CNFinance(US:CNF)2023-03-25 14:07Financial Data and Key Metrics Changes - The company generated interest income of RMB 1.7 billion and net revenue of RMB 58 million under the commercial bank partnership model for fiscal year 2022, achieving a net profit of RMB 140 million, an increase of 111% year-over-year [5][17]. - Total interest and fees income for fiscal year 2022 was RMB 1.7 billion, with total interest and fees expense at RMB 785 million [17][18]. - Net income increased by 111% to RMB 138 million for fiscal year 2022 compared to RMB 65 million for the same period last year [21]. Business Line Data and Key Metrics Changes - Total loan origination volume in Q4 2022 was RMB 3 billion, with RMB 2 billion recommended to commercial banks [15]. - Interest income charged to sales partners increased to RMB 122 million from RMB 33 million in the same period last year [17]. - Collaboration costs for sales partners decreased to RMB 321 million from RMB 426 million for the same period of 2021 [18]. Market Data and Key Metrics Changes - The delinquency ratio, excluding loans held for sale, was 18.3% as of December 31, 2022, while the non-performing loan (NPL) ratio decreased from 2.1% to 1.1% during the same period [21]. - The average loan-to-value (LTV) ratio at the end of 2022 was around 60%, remaining stable over the past three years [27]. Company Strategy and Development Direction - The company plans to target a total loan origination volume of RMB 20 billion in 2023, representing a 40% increase from 2022, with 40% expected to come from loans recommended to commercial banks [23]. - The company aims to deepen cooperation with commercial banks and introduce sales partners into the commercial bank partnership model [10][12]. - Investment in technology and digital transformation will be prioritized to enhance risk control systems and optimize the loan approval process [11][12]. Management Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing uncertainty in 2023, citing challenges from pandemic policies and economic conditions, but expressed confidence in the potential recovery of China's economy [10][13]. - The management believes that the adjustment of pandemic policies and government efforts to stimulate demand will create opportunities for growth [13][32]. Other Important Information - The company has started to refine its installment repurchase policy to alleviate liquidity pressure on sales partners [9]. - The company reported a net loss on sales of loans of RMB 45 million for fiscal year 2022, significantly improved from RMB 451 million in the previous year [20]. Q&A Session Summary Question: Expectations for origination in the current year - The company targets a total loan origination volume of RMB 20 billion in 2023, with 40% expected from commercial banks [23]. Question: Increase in sales partners due to additional services - The number of active sales partners increased by about 100, a 10% rise compared to the end of 2021, attributed to improved services and the installment repurchase policy [25]. Question: Current loan-to-value ratio - The average LTV ratio at the end of 2022 was around 60%, stable over the past three years [27]. Question: Future of interest charged to sales partners - Interest income charged to sales partners is expected to remain stable in 2023, with a slight decrease anticipated as asset quality improves [30]. Question: Biggest risk and opportunity for the company - The major challenge is managing the delinquency ratio post-pandemic policy adjustments, while opportunities lie in the potential recovery of China's economy and property market [32][33].