FinVolution Group (FinVolution or the Company) (NYSE: FINV) a leading fintech platform in China today announced its unaudited financial results for the third quarter ended September 30 2020

Third Quarter 2020 Financial and Operational Highlights

• Net revenue increased by 126% to RMB17933 million (US$2641 million) for the third quarter of 2020 from RMB15925 million in the same period of 2019
• Operating profit was RMB6890 million (US$1015 million) for the third quarter of 2020 representing an increase of 62% from RMB6489 million in the same period of 2019
• Non-GAAP adjusted operating profit^[1] which excludes share-based compensation expenses before tax was RMB6976 million (US$1028 million) for the third quarter of 2020 representing an increase of 61% from RMB6578 million in the same period of 2019
• Cumulative registered users^[2] reached approximately 1128 million as of September 30 2020
• Cumulative number of borrowers^[3] was approximately 186 million as of September 30 2020
• Number of unique borrowers^[4] was approximately 19 million for the third quarter of 2020
• Loan origination volume^[5] was approximately RMB170 billion for the third quarter of 2020
• Repeat borrowing rate^[6] was 897% for the third quarter of 2020 compared to 794% in the same period of 2019
• Average loan size^[7] was RMB 4095 for the third quarter of 2020 compared to RMB 3156 in the same period of 2019
• Average loan tenure^[8] was 83 months for the third quarter of 2020

Mr Feng Zhang the Chief Executive Officer of FinVolution commented We are pleased to report continued progress in our results as we continue our shift to attracting higher quality customers Our reported operational and financial performance were better-than-expected in the third quarter of 2020 a further testament to the agility and robustness of our core capabilities As China gradually emerges from the aftermath of COVID-19 our loan business recovery has been gathering momentum Our loan origination volume in Mainland China for the third quarter reached over RMB17 billion^[5] representing a 30% increase quarter-over-quarter and exceeding the top end of our previous guidance range

Encouragingly our continual efforts to enhance our technological capabilities and strengthen our risk management have led to significant improvements in delinquency rates across the platform in particular for newly facilitated loans Due to the shift to better quality customer cohort our vintage delinquency^[9] in the most recent quarter is expected to be significantly lower compared to the past several years

Our institutional funding partners continue to be supportive with ample funding and ongoing improvement in funding cost Going forward we expect further enhancement in funding cost as we continue to deepen our relationships with our partners

As part of our ongoing strategy to leverage our technological capabilities to support new  initiatives our international operations gained significant traction We are excited to report that our loan volume in Indonesia experienced a strong rebound from the depressed levels in the second quarter and is now much higher than pre-COVID-19 levels We expect this strong  momentum to continue moving forward

With a long and proven track record in technology innovation responsive risk management insights and effective measures taken to navigate across credit and economic cycles we believe our focus on our core strengths and fundamentals coupled with our strong culture of innovation sets a solid foundation for our sustainable operation and unlocks the vast potential in the consumer finance markets in China and internationally concluded Mr Zhang

Mr Simon Ho the Chief Financial Officer of FinVolution commented In the third quarter amid a recovering COVID-19 environment in Mainland China we delivered non-GAAP operating profit^[10] of RMB6976 million representing an increase of 211% quarter-over-quarter and further demonstrating the resilience of our core business model Our balance sheet and liquidity remain strong with RMB34 billion of cash and short-term liquidity Armed with strong technological capabilities and a conservative balance sheet FinVolution is well positioned to capture additional opportunities in the evolving environment

Third Quarter 2020 Financial Results

Net revenue for the third quarter of 2020 increased by 126% to RMB17933 million (US$2641 million) from RMB15925 million in the same period of 2019 primarily due to the adoption of ASC 326 Before the adoption of ASC 326 gains or losses related to quality assurance commitments were recorded in one combined financial statement line item within other income After the adoption of ASC 326 the guarantee income (ie the guarantee liability) was recorded as a separate financial statement line item within revenue and the credit losses for quality assurance were recorded within expenses The increase in net revenue was partially offset by the decline in loan origination volume and decrease in average rate of transaction fees

Loan facilitation service fees decreased by 456% to RMB4863 million (US$716 million) for the third quarter of 2020 from RMB8936 million in the same period of 2019 primarily due to the decline in loan origination volume and the decrease in the average rate of transaction fees 

Post-facilitation service fees decreased by 463% to RMB1614 million (US$238 million) for the third quarter of 2020 from RMB3007 million in the same period of 2019 primarily due to the decline in outstanding loans serviced by the Company and the rolling impact of deferred transaction fees

Guarantee income was RMB7471 million (US$1100 million) for the third quarter of 2020 due to the adoption of ASC 326 After the adoption of ASC 326 the guarantee liabilities of quality assurance commitment are released as a revenue systematically over the term of the loans subject to quality assurance commitment

