FinVolution Group ADR Stock

Hello, ladies and gentlemen. Thank you for participating in the second quarter 2026 earnings conference call for FinVolution Group. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Yam Cheng, Head of Capital Markets for the company. Yam, please go ahead.

Hi all. Thank you for joining our call. Welcome to our second quarter 2026 earnings conference call. The company's results were issued to newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's e-mail alerts by visiting the IR section of our website. Mr. Tim Li, our Chief Executive Officer; and Mr. Alexis Xu, our Chief Financial Officer, will start the call with the prepared remarks and conclude with a Q&A section.

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

Finally, we posted a presentation on our IR website providing details of our results.

Before I turn over to our CEO, we are dialing in from multiple locations, so if there is any delay in connection, please bear with us. I will now turn over to our CEO, Tim. Tim, please go ahead.

Thanks, Yam, and thanks, everyone, for joining us. Let me start with the big picture. For years, we have pursued one clear strategy: internationalization. In a world this volatile, such strategy matters more than ever. It let us take what we have learned and put it to work in markets that are ready for fintech, and it helps us diversify away from any single market. That strategy served us well this quarter, and it is exactly where we are headed.

Overall, the second quarter was a solid one. In China, a stable risk backdrop, together with the preemptive actions we took in early quarters, give us a constructive environment to operate in. Overseas, momentum in Indonesia and Australia more than offset a deliberate temporary pullback in the Philippines. That is our diversification strategy working as designed.

Let me turn to the results. Given the results in China in the fourth quarter of last year, the sequential trend is more telling measure. Group volume rose 5% sequentially to RMB 45 billion and the revenue moved [ in step ], up 6% to RMB 3.4 billion. Net profit was RMB 427 million, up 1%. But the figure we are most encouraged by is overseas, RMB 54 million in operating profit, up 17% sequentially. Overseas now account for roughly 27% of group revenue, and that share will keep rising for the rest of the year.

Now let me dive into the 2 segments, starting with our Chinese Mainland. At a high level, we booked RMB 41 billion in loan volume, up 6.5% quarter-over-quarter, a healthy continuation of the recovery that began at the beginning of 2026. That said, the industry was rattled by an isolated credit incident, which adversely impacted the risk and funding dynamics. I will walk you through in a bit. Right now, we are watching 3 priorities closely: asset quality, fundings and regulation.

First, asset quality. Coming into 2026, we expected a gradual recovery following the regulatory result in the fourth quarter of last year. Two quarters in, that played out as we expected through the first half. Risks continue to ease through the second quarter. C-M2 came down again from 0.68% to 0.56%. So we grew the book selectively, focusing on the high-quality repeat borrowers as we know well. The strategy generated 6% sequential growth in unique borrowers while keeping credit quality firm. Vintage credit cost was steady at roughly 2.7%.

The environment has since turned. In July, an isolated credit event led institutional funding partner to reduce funding for loan facilitation. Many smaller platform either exited or sharply cut loan origination. Separately, a regulation campaign around the collection industry has tightened the collection capacity across the industry. Together, this creates a risk headwind for us in the coming quarters. While it is in the early stage, we are staying cautious on the risk of our portfolio.

On funding, let me be direct. The same tightening sits behind our funding outlook. Our own funding held up well in the second quarter, but beginning in July, we are seeing the industry as a whole tighten as the institution turn more cautious. For us, that could meaningfully lower our origination volume and some upward pressure on funding costs.

Here is how we are managing it. Our balance sheet and liquidity give us room, and our asset quality and compliance record matter more when funding partners get selected. We've already begun allocating liquidity towards our China funding base and will prioritize funding stability over near-term growth until the environment normalizes.

On regulation, the new fee disclosure requirements took effect on August 1, and we are complying. The online marketing rules take effect at the end of September, and we are already working with our partners to be ready.

Now let's move on to the Overseas segment. Our Overseas segment is performing well. Volume rose 19% year-over-year and revenue reached RMB 930 million, up 18%. More important, these numbers are backed by real demand. Our unique borrowers more than doubled from a year ago to 5.3 million. Over the past 2 years, we have reached several important milestones. We have built a diversified portfolio of markets, where temporary weakness in any one country can be offset by strength in the others.

Last year, we absorbed an interest rate cap in Indonesia on the strength of the Philippines. This quarter, we deliberately dialed back origination as the new rate cap took effect in the Philippines. And that gap was filled by structural growth in Indonesia and the progress we keep making in our newest market, Australia.

As the country becomes balanced and as we add more profit -- profitable markets, our growth trajectory would be increasingly predictable and certain. Our playbook remains the same, product expansion and customer upgrade. We use broad portfolio of easy-to-use financing products to attract customers to try out and progressively cross sell other credit solutions to build better unit economics over time.

In Indonesia, offline buy now, pay later continued to lead the growth. Our partnership in various offline consumption scenarios continue to proliferate. Offline buy now, pay later is now around 25% of the volume comparing to single-digit contribution a year ago.

In the Philippines, the rate cap took effect this quarter. We slowed down deliberately to protect quality, the same approach we have taken through past transition. And growth has typically returned once the new pricing settles in.

In Australia, we further expanded our offerings to large ticket size, lower interest rate products to attract consumers with strong credit profiles for higher credit limit. While this is still preliminary, we plan to continue to pursue customer upgrade as a core strategy. We also made further investments in building the open banking infrastructure, giving us direct access to bank statement data and a far sharper read on each borrower.

Finally, ESG. In our business, trust is everything. In June, we published our eighth annual ESG report. On fraud prevention, we made 60 upgrades to our antifraud system, flagged more than 9,000 suspicious activities each day and blocked over 17,000 fraud attempts. We also launched our own consumer protection system, Golden Sentinel. It systematically integrates early risk warnings, compliant analysts, [indiscernible] and data dashboards to drive consumer protection governance from post-incidence handling towards proactive warning and thus, resolves 74.5% of cases on first contact, with customer satisfaction at 98.5%.

With that, let me hand it to Alexis for a closer look at numbers.

Thank you, Tim, and hello, everyone. Let me walk you through our key results for the second quarter, and please refer to our earnings press release for further details. Now let me discuss each of the segments. First, China. Macro in China remains in a gradual recovery model. China's real GDP growth slowed down from 5% in first quarter to 4.3% in the second quarter on the back of subdued household consumer confidence.

First, in Q2 Revenue was RMB 2.4 billion, up 8% sequentially, a direct result of recovery in loan volume during the quarter. Take rate stabilized at about 3.2%, in line with the first quarter. On risk, asset quality on new loans held steady at 2.7%. Early risk indicators show signs of improvement on outstanding loans. The day 1 delinquency ticked up slightly from 5.2% to 5.3%, while the 30-day collection rate strengthened from 87% to 89%. Overall, C-M2 improved to 0.56% from 0.68%, below the Q3 2025 level.

While this points to our portfolio of improving credit quality, we are vigilant on the risk uptick following various industry events in July. Separately, funding costs rose a further 30 basis points sequentially to 3.7%. Institutional funding supply began to tighten towards the end of the quarter, and we expect further upward pressure on funding costs in the coming quarters.

On customer acquisition, we raised our risk appetite for repeated borrowers. Combined with acquisition costs holding at an attractive level, that brought our overall customer acquisition costs down quarter-over-quarter. As a result, China's operating profit grew 4.3% sequentially to RMB 625 million.

Turning to the Overseas. Overseas revenue rose 18% year-over-year to RMB 930 million, partially dragged by our deliberate pullback in loan origination in the Philippines. One priority for our Overseas segment is to balance profitability with growth. By its nature, this business recognize customer acquisition costs and credit loss upfront, while revenue is earned over time. Philippines profit is inherently backloaded, and the rapid growth on its own would leave the early years deeply unprofitable. We manage it deliberately against that dynamics, ensuring we deliver profit even as we scale.

The second quarter was a case in point, RMB 54 million in operating profit, up 17% quarter-over-quarter and more than double year-over-year. Earlier this year, we guided to USD 13 million of full year EBITDA. Doubling from last year, we remain confident in delivery.

During the quarter, we added 2.2 million new borrowers in the quarter, up 29% sequentially. Offline buy now, pay later in Indonesia drove most of the new borrower momentum, a sign that our offline expansion is translating directly into new customers rather than just brand awareness. The Philippines continued to absorb the impact of the industry's new interest rate cap. We preemptively scaled back originations this -- over the past 2 quarters, but the momentum should soon restart. In Australia, unique borrowers grew 22% sequentially, driven by effective online marketing, a wider product range and a cleaner apps experience. Going into the next quarter, we continue to be mindful of the macros, such as oil price, may impose on currency as well as credit quality in market we operate.

On a group basis, net revenue reached RMB 3.4 billion, up 6% sequentially on the back of higher loan volume. Operating profit came in at RMB 529 million, which included a one-off intangible asset impairment of RMB 64 million. Excluding that impact, operating profit was up 8% sequentially. Net income was RMB 427 million, up 1% sequentially.

We held RMB 6.4 billion in cash and short-term investments and the leverage is set at 2.1x, near historical lows. The balance sheet strength gives us the flexibility to navigate a tighter funding environment in China. On shareholder returns, our capital allocation is clear. We prioritize business growth first and use buybacks as our flexible level, [ sized ] to market conditions, trading volume and the share price. In the second quarter, we repurchased USD 27.4 million of shares, bringing first half 2026 repurchase to USD 66.8 million.

Now to our outlook. We are reiterating our full year revenue guidance of RMB 11.5 billion to RMB 12.9 billion based on information currently available. We set that range conservatively at the start of the year given industry volatility. Our first half performance tracked ahead of our internal plan. That gives us a cushion. The other performance we delivered in the first half year helps absorb the softer second half we now expect as funding and credit conditions tighten. Given that near-term pressure, we would expect to land in the lower part of the range unless the operating environment substantially changes.

To sum up, China is moving through a transition that we believe will favor players with strong compliance and operational know-how. Overseas is becoming a second growing source of profit. We go into the third quarter clear-eyed about the funding and the regulatory pressure ahead and committed to the same disciplined execution that has carried us this far. Across both capital allocation and operations, we are focused on one goal: lasting compounding returns for our shareholders.

