Q2 2026 FinVolution Group Earnings Call

August 28, 2026

Speaker #2: Hello, ladies and gentlemen. Thank you for participating in the second quarter 2026 earnings conference call for FinVolution Group. At this time, all participants are in a listen-only mode.

Operator: Hello, ladies and gentlemen. Thank you for participating in the Q2 2026 earnings conference call for FinVolution Group. At this time, all participants are in a listen-only mode. After management prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Yam Cheng, Head of Capital Markets for the company. Yam, please go ahead.

Speaker #2: After management prepares remarks, there will be a question-and-answer session. Today's conference call is being recorded. I'll now turn the call over to your host, Yiem Cheng, Head of Capital Markets for the company.

Speaker #2: Yiem, please go ahead.

Speaker #3: Jasmine: Hi, all. Thank you for joining our call. Welcome to our second quarter 2026 earnings conference call. The company's results were issued through newswire services earlier today and are posted online.

Yam Cheng: Yes. Hi, all. Thank you for joining our call. Welcome to our Q2 2026 earnings conference call. The company's results were issued through Newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's email alerts by visiting the IR section of our website. Mr. Pim Li, our Chief Executive Officer, and Mr. Alexis Xu, our Chief Financial Officer, will start the call with the prepared remarks and conclude with a Q&A section. During this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and the reconciliation to GAAP measures, please refer to our earnings press release.

Speaker #3: You can download the earnings release and sign up for the company's email alerts by visiting the IR section of our website. Mr. Tim Lee, our Chief Executive Officer, and Ms. Alexa Xu, our Chief Financial Officer, will start the call with prepared remarks and conclude with a Q&A session.

Speaker #3: During this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP.

Yam Cheng: During this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and the reconciliation to GAAP measures, please refer to our earnings press release.

Speaker #3: For information about these non-GAAP measures and a reconciliation to GAAP measures, please refer to our earnings press release. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Yam Cheng: Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Finally, we posted a presentation on our IR website providing details of our results. Before I turn over to our CEO, we are dialing in from multiple locations, so if there is any delay in connection, please bear with us. I will now turn over to our CEO, Tim. Tim, please go ahead.

Speaker #3: Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's filings with the U.S. Securities and Exchange Commission.

Speaker #3: The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Finally, we posted a presentation on our IR website providing details of our results.

Speaker #3: Before I turn it over to our CEO, we are dialing in from multiple locations. So, if there is any delay in connection, please bear with us.

Speaker #3: I will now turn it over to our CEO, Tim. Tim, please go ahead.

Speaker #4: Thanks, Yiem, and thanks, everyone, for joining us. Let me start with the big picture. For years, we have pursued one clear strategy: internationalization. In a world this volatile, that strategy matters more than ever.

Pim Li: Thanks, CM, and thanks, everyone, for joining us. Let me start with the big picture. For years, we have pursued one clear strategy: internationalization. In a world this volatile, that strategy matters more than ever. It lets us take what we have learned and put it to work in markets that are ready for fintech, and it helps us diversify away from any single market. That strategy served us well this quarter, and it is exactly where we are headed. Overall, the Q2 was a solid one. In China, a stable risk backdrop. Together with the preemptive actions we took in early quarters, gave us a constructive environment to operate in. Overseas, momentum in Indonesia and Australia more than offset a deliberate temporary pull back in the Philippines. That is our diversification strategy working as designed. Let me turn to the results.

Tim Li: Thanks, CM, and thanks, everyone, for joining us. Let me start with the big picture. For years, we have pursued one clear strategy: internationalization. In a world this volatile, that strategy matters more than ever. It lets us take what we have learned and put it to work in markets that are ready for fintech, and it helps us diversify away from any single market. That strategy served us well this quarter, and it is exactly where we are headed. Overall, the Q2 was a solid one. In China, a stable risk backdrop. Together with the preemptive actions we took in early quarters, gave us a constructive environment to operate in. Overseas, momentum in Indonesia and Australia more than offset a deliberate temporary pull back in the Philippines. That is our diversification strategy working as designed. Let me turn to the results.

Speaker #4: It led us to take what we have learned and put it to work in markets that are ready for fintech, and it helps us diversify away from any single market.

Speaker #4: That strategy served us well this quarter, and it is exactly where we are headed. Overall, the second quarter was a solid one. In China, we see a stable risk backdrop.

Speaker #4: Together with the preemptive actions we took in early quarters, this gave us a constructive environment to operate in. Overseas, momentum in Indonesia and Australia more than offset a deliberate temporary pullback in the Philippines; that is our diversification strategy working as designed.

Speaker #4: Let me turn to the results. Given the results in China in the fourth quarter of last year, the sequential trend is more telling as a measure.

