Yahoo Finance Jiayin Group Inc. (NASDAQ:JFIN) Q4 2023 Earnings Call Transcript
Jiayin Group Inc. (NASDAQ:JFIN) Q4 2023 Earnings Call Transcript March 28, 2024
Jiayin Group Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day ladies and gentlemen, thank you for standing by, and welcome to the Jiayin Group fourth quarter 2023 earnings conference call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, we are recording today’s call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.
Shawn Zhang: Thank you Operator. Hello everyone. Thank you all for joining us on today’s conference call to discuss Jiayin Group’s financial results for the fourth quarter and full year of 2023. We released our earnings results earlier today. A press release is available on the company’s website as well as on newswire services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifang, Chief Risk Officer. 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; as such, the company’s actual results may be materially different from the expectations expressed today.
Further information regarding these and other risks and uncertainties is included in the company’s public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese and I will follow up with corresponding English translations. Please go ahead, Mr. Yan.
Dinggui Yan: [translated from Chinese] Hello everyone. Thank you for joining our fourth quarter and full year 2023 earnings conference call. The year of 2023 was a pivotal year for our company with the changing macroeconomic landscape amplifying our challenges, but also opening up unique opportunities for our group. We are thrilled to share that throughout the fourth quarter and the entire year, we firmly executed our strategic initiatives, achieving remarkable results on both financial and operational fronts. The execution of these strategies will form the core competitive edge for our company’s future growth. Reflecting on 2023, key words for China’s macroeconomic state were steady growth and structural adjustment. On the one hand, the recovery of the economy at the macro level faced extended timelines and increased difficulties due to the ongoing multi-year impact of COVID and escalating geopolitical conflicts worldwide.
Maintaining steady growth while strictly controlling potential risks became a critical consideration for policy makers. On the other hand, the importance of developing industries that are both strategic and emerging, as well as stimulating domestic demand became even more pronounced. Adjusting the structure of [indiscernible] development and focusing on transforming and upgrading the engines of growth emerged as primary discussions. Particularly from the fourth quarter onwards, new quality productive forces started to gain traction as a popular concept. In 2023, we kept a close watch on significant changes within the macroeconomic landscape, particularly in the financial and technology sectors. We remain focused on our core competencies of technological innovation and risk management.
We did this while striving to enhance our company’s market share and improve our precision in operations, thereby successfully meeting our business objectives. In the fourth quarter, the company’s loan facilitation volume was RMB 20.1 billion, an increase of 6.3% year-over-year. Meanwhile, the company’s total loan facilitation volume for the full year reached RMB 88.1 billion, an increase of 58.7% compared to 2022, surpassing the previously set target guidelines and achieving a new historical high in volume. In the fourth quarter, the company achieved net revenue of RMB 1.6 billion, an increase of 51.8% year-over-year. Annual net revenue reached RMB 5.47 billion, an increase of 67.1% year-over-year, continuing healthy growth momentum.
The recovery of the macro economy is closely linked to the support of credit services, and in 2023 the demand for consumer credit services in the Chinese market remained robust. Policies and measures such as the opinions of the General Office of the State Council on further unleashing the potential of consumer spending and promoting the sustained recovery of consumption, the National Development and Reform Commission’s effort for restoring and expanding consumption, and National Financial Regulatory Administration’s notice on the financial support for recovery and expansion of consumption and state councils’ initiatives to further facilitate the high quality development of inclusive finance, each contributed to the growth of the consumer credit service market.
Additionally, new requirements were introduced at the national level to regulate financial institutions and enhance service quality. At the end of 2023, according to data from the People’s Bank of China, the balance of various types of RMB loans from financial institutions amounted to RMB 237.59 trillion, an increase of 10.6% year-over-year. Through the year, RMB loans increased by RMB 22.75 trillion, an additional RMB 1.31 trillion compared with the previous year. Against the backdrop of the continuously increasing market demand, we are continuing to focus on optimizing customer structure, pursuing sustainable growth and business scale. 2023 was a year of transformation for our company in terms of technological empowerment, especially in the development and application of artificial intelligence technology.
In the third quarter, our company officially changed its name to Jiayin Technology, marketing a strategic shift where technology is top priority. This move aligns with the trend of applying AI in various business scenarios. AI technology has empowered us in areas like anti-fraud monitoring, marketing borrower acquisition models, and intelligent quality inspection for customer service. These advancements have boosted our risk control capabilities, improved borrower acquisition efficiency, and enhanced customer satisfaction and compliance. In the fourth quarter of 2023, we combined large language models and AIGC technology to enhance our innovation and influence through automated high quality image and video content creation. Internally, we are developing intelligent office tools leveraging open source large language models for better operational efficiency in the middle and back office.
By the end of 2023, we had partnerships with 71 financial institutions and were in talks with an additional 36. Our collaboration with these institutions covers operations, technology, risk management and customer-wide protection, enhancing our market competitiveness. In the fourth quarter, we welcomed one internet bank, two tier 1 city commercial banks, and several private banks as partners, diversifying our funding. This led to significant growth in our loan facilitation business throughout the year. We believe our expanding ecosystem of partners will be crucial for our long term growth. In the fourth quarter of 2023, the company continued its efforts in managing risk fluctuations and expanding its borrower base. We understand the importance of optimizing customer structure and ensure asset quality amid market changes.