Thank you. We will now hand the call to the operator for questions.

[Operator Instructions] The first question will come from the line of Cindy Wang of China Renaissance.

[Foreign Language] I have 2 questions here. First, following the Juzi platform incident, what business adjustment did the company make to ensure risk control? What is the current funding supply situation? And will the recent exit of small size platform would lead to a resurgence of industry risk? And what are the recent changes in the company's early risk indicators?

Second, what is the current interest rate adjustment situation in Philippines? And will they affect the growth rate of overseas new loan volume this year?

Thank you, Cindy. I will take your questions. I think you have 2 questions, and your first question is a very big and multipart question. So I will break it into different pieces. Okay. Let's start with what we are seeing on the funding side. After the Juzi event, the credit and the liquidity issues at the individual platform did trigger some broader volatilities in the funding across the loan facilitation industry.

So the first impact is the tightening risk appetite of the financial institutions. The event raised concerns among the financial institutions about the funding flow safety and the compliance of the platform. Since July, a lot of institutions have launched internal self-checks and do some reviews for their partners. Some of them paused the business during the process, took a wait-and-see approach. So that led to a fairly sharp near-term pullback in funding supply across the whole market.

I think most of the small- and middle-sized platforms have either exited or pulled back sharply on lending. And we are relatively less impact, but our China volume was down around 50% in July. And looking at August, we believe institutional confidence has started to stabilize. But the funding recovery is still coming back at a slower pace. Yes.

And what we have done to adjust our business for the challenge, okay, so first is on transparency. We have worked very closely with our financial institution partners, give them the visibility into our fund flows and the repayment path, kept everything in a very clear and closed loop compliance process. We believe it will help to ease their concerns. And secondly, during this period, we have prioritized the quality over the scale, further refined our customer segmentation, raised the underwriting bar and prioritized the fundings for our high-risk quality customers.

And then turn to the funding outlook. I think over the long term, financial institutions will keep reducing their exposure to those small platforms and focus on the big platforms, that they are compliant, well capitalized and have a strong risk track record. That's where we see it.

I can show some figures. In the second quarter, we had RMB 6.4 billion in cash and short-term investments. Cash flows stayed solid through July and August. And the latest number is RMB 7.5 billion. And on top of that, we have got roughly RMB 5 billion in highly liquidity assets. I mean those cash, we can recover very quickly in near term. So the aggregated number is RMB 12.5 billion in total. Okay? That gives a real resilience and forms the foundation for our leading position in this industry and our long-term relationships with the founding partners.

We think in near term, there will still be some volatility as the institutions still need time to rebuild their risk appetite and work through their process reviews. So maybe in the next 1 or 2 quarters, I think it comes down to 2 things. First, it depends on how fast institutions get through their self-checks and system fix. The pace varies a lot case by case, so industry-wide, the recovery hasn't quite caught up yet. Secondly, I think whether the broader credit environment stays stable and [ PL and SS ] keep existing and assuming there is no new extreme event, so in that cases, I would expect risk appetite and confidence to gradually come back with the self-check's ramp-up. Okay.

And last, I will talk about our early risk indicators. This round of funding tightened also overlapped with the regulatory action in the collection industry at the end of July. So collection results got tighter. And the recovery efficiency took a bit of hit, too. That's added some challenges on top. Okay.

Actually, we have seen some movement in our early risk indicators. As a result, our latest reading is up around 20% versus the second quarter. Given all of that, we are staying profit focused rather than chasing scale. We are also taking a more conservative posture on risk sharpening, how we are identifying higher-risk borrowers, speeding up model iteration and tighten the acquisition spend. All our goal is at protecting our unit economics. Okay? So that's my answer for your first questions.

And your second question is about Philippines. Okay. The Philippines rolled out a new interest rate cap effective from April 1. So heading into that, we took a pretty deliberate cautious approach in the first half. We actually slowed down the originations on purpose to give ourselves room to adjust the business.

Yes. short-term volume in the Philippines did take a hit, okay, as we have mentioned before. But based on our experience, navigating similar pricing adjustment in Indonesia before, we believe this kind of recovery typically takes about 2 or 3 quarters. So we expect the Philippines business will return to growth in the third quarter. And after the adjustment, the new regulatory framework sets in and as our mix shifts further toward high-quality borrowers, we have still got room to optimize both credit costs and funding costs and the growth picks back up from there.

And to be clear, in the Philippines, I think we are not just cutting prices to comply with the new rules. We are using this as a chance to push deeper structure upgrade across the business. For example, on the risk side, we have raised our underwriting bar and the pullback on the marginal segment where risk and returns were not linear, while growing the share of higher-quality borrowers, the ones with more stable repayment behavior and better repeated borrowing performance.

And on the product side, we are continuing to diversify beyond online cash loan product. We have expanded into more scenario-based products like our buy now, pay later product with the local smart shop company and Carousell. That lets us more beyond a single cash loan product into a broader range of consumption and payment use case. So we can match our better quality customers with the right credit line, tenure and the product and there, build the lifetime value through repeat borrowings.

Now zooming out to the Overseas business as a whole. The fee adjustment in the Philippines in the first half doesn't change the overall growth trajectory for our overseas markets. And there is really, thanks to our -- the multi-market proof point. The Q2 pullback in the Philippines was largely offset by the strong growth in our Indonesia and Australia market. So heading to the second half, we expect the momentum in Indonesia and Australia to continue. And also, we expect the Philippines to work through this adjustment period to get back to sequential growth. So for the full year, we are very confident to expect the overseas volume to grow at a double-digit rate year-over-year.

The next question now comes from the line of Alex Ye of UBS.

[Foreign Language] So I'll translate for my question. First question is about the funding cost. So what has been the latest funding cost in recent months compared to Q2? And what's your expectation for the coming 1 to 2 quarters?

Second question is that given funding supply has become a major bottleneck at the moment, so is there any adjustment that the company is going to make with regard to the utilization of your self-capital? So -- and in relate to that, how should we think about the pace of buyback in the coming 1 to 2 quarters?

Okay. Thank you, Alex. Yes. Your first question is about funding. Yes. We are seeing funding costs tick up in the third quarter relatively to the second quarter, up about -- around 30 basis points in July, and we expect the gradual upward trend to continue over the next quarter or 2, so just given the broader funding environment in China right now. Okay. And we believe short-term funding volatility is largely a matter of confidence. So over the long run, we don't see the competitiveness of the quality asset strategy. If anything, it will only get stronger.

Your second question is about the capital deployment and the buyback pace. So recently, the funding tightness from that -- the industry event has made a lot of financial institutions more focused on the compliance and the capital strains, and on our side, we are leaning into our own strong balance sheet and ample cash reserves. We have showed the figures before. We are offering a solid safety cushion and credit enhancement in our funding partnerships to work with them to build the institutional confidence and speed up the recovery.

Now we are also looking at exploring the possibilities at the capital injections into our licensed business, for example, the micro lending company, as a way to diversify our funding sources and improve the stability. So that's for our China business.

And on the other side, even in the short term, there are some pressures in the China market. Our long-term overseas build-out is already paying off. We are moving into a profit release phase. So gradually, we have also noticed a lot of our peers accelerating their own overseas business lately. But for us, that validated 2 things, that we were ahead of our -- the curve on this and the strategy itself was the right one.

So with a mature skilled Overseas business already in place, we have got a lot more patience and confidence to navigate the bumps in China. If anything, that's made us even more committed to accelerating investment overseas. For example, the Fundo acquisition in Australia last -- the first quarter last year also gave us valuable experience entering the new markets through M&A. So going forward, replicating the playbook through the capital allocation may be the smart move and can really help us to drive a healthy and faster growth Overseas business.

And the last on the buyback pace, yes, as we have mentioned, we will prioritize the steady operations in business first, the steady business in China and the fast growth business in overseas market. And from there, we will keep the flexibility to execute the buyback plan based on the share price and the market and liquidity. But it will not change our long-term direction on shareholder returns. We will remain committed to return the capital to maximize the long-term shareholders' value. Okay.

Our next question will come from the line of [ Yoyo Fan ] from CICC.

[Foreign Language] This is [ Yoyo Fan ] from CICC. My question is on Overseas business. We can see that the Overseas business is well on track based on the first half year data. So looking ahead to the second half of this year, what will be the key drivers of our Overseas profit growth?

Okay. Thank you, [ Yoyo ]. Before I get into the specific drivers for the second half, let me give you a bit of context. Looking back at how our Overseas business has developed, I would say has been marked by a real foresight and the proactively strategy from the start. Back in 2018, 8 years ago, where our China business is we're still enjoying strong growth, the group. We have already made global expansion a long-term strategic priority. So over the past 8 years, we have steadily built up our overseas foundation, securing license, establishing the local operations and building out our funding's ecosystem. We proved that the model from 0 to 1 in Indonesia and then replicate the experience in Philippines and the other countries and acquired the Fundo and entering the Australia, upgraded the whole approach into what we now call the strategy, LEGO+.

As such, the years of deliberate groundwork and sustained investment, that allowed our overseas business to become what it is today, a mature second profit engine, delivering steady and meaningful profit for the group. Okay. And then let me get into the details in the second half.

Looking ahead, we expect our 3 major overseas markets to work together in a very fairly commensurate way. Indonesia contributed the bulk of the incremental growth and the Philippines gradually recover and the Australia continue its rapid expansion. For Indonesia, which is the largest one, it already accounts for more than 50% of both our overseas volume and revenue. Even with the seasonal drag from Ramadan, we still delivered a solid 13% growth versus the second half year 2025 in the first half.

So the second half trends to benefit from the traditional peak season. So we would expect some further improvement in growth. We are also continuing to build out offline buy now, pay later products through our motor finance license. And the customer segment tends to be high quality, longer tenure and the larger ticket size, which will help us to keep improving our overall customer mix and finally drive the healthy returns. Okay. That's for the Indonesia.

And on the Philippines, in the first half, we made a deliberate choice to tighten up in response to the new interest rate cap, to raise our underwriting standards and cleanup of our customer mix. So after the new price environment stabilized, we would expect the Philippines volume to start recover sequentially in the second half. And as the share of the high-quality customers keep rising, that will continue to bring risk down and support the ongoing improvement in the unit economics.