Pim Li: Given the reset in China in Q4 of last year, the sequential trend is the most telling measure. Group volume rose 5% sequentially to RMB 45 billion, and the revenue moved in step, up 6% to RMB 3.4 billion. Net profit was RMB 427 million, up 1%. The figure we are most encouraged by is overseas. RMB 54 million in operating profit, up 17% sequentially. Overseas now accounts for roughly 27% of group revenue, and that share will keep rising for the rest of the year. Let me dive into the two segments, starting with our Chinese mainland. At a high level, we booked RMB 41 billion in loan volume, up 6.5% quarter-over-quarter, a healthy continuation of the recovery that began at the beginning of 2026.

Tim Li: Given the reset in China in Q4 of last year, the sequential trend is the most telling measure. Group volume rose 5% sequentially to RMB 45 billion, and the revenue moved in step, up 6% to RMB 3.4 billion. Net profit was RMB 427 million, up 1%. The figure we are most encouraged by is overseas. RMB 54 million in operating profit, up 17% sequentially. Overseas now accounts for roughly 27% of group revenue, and that share will keep rising for the rest of the year. Let me dive into the two segments, starting with our Chinese mainland. At a high level, we booked RMB 41 billion in loan volume, up 6.5% quarter-over-quarter, a healthy continuation of the recovery that began at the beginning of 2026.

Speaker #4: Group volume rose 5% sequentially to RMB 45 billion, and revenue moved in step, up 6% to RMB 3.4 billion. Net profit was RMB 427 million, up 1%.

Speaker #4: But the figure we are most encouraged by is overseas: 54 million RMB in operating profit, up 17% sequentially. Overseas now accounts for roughly 27% of group revenue, and that share will keep rising for the rest of the year.

Speaker #4: Now, let me dive into the two segments, starting with our Chinese mainland. At a high level, we booked RMB 41 billion in loan volume, up 6.5% quarter over quarter—a healthy continuation of the recovery that began at the beginning of 2026.

Pim Li: That said, the industry was rattled by an isolated credit incident, which adversely impacted the risk and the funding dynamics. I will walk you through in a bit. Right now, we are watching three priorities closely: asset quality, fundings, and regulations. First, asset quality. Coming into 2026, we expected a gradual recovery following the regulatory reset in Q4 of last year. Two quarters in, that played out as we expected through H1. Risk continued to ease through Q2. C2M2 came down again from 0.68% to 0.56%. We grew the book selectively, focusing on the high-quality repeat borrowers, as we know well. That strategy generated 6% sequential growth in unique borrowers while keeping credit quality firm. Vintage credit cost was steady at roughly 2.7%. The environment has since turned.

Tim Li: That said, the industry was rattled by an isolated credit incident, which adversely impacted the risk and the funding dynamics. I will walk you through in a bit. Right now, we are watching three priorities closely: asset quality, fundings, and regulations. First, asset quality. Coming into 2026, we expected a gradual recovery following the regulatory reset in Q4 of last year. Two quarters in, that played out as we expected through H1. Risk continued to ease through Q2. C2M2 came down again from 0.68% to 0.56%. We grew the book selectively, focusing on the high-quality repeat borrowers, as we know well. That strategy generated 6% sequential growth in unique borrowers while keeping credit quality firm. Vintage credit cost was steady at roughly 2.7%. The environment has since turned.

Speaker #4: That said, the industry was rattled by an isolated credit incident, which adversely impacted the risk and funding dynamics. I will walk you through it in a bit.

Speaker #4: Right now, we are watching three priorities closely: I said quality, funding, and regulations. First, I said quality. Coming into 2026, we expect a gradual recovery following the regulatory results in the fourth quarter of last year.

Speaker #4: Two quarters in, that played out as we expected through the first half. Risk continued to ease through the second quarter. C2M2 came down again, from 0.68% to 0.56%.

Speaker #4: So we grew the book selectively, focusing on the high-quality, repeat borrowers we know well. That strategy generated 6% sequential growth in unique borrowers, while keeping credit quality firm.

Speaker #4: Vintage credit cost was steady at roughly 2.7%. The environment has since turned. In July, an isolated credit event led institutional funding partners to reduce funding for loan facilitation.

Pim Li: In July, an isolated credit event led institutional funding partner to reduce funding for loan facilitation. Many smaller platforms either exited or sharply cut loan origination. Separately, a regulation campaign around the collection industry has tightened the collection capacity across the industry. Together, this creates a risk headwind for us in the coming quarters. While it is in the early stage, we are staying cautious on the risk of our portfolio. On funding, let me be direct. The same tightening sits behind our funding outlook. Our own funding held up well in Q2. Beginning in July, we are seeing the industry as a whole tighten as the institution turn more cautious. For us, that could mean meaningfully lower origination volume and some upward pressure on funding costs. Here is how we are managing it.

