NEWS WRAP: FinVolution’s international adventure bears fruit

The online lender’s international business grew far faster than its home market last year, accounting for nearly a fifth of its revenue 

By Teri Yu 

Shanghai-based fintech FinVolution Group (FINV.US) announced on Monday that its international operations grew far faster than its older, home-based loan facilitation business, providing a key new growth engine to counter a slowdown in China. 

FinVolution said its international transaction volume last year rose 84.7% to 7.85 billion yuan ($1.09 billion), while the outstanding loan balance for its global business jumped 57.5% year-on-year to 1.26 billion yuan, according to its latest financial report. The company’s revenue for all last year rose 12.7% to 12.55 billion yuan, while its annual net profit rose by a slower 4.5% to 2.38 billion yuan.

FinVolution’s international business now accounts for 17% of the company’s revenue, up sharply from the 10.3% in 2022. The company is trying to diversify beyond its home base in China as the local economy sputters after years of strong growth and default rates start to rise. 

China also carries higher potential for regulatory crackdowns than most global markets due to Beijing’s concerns that private companies may be too inexperienced in managing risk. Following such a crackdown in the late 2010s, FinVolution and many of its peers shifted their business model from direct lending to facilitating loans between borrowers and banks.

“Our international business grew exceptionally well in 2023, propelled by our effective strategy of pursuing sustained growth domestically in tandem with rapid growth overseas,” said CEO Li Tiezheng.  

While the full-year results looked strong, the company’s fourth quarter numbers painted a less rosy picture. Its revenue for last year’s final quarter rose just 5.7% year-on-year to 3.22 billion yuan, as its transaction volume grew 7.8% to 52.4 billion yuan. Its net profit fell 4.9% year-on-year for the quarter to 529 million yuan.

The company’s American depositary shares (ADS) fell 2.8% in Tuesday trading in New York to close at $4.85, extending a drop that has seen them fall nearly 10% in the last four trading days.

Citigroup lowered its target price on FinVolution to $5.30 after the results came out while maintaining a “neutral” rating on the company.  

FinVolution was cautious in its forecast for 2024, predicting its loan volume would grow 5% to 10% during the year to between 195.7 billion yuan and 205 billion yuan. At the same time, the company announced a 10.2% increase in its year-end cash dividend payout to $0.237 per ADS. 

FinVolution embarked on its international expansion in 2018 after China began to crack down on peer-to-peer (P2P) lending. It first ventured into the Philippines and later expanded to Indonesia.

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