R and D investment over the last five years to R2.3 billion.

Speaker 3

As of 12/31/2024, we employed a dedicated R and D team of around 700 skilled professionals and we've built a comprehensive IP portfolio comprising two eighty seven registered software copyrights and the successful filing of 196 patent applications with 58 invention patents already granted. Let me walk you through a few R and D highlights over the past year. In 2024, we have completed a significant upgrade in AI by integrating the the full version of DeepSeek R1 into our technologies, which already incorporates seventeen years of credit data and domain knowledge. With this upgrade, we are now able to further automate some of the processes in marketing content creation, customer acquisition and the servicing resulting in better productivity. For example, our internal pilot testing indicated AI facilitated content can generate 60% potential reduction in advertising production costs.

Speaker 3

AI powered customer service and acquisition can more accurately identify customer demand and concerns leading to 9% increase in borrowers conversion rate. On the risk management front, the enhanced AI model enables us to better identify fraud from deep fake technology with an accuracy of up to 99%. We are also proud to share that we have completed the general AI service registration with the Cyberspace Administration of China for our right seat large language model, not only validating regulatory recognition, but also allow wider potential to consumer applications, which we will explore in the future. To date, we have published and presented more than 25 papers at top tier international artificial intelligence conferences. These three of these papers were recognized as the best papers at top tier conferences, demonstrating our leadership in this year.

Speaker 3

As we have mentioned previously, we have set a target of reaching 50% of revenue from international markets by 02/1930 under our legal strategy. I'm pleased to say that our strong strategic execution has paid off over the years and our international operations have come a long way since 2018. Revenue contributions from international markets have increased rapidly, rising from 3.7% in 2020 to October in 2022 to around 20% in 2024. Looking ahead, we expect international business to play an even greater role in our company, supported by our validated successes in Indonesia and The Philippines. We plan to accelerate our international expansion efforts this year.

Speaker 3

For 2025, we anticipate the total revenue will increase between 10% to 15% and the international revenue contribution will further increase to around 25%. Let's move on to ESG in line with our social responsibility goals. We deepened our commitment to financial inclusion in 2024, particularly with respect to small business owner. We believe three things small business are the heart of a healthy economy. That's why we will constantly supported their efforts to create jobs and foster hyper local economic prosperity.

Speaker 3

In 2024, we empowered 826,000 small business owners with loans totaling RMB58 billion, up 223% respectively year over year. We also published our first consumer protection annual report in 2024, '1 of the many ways we integrated our consumer protection into the group's ESG strategy. This initiative aims to enhance borrowers' financial literacy, promote financial inclusion and consistently deliver exceptional consumer experiences, contributing to our outstanding borrower satisfaction rate of ninety eight point nine percent. I'm proud to report that our ESG efforts continue to win accolades from leading international rating agencies. In 2024, Morningstar and S and P among others ranked us as a top tier ESG performer within the diversified financial industry.

Speaker 3

In summary, we successfully leveraged and expanded our strength in technology, customer acquisition and retention to deliver solid results and made a challenging environment in 2024. Through firm execution of our local excellence global outlook strategy, a sharp focus on AI innovation and deep dedication to our mission of financial inclusion. We continue to advance and accelerate our progress and sustain our long term growth trajectory. Our accomplishments in 2024 has bolstered our confidence in achieving our vision for 2025 and beyond to become the leading fintech player across the Pan Asian region. We will continue to work tirelessly towards that goal and look forward to sharing our successes with our customers, shareholders and the communities in the regions where we operate.

Speaker 3

With that, I will now turn the call over to our CFO, Jiawen Xu, who will discuss our operational and financial results.

Speaker 4

Thank you, Li, and hello, everyone. Welcome to our fourth quarter and full year twenty twenty four earnings call. Let's go through our key results for the fourth quarter. To be mindful of the length of our earnings call today, I encourage listeners to refer to our fourth quarter and full year earnings press release for further details. China's recovery was uneven throughout 2024 and the fourth quarter was no exception.

