- Total Loan Volume Q4: RMB89.9 billion, a 9% sequential increase.
- Non-GAAP Net Income Q4: RMB1.97 billion, a 71.5% year-over-year increase.
- Non-GAAP Net Income per Diluted ADS Q4: RMB13.7, a 91.3% year-over-year increase.
- Full Year Non-GAAP Net Income 2024: RMB6.42 billion, a 44% year-over-year increase.
- Return on Equity (ROE) 2024: 27.9%.
- Total Net Revenue Q4: RMB4.8 billion.
- Revenue from Platform Service Capital Light Q4: RMB1.59 billion.
- 90-Day Delinquency Rate Q4: 2.09%.
- 30-Day Collection Rate Q4: 88.1%.
- Cash from Operations Q4: RMB3.05 billion.
- Total Cash and Cash Equivalents Q4: RMB10.36 billion.
- Share Repurchase Q4: Approximately 3.1 million ADS for USD107 million.
- Dividend per ADS for H2 2024: USD0.70.
- Non-GAAP Net Income Guidance Q1 2025: Between RMB1.8 billion and RMB1.9 billion.
- Warning! GuruFocus has detected 4 Warning Sign with QFIN.
Release Date: March 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qifu Technology Inc (NASDAQ:QFIN) achieved a record high non-GAAP net income in Q4 2024, increasing 71.5% year-over-year to RMB1.97 billion.
- The company successfully executed a USD410 million share repurchase, buying back approximately 12% of its share count at the beginning of the year.
- Qifu Technology Inc (NASDAQ:QFIN) reported a significant improvement in asset quality, with a decrease in the D1 delinquency rate and an increase in the 30-day collection rate.
- The company's platform service capital light segment accounted for 53% of total loan volume, showcasing a strong shift towards a more resilient business model.
- Qifu Technology Inc (NASDAQ:QFIN) enhanced user acquisition efficiency, with a 16.2% year-over-year increase in new borrowers and a 5.3% decline in average acquisition cost per credit line user.
Negative Points
- Despite strong on-balance sheet loans, there was a year-on-year decline in revenue from credit-driven service capital heavy due to a significant decline in off-balance sheet loans.
- The company experienced a slight increase in day 1 delinquency rate and collection rate due to changes in repayment reminder strategies.
- Funding costs are approaching the bottom line of financial institutions, indicating limited room for further decline.
- The macroeconomic environment remains uncertain, prompting Qifu Technology Inc (NASDAQ:QFIN) to adopt a cautious approach in business planning for 2025.
- The company faces interest rate uncertainty, which could impact funding costs and overall financial performance.
Q & A Highlights
Q: Could management discuss the integration of AI, particularly Deepseek, and the potential efficiency gains? Also, is there any recovery in credit demand following recent policy support? A: AI, especially Deepseek, is crucial for us, given the strong data foundation in the credit industry. We've implemented AI in sales, loan collection, and marketing, with significant efficiency improvements. For instance, our Capella system, used by 84% of our collection team, enhances communication strategies. We plan to expand AI applications in credit assessment and risk decision-making. Regarding credit demand, we observed a 10% increase in loan applications in Q4 compared to Q3, with a seasonal pickup in January. We expect Q1 loan volume to grow over 10% year-over-year, though we remain cautious about macro recovery.
Q: What drove the changes in early delinquency metrics in Q4, and what's the outlook for net take rate? A: (Yan Zheng, Chief Risk Officer) The slight increase in day-one delinquency and collection rates was due to optimizing our repayment reminder strategy, reducing early reminders by 13% to enhance user experience without affecting loss rates. Our risk levels remain stable. (Alex Xu, CFO) Our take rate improved steadily in 2024, reaching nearly 6% in Q4. We aim to maintain a take rate slightly above 5% for 2025, with room to test new strategies for incremental profitability.
Q: How will recent regulatory changes promoting consumer finance impact the industry and Qifu Technology? A: The new policy signals strong government support for boosting consumption through consumer credit. It suggests increased loan supply, flexible terms for financial institutions, and consumer protection. We expect a stable regulatory environment, allowing us to innovate and better serve customers.
Q: Is your funding cost continuing to decline, and what is the lowest level it can reach? A: Our funding costs have declined faster than LPR due to risk cuts and demand-supply dynamics. However, further declines are limited as current costs approach financial institutions' bottom lines. We plan to issue more ABS to optimize funding structure, potentially reducing overall costs slightly.
Q: How does Qifu Technology plan to deliver shareholder value, and what is the outlook for future growth? A: (Alex Xu, CFO) We are committed to shareholder returns, with a 70%-plus payout ratio target. Our focus is on share buybacks, with a $450 million program underway. We aim to increase dividends per share semiannually, supported by share base reduction. Long-term, we may adjust the mix between buybacks and dividends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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