Yiren Digital Ltd. Q1 FY2025 earnings call

• Technology Transformation Strategy: Focuses on sustainable growth, operational efficiency, technology innovation, and international expansion. Core business benefits from domestic economic stimulus policies.
• New Loan Facilitation Rules: China's National Financial Regulatory Administration's new rules lead to expected consolidation in the online lending industry, with major platforms like Yiren benefiting from compliance advantages.
• Financial Services Business: Loan volume facilitated reached RMB 15.2 billion in Q1 2025 (28% YOY growth). Repeat borrowing rate increased to 74% in Q1 2025. Added 3 new traffic partnerships. AI initiatives: Proprietary large language model Zhiyu approved for commercial use; AI customer service handles over 30 million calls monthly.
• Funding: Added 4 new institutional funding partners, total funding sources near 60; funding costs declined 9 basis points in March.
• Overseas Business: Philippines loan volume RMB 123.7 million in Q1 2025, 74% QOQ growth; Indonesia expansion progressing, expected to launch in H2 2025; leveraging AI for optimization.
• Insurance Business: Premiums down due to regulatory tightening, but dual strategy for life (new media acquisition) and property (embedded insurance); cross-selling premiums up 67% QOQ.
• Consumption and Lifestyle: Realigning resources to focus on financial services and AI-driven innovation.

Financial Services

• Loan facilitation in the first quarter of 2025 reached RMB 15.2 billion, a 28% year-over-year increase. Revenue from this segment surged 59% year-over-year to RMB 1.2 billion. Guarantee service revenue was RMB 318 million in the first quarter, compared to RMB 17 million in the same period last year.

Insurance

• Total premiums in the first quarter of 2025 were RMB 801.8 million, a 12% year-over-year decline. Revenue from the insurance segment was RMB 71.5 million, a 43% year-over-year decline.

Consumption and Lifestyle

• Total revenue in the Consumption and Lifestyle segment dropped 40% year-over-year to RMB 308 million as the segment scaled back product offerings following a strategic review.

• Revenue Guidance: Anticipates Q2 2025 revenue to be between RMB 1.6 billion to RMB 1.7 billion, a 7%-14% year-over-year increase.
• Philippines Growth: Expects double-digit growth in loan volume for Q2 2025 in the Philippines.
• Indonesia Expansion: Indonesia operations expected to launch in the second half of 2025.

• Regulatory Risks: New loan facilitation rules may impact smaller platforms, but major platforms like Yiren benefit from compliance advantages.
• Insurance Headwinds: Insurance brokerage market faces headwinds from regulatory tightening and market contraction.
• Crypto Asset Fluctuations: Minor investment in crypto assets leads to value fluctuations.

Q: What impact do the new loan facilitation rules have?

A: Yiren benefits from industry consolidation as major platforms like it have compliance advantages and are already on the white list of fintech partnerships.

Q: Can you provide details on international expansion?

A: Philippines loan volume is growing, with double-digit growth expected in Q2 2025; Indonesia operations to launch in H2 2025; exploring other markets like the Middle East and Europe.

Q: About the crypto asset and fair value adjustment?

A: Minor investment in crypto assets; experienced value drop in Q1 but expected to recover; fair value changes in Q1 were approximately USD 70 million.

Q: Why the higher provision for contingent liabilities and dividend commitment?

A: Higher provision due to accounting for self-guarantee loans; dividend is semi-annual, with careful assessment of balance between shareholder return and reinvestment for sustainable growth