Speaker 4

While the China's GDP expanded by five percent for the full year, Various uncertainties persist and the consumption remains low. On a bright note, data from the recent Chinese New Year holiday show that five zero one million domestic trips were undertaken, representing a year over year increase of 5.9%. Total spending on domestic travels amounted to RMB677 billion, marking a year on year rise of 7%. We successfully navigated this turbulence by capitalizing on our operational and the tax strength to achieve consistent growth throughout 2024 and beyond. Our loan application rate remained strong following the September stimulus.

Speaker 4

As a result, during the fourth quarter, transaction volume and outstanding loan balance further increased to RMB54 billion and RMB69.8 billion, up 86% respectively year over year. We continue to drive progress across multiple operational metrics in our China market during the fourth quarter. Cumulatively, we have served 26,800,000 borrowers in the China market with the number of unique borrowers in the fourth quarter remaining steady at 2,100,000. Our consistent investments in R and D led to a further improved delinquency rate of four point seven percent in recent weeks. While loan collection recovery rate remained stable at 89%.

Speaker 4

Given the ongoing recovery in consumer confidence and our holistic enhancement to technology and operational system, We expect vintage delinquency for the quarter to improve to around 2.4%. Moving on to our second growth driver, our international markets, which continue to grow rapidly and deliver and increase revenue contribution at the group level. As of the end of the fourth quarter, we had cumulatively served around 7,000,000 borrowers in international markets. Notably, we have acquired around 2,200,000 new borrowers in 2024 from a variety of channels, up 61% year over year. For the first time, international transaction volume exceeded RMB10 billion for the full year, while outstanding loan balance reached RMB1.7 billion, up 2831% respectively year over year.

Speaker 4

Specifically for the fourth quarter, international transaction volume reached RMB2.9 billion, up 26% year over year and 7% sequentially. Our strong operational performance drove international revenues to contribution for the full year of RMB24 billion to RMB2.5 billion, up 19% year over year and representing close to 20% of the total revenue. Notably, during the fourth quarter revenue from international markets further expanded to RMB739 million of 23% year over year and accounted over 21% of total revenue. Let's look more closely at our first and largest overseas market Indonesia. For the full year of 2024, Indonesia's economy grew over 5% compared to 2023, driven primarily by increased household spending and investment.

Speaker 4

Notably, the consumer confidence index in Indonesia has remained above 120% for two consecutive years. In December 2024, expectations of a more favorable macro economy and the stabilized regulatory environment following Indonesia's national election boosted Indonesia's manufacturing PMI to 51.2 points. Market has first returned above 50 points since June. For the full year of 2024, motorbike sales in Indonesia increased by 1.5% year over year to 6,300,000 units. I also want to highlight that in January 2025, Indonesia joined BRICS, a strategic move that will allow the nation to leverage various economic opportunities and partnerships, accelerate its development agenda, diversify trade and attract crucial investments, empowering its domestic economy and its position in the global trade landscape.

Speaker 4

Indonesia's interest rate reduction implemented in January 2024 poses some challenges to our business. However, we quickly adjusted our operations to adapt to the new interest rate cap, successfully completing the transaction within the first five months of the year. During the second half of twenty twenty four, our Indonesia transaction volume grew to RMB3.7 billion, up 11% compared to the first half of the year. We are also proud to share that with the successful transition, we continue to attract new funding partners such as SuperBank to support our quest for financial inclusion in Indonesia. To date, we have 10 solid and active funding partners in country.

Speaker 4

With the new business model firmly in pace, we are confident of returning to accelerated growth in the country. I also want to highlight that after several quarters of preparation, we have successfully acquired a large majority stake in the local multi finance company, which will enable us to diversify our products into offline consumption loans with different scenarios such as mobile and electronic devices. This in turn will empower us to expand our presence to serve more borrowers. The completion of this acquisition underscores regulators' trust and confidence in our local operations. The Philippines, our second international market achieved an economic growth rate of 5.6% for 2024, positioning it as one of the fastest growing economies in the Asia Pacific region.