Tim Li: In July, an isolated credit event led institutional funding partner to reduce funding for loan facilitation. Many smaller platforms either exited or sharply cut loan origination. Separately, a regulation campaign around the collection industry has tightened the collection capacity across the industry. Together, this creates a risk headwind for us in the coming quarters. While it is in the early stage, we are staying cautious on the risk of our portfolio. On funding, let me be direct. The same tightening sits behind our funding outlook. Our own funding held up well in Q2. Beginning in July, we are seeing the industry as a whole tighten as the institution turn more cautious. For us, that could mean meaningfully lower origination volume and some upward pressure on funding costs. Here is how we are managing it.

Speaker #4: Many smaller platforms either exited or sharply cut loan origination. Separately, a regulatory campaign around the collection industry has tightened the collection capacity across the industry.

Speaker #4: Together, this created a risk headwind for us in the coming quarters. While it is in the early stage, we are staying cautious on the risk of our portfolio.

Speaker #4: On funding, let me be direct. The same tightening sits behind our funding outlook. Our own funding held up well in the second quarter, but beginning in July, we are seeing the industry as a whole tighten.

Speaker #4: As institutions turn more cautious, for us that could mean meaningfully lower origination volume and some upward pressure on funding costs. Here is how we are managing it.

Speaker #4: Our balance sheet and liquidity give us room. And our asset quality and compliance record matter more when funding partners get selected. We've already begun allocating liquidity toward our China funding base.

Pim Li: Our balance sheet and liquidity give us room, and our asset quality and compliance record matter more when funding partners get selective. We have already began allocating liquidity towards our China funding base, and we will prioritize funding stability over near-term growth until the environment normalizes. On regulation, the new fee disclosure requirements took effect on 1 August, and we are complying. The online marketing rules take effect at the end of September, and we are already working with our partners to be ready. Let us move on to the overseas segment. Our overseas segment is performing well. Volume rose 19% year-over-year, and revenue reached RMB 930 million, up 18%. More important, these numbers are backed by real demand. Our unique borrowers more than doubled from a year ago to 5.3 million. Over the past two years, we have reached several important milestones.

Tim Li: Our balance sheet and liquidity give us room, and our asset quality and compliance record matter more when funding partners get selective. We have already began allocating liquidity towards our China funding base, and we will prioritize funding stability over near-term growth until the environment normalizes. On regulation, the new fee disclosure requirements took effect on 1 August, and we are complying. The online marketing rules take effect at the end of September, and we are already working with our partners to be ready. Let us move on to the overseas segment. Our overseas segment is performing well. Volume rose 19% year-over-year, and revenue reached RMB 930 million, up 18%. More important, these numbers are backed by real demand. Our unique borrowers more than doubled from a year ago to 5.3 million. Over the past two years, we have reached several important milestones.

Speaker #4: And we'll prioritize funding stability over near-term growth until the environment normalizes. On regulation, the new fee disclosure requirements took effect on August 1, and we are compliant.

Speaker #4: The online marketing rules take effect at the end of September, and we are already working with our partners to be ready. Now, let's move on to the overseas segment.

Speaker #4: Our overseas segment is performing well. Volume rose 19% year over year, and revenue reached RMB 930 million, up 18%. More importantly, these numbers are backed by real demand.

Speaker #4: Our unique borrowers more than doubled from a year ago, to 5.3 million. Over the past two years, we have reached several important milestones. We have built a diversified portfolio of markets.

Pim Li: We have built a diversified portfolio of markets, where temporary weakness in any one country can be offset by strength in the others. Last year, we absorbed an interest rate cap in Indonesia on the strength of the Philippines. This quarter, we deliberately dialed back origination as a new rate cap took effect in the Philippines, and that gap was filled by structural growth in Indonesia and the progress we keep making in our newest market, Australia. As the country more balanced, and as we add more profitable markets, our growth trajectory would be increasingly predictable and certain. Our playbook remains the same: product expansion and customer upgrade. We use broad portfolio of easy-to-use financing products to attract customers to try out and progressively cross-sell other credit solutions to build better unit economics over time. In Indonesia, offline buy now, pay later continue to lead the growth.

Tim Li: We have built a diversified portfolio of markets, where temporary weakness in any one country can be offset by strength in the others. Last year, we absorbed an interest rate cap in Indonesia on the strength of the Philippines. This quarter, we deliberately dialed back origination as a new rate cap took effect in the Philippines, and that gap was filled by structural growth in Indonesia and the progress we keep making in our newest market, Australia. As the country more balanced, and as we add more profitable markets, our growth trajectory would be increasingly predictable and certain. Our playbook remains the same: product expansion and customer upgrade. We use broad portfolio of easy-to-use financing products to attract customers to try out and progressively cross-sell other credit solutions to build better unit economics over time. In Indonesia, offline buy now, pay later continue to lead the growth.

Speaker #4: While temporary weakness in any one country can be offset by strength in the others, last year we absorbed an interest rate campaign in Indonesia on the strength of the Philippines. This quarter, we deliberately dialed back origination as a new rate campaign took effect in the Philippines.

Speaker #4: And that gap was filled by structural growth in Indonesia and the progress we keep making in our newest market, Australia. As the country becomes more balanced and as we add more profitable markets, our growth trajectory will become increasingly predictable and certain.