And for Australia, as the new starts in our overseas expansion, it's very high compliance, high-value developed market and the growth has been fast since we consolidated at the end of last year. And in the second quarter, unit borrowers were up 22% quarter-over-quarter. It drove the volume to 70% sequentially. So we would expect Australia to keep going up to double-digit sequential growth in the second half. Given the Australian customer tends to have the larger ticket size and better risk performance overall, we think Australian contribution to overseas profit will keep increasing as the customer base grows and more of our acquisition shifts to our proprietary apps. Okay. So that's for our 3 major overseas market.

And yes, summary, okay, our Overseas business is no longer dependent on any single market, instead as build out 3 things working together, and maybe in near future, it will be more countries added in. Broader product diversification, continued customer mix upgrade and our LEGO+-- global platform, so together, we have built a cross-regional growth structure that is really resilient through the cycle.

That's what gives us the ability to bear the regulatory shifts in any single market and stay on track towards the long-term goal. We have an ambitious target by 2030. We expect the overseas revenue will reach more than 50% of the total group revenue. Okay. That's all for my answer. Thank you.

Questions now, I would like to turn the call back over to the company for closing.

Thank you. Thank you once again for joining us today. If you have any further questions, please reach out to the Investor Relations team. Thank you very much.

This conference call, thank you for your participation. You may now disconnect your lines. Thank you.

Hello, ladies and gentlemen. Thank you for participating in the First Quarter 2026 Earnings Conference Call for FinVolution Group. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Yam Cheng, Head of Capital Markets for the company. Yam, please go ahead.

Thank you, Desmond. Hello, everyone. Welcome to our First Quarter 2026 Earnings Conference Call. The company's results were issued via newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's e-mail alerts by visiting the IR section of our website. Mr. Tiezheng Li, Tim, our CEO; and Mr. Jiayuan Xu, Alexis, our CFO, will start the call with the prepared remarks and conclude with a Q&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. 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 provision of the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements. except as required under applicable law. Finally, we posted a slide presentation on our IR website, providing further details of our results for this quarter.

I will now hand over to our CEO, Tim. Tim, please go ahead.

Thank you, Yam. Hello, everyone. We close out 2025. Besides, we were stepping into this year with clarity, not certainty. One quarter in, the clarity is beginning to show in the trajectory of our business and in the release results of disciplined choices we made last year. The macro backdrop has its challenges, yet we delivered a firm first quarter. This is recovering in China, overseas business continue to scale with its own stride. And across the platform, years of technology investment are compounding into operating efficiency.

Despite the typical seasonal softness in the first quarter, transaction volume held broadly steady at RMB 42.6 billion, roughly in line with last quarter. Our group net revenue reached RMB 3.2 billion up 6% sequentially. Operating profit was up 13% sequentially. Net profit came in at RMB 421 million, up 1%, reflecting the impact of foreign exchange fluctuation. Overseas markets again delivered 30% of group revenue this quarter. This is no longer only a diversification story, it has matured into a second profitable engine. To give investors a clear view of this business, for the first time, we are disclosing our overseas business as a separate reportable segment. In the first quarter, overseas revenue reached RMB 949 million. up 35% year-over-year. Operating profit reached RMB 46 million, up 88% year-on-year. This is a reflection of both the scale we have built and the earnings power that now stand on its own.

Now let me walk you through our 2 segments. Let's start with our mature market, Chinese Mainland. The first quarter in China was in a word patience. We are seeing early signs of a recovery in progress. The Chinese New Year holiday always makes the first quarter a seasonally softer period. Yet transaction volume held up at RMB 38.5 billion, roughly flat sequentially. On risk, we are seeing gradual improvements. The actions we took in the second half of last year are working, and credit risk is finding its way back to a healthier baseline. Vintage delinquency eased by 30 basis points. Day 1 delinquency ratio also improved, while 30-day collection rates ticked up. This improving environment has given us the operating headrooms to reengage with growth cautiously, not aggressively.

As the industry consolidated, some players pulled back, we selectively acquired more high-quality customers at compelling costs. Conversion improved. Acquisition costs came down and we added roughly 0.6 million new borrowers in China this quarter, up 7% sequentially. In the near term, we will continue to closely observe the evolving regulatory landscape. There is still uncertainty ahead. Our approach is to stay aligned with the rules, manage risk carefully and capture opportunities as they emerge.

Now I'll walk through our overseas business. Our overseas market segment is a regional platform that learns compounds and transfers. Under our LEGO+ framework, the capability we build in one market are deliberately designed to flow into the next. That means risk infrastructure, product architecture, customer strategy, funding relationships. A lot of these can be leveraged and replicated. This quarter is a demonstration of that idea in practice. The first quarter is traditionally a low season for our overseas markets as well. Across the region, transaction volume was RMB 4.1 billion, broadly flat sequentially.

Indonesia moved through relevant. In the Philippines, we deliberately moderated origination ahead of new interest rate regime, taking effect in the second quarter, a measured decision. Consistent with our playbook year-over-year, the direction is clear. Loan volume up 35%, loan balance at 38% and unique borrowers more than doubled to 4.5 million. Australia is unfolding on the roadmap we said. we are firmly executing the initiatives we laid out from day 1, expanding new customer acquisition channels, migrating the platform onto our proprietary risk infrastructure deploying credit models and the decisioning rules tailored for the Australian consumers. Early results are there, sharper risk detection, better borrower segmentation stronger portfolio economics, What will make Australia work is the same combination that has served us before. Cross-market experience layered onto deep local knowledge.

Technology, AI is no longer a supporting capability for us. It's how we run the business from AI agents to workflow automation. We are proactively deploying nearly 120 active initiatives across the business. And more than 50% are embedded directly in frontline operations. For example, our engineering teams are building propriety AI native infrastructure to support new product launches across our current and future markets.

In some of our overseas business, the results are already tangible, AI collection agents are not only the default touch point for predeal reminders. They are also handling 50% of early-stage collections at a recovery efficiency level, in line with our historical benchmarks. We believe this is a durable compounding competitive mode, and we are just getting started.

Community, our long-standing community engagement programs continue to make an impact this quarter. Our macro business support program further expanded its reach this quarter, opening eligibility to retired athletes who run their own business in China. Since the launch, over 140 small business owners have benefited from this initiative and upgraded their business with our help on operational and funding support. In the Philippines, our local platform partnered with multi-local institutions to combine fintech-related cybercrime, reinforcing our commitment to building a safer digital financial ecosystem. Together, these initiatives reflect the depth of our local roots and the consistency of our commitment to responsible growth.

To close, the first quarter gave us the early shape of the year, a recovery in China amid regulatory fog. Our overseas business standing on its own with growth and profit. a technology advantage that is compounding against an uncertain macro, we move with the same posture we spoke of last quarter, clarity, not certainty, patience, not haste. We remain focused on growth that lasts and on creating durable value for consumers and our stakeholders.

I will now turn the call over to Alexis.

Thank you, Tim. This quarter marks a meaningful evolution in how we report. For the first time, we are presenting our overseas operations as a separate segment. The reason is simple, our overseas operation has grown into a business with its own scale, profitability and trajectory. Reported alongside our China operations to tell a cleaner story. China is the foundation of cash flow and stability. Overseas is the engine of growth. Two engines, distinct but aligned. The overseas segment consists of the Indonesia, the Philippines and Australia. Together, these 3 markets have reached scale, growth and profitability where segment reporting gives investors a much clearer view of how they will drive upside going forward.

We are also introducing adjusted EBITDA for each segment. This metric aligns with how global peers report their financial services business and help investors see the underlying profitability of each engine. Transparency builds trust. By separating the 2 engines, we make it easier for investors to value each segment on its own metrics and unlock the true value of the platform we have built.

Now let me discuss each of the segments. China, the macro backdrop was broadly stable, GDP growth of 5%. Consumption sentiment holdings is ground. Our China business continues to work through the reset and began in the second half of 2025. Loan origination volume was largely flat quarter-on-quarter. Given Q1 seasonality, this is the resilient outcome. Net revenue came in at RMB 2.2 billion, up 7% sequentially. Take rate rose from 3% to 3.2%, supported by a better risk performance. On risk. The picture is consistent across indicators.

In the first quarter, vintage delinquency eased from 3% to 2.7%. And Day 1 delinquency improved from 5.5% to 5.2%. The 30-day collection rate ticked up from 85.9% to 86.8%, as a result, M2 flow rate declined from 0.77% to 0.68%. On the funding side, we continue to maintain stable partnerships with broad base of financial institutions, which kept funding cost stable during the quarter. This healthy risk environment allows us to selectively broaden our credit appetite. Targeting has sharpened. Conversion has improved. New borrowers rose 7% sequentially even when we actually reduced sales and marketing spend in China.

Overseas segment. Overseas revenue was up 35% year-over-year at expanding margin, adjusted EBITDA was RMB 47.5 million, up 87% year-over-year. More encouragingly all 3 markets contributed to this profitability. The deeper picture is in how we deepen our integration into local ecosystems. We are embedding our financial services into the daily life and the commerce of each market. This plays out across 3 consistent themes. First, customer upgrading through targeted product development. Across all markets, we are systematically shifting our portfolio towards better quality borrowers. This is not a collection of one-off products. It's a consistent push towards higher-quality portfolio composite.

Indonesia, off-line buy now, pay later remains the primary growth engine despite revenue, a seasonally slow period. Both transaction volume and the loan balance grew 5% sequentially. Customer quality improved and the take rate held steady. Even as headline PMI eased modestly to 15.1. Unique borrowers reached 3.2 million, nearly 5x the level of the same period last year.

Second, regulator prepared as our core capability. Our regulatory playbook is being applied again in the Philippines. We tightened the loan origination ahead of the new pricing regulation and the early read on risk indicators suggest that caution is playing off. We have navigated pricing transaction in Indonesia and China before, and we are approaching this one with the same posture and the same applied competence.