Speaker 4

As manufacturing PMI has remained above 50 points for three consecutive years and unemployment rate declined by 80 bps from 3.9% in October to 3.1% in December 2024, reflecting sustained individual activity, heightened production and healthy job creation, a useful and growing population, stable inflation and the consistent remittance from overseas Filipino workers are also following consumer demand. Also final consumption expenditure recorded the highest year on year growth rate at 9.7% in 2024. Together these conditions create a solid foundation for sustained economic growth. Our operations in The Philippines continue to grow rapidly in 2024 with transaction volume reaching RMB3.1 billion for the year, up 138% year over year. We are the first platform in the country to introduce the concept of institutional funding through our loan facilitation model in 2024 with a list of reliable trusted partners.

Speaker 4

We are also proud to share that the percentage of the loan facilitated by local financial institutions has grown from nearly 10% in the first quarter of twenty twenty four to around 17% in the fourth quarter of twenty twenty four. Going forward, we are confident of maintaining high double digit growth in The Philippines as we cement our rules in the country. Further expand our funding sources and diversify our business models. As part of our strategy to transit to better quality borrowers, our exciting initiative we have undertaken in The Philippines is our cooperation with mainstream e commerce players such as TT and other leading players to promote buy now pay later model. By directly embedding five volition's fintech capabilities in the e commerce platform's payment interface, we greatly brought our reach while also facilitating financial inclusion for more Philippines consumers.

Speaker 4

In 2024, the binocular model contributed 19% of Philippines transaction volume and we expect further contribution from this segment in 2025. Now turning to our financial metrics. This quarter's operational excellence resulted in a solid financial performance. Net revenue for the quarter reached RMB3.5 billion, marking a 7% increase year over year and a 6% increase sequentially. Net income was RMB681 million, representing a 29% increase year over year and a 9% sequential increase.

Speaker 4

Meanwhile, sales and marketing expenses rose by 8% year over year to RMB503 million as we continued to stress efforts to acquire new borrowers of high quality in both China and international markets. Furthermore, our leverage ratio defined as risk bearing loans divided by shareholders' equity improved to around three times, reflecting potential growth opportunities as the macroeconomic environment stabilize. Our total liquidity position consisting of cash and cash equivalent plus short term investments remained strong at RMB7.5 billion showcasing a robust basic balance sheet that is well able to support our business growth across multiple countries while consistently increased shareholder return. Before I conclude, a few words about our ongoing efforts to ensure shareholders value. Since 2018, we have continuously returned value to our shareholders in the form of share repurchase and dividends.

Speaker 4

Recently, our Board of Directors approved our seventh annual dividend in the amount of US0.277 dollars per ADS, reflecting a DPS increase of 17% year over year. After thoughtful consideration, our Board of Directors have also approved the revision of dividend policy from no less than 10% of net income to between 20% to 30% of net income for 2025 onwards. Validating the company's commitment to enhancing shareholders value. In addition, our Board of Directors have also approved the Evolution Force share repurchase program of up to US150 million. Dollars We believe the current environment presents an opportunity to further increase shareholder value and the shares repurchase as an effective capital management tool to achieve our goal.

Speaker 4

For full year 2024, we returned a total of over US160 million dollars to our shareholders, consisting of US17 million dollars in dividends and US19 million dollars through shared repurchase, representing a total payout of 49% of 2024 net income. As of 12/31/2024, the company has cumulatively returned US765 million dollars to our shareholders, demonstrating our consistent commitment to enhancing shareholder value. In summary, our business continued to grow and thrive internally through firm execution of our local excellence global outlook strategy. Despite an uneven macro environment for 2025, we will remain committed to expanding our international product offerings while providing outstanding service to a growing consumer base at home and abroad. As shared previously, we have established a target of achieving 50% revenue contribution from international markets by 02/1930.

