Financial Data and Key Metrics Changes - In Q3 2024, loan originations reached RMB 51 billion, with an outstanding loan balance of RMB 111.3 billion. Revenue was RMB 3.7 billion, and net profit was RMB 310 million, indicating a return to steady growth for both revenue and net profit [7][41]. - The net profit margin improved to 8.45%, a quarter-over-quarter increase of 223 basis points, driven by reduced risk levels and enhanced asset quality [12][53]. - The funding cost decreased by 98 basis points from the previous quarter, reaching a historical low of 4.28% [13][90]. Business Line Data and Key Metrics Changes - The company focused on expanding high-quality new loans, resulting in a 78% increase in transaction volume for small and micro business loans quarter-over-quarter [15]. - The number of drawdown customers increased by 24% compared to the previous quarter, reflecting successful customer acquisition strategies [16]. - The credit facilitation and service income increased by 11.3% quarter-over-quarter, driven by higher facilitation volume growth [50]. Market Data and Key Metrics Changes - The day 1 delinquency ratio of the overall portfolio declined by around 9% compared to the previous quarter, indicating improved asset quality [8][25]. - The risk level of new customers acquired through online advertising channels decreased by 10% compared to Q2, with FPD7 for new customers significantly decreasing by about 50% compared to its peak in Q4 last year [28][80]. Company Strategy and Development Direction - The company remains committed to a prudent operational approach, focusing on reducing overall loan risk and enhancing profitability [21][22]. - The introduction of the Intelligent Credit Platform (ICP) aims to expand the addressable market while smoothing potential risk fluctuations across credit cycles [84]. - The company plans to increase its dividend payout ratio from 20% to 25% of net profit starting in 2025, reflecting confidence in future profitability [23][56]. Management's Comments on Operating Environment and Future Outlook - Management observed positive short-term changes in consumer loan demand following government economic stimulus measures but emphasized the need for ongoing macroeconomic improvement for sustainable recovery [62]. - The company expects continued improvement in asset quality and net profit growth in 2025, driven by strategic risk management and operational optimizations [68][72]. Other Important Information - The company invested RMB 149 million in research and development in Q3 to enhance its technological capabilities [17]. - The total cash position was approximately RMB 4 billion, with a provision coverage ratio of about 240% at the end of Q3 [55]. Q&A Session Summary Question: What is management's view on the growth strategy for Q4 following the government policy stimulus? - Management noted some positive short-term demand changes but emphasized that long-term recovery depends on macroeconomic conditions [62]. Question: What are the core drivers for the significant net profit growth this quarter? - The significant net profit growth was attributed to improved asset quality and record low funding costs, with expectations for continued profit growth in the future [66][70]. Question: Could you elaborate on the main measures taken in Q3 to optimize the risk level of new loans? - Key measures included focusing on high-quality channels, enhancing anti-fraud detection, and improving risk identification capabilities, resulting in a stable decline in risk levels [78][80]. Question: What is the future plan for the Intelligent Credit Platform model? - The ICP model is expected to expand the addressable market and improve asset structure, with significant growth potential anticipated [84][87]. Question: What are the driving factors behind the record low funding cost this quarter? - The funding cost decreased due to ample market liquidity and strong demand for high-quality consumer credit assets, with expectations for continued optimization in 2025 [90][92].
Lexin(LX) - 2024 Q3 - Earnings Call Transcript