Third, our proprietary risk infrastructure, refined over years in China and Southeast Asia is being gradually deployed in Australia. Credit trends there have moved lower from our last quarter's seasonal peak, a validation of the portability of our infrastructure. With a renewed credit model, we still achieved sequential growth in transaction volume despite the seasonal softness in the first quarter.

Finally, our funding ecosystem continues to expand. We have recently added a permanent international bank to our founding partnerships in the Philippines. We are encouraged by the shared mission of our partners to support the exciting growth of the digital credit industry in the country. Our group basis, net revenue for the quarter reached RMB 3.2 billion, marking a 6% increase sequentially driven by an improved take rate. Operating profit improved by 30% quarter-on-quarter to RMB 547 million, offset by impact of FX fluctuation. Net income reached RMB 421 million, up 1% sequentially.

Our shareholder return since 2018, we have continuously returned value to our shareholders through share repurchase and dividends. Recently, our Board of Directors approved our eighth annual dividend in the amount of USD 0.306 per ADS, reflecting a DPS increase of 10.5% year-over-year. This dividend was distributed to May 7, 2026, bringing our total dividend distributions to shareholders for fiscal year 2025 to USD 74.5 million. As of the end of April, we have deployed USD 54 million towards share repurchase. Reflecting our conviction in our business and the commitment to our shareholders.

Outlook. For full year 2026, we reiterate our revenue guidance in the range of RMB 11.5 billion to RMB 12.9 billion. We are on track towards our 2030 ambition 15% of group revenue from overseas markets. To conclude, China continues to provide a resilient foundation and is steadily funding its footing Overseas is scaling profitability alongside it. The combination gives us the stability we need today and growth we are building for tomorrow. We step a quarter deeper into the year with the confidence that is quieter but firmer in the resilience of our model and the discipline of execution and in the partnerships that carry us forward.

Thank you. Now back to the operator for questions.

[Operator Instructions] The first question comes from the line of Alex Ye from UBS.

[Foreign Language] I'll translate for my question. First one is on buybacks. So we are glad to see company is maintained its pace of buyback in Q1, similar to previous quarters. So can you give us some color in terms of the outlook, including the pace for your buyback in the coming quarters?

Second question on the regulatory outlook. We have seen several new documents, regulatory document coming up in past several months, including the latest document, which is so-called the management rules on the online marketing or financial products. Could you share with what could -- what impact could this regulation document brings to your day-to-day operations? And how would the company react to mitigate the impact? .

Okay. Thanks, Alex. Yes, I will take your first question, and Tim will take your second question. And your first question is about the buyback. On the buyback execution side, as you have seen, we have been running a very pretty active pace since the fourth quarter last year. We did around $14 million in the fourth quarter, and the momentum has carried into 2026. In the first quarter, we executed another $39 million. And by the end of April, we have added another $15 million. So the total amount this year is about $54 million and the remaining capacity and our current program stands at about $20 million.

With that as the backdrop, our Board recently approved a new USD 150 million program and also as for 2 years. It's quite similar to the two programs we did in 2023 and 2025. And on the capital allocation, our goal is always to maximize the shareholder return. The return accretion could come from business expansion, especially from the overseas business. And it could also come from the share repurchase at the dislocated price. So we will make sure we have enough firepower to support the business expansion and then deploy the buybacks in a more flexible way based on the liquidity and the price we trade. It would be dynamically balanced.

Alex. As we mentioned, the online marketing of financial products, we think this regulation is a natural continuation of a long-running trend. The core ideas, I think are protecting consumers ensuring only licensed players offer financial products and keeping a clean line between tech and the finance. And all of these, we are already -- we agree with. Right now, I think it's still early to determine the full impact. The industry is working through the details on execution.

And generally, we see 3 broad areas where the industry will adapt. First, marketing rules are getting tighter, things like low barrier to entry and instant disbursements and zero costs are out. The days of flashy borderline misleading advertisements are feeding for the industry, that means higher compliance costs and some players, we think may need to make some adjustment to their processes. Our approach has always focused on responsible lending and long-term brand building. So we see this as an opportunity to raise our standards even further.

And second, on user traffic flow from a platform to lenders, the rules add some friction. It requires third-party platform to refer users directly to the financial institutions' own platform. A lot of details we still need to be hammered out on implementation. So it's too early to say for sure, but we are working with financial institutions and the Internet platforms to restructure some of the workflow under this renewed framework. There will certainly be some adjustment to the process via in close communication.

And the third, on business boundaries, the regulation reinforced that core financial decisions, such as credit approval and the risk assessments must rest licensed financial institutions. This has always been our model. We provide the technology and data tools our partners make the final call.

And overall, this regulation raised the bar for the entire industry, there would be adjustments near term. But as a company, FinVolution as a company with strong compliance and technology infrastructure. We see it as a net positive over the medium to long term. And thanks, Alex.

Our next question comes from the line of Cindy Wang of China Renaissance.

[Foreign Language] have two questions. First, could you let us know whether domestic risk performance in April and May continue to improve from first quarter and then if credit risk improves, will transaction volume in China in the second quarter would increase and second, we noticed that the company has made segment disclosure this time. Could you please share the consideration behind the segment disclosure? And also, could you please introduce some operating indicators for overseas markets, including like APR funding cost and default rate. And now what percentage of the group's EBITDA is expected to contribute from overseas market by 2030. Thank you.

Okay. Thank you, Cindy. I will take your questions. Your first question is about the domestic business. Yes, when we look at the risk performance in the second quarter, the improving trend has continued. The asset quality has continued to get better. And by the end of April, our day 1 delinquency has already fallen below 5% back to where we were in July and August of last year. The sustained improvement in the asset quality is really the reflection of the risk management we have been building across the full credit life cycle. On the front end, customer acquisition and the preapproval, we have been actively moving up the credit quality curve offering higher limits and better pricing to those high-quality customers.

And on the technology side, we have been leveraging the large language model to refine the risk analysis, fraud detection and intelligent post loan collections, which has meaningfully lift both the business efficiencies and asset quality. As the asset quality stabilized, we have selectively raised our risk appetite in the second quarter. We are now running a diversified approach backed by the AI models. For those high-quality existing borrowers, we are now offering more credit limit at controlled pace. And we're also selectively offering a wider group of customers of reasonable credit quality to expand our potential customer pool. So we are making progress on sustaining the first quarter growth momentum into the second quarter and we will keep a close eye on the macro environment and our early risk indicators. Stay focused on the high-quality growth and continue to keep the balance between volume, risk and profitability, okay?

And then your next question is about the overseas business. I think it's the multipart question. So I will break it into three pieces yes. First is about the overseas operating metrics. We will not break our APR funding cost or risk by market because each is very different from the interest rate to borrow profile but I will give you some high-level guidance for reference. For APR, compliance is always our first priority. We strictly follow the local pricing rules. At the same time, moving towards high-quality customers will give us the flexibility to offer different price. Take the buy now pay later product, as an example, it helps us reach more prime customers. And for the funding costs, more institutions recognize our asset quality. And our funding partners grew from 13 in 2024 to 18 today, which is continuously optimizing our funding cost.

And for the delinquency rates, as we upgrade customer quality and advance our risk capabilities, the risk metrics are improving across all markets. We continue to aim to progressively bring this down going forward, okay?

And the second part is about the EBITDA contribution, okay? For 2030 overseas EBITDA, I think it's still too early to guide on that because it depends on too many variables. The contribution from our Chinese business, the accounting rules impact and the pace of the overseas business. But for 2026, we have a very clear target...

[Technical Difficulty]

Excuse me, this is the operator. The speaker is experiencing some technical difficulties. Please continue to stand by. The conference will resume shortly.

This is the operator. Please continue from the second part of the answer. Thank you.

Desmond, can you hear us?

Yes. Please continue.

If you look back over the past few years, you will see a very clear road map. We clarify our strategy and then executed, delivered results and report them. So segment disclosure is a major milestone in that ongoing narrative. When we look back at our international journey, it goes like the step 1, prove and replicate the operating model. We first proved the viability and the profitability of our business model in Indonesia. This was our first 0 to 1 breakthrough in overseas market and then we replicated the success to the Philippines. And step 2, we set our long-term goal and delivered steadily. As our overseas business took share. We formulated a group strategy to guide operations and growth our local excellence, global outlook or LEGO strategy. We also clearly laid out the goal of reaching 50% overseas revenue by 2030. We are now already at 30% today, steadily on track.

And step 3, the full strategic upgrade to LEGO+ as we expanded into developed markets like Australia, we have made a fundamental upgrade to what we call LEGO+. We moved from being a collection of local wins to an integrated platform with compounding platform-level advantages. So under this framework, revenues experience, product structures, risk capabilities and funding networks all validated in one market, can be systematically renewed and migrated to new markets. That has great accelerated and de-risked the new market entry.

And the next step, the formal segment disclosure. Now we truly run a business that is both high growth and the profitable on its own. That's the right time to provide separate disclosure for a better understanding of the value in that business. This segment disclosure is a natural link our overseas story, advertise together what we have done and where we are headed. But it is the success of our LEGO strategy to date, and it provides the transparent window into the high-quality global goals we are building for the future.

In coming years, you will see that our overseas engine is not only fast, but also increasingly profitable with unit economics that are keeping improving. Okay, thank you.

Our next question comes from the line of yujie Jing from CICC.

[Foreign Language] I have a question regarding overseas market expansion. Now that our overseas business has achieved profitability. What will be the key drivers for its growth? Could you take -- could you also share your outlook for this business?

Thanks, Yujie. I will answer this question. As previously mentioned, our overseas business continues to deliver strong and resilient growth and over the past 5 years from 2020 to 2025. Overseas transaction volume grew at 69% CAGR. In the first quarter of this year, despite a seasonally slow period, we still delivered solid results. And our revenue grew 35% year-over-year with EBITDA up 87%, and the overseas business is now the group's second largest growth engine. The core driver behind this growth is a dual flywheel loop we built as a data-driven type platform. With over 56 million registered users our growing data pool sharpens our risk models and the high-quality assets consistently attract more institutional fundings. More capital at better cost allows us to serve broader and higher-quality customer segments.