Speaker 4

In lieu of this, we would like to introduce our revenue guidance for 2025 to be in the range of around RMB14.4 billion to RMB15 billion, representing an increase of between 10% to 15% year over year. So that concludes my prepared remarks. We will now open the call to the questions. Operator, please continue.

Operator

Thank Today's first question comes from Alex Yi with UBS. Please go ahead.

Speaker 2

So I'll translate for my question. First question is about your international business. So we are glad to see the company's target of international revenue contribution to raising to 50% of the group by 02/1930. So just want to have some more color in terms of the cost base, operating cost base for the overseas segment. For example, what's the total OPEQ for this and then the expected growth for this year and down to the bottom line contribution for this year?

Speaker 2

Second question is about your shareholders return policy. So we have noted the company has end up paying about 50% total payout in last year, consisting of about 20% in cash and 30% via the buyback. And we have noticed that the pace of payback has accelerated visibly from previous year. So how should we think about the total payout going forward for this year and then the split between cash and buyback?

Speaker 4

Okay. Thanks, Zack. I will take your questions. Your first question is about our overseas business. Okay.

Speaker 4

Thanks for your attention for our ambitious target by 02/1930. Okay. And you have seen we have shifted our guidance from the origination to revenue. This adjustment is closely aligned with our long term strategy to grow by 02/1930. So the revenue guidance not only demonstrates our confidence in the future development of our international business, but also it provides the shareholders with a more transparent and specific roadmap in understanding the company's long term strategic growth.

Speaker 4

And then in terms of the overseas operation costs and the corporate contributions, well, they were subject to the different stages of the business. So the preparation of the operation costs were decreased when our business operations entered the mature stage and the unit economics will improve as well. I will give you some examples. In 2024, we achieved a profit of $5,000,000 in Indonesia. And in 2025, we expect that the profit from Indonesia will be at least double.

Speaker 4

And for our Philippines market, it was at loss in 2024 and we expect it will begin to make profits graduate from 2025. So the calculation of profit from these two countries will increase significantly in 2025. But also you know we will accelerate our overseas expansion. So it will require the initial investment in the early stage and they will have some clearly impact on our portfolio. But generally speaking, if we are looking ahead to the twenty twenty, thirty, the percentage of the international profit contribution is sure to rise.

Speaker 4

And the pace of the increase should be tied to the development of our business. And your second question is about our shareholder return. Okay. We are committed to delivering the long term sustainable returns to our shareholders. We aim to create the value for our shareholders, primarily through the sustainable and rapid growth of our business.

Speaker 4

And also we are exploring to utilize the capital tools to reward our shareholders. Although we have mentioned since 2018, we have consecutively distributed dividends and conducted the share buybacks for seven years. That's why it make us one of the earliest in the industry to do so. Okay. So over the past seven years, we have returned a total of $765,000,000 to our shareholders by these two measures.

Speaker 4

As almost close to the 40% of our market cap. And in 2024, we deployed $19,000,000 for share repurchase and distribute $17,000,000 in dividend. It's resulting in total capital return of US116 million dollars for our shareholders and it represents almost 49% of the net profit. It's in line with our long term capital return strategy. And as we have mentioned, we have revised our dividend policy to raise the payout ratio for at least 10% to the range of 20% to 30% of net profit.

Speaker 4

Okay. The revision reflects our strong commitment to rewarding our shareholders. And for 2024, the dividend per share reached US0.277 dollars representing a 17% increase compared to the previous year. And this marks the fifth consecutive year of DPS growth with a five year CAGR of 18%. And at the same time, our Board of Directors has approved a fourth share repurchase program of an allocation of $115,000,000 with a duration of two years.

Speaker 4

Basically, the specific execution will depend on market condition, liquidity and the regulatory requirements, okay? So the new repurchase plan and the strengthened dividend policy demonstrates that we are not only delivering the returns to our shareholders through business growth, but also consistently utilizing the capital tools toward our shareholders. And supported by the strong cash flow and the solid profitability, even during you know we accelerated the price of global expansion, we are capable of balancing the long term strategic investments with increasing shareholder return. And also I want to draw attention is the revision of our given policy indicates the company will have the flexibility to create the value for our shareholders. Okay.