The delinquency rate for 61 to 90 days remained at 0.68%, manageable overall. Going forward, Jiayin will maintain prudent and flexible risk control strategies. For new borrower acquisition, we pursued a stable strategy focusing on existing multi-channel borrower acquisition metrics and achieved success in cost control. This led to an 11.9% reduction in Q4 2023 sales and marketing expense compared to the same period of last year. In borrower operations, through refined management, we deeply explored the lifetime value of core assets. Our repeat borrowing rate reached 72.9% with average borrowing amount per borrowing of RMB 9,944. The company’s expansion into overseas markets is progressing steadily. In Nigeria, we are mindful of the ongoing fluctuations in local exchange rates and market risks which may pose challenges to further growth.
We will continue to monitor the local business environment closely and make informed decisions accordingly. Meanwhile, the promising pan-African market, like Tanzania, we are actively exploring expansion opportunities. Indonesia is also a key market of interest. By the end of 2023, Indonesian regulatory authorities had introduced new policies requiring lower rates and a tighter market oversight. We are closely monitoring these developments and plan to support our partner to optimize their asset structures and target high quality borrower segments. Additionally, we are keeping a close eye on Latin American markets, including Mexico, for potential business development opportunities. Throughout the fourth quarter and full year 2023, consumer rights protection remains a central focus for Jiayin’s development.
We actively responded to the customer rights protection initiative, defending consumer rights with determination. Leveraging our digital technology advantages, we implemented lean operational strategies internally and established a robust consumer rights protection system. Externally, we continue to empower our business with technology, building a strong anti-fraud firewall to foster a harmonious and stable consumer environment. In the 2023 consumer rights protection white paper released in January, we detailed our achievements and deep industry insights. This included educating 26 million individuals on consumer protection and assisting 9,900 borrowers in need. The company’s outstanding performance was recognized with the Best Financial Consumer Rights Protection Award at the Financial Compliance Annual Award ceremony.
Reflecting on 2023, we are pleased to report that we achieved high quality growth, demonstrating the effectiveness of our strategies. Currently as industry regulation enters into a normalized stage, it is expected that the future industry environment will be more conducive to Jiayin’s sustained development. We also made significant strides in technology-enabled business operations and in expanding our overseas footprint. We are convinced that maintaining a focus on technological innovation as a cornerstone of our long term competitive strategy, along with our commitment to expanding our business scale, automating our asset structure and religiously managing risk, we’ll ensure our continued and stable growth in both Chinese and international markets.
We are confident in our company’s performance in 2024, setting a goal for total loan facilitation to range from RMB 93 billion to RMB 98 billion for the year, with RMB 22 billion targeted for the first quarter. Finally, I would like to talk about the company’s efforts in boosting shareholders returns. Over the past nine months, we have distributed two cash dividends to shareholders totaling U.S. $0.80 per ADS. The total dividend amount reached US $42.7 million, accounting for 25% of the company’s net income after tax for the fiscal year of 2022. Going forward, we will continue to execute the company’s dividend policy, which is to distribute dividends twice a year in cash with an annual total dividend not less than 15% of the previous year’s net income after tax, subject to dividend conditions being met.
Regarding our share repurchase program, as of now the company has repurchased its ADS for approximately US $10.6 million, and with our current effective share repurchase program limited to US $13 million, we look forward to reaffirming our commitment to creating value for our shareholders and our confidence in the company’s long term growth prospects through these measures. With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.
Chunlin Fan: Thank you, Mr. Yan, and hello everyone. Thank you for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in renminbi and our percentage changes refer to year-over-year comparisons unless otherwise noted. As Mr. Yan mentioned earlier, [indiscernible] growth momentum over the past year to achieve new milestones in the fourth quarter, notably our loan facilitation volume grew by 6.3% to RMB 20.1 billion. Our net revenue was about RMB $1.6 billion, up 51.8%. Moving onto costs, facilitation and servicing expenses were RMB 857.2 million, representing an increase of 329.1% from the same period of 2022, primarily due to increased loan facilitation volume and expenses related to financial guarantee services.
Allowance for uncollectible receivables, contra-assets, loan receivables, and others was RMB 43.8 million, representing an increase of 190.1% from the same period of 2022, primarily due to the increased balances arising from our loan facilitation and guarantee services. Sales and marketing expense was RMB 329.5 million, representing a decrease of 11.9% from the same period of 2022 primarily due to lower commission expenses. G&A expenses were RMB 65.2 million, representing an increase of 9.9% from the same period of 2022, primarily driven by an increase in employee costs. R&D expenses were RMB 92.9 million, representing an increase of 44.3% from the same period of 2022 primarily due to higher employee compensation as a result of an increase in research and development department headcount.
Consequently, our net income for the fourth quarter was RMB 367.6 million, representing a decrease of 31.1% from RMB 533.7 million in the same period of 2022. Our basic and diluted net income per share was RMB 1.72 compared to RMB 2.49 in the fourth quarter of 2022. Basic and diluted net income per ADS was RMB 6.88 compared to RMB 9.97 in the fourth quarter of 2022. We ended this quarter with RMB 370.2 million in cash and cash equivalents compared to RMB 180.3 million at the end of the previous quarter. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer and I will answer your questions. Operator, please proceed.
See also 12 Best Places to Retire in Idaho and 12 Best Places to Retire in Bali.
To continue reading the Q&A session, please click here.