Across Indonesia, the Philippines and Australia. We graduated from the early investment phase and now profitable. And for Indonesia market, after fee adjustments in the past years, growth has resumed. The first quarter transaction volume grew over 30% year-over-year and our approach is to proactively pursue higher-quality customers and the continued traction of our off-line buy now pay later product is a direct result of that strategy. In the first quarter, offline buy now pay later volume doubled from last year. And the Philippines, we proactively adjust our lending piece in the first quarter and ahead of the new interest rules, it take effect in the second quarter this year. Even though transaction volumes still grew on double digit year-over-year. We also broadened our funding sources with a new international bank, a clear recognition of our asset quality.

And for the Australian market, we are systematically deploying our fintech expertise and risk management capabilities, automated system and funding capacity from the group. And the first quarter transaction volume grew 25% year-over-year with more local data and ongoing model improvements, we are confident Australia will continue to grow in both top line and profitability. And looking ahead, as our business scales, the flywheel loop would accelerate our long-term vision is to become A global example of technology-driven inclusive financial platform, operating on multiple fronts globally comes with challenge, but we are a mature tech mode. With our mature tech mode and operational agility. We are very confident about the journey ahead.

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

Thank you, Desmond. Thank you once again for joining us today. If you have any further questions, please feel free to contact our groups and our team. Thank you so much.

That does conclude today's conference call. You may now disconnect your lines. Thank you.

Hello, ladies and gentlemen. Thank you for participating in the Fourth Quarter and Full Year 2025 Earnings Conference Call for FinVolution Group. [Operator Instructions] Today's conference call is being recorded.

I will now turn the call over to your host, Yam Cheng, Head of Capital Markets for the company. Yam, please go ahead.

Thank you, Walko. Welcome to our fourth quarter and full year 2025 earnings conference call. The company's results were issued via Newswire services earlier today and posted online. You can download the earnings release and sign up for the company's e-mail alerts by visiting the IR section of our website at http.ir.finvgroup.com. Mr. Tiezheng Li, our CEO; and Mr. Jiayuan Xu, our CFO, will start the call with their prepared remarks and conclude with a Q&A section.

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. For information about these non-GAAP measures and reconciliation to non-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. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U.S. SEC. The company does not assume any obligation to update forward-looking statements, except as required under applicable law. Finally, we have posted 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. Tiezheng Li. Tiezheng, please go ahead.

Thanks, Yam. Welcome to our fourth quarter and full year 2025 earnings call.

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Pardon me, everyone. It looks like we have lost the audio. Please stand by. Please proceed.

Thanks, Yam. Welcome to our fourth quarter and full year 2025 earnings call. 2025 was a significant year for us. It was FinVolution's 18th anniversary, much like a person stepping into [indiscernible]. Our company has grown from a passionate credit pioneer in China, into a regional platform, reaching the credit gap across Asia and beyond. This journey has been more than just about scaling. We've learned, adapt and build something viable and lasting.

2025's challenging micro environment tested our resilience, but it also reaffirmed our strategic direction to advance our international expansion. To conclude the year, we delivered full year group revenue of RMB 13.6 billion, up 3.8% year-over-year. Net profit also rose to RMB 2.5 billion, a 6.6% increase from last year. The resilient financial performance was achieved despite the regulatory uncertainty in China in the second half of the year, which tempered the full year transaction volume to RMB 200 billion, down 2.9% year-over-year. Our local excellence global outlook strategy has unlocked diversification value and brought much needed resilience to our platform.

In 2025, our international business grew significantly. Our volume increased by 38.6% and revenue rose by 32.0% year-over-year. Most notably, international business contributed 31% of revenue for the quarter, significantly higher than 21% just a year ago. As set out before, we target to grow this number to 50% in 2030, and we are confidently on track to achieve this goal. Today, we operate across both developing markets and most recently, divided the market with our recent entry into Australia. Underpining this momentum is quite evolution of our international strategy itself.

In our early expansion, we focus on disciplined execution in each individual market. But as the scale across the region, we have learned that strengthen also lies in connection. We have deepened our capabilities at the platform level inside of each country operating as a standard alone effort. We systematically captured the expertise, relationships and the capabilities we developed in the market and recycle them to accelerate the derisk entry into the next. This means leveraging proven regulatory experience, product development, advanced risk analytics, centralized funding and the regional ecosystem partnership across others.

This LEGO+ Strategy has formed our international portfolio from a collection of local wins into an integrated platform with compounded platform-level advantages. Today, we manage our business through 2 distinct lenses. The first is our mature market, China, which serves as our foundation for consistent profitability and cash generation. The second is our international markets, which include Indonesia, the Philippines and now Australia. These markets are characterized by high growth, scalable opportunities and increasing contributions to our overall portfolio.

Now I would like to walk you through the key achievements and updates across both segments. First, our mature market in China. New regulations reshaped the operating landscape in the fourth quarter, as discussed in our Q3 earnings session. We prioritized risk over loan origination in Q4. That means tightened underwriting and enhanced risk controls. The result is a near-term moderation of loan origination volume to RMB 38.7 billion and loan balance to RMB 68.3 billion in the fourth quarter. These delivery efforts began to pay off with risk [ content ]. Vintage loss for new loan originations stabilized at 3.0%. Outstanding loan portfolio saw risk trending up in line with expectations with [ CM2 ] increased from 0.61% to 0.77% for the quarter.

As we ran down our existing loan book upon repayment and originate new loans at higher credit standards, we saw the overall portfolio risk starts stabilizing in December. As we gradually exit the regulatory reset result with a capital reach loan portfolio, compliance infrastructure and risk models, long-term profitability would eventually normalize. We anticipate a phase of industry consolidation but the full effect of the regulation is reflected, and we are well positioned to seize the opportunities.

Within our portfolio, China will continue to provide the scale and cash flow foundation that allows us to invest confidently in our growth overseas. Second, our international markets, including Indonesia, the Philippines and now Australia, we have reached an encouraging milestones for Southeast Asia. Both Indonesia and the Philippines achieved full year profitability and contributed over USD 15 million in combined operating profit. Behind the financial outcome is a validation of a respectful locally attuned approach of our international playbook. Our highly localized approach drove strong user growth. We doubled our unique user base to [ $5.9 million ] across Indonesia and the filings for the full year.

We also penetrated deeper into the consumer base with diverse product customized around the local consumption preference. For example, our Buy Now, Pay Later solutions have been well received by consumers and ecosystem partners across online and offline channels. In the fourth quarter, we entered the Australian market with the acquisition of a respected lending platform, [ Bundle ]. This new foray is a well-considered move that draws our -- on our experience in maturing regulatory regime in China and operational excellence in overseas markets.

First, our evolving experience in China has prepared for a mature regulatory environment. Over the years, we have navigated China's transition from high-growth emerging regulation towards a more consumer focused framework. Our operating model has similarly matured towards a lower risk, more sustainable approach. This experience has equipped us with the regulatory maturity, complies discipline and the consumer-first mindset that align closely with the expectation of developed economies like Australia.

Second, we have a proven track record of building profitable businesses from the ground up overseas. We have successfully executed the 0 to 1 journey, not just once, but in multi-international markets, scaling operations to profitability. This capability in launching, localizing and scaling businesses abroad gives us strong conviction in our ability to replicate success in Australia.

Moving on to respect tech innovation, a core part of how we build...

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Your line is open, please proceed.

It's embedded directly into application flow, breaking the journey into a clear logical steps and offering a real-time guidance at each stage. The impact has been tangible. We are seeing fewer viewers drops off, higher complication rates and better overall conversation. It's a refinement that may sound small, but it meaningfully improves how user experience our platform.

Localization and support of local communities also play a key role in our success overseas. In Q4, we launched an emergency humanitarian response following the severe flooding that struck Indonesia in late November 2025. We established emergency kitchen and fully equipped sanitation facilities to benefit approximately 1,800 affected residents across 6 locations in [ Samara ]. Our ESG efforts like this have driven an increase in our S&P [ CSA ] score for 7 consecutive years, reflecting our belief that how we grow is as important as how much we grow.

Our commitment to responsible stewardship extends to our shareholders. We accelerated to our buyback program this year with USD 107 million repurchased in 2025. It's a historical record since our IPO. This commitment is personal as well. In December, our Chairman and the management team recently invested an additional USD 1.9 million of their own capital in share buyback, a gesture of deep confidence in this journey, we are on together. In addition of buyback, we are also announcing approximately USD 74.5 million in dividend for 2025. That translates to total shareholder return of approximately [ $182 million ], equivalent to 50% payout.

As we entered 2026, we do so with clarity, not certainty. We will manage our China business with patience, nurture our international segments with focus and continue investing in the technologies and the partnerships that make sustainable growth possible. Our long-term vision remains to build a truly global evolution. Thank you for being part of this journey with us.

I will now turn the call or to our CFO, Jiayuan Xu for deeper look at the numbers.

Thank you, Tiezheng, and hello, everyone. Let me go through our key results for the fourth quarter and full year. Please refer to our earnings press release for further details. On a group level, our fourth quarter results reflect the near-term impact of our disciplined China strategy and the continued investment in international expansion. Group net revenue was RMB 3 billion. In 2025, China economy remained largely stable with GDP growth of 5%, maintained within reasonable range while in pursuit of high-quality development.

On the industry front, the regulator authorities released upon new guidance for banks, customer finance and macro-lending companies during the quarter, which aimed at lowering the overall financing costs. As the industry reconfigured its assets and funding in line with the new regulatory framework, we saw contraction in loan volume and a pickup in risk in the second half of 2025. We are refining our underwriting parameters to focus on the high-quality borrowers and have gradually praised our marginal assets that used to be credible before the new regulation. This provided protection to the unit economics.

Our IRR remained stable. As Tiezheng mentioned, the vintage loss of the newly originated cohort began to stabilize around 3% in Q4. More importantly, early risk indicators began to show signs of peaking in the middle December with day 1 and the 30 collection rate coming down upwards. We continue to deepen our engagement with funding partners as the funding supply of dynamics start to normalize. In Q4, we added new funding partners and further reduced the funding cost by 20 basis points quarter-on-quarter to 3.4%. Overall, our take rate held steady at around 3%. Closing the quarter, we booked RMB 2.1 billion revenue for China.

