LexinFintech (LX) Q2 FY24 Earnings call transcript Aug 28, 2024
AInvestThursday, Aug 29, 2024 11:56 am ET
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In the second quarter of 2024, LexinFintech, a leading technology-driven consumer finance company, released its earnings report, showcasing a prudent business strategy and a steady path towards growth amidst challenging macroeconomic conditions. During the earnings call, executives Jay Xiao, Zhanwen Qiao, and Xigui Zheng shared insights into the company's financial performance, risk management strategies, and future plans.

Financial Highlights and Strategic Approach

LexinFintech reported a total loan origination of RMB 51.1 billion and a managed loan balance of RMB 115.2 billion for the second quarter of 2024. Despite a sluggish macroeconomic recovery, the company achieved an increase in revenue of 12.3% quarter-over-quarter, reaching RMB 3.64 billion. Net profit also rose by 12.4% quarter-over-quarter, standing at RMB 230 million. The company's cautious approach, emphasizing risk management and data analytics, has played a crucial role in maintaining profitability and ensuring a healthy loan portfolio.

Risk Management and Asset Quality

A key focus for LexinFintech has been the management of risk, particularly in the context of the evolving credit cycle within the loan facilitation sector. The company's efforts to optimize risk management capabilities have shown positive results, with a decrease in day 1 occupancy ratio and an increase in the 30-day collection rate. These improvements have been achieved through a combination of strategies, including low and grow risk management, differentiated pricing, and the implementation of AI-powered robots for handling high-risk users.

Overseas Expansion and Funding Costs

LexinFintech's overseas business, particularly in Mexico, has shown significant growth, with a 61% increase in loan origination volume and an 113% increase in revenue quarter-over-quarter. The company's strategic expansion into emerging markets is a testament to its ability to adapt to global trends and capitalize on new opportunities. Furthermore, a record low funding cost of 5.26% in the second quarter, down 58 basis points quarter-over-quarter, has contributed to the company's financial success.

Looking Ahead

Looking forward, LexinFintech is poised to continue its prudent business strategy, focusing on risk management and growth opportunities. The company aims to expand its overseas business, enhance user engagement through its e-commerce platform and Lehua Card, and deepen collaboration with financial institutions to optimize its funding structure. These initiatives reflect a proactive approach to navigating the ever-evolving financial landscape and positioning LexinFintech for sustainable growth.

In conclusion, LexinFintech's second quarter earnings call painted a picture of a company navigating challenges and capitalizing on opportunities. The company's focus on risk management and strategic expansion, coupled with its commitment to innovation and investor value, underscores its resilience and forward-thinking approach. As LexinFintech continues to leverage technology and data analytics to drive growth and enhance customer experience, it is well-positioned to thrive in the competitive consumer finance industry.

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