Speaker #4: Our playbook remains the same: product expansion and customer upgrades. We use a broad portfolio of easy-to-use financing products to attract customers to try us out, and progressively cross-sell other credit solutions to build better unit economics over time.

Speaker #4: In Indonesia, offline final pay later continues to lead the growth. Our partnerships in offline consumption scenarios continue to proliferate. Offline final pay later is now around 25% of the volume, compared to single-digit contribution a year ago.

Pim Li: Our partnership in various offline consumption scenarios continue to proliferate. Offline buy now, pay later is now around 25% of the volume, comparing to single-digit contribution a year ago. In the Philippines, the rate cap took effect this quarter. We slowed down deliberately to protect quality, the same approach we have taken through past transition. Growth has typically returned once the new pricing settles in. In Australia, we further expanded our offerings to large ticket size, lower interest rate products to attract consumers with strong credit profiles for higher credit limit. While this is still preliminary, we plan to continue to pursue customer upgrade as a core strategy. We also made further investment in building the open banking infrastructure, giving us direct access to bank statement data and a far sharper read on each borrower. Finally, ESG. In our business, trust is everything.

Tim Li: Our partnership in various offline consumption scenarios continue to proliferate. Offline buy now, pay later is now around 25% of the volume, comparing to single-digit contribution a year ago. In the Philippines, the rate cap took effect this quarter. We slowed down deliberately to protect quality, the same approach we have taken through past transition. Growth has typically returned once the new pricing settles in. In Australia, we further expanded our offerings to large ticket size, lower interest rate products to attract consumers with strong credit profiles for higher credit limit. While this is still preliminary, we plan to continue to pursue customer upgrade as a core strategy. We also made further investment in building the open banking infrastructure, giving us direct access to bank statement data and a far sharper read on each borrower. Finally, ESG. In our business, trust is everything.

Speaker #4: In the Philippines, the rate cap took effect this quarter. We slowed down deliberately to protect quality, the same approach we have taken through past transitions.

Speaker #4: And growth has typically returned once the new pricing cycle is seen. In Australia, we further expanded our offerings to large ticket-size, lower interest rate products to attract consumers with strong credit profiles, for higher credit limits.

Speaker #4: While this is still preliminary, we plan to continue to pursue customer upgrades as a core strategy. We also made further investments in building the open banking infrastructure.

Speaker #4: Giving us direct access to bank statement data, and a far sharper read on each borrower. Finally, ESG. In our business, trust is everything. In June, we published our eighth annual ESG report.

Pim Li: In June, we published our eighth annual ESG report. On fraud prevention, we made 60 upgrades to our anti-fraud system, flagged more than 9,000 suspicious activities each day, and blocked over 17,000 fraud attempts. We also launched our own consumer protection system, Golden Sentinel. It systematically integrates early risk warnings, complaint analyst, and data dashboards to drive consumer protection governance from post-incidence handling towards proactive warning. It thus resolves 74.5% of cases on first contact, with customer satisfaction at 98.5%. With that, let me hand it to Alexis for a closer look at the numbers.

Tim Li: In June, we published our eighth annual ESG report. On fraud prevention, we made 60 upgrades to our anti-fraud system, flagged more than 9,000 suspicious activities each day, and blocked over 17,000 fraud attempts. We also launched our own consumer protection system, Golden Sentinel. It systematically integrates early risk warnings, complaint analyst, and data dashboards to drive consumer protection governance from post-incidence handling towards proactive warning. It thus resolves 74.5% of cases on first contact, with customer satisfaction at 98.5%. With that, let me hand it to Alexis for a closer look at the numbers.

Speaker #4: On fraud prevention, we made 60 upgrades to our anti-fraud system, flagged more than 9,000 suspicious activities each day, and blocked over 17,000 fraud attempts.

Speaker #4: We also launched our own consumer protection system, Golden Satin Nail. It systematically integrates early risk warnings, compliant analysts, compliance, and data dashboards to drive consumer protection governance, from post-incident handling towards proactive warning.

Speaker #4: And those results: 74.5% of cases were resolved on first contact, with customer satisfaction at 98.5%. With that, let me hand it over to Alexis for a closer look at the numbers.

Speaker #1: Thank you, Tim. And hello, everyone. Let me walk you through our key results for the second quarter. Please refer to our earnings press release for further details.

Alexis Xu: Thank you, Tim, and hello, everyone. Let me walk you through our key results for the second quarter, and please refer to our earnings press release for further details. Let me discuss each of the segments. First, China. Macro in China remains in a gradual recovery model. China's real GDP growth slowed down from 5% in Q1 to 4.3% in Q2 on the back of subdued household consumer confidence. For us in Q2, revenue was RMB 2.4 billion, up 8% sequentially. A direct result of recovering loan volume during the quarter. Take rate stabilized at about 3.2%, in line with Q1. On risk, asset quality on new loans held steady at 2.7%. Early risk indicators show signs of improvement on outstanding loans. The day one delinquency tick up slightly from 5.2% to 5.3%, while the 30-day collection rate strengthened from 87% to 89%.