In our international markets, we maintained a strong growth momentum in Q4 with the consolidation of our new Australia business, complemented by broad-based performance across our established markets in Indonesia and the Philippines. From a regional macro perspective, we navigated a period of moderate economic growth with accelerated GDP growth in Indonesia, offset by slower growth in the Philippines due to seasonal flows. Overall, we delivered robust results. Our international transaction volume reached RMB 4.1 billion or USD 0.6 billion for the quarter, up 41% year-over-year. And the unique borrowers grew to 3.8 million, 133.8% increase year-over-year.

Across the region, we are benefiting from a clearly regulatory environment. In Indonesia, the regulatory clarity provided by July's announcement to maintain the interest rate cap provided a stable framework. We proactively increased our customer acquisition investment, which drove transaction volume to a historical high of USD 0.3 billion, equivalent to 10% growth quarter-over-quarter. In the Philippines, a new interest rate cap is scheduled to take effect in April 2026. We believe this upcoming change will favor players with strong technology and operational capabilities, areas we are [indiscernible]. We are already preparing in advance to accommodate the new pricing structure, driving our relevant experience, navigating similar regulatory transactions in multiple markets.

We are confident in managing a smooth adaptation even as we anticipate some near-term moderation during the transition period. We continued to upgrade customer quality and expand our diversified product offerings to credible consumers. During the quarter, we have added 1.6 million new borrowers, up 26% quarter-over-quarter. In Indonesia, our offline consumption finance initiatives boost customer quality and engagement. Buy Now Pay Later solutions in mobile phone stores and other small ticket items drove an influx of new users, growing new borrower base by more than 3x year-over-year. In the Philippines, embedded e-commerce partnerships now contribute 43% of the country's volume compared to 30% a year ago. Total transaction volume in the Philippines reached USD 0.2 billion, a 64% of growth year-over-year.

On new market, our recent entry into Australian marks a significant strategic expansion into a developed market. Australia represents a high-value English-speaking market with a material regulatory framework that provides long-term operating stability. The combination of near-prime customers' unmet demand for digital lending, stable pricing structure and an under-digitalized market creates a significant opportunity for superior risk-adjusted returns. The [ Fundo ] acquisition allows us to leverage our core strength in data-driven risk pricing, operational efficiency and low-cost capital to grow in Australia efficiency while building a durable and diversified revenue stream for FinVolution Group.

Moving on to shareholder returns. We maintained our commitment to meaningful shareholder returns in 2025. We executed USD 40.7 million of buybacks in the fourth quarter alone, which is our largest quarterly buyback every if we exclude the buyback concurrent with convertible issue in Q2. We also increased our dividend per share by 10.5% to [ USD 0.36 ] for the year. The progressive dividend and buyback for 2025 highlights our commitment to our shareholders during a year of volatility.

In short, we navigated a complex environment and delivered resilient results in 2025. In light of the recent regulatory change in China, we expect full year 2026 group revenue to decline between 5% and 15% year-over-year. Our long-term goal remains to be 50% of revenue coming from international markets by 2030. We are stepping into the new year, not with grand promises, but with a quite steady confidence in the resilience of our model, the dedication of our teams and the solid partnerships we have built along the way.

Thank you. I will now hand the call back to the moderator for Q&A.

[Operator Instructions] Our first question today comes from Alex Ye at UBS.

I have 2 questions here. The first one is about the company's shareholder return policy. So it's good to see the accelerated buyback pace in Q4. So can we expect this momentum to sustain in the near term given there's still a lot of uncertainty on the regulatory front? Second question is regarding the Chinese market. So based on the various regulatory tightening measures since last year, can you give us an update on some of the operational targets for this year for the domestic market, such as the loan volume growth, average loan pricing and sales and marketing budget?

Okay. I will take your questions. Well, your first question is about our share buybacks. Yes. We have mentioned with that up significantly in the fourth quarter, reached about $4.7 million. And this is a quarterly record for us and for the full year 2025, total repurchase coming at $107 million. Despite the domestic regulatory headwinds, our China business had remained resilient and our international business continued to deliver a very strong growth with improving profitability. So at the current valuation level, we see still the very attractive opportunities for us. So we are maintaining that purchase momentum.

Just to give you some sense, in the first quarter so far, we have already executed another $38 million in buybacks. As of year-end '25, we had about $74 million remaining under our current $150 million buyback authorization. We will continue to review the program regularly to ensure our buyback policy remains consistent and sustainable. And beyond the corporate level activity, I also want to highlight the personal commitment from our Chairman and the senior management team. We have repurchased about [ 1.9 million ] worth of ADS around 370,000 shares using their own personal funds. This is a very clear signal of the long-term confidence in the company's core value.

And your second question is about our forecast for our domestic business. Yes. In 2026, our China business will focus on what we call the high-quality operations. That means greater focus on sustainability, compliance and serving better quality customers. We are also exclusively excessively embracing the use of AI to drive efficiencies across customer acquisition risk and the various key functions within our organizations. Here are some of our key priorities for information. As for the transaction volume in the first quarter, we typically would expect lower transaction volume due to Chinese New Year, and this year should follow the same pattern. And for the full year, it will really depend on the risks, macro, the regulation, which we are closely tracking. At this point, we are focusing on strengthening our business operation and will adapt as the conditions become clearly.

And for price, our price is shared by funding partners and the regulator guidance. We are continuously refining our models to balance risk and return with our compliance framework. We are also offering the better pricing to high-quality borrowers. This aligns with the revenue expectation and is good for building a stronger customer base in the long term. As for the customer acquisition, actually, last year, the unrest in China market led to relatively moderate competition in marketing activities. Customer acquisition costs came down as a result. In Q4, our cost per new borrower declined by 15% quarter-over-quarter, while our acquisition expense ratio declined by 22%. Now we consider the rent acquisition cost is quite attractive, especially when you compare the lifetime value and new customer can potentially bring. So we maintain a relatively proactive customer position in the first quarter of 2026, and we will keep a close eye on our customer acquisition strategy dynamically.

Our next question comes from Cindy Wang at China Renaissance.

I have 2 questions. First, could you give us the trend in Q4 and January to March for day 1 delinquency rate and 30-day loan collection rate? Based on the changes in early indicators, how do you see this round of the credit cycle? Has it approached to the end or still in the middle of the cycle?

Second, the revenue contribution from overseas markets increased significantly in Q4. How do you view the revenue contribution from overseas market this year? And what customer acquisition strategy are employed in Indonesia and Philippines?

Okay. Thank you, Cindy. And I will take your questions. Well, your first question is about the recent metrics for our domestic business. Yes. Actually, we have seen an increase in risk overall, but it appears to be contained, especially from the current vantage point. During the quarter, we saw risk picking up from the end of September, accelerating October moderating but still trending up in November and finally peaking in the middle of December. Average early risk indicators in Q4 increased slightly from Q3. They were up from 5% to 5.5% and the 30-day loan collection rate down from 88% to 86%. So the CM2 flow rate as a result increased from 0.61% in Q3 to 0.77% in Q4.

And in the first quarter, 2026 following the gradual runoff of our legacy loans from the high-risk customers, the quality of the existing loan portfolio continued to improve. Meanwhile, the new loans are originated at high credit standards and have better credit quality. So as a result, our delinquency has trended down in January and February for 2 consecutive months. For example, the early risk indicators show initial sense of recovery, returned to the level somewhat closer to the end of September last year. Now the current day 1 delinquency has slowed to around 5%. Having said that, we continue to be diligent on risk until the sign of recovery is care.

And your second question is about our overseas market. Yes, in terms of the 2026 international revenue contribution, we expect our international business to maintain its rapid growth momentum this year. And for this year, we are guiding international revenue to account for roughly 30% of our full year total. And the profitability should scale nicely as well. We are looking at a meaningful step from the USD 15 million operating profit we delivered in 2025.

And let me share some updates for the customer acquisitions in Indonesia and the Philippines. Well, we have built a pretty systematic approach to customer acquisition. It really comes down to 3 things. The precision traffic acquisition, embedding ourselves into high-frequency spending scenarios and then looking in user loyalty through brand and experience. Those combination helps us move beyond just acquiring users It's about capturing deeper lifetime value. In terms of the online acquisition channels, across our international markets, we use mainstream channels like Google, Facebook, Instagram and TikTok.

Backed by our data models and the years of execution experience, we can reach our target audience pretty efficiently. Those channels are not easy to master. They have high operating batteries. But when you crack and code, they can help you build a strong brand recognition and capture full user lifetime value. And once the model is validated, it becomes a sustainable growth engine for the local business. And the second, moving beyond the traditional online advertisement, we focus on deeper integration with local ecosystem. For example, in Indonesia, our MF license was an important channel for our ecosystem expansion. It allowed us to expand from pure online cash loans into offline installment lending, cover things like [ 3G ] products, home appliance and furniture.

We are now showing up where people actually spend the money. The results speak for themselves. We cross 3 million new customers in '25, 3x of last year. This year, we will keep expanding that offline footprint and build out true multichannel acquisition network. And in the Philippines, our approach is partnership-driven. We have integrated with lending e-commerce platforms to offer [ Banorte ] product at online checkout. That now account for 36% of our volume in 2025. We have also teamed up with [indiscernible], a major telecom operator for Buy Now Pay Later products on mobile tops. And also, we are working with [ cover sales ], the regional second-hand marketplace to embed financial services into their platform. Those thinking are simple, meet users in their daily routines, make the financial services part of experience and the customer acquisition happens steadily.

And our next question comes from [ Jing ] with CICC.

Let me translate my questions which is about the overseas market expansion. You mentioned in the meeting that we plan to enter development in markets such as Australia. Could you share the strategic thinking behind this decision? And what the current competitive and regulatory environment in development markets Also, could you briefly talk about the company's full development plans?

