Hello, ladies and gentlemen. Thank you for participating in the fourth quarter and full year 2023 earnings conference call for FinVolution Group. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Jimmy Tan, Head of Investor Relations for the company. Jimmy, please go ahead.

Hello, everyone. And welcome to our fourth quarter and full-year 2023 earnings conference call. The company results were issued via newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's e-mail alerts by visiting the IR section of our website at ir.finvgroup.com. Mr. Tiezheng Li, our Chief Executive Officer, and Jiayuan Xu, our Chief Financial Officer, will start the call with their 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 US 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 US 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 filings with the US 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 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. Please go ahead, sir.

Thanks, Jimmy. Hello, everyone. And thank you for joining our earnings call. This is Tiezheng Li, CEO of FinVolution Group. We are happy to speak with you today. When I became CEO one year ago, FinVolution set a clear objective, become a leader in fintech industry, providing inclusive financial solutions for underserved borrowers and small business owners. In 2023, we advanced towards that goal with continuous strong execution of our local focus, global outlook strategy. Adapting to the unique situations in different markets, I'm thrilled to report that we delivered exceptional progress on all fronts. Throughout the year, we maintained our robust momentum with the progressive expansion in China, while pursuing much faster growth internationally, where economic conditions were more favorable. We have achieved leadership positions in both Indonesia and the Philippines. We are also fortifying our success and high-quality growth in China as we proactively adjust our strategies to suit China's dynamic economy. Performance-wise, we continue to grow our business across the board despite evolving macroeconomic challenges. The cumulative number of borrowers we served in China, Indonesia, and the Philippines has reached 30 million, growing at an accelerated pace with a net increase of around 3 million new borrowers year-over-year. For full year 2023, our total transaction volume reached RMB 194 billion and our outstanding loan balance reached RMB 67 billion, representing year-over-year increases of 11% and 4% respectively. Net revenue for the full year 2023 reached RMB 12.5 billion, up 13% year-over-year. Our international business grew exceptionally well in 2023, propelled by our effective global outlook strategy of pursuing rapid growth in overseas markets. International transaction volume for 2023 soared to RMB 7.9 billion, and our outstanding loan balance rose to RMB 1.3 billion, up 85% and 58%, respectively, compared to the prior year. International market revenue increased…

Thank you, Li. And hello everyone. Welcome to our fourth quarter and full year 2023 earnings call. Let's go through our key results for the fourth quarter. To mindful of the length of our earnings call today, I encourage listeners to refer to our fourth quarter earnings press release for further details. Despite GDP growth of over 5% in 2023, China's overall economic environment continues to evolve. We leveraged our various strengths to navigate the turbulence and conclude 2023 on a solid note. Our domestic transaction volume reached RMB 50 billion for the fourth quarter, up 6% year-over-year and 2% sequentially, while outstanding loan balance grew to RMB 66 billion, up 4% year-over-year and 2% sequentially. Achieving growth in both metrics amid such a soft consumer environment is a testament to our business resilience, as well as our outstanding technology innovation and operational excellence. We have observed several notable improvements as we move through the first quarter of 2024. During the recent lunar new year, consumption activities pick up rapidly with 474 million tourist trips nationwide, up 19% from the comparable period in 2019. Total tourism spending also climbed 8% to RMB 633 billion from the comparable period in 2019, with air and train travel surpassing 2019 levels by 15% and 36%, respectively, reaching new record highs. Box office ticket sales also rebounded and reached more than RMB 8 billion, setting a new record for the holiday period. Furthermore, several macro metrics exhibited varying degrees of improvement. For example, total social financing in general increased to RMB 6,500 billion, up 9.5% year-over-year. Total retail consumption in December was increased to RMB 4,355 billion, up 7.4% year-over-year. Fabric manufacturing and the service PMI index also improved slightly to 49.1 points and 51 points. We believe these signs reflect the dawn of…

[Operator Instructions]. The first question comes from Yada Li CICC.

[Foreign Language] Firstly, considering the current macroenvironment, I was wondering what adjustments have we done in the lending strategy, customer acquisition and risk management? And with the help of these matters, how to view the asset quality going forward? And secondly, for the international branches, what are the growth and profit outlooks for Indonesian and Philippine markets respectively? That's all.