Speaker 4

Thanks.

Operator

Thank you. And our next question today comes from Yaron Li at CICC. Please go ahead.

Speaker 1

Then I'll do the translation. Hello, management. Thank you for taking my questions. The first one is about the user demand. And can you elaborate more about whether there's a sense of user demand recovery in 4Q 'twenty four and 1Q 'twenty five?

Speaker 1

Additionally, how to view the loan guidance of domestic business for 2025? Secondly, the question is about the progress of AI development. I was wondering how the AI tools such as Deepsafe utilized to help increase the operational efficiency? And are there any potential for decreasing the overall credit risks and increasing the profitability in future? And that's all.

Speaker 1

Thank you.

Speaker 4

Okay. Thanks, Yada. I will take your first question and Tim will take your second question. Okay. For the domestic business, the customer demand in the fourth quarter continues the recovery trend as we have observed since the last quarter in 2024.

Speaker 4

In terms of the quarter on quarter and the year on year basis, the growth rate exceeds at least 10%. So it reflects the gradual recovery of our consumer confidence in the second half of the year. And if we look at the full year of 2024, we have observed the consumer demand exhibit pattern of being weaker in the first half and stronger in the second half. And the recovery trend in the second half we believe will be expected to continue in 2025. And for the first quarter of twenty twenty five, it's always the typically the seasonal loan period due to the factors such as the Chinese New Year holiday.

Speaker 4

We have observed the customer demand remains resilient. Okay. And for example, the application volumes show some high single digit year over year growth. So it will lead a solid foundation for our full year development. And also, yes, at the national level, the government is actively implementing various measures to boost the consumer confidence.

Speaker 4

Following the two sessions meetings, the newly proposed action plan to stimulate the consumption through multiple channels, including the increasing household income, ensuring the spending capacity, improving the quality of the service consumption and the larger ticket size item consumption. So these efforts are designed to comprehensively expand the domestic demand. And also, you must have seen the notice from last week, the National Financial Regulatory Administration issued a document to encourage the healthy development of consumer finance. So we believe this series of regulatory measures will largely boost the sector's confidence and it will provide support for the continued recovery of consumer sentiment. So looking ahead, we are optimistic to wait and see those detailed implementations for consumer finance from a regulatory side.

Speaker 4

And the consumer credit demand is expected to receive an additional boost. And it will long term stable and the positive growth trend in our domestic business.

Speaker 3

Okay. Hi, Yada. This is Kejun. I will answer the AI question. Generally, we are very excited about the AI opportunities in front of us.

Speaker 3

And we have explored integrating AI into various parts of our business. And here are some key highlights for our AI strategy. Last November, just as I mentioned, we successfully completed the general AI service filing with Cyberspace Administration of China for our self developed direct seat larger language model. With this qualification, we are now able to integrate a larger language model into customer facing application. This means we could productively gain from AI automation across customer facing processes, like customer service, user acquisition and loan collections, etcetera.

Speaker 3

We have also devised various AI agents and AI automation tools for our operations from user acquisition, customer service, credit risk management to process automation. Here are some examples. The first example is on our user acquisition and customer service. We use AI to simplify the content production process. In our recent pilot test, we were able to generate 50% of our advertising content with AI and a lower contention production cost by 60%.

Speaker 3

We have also implied AI bots for our customer service. The second example is about credit risk. With AI and our domain data, we create AI model that successfully identifies fraud, a credit application based on deepfake technology in Indonesia and we are replicating the experience in other countries. On the loan collection front, we are developing AI powered bots that are capable of calling and interacting with customers for early delinquency, typically with the first three days of overdue. The AI bots is optimized and replicate human like conversation capabilities from tone, pitch, rhythm and a general ability to react to complex emotion and intention from human conversation.