I will take your question. I will answer your question in 3 parts. First is why developed market. Let think of it this way, we are taking the mature experience we will build in China. It's actually aligned pretty close to developed market regulations and combining it with a scalable growth engine we've proven in Southeast Asia. So we are exporting our capabilities to a new frontier. We think development markets offer something really valuable, large Spanish personal loan market that are ready for digital transformation. By entering this market, we are not just chasing growth. We are building a resilient. A more balanced geographical portfolio helps us hedge earnings volatility in any single market. And frankly, being of the new fintech platform that can credibly operate across both emerging and divide the market, evaluate our global brand and influence.

And second, why Australia? Australia presents a clear structure opportunities. The unsecured personal loan market here is around AUD 33 billion. It is sizable. And we watched nonbank players steadily gain shares from traditional banks over the past few years. So as one of the first Chinese players to enter, we have first-mover advantage. And looking at the general operating landscape, we see a somewhat moderate competition. Digitalization level remains moderate. There is no major dominant player in the space. So for a technology-driven platform like FinVolution, it's an ideal entry point. And added to that, regulatory environment that both robust and transparent giving us the clarity and the stability we need for long-term sustainable operation. So Australia became the natural -- became our first choice for our push into high-income, highly regulated markets.

Third, [ bundle ]. [ Fundles ] has an ACL license, it typically requires a long expensive process to guide and ongoing compliance costs are significant. By acquiring Fund, we effectively bought ourselves a fast pass into Australian market. It lets us enter faster at lower cost and with the ability to immediately upgrade an existing operation rather than starting from the stretch. And the [ fund ] business already self-sustaining and profitable with strong risk controls in place. And more importantly, [ fundle ] level of digitalization and automation already put it ahead of most local competitors. That made it a candidate to plug into our LEGO+ global platform.

Looking ahead to 2026, our focus is straightforward. Sharpen our risk models and refine operations and optimize funding costs to keep improving the unit economies. We are confident we can help fund to accelerate its growth, both in origination volume and revenue.

Thank you. That concludes our question-and-answer session. I'd like to turn the conference back over to the company for any closing remarks.

Okay. Thank you. Thank you once again for joining us today. If you have any further questions, please feel free to contact FinVolution Group's IR team. This concludes the conference call. You may now disconnect your lines. Thank you so much.

Thank you. Once again, that does conclude the conference call. You may disconnect your line at this time, and have a wonderful day.

Hello, ladies and gentlemen. Thank you for participating in the third quarter 2025 earnings conference call for FinVolution Group. [Operator Instructions] After management's prepared remarks, there will be an opportunity to ask questions. Today's conference call is being recorded. I will now turn the call over to your host, Yam Cheng, Head of Capital Markets for the company. Yam, please go ahead.

Okay. Thank you. Before I start, thank you, everyone, for dialing in. I think the line today could be a bit choppy. So in case we get disconnected, we'll dial again. So bear with us.

Okay. So welcome to the third quarter 2025 earnings conference call. The company's results were issued via Newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's e-mail alerts by visiting the IR section of our website.

Mr. Tiezheng Li, our CEO; and Mr. Jiayuan Xu, our CFO, will start the call with prepared remarks and conclude with a Q&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. 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. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Finally, we have posted a slide presentation on our IR website providing details of our results for the quarter.

I will now turn over the call to our CEO, Mr. Tiezheng Li. Tiezheng, please go ahead.

Thanks, Yam. Hello, everyone. Welcome to our earnings call. In the third quarter of 2025, against a dynamic regulatory backdrop in China, we delivered another resilient result driven by robust growth in our international business. Total revenue grew 6.4% year-over-year to RMB 3.5 billion, and net profit came in at RMB 641 million, up 2.7% year-over-year.

Our China business demonstrated stable revenue. Meanwhile, our international business continued to shine. Transaction volume was up 33% year-over-year, and revenue rose in line with volume, up 37% year-over-year. Our international segment continued to be an effective natural hedge to our China business, representing a record 25% of total revenue this quarter comparing to 19% a year earlier.

We made meaningful progress in our international expansion. Our borrower base now stands at a cumulative 10 million with new borrowers up 18% sequentially in the third quarter, reaching 1.3 million. Notably, our international new borrower count has exceeded China's for 6 straight quarters.

In Indonesia, growth accelerated following the stable interest rate policy announced by the OJK in July 2025. We also succeeded in upgrading customers' quality which improved risk metrics and take rate. In the Philippines, we boosted transaction volume by 86% year-over-year to RMB 1.6 billion despite typhoon-related seasonal softness.

Turning to China regulatory landscape, a new consumer finance regulation framework took effect on October 1, 2025. As expected, we saw transitional effects across the industry in the third quarter. Our response was proactive and disciplined. We tightened credit standards to keep delinquency in check, prudently managed the loan growth and maintained close communication with our funding partners to ensure stable funding supply. Our funding costs improved slightly as a result. We anticipate that full implementation of this regulation in the fourth quarter could create short-term uncertainties over volume, revenue and risk metrics. But...

Pardon me, ladies and gentlemen. We have appeared to lose the main speaker line. Please stand by while we reconnect.

[Technical Difficulty]

And it appears we got the speaker line back in. We may proceed.

Okay. Sorry, we got disconnected. We will resume from where we start regarding the China regulatory landscape.

Okay. Turning to China regulatory landscape. A new consumer finance regulation framework took effect on October 1, 2025. As expected, we saw transitional effects across the industry in the third quarter. Our response was proactive and disciplined. We tightened credit standard to keep delinquency in check, prudently managed the loan growth, and maintained close communication with our funding partners to ensure stable funding supply. Our funding costs improved slightly as a result. We anticipate that full implication of these regulations in the fourth quarter could create short-term uncertainties over volume, revenue and risk metrics.

But this is not new to us. As an industry pioneer with 18 years of proprietary data spanning diverse credit profiles and economic cycles, we have built a deeply resilient foundation. We continuously enhance our industry-leading risk assessment and pricing capabilities by leveraging big data analytics and AI to refine our models. Most importantly, we have the experience of actually adjusting our operations to dynamic regulatory shifts. We have successfully navigated through interest rate change in China and other developing countries. And we are well prepared to adapt to this new environment.

We also continue to lead on the technology and AI. In the third quarter, we hosted our annual FinVolution Global Data Science Competition, which brought together top AI researchers, engineers and data scientists to develop tools to combat deep fake image detection. Over the past decade, the competition has attracted nearly 10,000 cumulative participants and covered frontier topics, including credit assessment, fraud detection, behavioral analytics, device recognition and voice authentication. The competition is winning growing recognition from academic institutions as well, including official tracks like IJCAI, International Joint Conference on Artificial Intelligence 2025, and the CIKM, Conference on Information and Knowledge Management 2025, and showing the value we are bringing to the global ecosystem.

On the ESG front, we adopted AI to improve fulfillment of customer service and enhance consumer rights protection. During the quarter, we introduced a new upgrade on customer service AI agent to more accurately identify customer intent and automated response to select inquiries based on the level of urgency. This upgrade simplifies the customer service journey, enabling more timely engagement with customers. During the quarter, the enhanced AI agent have successfully completed over 1 million times of service interactions.

In summary, we delivered a resilient quarter, thanks to disciplined execution of our local excellence, global outlook strategy and an experienced response to changing regulation. Our diverse portfolio was a key strength. We remain confident in the long-term fundamentals of our China business, where our international operations are gaining exciting momentum.

I'm now turning the call over to our CFO, Jiayuan Xu, for a deeper look at the numbers.

Thank you, Tiezheng. Hello, everyone. Let me go through our key results for the third quarter. Please refer to our third quarter earnings press release for further details.

Let's start with China. The economy remains in moderate recovery model. Domestic demand is still relatively mild amid a complex external environment. Consumer confidence index trended up slightly in Q3. Against this softer environment, coupled with the early impact of the new regulation, we saw

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liquidity has improved while funding cost has been on a downward trend, improving from 3.7% last quarter to 3.6% this quarter. Customer acquisition

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has also become more rational as competition for consumer eased. Looking ahead, we should continue to be diligent on risk as we manage our business.

On the international front, we delivered robust growth this quarter, underscoring the strength of our regional strategy and the power of our scalable platform. On the timing, this regional performance is our core technological capability. We are systematically replicating our proven playbook, spanning technology, risk modeling and the partnership frameworks into high-growth economies like those in Southeast Asia. The results speak for themselves.

From the macro standpoint, we saw a touch of softness in the region. Typhoon season lowered the PMI to 49.9% in the Philippines, while consumer confidence remained similar in the third quarter in Indonesia. Against this economic climate, we delivered RMB 3.6 billion in total transaction volume, a 33% increase year-over-year. The growth was broad-based with Indonesia and the Philippines contributing 57% and 43% of volume, respectively.

Our unique international borrower base also expanded to 3 million, surging 114% year-over-year, confirming the deep untapped demand across the region. Our regional strategy even out the distinct local conditions and brought about diversification. For example, while our growth was moderated by the seasonal typhoon in the Philippines, we were encouraged by the stabilizing regulatory environment in Indonesia, allowing us to accelerate our user acquisition. This drove transaction volume to RMB 2.1 billion, up 14% year-over-year and the loan balance to RMB 1.4 billion, up 21% year-over-year in Indonesia.

Across the region, we continue to scale the platform with our operational know-how. We strategically upgraded our user quality in Indonesia to drive improved unit economics as evidenced by longer loan tenure, healthy risk metrics and higher take rates. Furthermore, our partnerships with ecosystem partners continue to expand. Our growing credibility is unlocking premium funding sources and attracted a new institutional bank partners to our franchise in the Philippines. Our e-commerce partnerships also continue to proliferate, forming 36% of volume in the Philippines, up from 20% a year ago. As a result, transaction volume was up 86% year-over-year to RMB 1.6 billion, and the loan balance surged 101% year-over-year to RMB 897 million in the country.

Overall, strong operational execution this quarter produced a resilient financial results despite modern external challenges. Group net revenue reached RMB 3.5 billion, up 6.4% year-over-year. Net income was RMB 641 million, up 2.7% year-over-year, but down 14.7% sequentially, partially due to one-off government subsidiaries in Q2. Our balance sheet remains healthy with cash and short-term investments of RMB 7 billion and a historical low leverage ratio of 2.4x. We also maintained a prudent provision coverage ratio of 517%.