Net interest income decreased by 244% to RMB2609 million (US$384 million) for the third quarter of 2020 from RMB3450 million in the same period of 2019 primarily due to decreased interest income from the reduction in the outstanding loan balances of consolidated trusts and the decrease in interest rates 

Other revenue increased by 1586% to RMB1376 million (US$203 million) for the third quarter of 2020 from RMB532 million in the same period of 2019 primarily due to increased customer referral fees to other third-party service providers 

Origination and servicing expenses increased by 20% to RMB3389 million (US$499 million) for the third quarter of 2020 from RMB3321 million in the same period of 2019 primarily due to an increase in fees paid to third party service providers

Sales and marketing expenses decreased by 497% to RMB1153 million (US$170 million) for the third quarter of 2020 from RMB2292 million in the same period of 2019 primarily due to the decrease in online customer acquisition expenses as a result of the decline in newly registered users on the Company's platform

General and administrative expenses decreased by 155% to RMB1054 million (US$155 million) for the third quarter of 2020 compared to RMB1248 million in the same period of 2019 due to improved operating efficiency

Research and development expenses decreased by 141% at RMB930 million (US$137 million) for the third quarter of 2020 compared to RMB1082 million in the same period of 2019 due to a more streamlined team in technology related departments

Credit losses for quality assurance commitment were RMB3266 million (US$481 million) for the third quarter of 2020 due to the adoption of ASC 326 After the adoption of ASC 326 the expected credit losses of quality assurance commitment will be accounted for in addition to and separately from the guarantee liabilities accounted for under ASC 460

Provision for loans receivables was RMB900 million (US$133 million) for the third quarter of 2020 compared with RMB801 million in the same period of 2019 primarily due to the adoption of ASC 326 which requires the Company to recognize the life time credit losses upon initial recognition and provisions for new international business

Provision for accounts receivables and other receivables decreased by 493% to RMB351 million (US$52 million) for the third quarter of 2020 compared with RMB692 million in the same period of 2019 as a result of the decline in loan origination volume and improvement in delinquency rates which was partially offset by provision provided on other receivables

Operating profit increased by 62% to RMB6890 million (US$1015 million) for the third quarter of 2020 from RMB6489 million in the same period of 2019

Non-GAAP adjusted operating profit which excludes share-based compensation expenses before tax was RMB6976 million (US$1028 million) for the third quarter of 2020 representing an increase of 61% from RMB6578 million in the same period of 2019

Other income decreased by 495% to RMB263 million (US$39 million) for the third quarter of 2020 from RMB521 million in the same period of 2019 For the third quarter of 2020 other income primarily consisted gains from investments

Income tax expenses were RMB1184 million (US$174 million) for the third quarter of 2020 compared with RMB1307 million in the same period of 2019 due to the decline in pre-tax profit and recognition of gain related to quality assurance in a subsidiary with preferential tax status due to tax planning

Net profit was RMB5969 million (US$879 million) for the third quarter of 2020 compared with RMB5985 million in the same period of 2019

Net profit attributable to ordinary shareholders of the Company was RMB6027 million (US$888 million) for the third quarter of 2020 compared with RMB5979 million in the same period of 2019

As of September 30 2020 the Company had cash and cash equivalents of RMB11072 million (US$1631 million) and short-term investments mainly in wealth management products of RMB22784 million (US$3356 million)

The following table provides the delinquency rates for all outstanding loans on the Company's platform in Mainland China as of the respective dates indicated

The following chart and table display the historical cumulative 30-day plus past due delinquency rates by loan origination vintage in Mainland China for all loan products facilitated through the Company's online marketplace as of September 30 2020:

Click here to view the chart

Changes in Board of Directors and Management

The Board of Directors of the Company (the Board) has approved and appointed Mr Simon Tak Leung Ho as a member of the Board effective on November 16 2020 At the same time the Board has approved the appointment of Mr Jiayuan Xu as the Company's new Chief Financial Officer effective on December 1 2020 Mr Xu currently serves as the Company's Senior Vice President for Finance and will succeed Mr Ho who tendered his resignation from the position as the Company's incumbent Chief Financial Officer due to personal reasons To ensure a smooth transition Mr Ho will remain in his capacity until November 30 2020

Mr Jiayuan Xu has been serving as our Senior Vice President for Finance and Head of Financial Institutions Department since March 2018 Mr Xu served as the Vice President for finance from June 2016 to March 2018 Mr Xu joined us as our Financial Controller in June 2015 Prior to joining us Mr Xu served as the Head of Financial Management Department of Nanyang Commercial Bank (China) Co Ltd from 2008 to 2015 Mr Xu was an Audit Manager at PricewaterhouseCoopers Zhong Tian LLP from 2003 to 2008 Mr Xu received his bachelor's degree in international trade and finance from Shanghai Jiaotong University in and FMBA degree from China Europe International Business School Mr Xu is also a member of Chinese Institute of Certified Public Accountants

