LexinFintech Holdings Ltd (LX) Q3 2024 Earnings Call Highlights: Strong Net Profit Growth ...

GuruFocus.com11-27

Revenue: CNY3.7 billion. Net Profit: CNY310 million, a 36.7% increase quarter over quarter. Loan Originations: CNY51 billion. Outstanding Loan Balance: CNY111.2 billion. Net Profit Margin: 8.45%, ...

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The company expects continued profit growth next year, supported by ongoing ri","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"LX":"乐信"},"translate_title":"乐信金融科技控股有限公司(LX)2024年第三季度收益看涨期权亮点：净利润强劲增长...","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"LX":1},"content_text":"Revenue: CNY3.7 billion.\nNet Profit: CNY310 million, a 36.7% increase quarter over quarter.\nLoan Originations: CNY51 billion.\nOutstanding Loan Balance: CNY111.2 billion.\nNet Profit Margin: 8.45%, increased by 223 basis points quarter over quarter.\nFunding Costs: 4.28%, decreased by nearly 100 basis points from the previous quarter.\nResearch and Development Investment: CNY149 million.\nProvision Coverage Ratio: Approximately 240% at the end of Q3.\nDividend Payout Ratio: Planned increase from 20% to 25% starting in 2025.\n\n\nWarning! GuruFocus has detected 7 Warning Signs with LX.\n\nRelease Date: November 26, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nLexinFintech Holdings Ltd (NASDAQ:LX) reported a significant increase in net profit, reaching CNY310 million, marking a 36.7% growth quarter over quarter.\nThe company achieved a record low funding cost of 4.28%, which is nearly 100 basis points lower than the previous quarter.\nThe net profit margin improved to 8.45%, representing a quarter-over-quarter increase of 223 basis points.\nLexinFintech Holdings Ltd (NASDAQ:LX) has successfully reduced the risk level of new loans, with the FPD7 indicator decreasing by about 13% compared to the second quarter.\nThe company plans to increase its dividend payout ratio from 20% to 25% of net profit starting in 2025, indicating confidence in future profitability.\n\n Negative Points \n\nTotal revenue remained flat at CNY3.7 billion compared to the previous quarter, indicating limited top-line growth.\nTech-empowered service income fell by 28.2% quarter over quarter due to product mix upgrades.\nE-commerce business revenue dropped by 29.5% quarter over quarter, attributed to a higher base from the previous quarter's shopping festival.\nProcessing and servicing costs increased by 16.1% quarter over quarter due to intensified loan collection efforts.\nThe macroeconomic environment remains uncertain, which could impact future loan origination volumes and overall growth.\n\n Q & A Highlights \nQ: What's management's view on the growth strategy for the fourth quarter following the rollout of government policies, and can we see signs of consumer loan demand recovery? A: Mandy Dong, Investor Relations, explained that while there have been positive changes in short-term demand due to government stimulus measures, long-term recovery depends on macroeconomic improvements. The company maintains a prudent operational strategy, focusing on asset quality, and has seen a slight increase in high-quality customer demand.\nQ: What are the core drivers for the significant net profit growth this quarter, and will this momentum continue? A: Jay Xiao, CEO, highlighted that the 36.7% net profit growth was driven by improved asset quality and record low funding costs. The company expects continued profit growth next year, supported by ongoing risk management improvements and favorable funding conditions.\nQ: Could you elaborate on the measures taken in Q3 to optimize the risk level of new loans and the outlook for asset quality recovery? A: Arvin Qiao, Chief Revenue Officer, detailed efforts in risk identification, decision-making, and pricing. The risk level of new customers decreased by 10% compared to Q2, and the company expects continued improvement in asset quality, leading to significant net profit growth in 2025.\nQ: Can you provide more details on the newly launched Intelligent Credit Platform model and its impact on business scale and profitability? A: Jay Xiao, CEO, explained that the Intelligent Credit Platform (ICP) is a capital-light profit-sharing model that enhances customer segmentation and risk distribution. Although in early stages, ICP is expected to significantly adjust the asset structure and contribute to sustainable business growth.\nQ: How did LexinFintech achieve a record low funding cost, and what is the outlook for Q4? A: James Zheng, CFO, stated that funding costs decreased by 100 basis points due to ample market liquidity and strong demand for high-quality assets. While further reductions in Q4 may be moderate due to seasonal factors, continued optimization is expected in 2025.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2486155338"}