Speaker 3

And additionally, by analyzing factors such as repayment timelines mentioned by users, their attitudes and emotions and the system comprehensively assesses their willingness to repay and assess timely reminder. And the third example is on our process automation. Now some of our automation are progressively implemented across our organization. For example, code generation, AI agents for documents, review and the facilitated booking and management. Overall, we see a lot of opportunities from AI and we will continue to explore the potential applications in our business.

Speaker 3

Thank you, Yada.

Operator

Thank you. And our next question comes from Cindy Wong with China Renaissance. Please go ahead.

Speaker 5

Thanks for taking my question. My question is related to the international market. So your international market is growing fast and now you operate not only Indonesia and Philippines, but also tapping Pakistan. So could you talk about your international business expansion strategy and outlook in these three markets in 2025? Thank you.

Speaker 3

Thanks, Cindy. The team I will answer the question. First, it's about Indonesia. In the past year, the Indonesia business, we achieved two significant milestones. The first one is we successfully completed the transformation to target higher quality customers within six months.

Speaker 3

After the pricing adjustment, the business returned to healthy growth. The average loan amount per customer increased by 12%, while risk decreased 25% and the customer acquisition cost improved by low double digits and this take rate returned to prior adjustment levels. Now, numbers of our institutional funding partners reached 10 and the business achieved full year profitability for the first time. And the second milestone is we completed the acquisition of around 84% stake in the multi finance license and began laying the groundwork for offline business operations combining multiple channels and scenarios. And also in Indonesia, there has been some positive development on the policy front.

Speaker 3

At the end of twenty twenty four, so Indonesia Financial Regulatory Authority or OJK issued a new interest rate adjustments inside of the previous plan to reduce fees to 0.2%. The new policy difference pricing based on loan tenure. The interest rate cap for loan with tenure of six months or less is set at 0.3%, while loan with a tenure exceeding six months have a cap of 0.2%. Given that our average loan tenure is about three to four months, so the impact on our business is limited. So this policy shift signals a chance in OJIX's stance, eliminating long term regulatory uncertainties and providing strong support for our sustainable growth.

Speaker 3

And then looking ahead for the year, the Indonesia business is expected to continue its growth trajectory, while maintaining healthy profitability. Just as Alexis mentioned, the Indonesia business achieved a net profit of RMB5 million and is projected to at least double its net profit in 2025. And The Philippines part, The Philippines business achieved three major milestones in last year. The first one is we have rapid expansion in cash loan business. The transaction volume more than doubled year over year and the business successfully reached breakeven by the year end.

Speaker 3

And the second one is we broke through in targeting higher quality customer segments and the installment scenarios. We established a strategic partner with TickShoxShop to provide online installment payment service for its users. By 2024, TikTok related transaction accounted for 19% of total volume. The third one is about institutional fundings. We are the first platform in Philippines to introduce institutional fundings and we saw rapid growth in the number of institutional partners reaching five by 2024.

Speaker 3

And the proportion of institutional funding increased significantly from 10% at the beginning of the year to nearly 7% by year end. Looking ahead, the Philippine business is expected to maintain rapid growth with the share of buy now pay later transaction further increasing. At the same time, the Philippine business will begin contributing profits to the group. And lastly, for the new market expansion, in terms of new market expansion, we obtained a non banking financial company, NBFC license from the Security and Exchange Commission of Pakistan, FCCP, and we plan to accelerate our operations in Pakistan in 2025. We also actively exploring opportunities in other countries and we will share more updates when appropriate.

Speaker 3

So thanks Sindhi.

Operator

Thank you. As there are no further questions now, I'd like to turn the call back over to the company for closing remarks.

Speaker 1

Thank you once again for joining our call today. If you have any further questions, please feel free to contact Ping Pui Shen Group Investor Relations team. And have a nice day.

Operator

Thank you, sir. This concludes the conference call. You may now disconnect your lines. Thank

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Earnings Conference Call
FinVolution Group Q4 2024
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