Speaker #1: Now, let me discuss each of the segments. First, China. The micro environment in China remains in a gradual recovery mode. China's real GDP growth slowed down from 5% in the first quarter to 4.3% in the second quarter.

Speaker #1: On the back of subdued household consumer confidence. Fourth, in Q2, revenue was RMB 2.4 billion, up 8% sequentially—a direct result of recovering loan volume during the quarter.

Speaker #1: Take rate stabilized at about 3.2%, in line with the first quarter. On risk, asset quality on new loans held steady at 2.7%. Early risk indicators show signs of improvement on outstanding loans.

Speaker #1: The day-one delinquency ticked up slightly, from 5.2% to 5.3%, while the 30-day collection rate strengthened from 87% to 89%. Overall, C2M2 improved to 0.56% from 0.68%, below the Q3 2025 level.

Alexis Xu: Overall, C2M2 improved to 0.56% from 0.68%, below the Q3 2025 level. While this point to a portfolio of improving credit quality, we are vigilant on the risk uptick following various industry events since July. Separately, funding costs rose a further 30 basis points sequentially to 3.7%. Institutional funding supply began to tighten toward the end of the quarter, and we expect further upward pressure on funding costs in the coming quarters. On customer acquisition, we raised our risk appetite for repeated borrowers. Combined with acquisition costs holding at an attractive level, that brought our overall customer acquisition costs down quarter over quarter. As a result, China's operating profit grew 4.3% sequentially to RMB 625 million. Turning to the overseas. Overseas revenue rose 18% year-over-year to RMB 930 million, partially dragged by our deliberate pullback in loan origination in the Philippines.

Speaker #1: While disappointed in our portfolio of improving credit quality, we are benefiting from the risk uptake following various industry events since July. Separately, funding costs showed a further 30 basis points increase sequentially.

Speaker #1: To 3.7%. Institutional funding supply began to tighten toward the end of the quarter, and we expect further upward pressure on funding costs in the coming quarters.

Speaker #1: On customer acquisition, we raised our risk appetite for repeat borrowers. Combined with acquisition costs holding at an attractive level, that brought our overall customer acquisition cost down quarter over quarter.

Speaker #1: As a result, China's operating profit grew 4.3% sequentially. To MB 600 and 25 million. Taking to the overseas, overseas revenue rose 18% year over year, to MB 900 and 13 million.

Speaker #1: Partially dragged by our deliberate pullback in loan origination in the Philippines, when the priority for our overseas segment is to balance profitability with growth. By its nature, this business recognizes customer acquisition costs and credit loss.

Alexis Xu: One priority for our overseas segment is to balance profitability with growth. By its nature, this business recognizes customer acquisition costs and credit losses upfront, while revenue is earned over time. That means profit is inherently back-loaded, and the rapid growth on its own would leave the early years deeply unprofitable. We manage it deliberately against less dynamic, ensuring we deliver profit even as we scale. The second quarter was a case in point. RMB 154 million in operating profit, up 17% quarter over quarter, and more than double year over year. Earlier this year, we guided to US$13 million of full year EBITDA, doubling from last year. We remain confident in delivering it. During the quarter, we added 2.2 million new borrowers in the quarter, up 29% sequentially.

Speaker #1: Up front, while revenue is earned over time, that means profit is inherently backloaded, and rapid growth on its own would leave the early years deeply unprofitable.

Speaker #1: We manage it deliberately against that dynamic, ensuring we deliver profit even as we scale. The second quarter was a case in point: RMB 15.4 million in operating profit, up 17% quarter over quarter, and more than double year over year.

Speaker #1: Earlier this year, we guided to $13 million of full year EBITDA, doubling from last year. We remain confident in delivering it. During the quarter, we added 2.2 million new borrowers.

Speaker #1: Up 29% sequentially. Offline bill operator in Indonesia drove most of the new borrower momentum. Aside from that, our offline expansion is translating directly into new customers, rather than just brand awareness.

Alexis Xu: Offline by operator in Indonesia drove most of the new borrower momentum, a sign that our offline expansion is translating directly into new customers rather than just brand awareness. The Philippines continued to absorb the impact of the industry's new interest rate cap. We pre-actively scaled back originations this over the past two quarters, but the momentum should soon restart. In Australia, unique borrowers grew 22% sequentially, driven by effective online marketing, a wider product range, and a cleaner apps experience. Going into the next quarter, we continue to be mindful of the macros, such as oil price, may impose on currency as well as credit quality in markets we operate. On a group basis, net revenue reached RMB 3.4 billion, up 6% sequentially on the back of higher loan volume. Operating profit came in at RMB 529 million, which included a one-off intangible asset impairment of RMB 64 million.