Company's Share Repurchase Update

As of November 12 2020 the Company has deployed approximately US$109 million under its existing repurchase program with an authorization of US$60 million to repurchase its American Depositary Shares (ADSs) In combination with the Company's previous repurchase program with authorization of US$120 million the Company has deployed a total of approximately US$1219 million to repurchase its ADSs

FinVolution Group's Chairman Ownership Update

Mr Shaofeng Gu the Chairman and Chief Innovation Officer of the Company has informed the Company on August 11 2020 that he had continued to purchase in his personal capacity 04 million of the Company's ADSs in the second quarter of 2020 The purchases were made during an open window period and in compliance the Company's guidelines As of September 30 2020 Mr Shaofeng Gu beneficially owned an aggregate number of 414256580 ordinary shares representing approximately 289% of beneficial ownership in the Company

Business Outlook

As China gradually recovers from the aftermath of the COVID-19 outbreak the Company has continued to experience improvements in delinquency trends for newly facilitated loans The Company will continue to closely monitor the global development of the pandemic and remain agile in its business operations The Company holds a cautiously optimistic view on its operations and expects progressive growth for its loan origination volume in the fourth quarter of 2020 to be in the range of RMB18 billion to RMB20 billion With a gradual recovery in the macro economy the Company expects it's vintage delinquency⁹ risks to further improve

The above outlook is based on current market conditions and reflects the Company's preliminary expectations as to market conditions its regulatory and operating environment as well as customer and institutional investor demand all of which are subject to change

Conference Call

The Company's management will host an earnings conference call at 7:00 AM US Eastern Time on November 17 2020 (8:00 PM Beijing/Hong Kong time on November 17 2020)

Dial-in details for the earnings conference call are as follows:

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for FinVolution Group

Additionally a live and archived webcast of the conference call will be available on the Company's investor relations website at https://irfinvgroupcom

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until November 24 2020 by dialing the following telephone numbers:

About FinVolution Group

FinVolution Group is a leading fintech platform in China connecting underserved individual borrowers with financial institutions Established in 2007 the Company is a pioneer in China's online consumer finance industry and has developed innovative technologies and has accumulated in-depth experience in the core areas of credit risk assessment fraud detection big data and artificial intelligence The Company's platform empowered by proprietary cutting-edge technologies features a highly automated loan transaction process which enables a superior user experience As of September 30 2020 the Company had over 1128 million cumulative registered users

For more information please visit  https://irfinvgroupcom

Use of Non-GAAP Financial Measures

We use Non-GAAP operating profit a Non-GAAP financial measure in evaluating our operating results and for financial and operational decision-making purposes We believe that adjusted operating profit help identify underlying trends in our business by excluding the impact of share-based compensation expenses and expected discretionary measures We believe that adjusted operating profit provide useful information about our operating results enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making

Non-GAAP adjusted operating profit is not defined under US GAAP and is not presented in accordance with US GAAP This Non-GAAP financial measure has limitations as analytical tool and when assessing our operating performance cash flows or our liquidity investors should not consider it in isolation or as a substitute for net (loss)/income cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with US GAAP The Company encourages investors and others to review our financial information in its entirety and not rely on a single financial measure

For more information on this Non-GAAP financial measure please see the table captioned Reconciliations of GAAP and Non-GAAP results set forth at the end of this press release

Exchange Rate Information

This announcement contains translations of certain RMB amounts into US dollars at a specified rate solely for the convenience of the reader Unless otherwise noted all translations from RMB to US dollars are made at a rate of RMB67896 to US$100 the rate in effect as of September 30 2020 as certified for customs purposes by the Federal Reserve Bank of New York

Safe Harbor Statement

This press release contains forward-looking statements These statements constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the US Private Securities Litigation Reform Act of 1995 These forward-looking statements can be identified by terminology such as will expects anticipates future intends plans believes estimates target confident and similar statements Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the Company's control Forward-looking statements involve risks uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements Potential risks and uncertainties include but are not limited to uncertainties as to the Company's ability to attract and retain borrowers and investors on its marketplace its ability to increase volume of loans facilitated through the Company's marketplace its ability to introduce new loan products and platform enhancements its ability to compete effectively laws regulations and governmental policies relating to the online consumer finance industry in China general economic conditions in China and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE including its ability to cure any non-compliance with the NYSE's continued listing criteria Further information regarding these and other risks uncertainties or factors is included in the Company's filings with the US Securities and Exchange Commission All information provided in this press release is as of the date of this press release and FinVolution does not undertake any obligation to update any forward-looking statement as a result of new information future events or otherwise except as required under applicable law

In China:
FinVolution Group
Head of Investor Relations
Jimmy Tan
Tel: +86 (21) 8030 3200- Ext 8601
E-mail: [email protected]

The Piacente Group Inc
Jenny Cai
Tel: +86 (10) 6508-0677
E-mail: [email protected]

In the United States:
The Piacente Group Inc  
Brandi Piacente
Tel: +1-212-481-2050
E-mail: [email protected]