[Foreign Language] OK, Yada, let me do the translation. From observation and study, China macroeconomy is still facing uncertainties, but expect to have a gradual recovery. Around the third quarter last year, we have observed some negative impact on the industry, which results in asset fluctuations. We have been quick with our responses. For example, we have reduced customer acquisitions from lower quality channels and stepped up our model updates from higher quality channels, updating the models, tightening the approval rates and credit limit for borrowers whom are more prone to economy uncertainties such as those with a higher level of debt. We have also closely monitored changes in our core metrics, such as day one delinquency and loan collection recovery rates for the disbursed loans. And through the analysis of different borrower segments and title approval rates, we have ensured financial services for higher quality borrowers, for example those with lower debt levels, remain intact. For post loans, I believe you are aware of the impact on loan collections due to the reductions of telephone lines. The impact on us is minimal due to our sufficient advanced preparations of telephone lines which are able to satisfy the needs of our post loan collection team. Although our loan collection recovery rate slightly declined from 89% to 87%, we are still leading ahead of the industry. And with the implementation of these efforts, we have seen positive results in December. For the recent three months, our day 1 delinquency rate improved to 5.3% from 5.7% in the third quarter and further improved to 5.25% in February, while loan collection recovery rate remained stable at 87% with vintage delinquency returning to 2.5%. Our recovery should be ahead of the industry, and we are confident to maintain industry-leading asset quality with continuous improvement…

The next question comes from Cindy Wang with China Renaissance.

[Foreign Language] The first question is related to the customer acquisition cost. Since you are aggressively on the international market expansion, what is your CAC target this year? The second is related to the Philippine market. The Philippine market has grown very strong in 2023. Can you talk about the competitive landscape and how do you achieve to be the number one market share position this year? How would that contribute to the international market revenue in 2024?

[Foreign Language] We have been operating in the Indonesian market for quite a period of time, in fact six years. And we have a deep understanding of the market. Information continues to be the main method to acquire better quality borrowers for us. Although the pricing cap has some impact on our operations, we have made adjustments to our models and the results have been very positive. For example, when we have higher quality borrowers, we are able to increase our ticket size with longer loan tenure and the fee rates further improve with weaker competition. We believe this trend will continue in 2024 and we will re-evaluate our customer acquisition strategies in the second half when the macroenvironment stabilizes. For the Philippines, it is in a much earlier stage compared to the Indonesian market. Over the past two years, our marketing efforts are much more proactive and it has been pretty stable among the tops. We believe this trend will continue into 2024. [Foreign Language] Let me do the translation. We entered the Philippines market in 2020 and this is our fourth year of operations. Philippines has a population of around 130 million and our target customer base is around 40 million. To date, we have registered users of around 5 million and our borrowers is around 740,000. There are currently over 100 players and the largest players are from the US and local Philippines companies. We believe as a fintech company from China, our advantages are obvious and we will continue to leverage on our advantages and duplicate our success in China and Indonesia in the Philippines market. Around 20% of our transaction volume for the international market is coming from the Philippines in the fourth quarter and we believe this proportion will continue to increase in 2024.

The next question comes from Alex Ye with UBS.

[Foreign Language] Let me do the translation. First of all, I would like to reiterate FinVolution position. We are a global consumer finance technology company. Our success has been validated in China, Indonesia and the Philippines with leadership position. In the recent years, as China market matures, our business entered into a stage known as high-quality progressive growth. On the other hand, based on our observation, the international markets are still in early stages of development where market opportunities for growth is enormous. And we are very confident to cement our success in Indonesia and the Philippines while expanding to more countries, ensuring a rapid growth rate for our company. Our capital return program is closely in line with our company positioning. We hope rapid and healthy business growth can be the main way to create value for our shareholders. Over the last three years, we have proven this point. We have completed the business transition of our China business and expanded internationally with an average CAGR growth of over 44% and revenue growth of around 20%. And apart from this, we have also returned value to our shareholders through our capital return program. We began our dividend program and share repurchase program since 2018, the earliest in our industry. Over the last six years, we have cumulatively returned over US$600 million to our shareholders, equivalent to almost half of our market cap today. In 2023, we deployed close to US$100 million to repurchase our shares and US$62 million for dividend distribution, representing around 50% of net income for 2023 and a combined dividend of 11%. In 2023, our dividend per ADS was US$0.237, the fourth year of consecutive increase. And on the five years average, this increase in dividend was above 10%. And I would like to emphasize on this. For China ADR, there are not more than six companies with five years of consecutive dividend and consistent increase in EPS, and we are one of these companies. And in summary, we are returning value to shareholders in terms of growth and a leading capital return program. Going forward, we will continue with this belief and let high quality growth remain as our core method to return value to our shareholders and concurrently maintain a leading capital return program. Regarding dividend, we are confident to maintain our track record and continue to deliver consistent increase in dividend for our shareholders.

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

Thank you all once again for joining us today. If you have any further questions, please feel free to contact FinVolution Investor Relations team.

This concludes the conference call. You may now disconnect your line. Thank you.