Speaker #1: The Philippines continue to absorb the impact of the industry's new interest rate cap. We proactively scaled back originations over the past two quarters.

Speaker #1: But the momentum continues to restart. In Australia, unique borrowers grew 22% sequentially, driven by effective online marketing, a wider product range, and a cleaner app experience.

Speaker #1: Going into the next quarter, we continue to be mindful of the macro factors, such as oil prices, which may impact currency as well as credit quality in the markets we operate.

Speaker #1: On a group basis, net revenue reached RMB 3.4 billion, up 6% sequentially on the back of higher loan volume. Operating profit came in at RMB 529 million.

Speaker #1: Which included a one-off intangible assets impairment of RMB 64 million. Excluding that impact, operating profit was up 8% sequentially. Net income was RMB 427 million, up 1% sequentially.

Alexis Xu: Excluding that impact, operating profit was up 8% sequentially. Net income was RMB 427 million, up 1% sequentially. We held RMB 6.4 billion in cash and short-term investments, and the leverage sat at 2.1 times, near historical lows. That balance sheet strength give us the flexibility to navigate a tighter funding environment in China. On shareholder returns, our capital allocation is clear. We prioritize business growth first and use buybacks as our flexible lever, sized to market conditions, trading volume, and the share price. In the second quarter, we repurchased US$27.4 million of shares, bringing H1 2026 repurchase to US$66.8 million. Now to our outlook. We are reiterating our full-year revenue guidance of RMB 11.5 billion to RMB 12.9 billion, based on information currently available. We set that range conservatively at the start of the year given industry volatility. Our H1 performance tracked ahead of our internal plan.

Speaker #1: We held RMB 6.4 billion in cash and short-term investments, and leverage is set at 2.1 times—yet historical lows. That balance sheet strength gives us the flexibility to navigate a tighter funding environment in China.

Speaker #1: Our shareholder returns. Our capital allocation is clear. We prioritize business growth first and then use buybacks as our flexible lever, sized to market conditions, trading volume, and the share price.

Speaker #1: In the second quarter, we repurchased US$27.4 million of shares, bringing first half 2026 repurchases to US$66.8 million. Now, to our outlook. We are reiterating our full-year revenue guidance of RMB 11.5 billion to RMB 12.9 billion.

Speaker #1: Based on information currently available, we set that range conservatively at the start of the year given industry volatility. Our first-half performance tracked ahead of our internal plan, which gives us a cushion.

Alexis Xu: That gives us a cushion. The outperformance we delivered in H1 helps absorb the softer H2 we now expect as funding and credit conditions tighten. Given that near-term pressure, we would expect to land in the lower part of the range unless the operating environment substantially changes. To sum up, China is moving through a transitioning that we believe will favor players with strong compliance and operational know-how. Overseas is becoming a second growing source of profit. We go into Q3 clear-eyed about the funding and the regulatory pressure ahead, and are committed to the same disciplined execution that has carried us this far. Across both capital allocation and operations, we are focused on one goal: lasting, compounding returns for our shareholders. Thank you. We will now hand the call to the operator for questions.

Speaker #1: The outperformance we delivered in the first half-year helps absorb the softer second half we now expect, as funding and credit conditions tighten. Given that near-term pressure, we would expect to land in the lower part of the range, unless the operating environment substantially changes.

Speaker #1: To sum up, China is moving through a transition that we believe will favor players with strong compliance and operational know-how. Overseas is becoming a second growing source of profit. We are going into the third quarter clear-eyed about the funding and regulatory pressure ahead.

Speaker #1: And we remain committed to the same disciplined execution that has carried us this far. Of course, both capital allocation and operations were focused on one goal.

Speaker #1: Lasting, compounding returns for our shareholders. Thank you. We will now turn the call over to the operator for questions.

Speaker #2: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 11 and wait for your name to be announced.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please dial star 11 and wait for your name to be announced. For the benefit of all participants on today's call, if you wish to ask your questions to management in Chinese, we ask that you please kindly repeat your questions in English. One moment for our first question. The first question will come from the line of Cindy Wang of China Renaissance. Please go ahead.

Speaker #2: For the benefit of all participants on today's call, if you wish to ask your questions to management in Chinese, we kindly ask that you please repeat your questions in English as well.

Speaker #2: One moment for our first question. The first question will come from the line of Cindy Wang of China Renaissance. Please go ahead.

Speaker #3: 谢谢管理层给我这个提问的机会。那我这边有两个问题想请问。第一个的话，想请教一下这个橘子平台事件之后，公司有做了哪一些业务的一个调整，去确保这个风险可控？以及目前我们看到这个资金方的一个供给状况为何？是否这个在风险上面，因为近期中小平台的一个出清，有所上升？那公司近期的这个早期风险指标的一个变化为何？那第二个想请教一下菲律宾，目前这个利率调整的一个状况为何？那是否会影响到这个海外今年的一个新放贷款的一个增速？那我很快翻译一下我两个问题。 Thanks for taking my call. I have two questions here. First, following the 橘子 platform incident, what business adjustment did the company make to ensure risk control?