Furthermore, we remain committed to shareholder returns in the third quarter. We repurchased a total of approximately USD 2.6 million. As of September 30, 2025, we have repurchased a total value of approximately USD 66.5 million, bringing cumulative share repurchase amount to USD 437 million since 2018. Since October, we further accelerated our buyback effort amid market price dislocation.

In short, we continue to demonstrate strong execution of our local excellence global outlook strategy, while our financial performance for the first 9 months ended September 30, 2025, remains generally in line with our revenue forecast for this period. The recent regulatory changes in China have introduced near-term uncertainties. We now expect full year 2025 total revenue guidance to be in the range of approximately RMB 13.1 billion to RMB 13.7 billion, representing year-over-year growth of approximately 0% to 5%.

Thank you. Now let me hand over the call to the moderator. Operator, please continue.

Okay. We will now begin the question and answer session. For the benefit of all participants on today's call, if you wish to ask a question, please ask your question to management in Chinese, we may ask that you kindly repeat your question in English.

Our first question comes from Alex Ye with UBS.

[Foreign Language] So I will translate my question. My first question is regarding -- so given the current regulatory changes, it has introduced some volatility in the near-term risk as well as impairment charges, which impact our earnings as well. So I'm just wondering how should we expect our normalized take rate to settle in the next few quarters after assuming the asset quality gradually stabilized?

So the second question is regarding our buyback plan. So can you remind us what are the current unused quota that we have in place? And given the current elevated uncertainties and depressed share price, do you have any more specific guidance in terms of the pace and scale that you're going to implement those buyback plan in the next 12 months?

Okay. Thanks, Alex. I will take your questions. Your first question is about the normalized situation and the 24%. But our risk-bearing loan stays within 24%. In Q3, the average is around 22%. So following the 24% cap, there were several factors to consider. First, risk may fluctuate across cycle and is the most important factor in the current environment. Based on our experience in the previous cycles, it would be mostly back to the normal level.

And on the funding side, as subject to the demand and supply of liquidity, now we are seeing more liquidity changing after high-quality assets as there should be some room for the optimization of funding costs. So overall, for our risk-bearing portfolio, the take rate should likely track well towards during the normal period.

However, the new regulation may impact some parts of our business, such as the traffic referral business. Some customers will no longer be served. Also, we expect the take rate for this service should narrow accordingly. It depends on the factors like the market liquidity, funding costs and the real appetite of our partners.

Below the revenue take rate, we also need to factor in operational efficiency. On the user acquisition front, we have noticed that reduced competition in the market, there should also be some room to optimize the acquisition costs. We will continue to adjust our acquisition pace dynamically based on price, funding availability and the risk strategy. As the business scales up and the technology becomes more deeply embedded across our operations, we also see further potential to optimize the fixed cost.

In short term, we do anticipate some P&L impact from the risk. This uptick will tighten our new loan origination and impact the volume. At the same time, the historical cohort will likely perform when risk increase. It result in the high provision cost. Both elements could reduce the near-term profit level. As the risk metrics are still volatile, it may be too early to say how risk may evolve, but we will continue to monitor this closely.

And your second question is about the shareholder return. On the buyback front, we have been actively repurchasing our shares. As of November 14, we have bought back USD 78.4 million worth of shares. Notably, the pace picked up in the fourth quarter. We did $12 million in the Q4 so far, which is nearly 5x what we did in the third quarter. So given the momentum, we are on track for a full year total that looks a lot like last year.

And for the dividends, in 2024, we paid out $0.277 per share, representing 17% year-over-year increase. And it makes -- it marks 5 straight years of growth. Average is an 80% CAGR. And looking ahead, our focus remains on delivering the steady growth of our EPS.

Let me reiterate our shareholder return strategies. Even with all the short-term fluctuations in the market, our core commitment to our shareholders remains solid. When we think about the returning value, we will look at the whole picture, including the dividend and the share buyback program. We will weigh the benefits of each. And right now, with our stock trading at just 0.6x of our net book value and only 1.5x of our short-term liquidity, in this situation, buying back our own shares is an effective way to create the value for our shareholders. That's why we are ramping up our buyback activity. Okay.

And the next question comes from Cindy Wang with China Renaissance.

[Foreign Language] I have 2 questions here. First one, due to the connection issues, so could you tell us, what's your day 1 delinquency rate and also the 30-day loan collection rate in third quarter. And based on the early risk indicators since July, have you seen a stabilization in October and November? And how do you determine the inflection point of credit risk?

Second, looking ahead, will the growth momentum in overseas market accelerate? And what are the main product driving growth in Indonesia and the Philippines?

Okay. Thank you, Cindy. Yes. Sorry for the connection issue, and hopefully, everything is good now.

I will take your first question, and Tiezheng will take your second question.

Your first question is about the risk in our domestic business. Well, the new regulation has tightened the industry-wide liquidity and increased the credit risk. And this was reflected in our Q3 results with the day 1 delinquency rate increasing by 30 bps quarter-over-quarter to 5% and the 30-day collection rate softened to 88%.

This trend persisted in the early October driven by the regulatory changes and the seasonal effect on the National Day holiday, we saw a further uptick on risk in the first half of October. Now we have begun to see early signs of stabilization. By November, the day 1 delinquency rate decreased by 4% from its October peak, though it remains by 8% above the Q3 average. While this is a positive development, we believe it's too early to draw a conclusion here. And if we see -- if we can see the sustained improvement over 2 consecutive months, it could be a turning point.

Our response to this cycle has been shifting and strategic. We focus on the key risk management areas like risk underwriting, collection. We have proactively refined our risk models, leveraging the insights from past downturns to simulate various scenarios to more precisely calibrate, create credit exposure. Furthermore, we are deploying advanced AI to enhance our early warning alert capabilities for individual borrower stress. This analytical approach has been translated into concrete measures. We have tightened the underwriting standards, reduced exposure to high-risk profiles and scaled back customer acquisition spending on lower-quality channels.

On the collection front, we have adopted a more refined and dynamic strategy, customizing repayment reminders based on user categories and enhancing our communication approach. So the cumulative impact of this volume and risk management adjustment is that while overall risk levels remain on a high level, the rate of increase has begun to moderate. As a market leader with consistent prudent risk culture and deep cycle experience, we are confident in our positioning. We maintain strong risk resilience supported by ample cash reserves and consecutive provision coverage ratio of 517%. This solid financial foundation positions us to not only withstand the current market fluctuations, but to emerge from this cycle in a strengthened competitive position. Okay.

I will share some information about the growth and products on our international markets. Our international business are growing very fast right now. And since from 2020 to 2024, the transaction volume grew at a CAGR of over 70%. And in Indonesia, after increased rate cap adjustment, the business has bounced back and is now growing very quick. And the Philippine market has kept up high double-digit growth year-on-year. Looking ahead to 2025, we expect transaction volume for both markets to grow at current trajectory, and profitability should also stay solid.

And from product side, we have a diverse product to meet different consumption scenarios. And in Indonesia, we are not just doing online cash loans, we've also been pushing into buy now, pay later in offline retail. And we got most finance license last year, and we are rolling out installment finance for products like phones and e-bikes and appliance and furnitures. And we have built partnership with leading electronic brands to attach our financing solutions to select 3C products in their store. Right now, the buy now, pay later product still makes a small part of our overall business, but they are growing very fast. It's 6x in transaction volume year-over-year.

And in Philippines, we built attractive e-commerce partnerships. It's contributed 36% of the transaction volume. We started the digital partnership in February last year, and now it's -- the transaction volume was triple of what it was a year earlier. This helped us reach a whole different kind of customer cohort, smaller take size, higher repurchase frequency, and a lot of them are female customers. And we think this user tend to be lower risk, and it will balance out our online loan portfolio.

Building on the success, we are expanding similar solutions to daily consumption broader -- in broader industry. For example, we recently partnered with Smart. It's a Philippine local telecom provider, provides consumer with buy now, pay later solution. As we keep expanding into more offline scenarios, we'll be able to reach even more people who aren't active online. So we expect our customer base to keep getting broader and higher quality over time. Thank you, Cindy.

And the next question comes from [ Gian ] Zhou with CICC.

[Foreign Language] I will translate my question. With the current regulatory situation so uncertain, what measures has the company taken to address it? And what are the key priorities for the future development?

Thanks, Dongping. For over 18 years, FinVolution has successfully navigated multiple market cycles. In China, we have upgraded from a P2P model to a loan facilitation model, adapted to an evolving regulatory landscape, and managed through several interest rate cap adjustment. Our international business has similarly matured through its own cycle of regulatory change. This experience made us a more resilient and stronger company.

In China, we took preemptive action early this year in response to initial signs of market volatility and decisively prioritized quality over quantity. In recent months, we have proactively upgrade our borrower base, and we raised our underwriting standard to target higher quality customers. And we also adjusted our user acquisition spend to maximize risk-reward efficiency from a lifetime value perspective. This strategy allowed us to reduce both near-term risk and the user acquisition cost. As a direct result of these efforts, our sales and marketing expense decreased by 12% quarter-over-quarter. Looking forward, we remain vigilant in our risk management discipline.

And turning to our international markets. Since our expansion began in 2018, we have built one of the few scaled overseas platform in our sector. We reached a significant milestone this quarter. And as our international revenue contributed 25% of group revenue for the first time. Today, our international business has built a strong foundation. We have over 15 institutional funding partners, a diverse network of online and offline partnerships, flexible product offerings and a complete licensing portfolio across multi countries. So our playbook has proven successful in Southeast Asia, and we are well positioned to replicate this model further.

And looking ahead, the China market will continue to be a major bedrock of our business. We will focus on the right balance between risk and growth, solidifying the foundation for profitable, long-term sustainable business. And our international operations are already profitable, and we will continue to enhance the profitability as we scale. Our strategic target is to build a balanced portfolio with 50% of our business coming from international markets by 2030. Thank you.

As there are no further questions, I'd like to turn the call back over to management for any closing remarks.

Thank you once again for joining us today. Apologies for the disconnection of the call. If you have any further questions after this call, please feel free to let us know and contact the FinVolution IR team. Thank you so much.

This concludes the conference today. You may now disconnect your lines. Thank you.