FINV.US

The online loan facilitator said its international loan transaction volume grew 41% in the first quarter, slowing from 85% in the previous quarter

  

By Doug Young

Online loan facilitator FinVolution Group (FINV.US) on Wednesday reported that growth of its international business slowed in the first quarter, reflecting difficulties it will face in boosting that part of its portfolio to offset much slower growth for its more mature China business.

At the same time, an 11.3% gain in the company’s overall loan transaction volume helped it to post modest revenue growth, even as its profit fell and its nonperforming loans grew amid shaky conditions in China’s slowing economy.

FinVolution’s shares fell 2.1% in Thursday trade after the results came out. The stock is up 2.2% year-to-date, trailing a 16% gain for the broader iShares MSCI China ETF, as investors worry about growing loan defaults in China’s financial sector. FinVolution reported that its China operation’s loans delinquent for more than 90 days rose to 2.45% of its total as of March 31 this year, up from 1.72% a year earlier.

While many of its rivals have seen their lending activity and revenue fall in China as they become more conservative in the current climate, FinVolution has continue to boost its activity.

The company said total loan transaction volume for its core China business rose 10.3% in the first quarter to 46.1 billion yuan ($5.87 billion) from 41.8 billion yuan a year earlier, according to its latest results announcement. Its international loan transaction volume grew by a much faster 40.8% to 2.21 billion yuan from 1.57 billion yuan a year earlier, though the growth rate was down sharply from 85% in last year’s fourth quarter and 99% in the third.

FinVolution is looking to international markets to offset slower growth and higher risk in its home China market, where it faces not only growing defaults in a slowing economy but also higher regulatory risk due to frequent tightening by China’s financial regulators.

Still, its overseas business, which includes operations in Indonesia and the Philippines, is a tiny fraction of its main China business, with foreign loans accounting for just 2% of its total outstanding loan balance. The overseas contribution to the company’s revenue is higher but still relatively small, accounting for 18.8% of the total in the first quarter, the company said.

FinVolution’s number of unique borrowers for its China operation fell 18.2% year-on-year in the first quarter to 1.8 million. But it was able to offset that with a sharp increase in its average loan size, which rose 28% to 10,121 yuan in China. As a result, its overall revenue for the first quarter rose 3.7% year-on-year to 3.17 billion yuan, even as its net profit fell 23% to 532 million yuan.

“While the macroeconomic recovery continued to gain traction with pockets of improvement since the beginning of 2024, uncertainties persist in the markets in which we operate,” FinVolution said. “The company has observed encouraging signs of recovery and will continue to closely monitor macro conditions across our pan-Asian markets and remain prudent in our business operations.”

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