Cindy Wang: Thanks for taking my call. I have two questions here. First, following the Juzi platform incident, what business adjustment did the company make to ensure risk control? What is the current funding supply situation? Will the recent exit of small size platforms lead to a resurgence of industry risk? What are the recent changes in the company early risk indicators? Second, what is the current interest rate adjustment situation in Philippines, and will it affect the growth rate of overseas new loan volume this year? Thank you.

Cindy Wang: [Foreign language]. Thanks for taking my call. I have two questions here. First, following the Juzi platform incident, what business adjustment did the company make to ensure risk control? What is the current funding supply situation? Will the recent exit of small size platforms lead to a resurgence of industry risk? What are the recent changes in the company early risk indicators? Second, what is the current interest rate adjustment situation in Philippines, and will it affect the growth rate of overseas new loan volume this year? Thank you.

Speaker #3: What is the current funding supply situation? And will the recent exit of small-size platforms lead to a resurgence of industry risk? Also, what are the recent changes in the company's early risk indicators?

Speaker #3: Second, what is the current interest rate adjustment situation in the Philippines? And will it affect the growth rate of overseas new loan volume this year?

Speaker #3: Thank you.

Alexis Xu: Thank you, Cindy. I will take your questions. I think you have two questions, and your first question is a very big and multi-part question. I will break it into different pieces. Let's start with what we are seeing on the funding side. After the Juzi event, the credit and the liquidity issues at the individual platform did trigger some broader volatilities in the funding across the loan facilitation industry. The first impact is the tightening risk appetite of the financial institutions. The event raised concerns among the financial institutions about the fund flow safety and the compliance of the platform. Since July, a lot of institutions have launched full internal self-checks and did some reviews for their partners. Some of them paused the business during that process, took a wait and see approach.

Speaker #1: Thank you, Cindy. I will take your questions. I think you have two questions, and your first question is a very big and multi-part question.

Speaker #1: So I will break it into different pieces. Okay. Let's start with what we are seeing on the funding side. You know, after the juice event, the credit and the liquidity issues at the individual platform did trigger some broader volatilities in the funding across the loan position industry.

Speaker #1: So, the first impact is the tightening risk appetite of the financial institutions. The event raised concerns among the financial institutions about fund flow safety and the compliance of the platform.

Speaker #1: Since July, a lot of institutions have launched internal self-checks and conducted some reviews for their partners. Some of them paused business during that process, taking a wait-and-see approach.

Speaker #1: So that led to a fairly sharp near-term pullback in funding supply across the whole market. I think most of the small and mid-sized platforms have either exited or pulled back sharply on lending.

Alexis Xu: So that led to a very sharp near-term pullback in funding supply across the whole market. I think most of the small and middle sized platforms have either exited or pulled back sharply on lending, and we are relatively less impacted, but our channel volume was down around 50% in July. Looking at August, we believe institutional confidence has started to stabilize. But the funding recovery is still coming back at a slower pace. What we have done to adjust our business for the challenge, first is on transparency. We have worked very closely with our financial institution partners, given them the visibility into our fund flows and the repayment rates, kept everything a very clear, closed loop compliance process. We believe it will help to ease their concerns. Secondly, during this period, we have prioritized the quality over the scale.

Speaker #1: And we are relatively less impacted, but our China volume was down around 50% in July. Looking at August, we believe institutional confidence has started to stabilize.

Speaker #1: But the funding recovery is still coming back at a slower pace. Yeah. And what we have done to adjust our business for the challenge—okay, so first is on transparency.

Speaker #1: We have worked very closely with our financial institution partners to give them visibility into our fund flows and the repayment paths. Capital, everything—a very clear, closed-loop, complex process.

Speaker #1: We believe it will help to ease their concerns. Secondly, during this period, we have prioritized quality over scale. We have further refined our customer segmentation, raised the underwriting bar, and prioritized funding for our high-quality, low-risk customers.

Alexis Xu: Further refined our customer segmentation, raised the underwriting bar, and prioritized the fundings for our high-risk quality customers. Then, turn to the funding outlook. I think over the long term, financial institutions will keep reducing their exposure to those small platforms and focus on the big platforms that there are compliant, well-capitalized, and have a strong risk track record. That is where we sit. I can show you some figures here. In Q2, we had RMB 6.4 billion in cash and short investments. Cash flows stayed solid through July and August. The latest number is RMB 7.5 billion. On top of that, we have got roughly RMB 5 billion in highly liquid assets. Those cash we can recover very quickly in near term. So the aggregated number is 12.5 billion in total.

Speaker #1: And then, turning to the funding outlook, I think over the long term, financial institutions will keep reducing their exposure to those small platforms and focus on the big platforms that are well-capitalized and have a strong risk track record.

