LexinFintech (LX) Q3 Earnings call transcript Nov 26, 2024
2min read In LexinFintech's Third Quarter 2024 Earnings Call, the company showcased a strong performance, focusing on risk management upgrade, and provided insights into its future outlook. The call, led by executives Jay Xiao, Arvin Qiao, and James Zheng, highlighted a steady trajectory of growth and a commitment to prudent operational strategies.
Strong Performance and Prudent Operational Strategies
LexinFintech reported a revenue of RMB 3.7 billion in the third quarter, with a net profit of RMB 310 billion. Both revenue and net profit returned to a steady growth trajectory, reflecting the company's successful implementation of risk management strategies. The company's asset structure is gradually improving, with loan origination reaching RMB 51 billion and outstanding loan balance standing at RMB 111.3 billion.
Jay Xiao, CEO, emphasized the company's commitment to a prudent and steady operational strategy, focusing on risk management upgrade and deep data analytics. The efforts have yielded tangible results, with a continuous improvement in new asset quality and a turning point in overall portfolio risk. FPD7 of new loans decreased by about 13% compared to the second quarter, and day 1 delinquency ratio of the overall portfolio declined by around 9% compared to the previous quarter.
Risk Management Upgrade and Operational Efficiency
Arvin Qiao, CRO, highlighted the company's focus on risk management for new assets from new customers. The company has made significant progress in new customer acquisition through online advertising channels and activating dormant customers on its existing user base. The risk level of new customers acquired through online advertising channels has decreased by 10%, and the risk level of existing customers' loans has been optimized through tailored risk management strategies. The company's data management capabilities have also been enhanced, with a full life cycle management platform for third-party data and real-time monitoring, automatic alerting, and coordinated handling across the entire data chain.
James Zheng, CFO, provided a detailed update on the company's financial statements, emphasizing the significant profit increase driven by higher revenue take rate, improved asset quality, and optimization of overall business operations. The net income improved by RMB 83 million or 36.7% quarter-over-quarter, and the overall net profit margin improved from 6.2% in Q2 to 8.5% in Q3.
Future Outlook: Growth, Profitability, and Customer Acquisition
Looking ahead, LexinFintech remains committed to a prudent operational approach focused on bringing down risk levels and enhancing profitability. The company plans to properly intensify its customer acquisition efforts and push for steady growth in business scale. The proportion of high-quality new loans is expected to increase, and existing loans are expected to mature gradually, leading to continued accelerated improvement in the asset quality of the overall loan book. The company is confident in its ability to deliver stronger profitability in the coming year.
To reward shareholders, LexinFintech plans to raise its dividend payout ratio from the current 20% of net profit to 25% starting in 2025. This move signifies the company's commitment to sustainable value creation for shareholders.
In conclusion, LexinFintech's Third Quarter 2024 Earnings Call presented a picture of a company on a steady growth trajectory, with a focus on risk management, operational efficiency, and customer acquisition. The company's commitment to a prudent operational strategy, coupled with its robust financial performance, positions it well for future growth and profitability.