Speaker #1: That's where we sit. I can show some figures. Yeah. In the second quarter, we had RMB 6.4 billion in cash and short-term investment. Cash flows stayed solid through July and August.

Speaker #1: And the latest number is RMB 7.5 billion. And on top of that, we have got roughly RMB 5 billion in highly liquid assets. I mean, those are cash we can recover very quickly in the near term.

Speaker #1: So, the aggregator number is $12.5 billion in total. Okay. That gives a real resilience and forms the foundation for our leading position in this industry.

Alexis Xu: That gives us a real resilience and forms the foundation for our leading positions in this industry and our long-term relationships with the funding partners. We think in near term, there will still be some volatility as the institutions still need time to rebuild their risk appetite and work through their process reviews. So maybe in the next one or two quarters, I think it comes down to two things. First, it depends on how fast institutions get through their self-checks and system fix. The pace varies a lot case by case, so industry-wide recovery has not quite caught up yet. Secondly, I think whether the broader credit environment stays stable as PL and SL keep exiting and assuming there is no new extreme event. So, in that case, I would expect risk appetite and the confidence to gradually come back with the self-checks wrap up.

Speaker #1: And our long-term relationships with the funding partners. Okay. We think in the near term there will still be some volatility, as the institutions still need time to rebuild their risk appetite and work through their process reviews.

Speaker #1: So maybe in the next one or two quarters, I think it comes down to two things. First, it depends on how fast institutions get through their self-checks and system fixes.

Speaker #1: The pace varies a lot case by case, so industry-wide recovery hasn't quite caught up yet. Secondly, I think whether the broader credit environment stays stable.

Speaker #1: As PL and SS keep exiting and assuming there is no new extreme event. So in that cases, I would expect risk appetite and the confidence to gradually come back with the self-checks rubber.

Speaker #1: Okay. And last, I will talk about our early risk indicators. Yeah, this round of funding tightening also overlapped with regulator action in the collection industry at the end of July.

Alexis Xu: Last, I will talk about our early risk indicators. This round of funding tighten also overlapped with the regulatory action in the collection industry at the end of July. So, collection resource got tighter, and the recovery efficiency took a bit of hit too. That added some challenges on top. Actually, we have seen some movement in our early risk indicators as a result. Our latest reading is up around 20% versus Q2. Given all of that, we are staying profit focused rather than chasing scale. We are also taking a more conservative posture on risk sharpening, how we identify higher risk borrowers, speeding up model iteration, and tighten the acquisition spend. All our goal is at protecting our unit economics. So that is my answer for your first questions. Your second question is about Philippines.

Speaker #1: So, collection results got tighter, and the recovery efficiency took a bit of a hit too. That's added some challenges on top. Okay. Actually, we have seen some movement in our early risk indicators as a result.

Speaker #1: Our latest reading is up around 20% versus the second quarter. Given all of that, we are standing profit-focused rather than chasing scale. We are also taking a more conservative posture on risk, sharpening how we identify higher risk borrowers.

Speaker #1: Speeding up model iteration and tightening acquisition spend. Our goal is to protect our unit economics. Okay, so that's my answer to your first question.

Speaker #1: And your second question is about the Philippines. Okay. The Philippines rolled out a new interest rate cap, effective from April 1st. So, in response to that, we took a pretty deliberate and cautious approach in the first half.

Alexis Xu: The Philippines rolled out a new interest rate cap effective for 1 April. Heading into that, we took a pretty deliberate cautious approach in H1. We actually slowed down the originations on purpose to give ourselves room to adjust the business. Short-term volume in the Philippines did take a hit, as we have mentioned before. Based on our experience navigating similar pricing adjustment in Indonesia before, we believe this kind of recovery typically takes about 2 or 3 quarters. We expect the Philippines business will return to growth in Q3. After the adjustment, the new regulatory framework setting and as our mix shifts further toward high-quality borrowers, we have still got room to optimize both credit cost and funding cost and the growth picks back up from there.

Speaker #1: We actually slowed down the originations on purpose to give ourselves room to adjust the business. Yes, short-term volume in the Philippines did take a hit.

Speaker #1: Okay, as we have mentioned before, based on our experience navigating similar pricing adjustments in Indonesia previously, we believe this kind of recovery typically takes about two to three quarters.

Speaker #1: So, we expect the Philippines business will return to growth in the third quarter. After the adjustment to the new regulatory framework, and as our mix shifts further toward high-quality borrowers, we still have room to optimize both credit cost and funding cost. We expect growth to pick back up from there.

Speaker #1: And to be clear, in the Philippines, I think we are not just cutting prices to comply with the new rules. We are using this as a chance to push a deeper structural upgrade across the business.

Alexis Xu: To be clear, in the Philippines, I think we are not just cutting prices to comply with the new rules. We are using this as a chance to push a deeper structure upgrade across the business. For example, on the risk side, we have raised our underwriting bar and pullback on the marginal segment where risk and returns were not linear, while growing the share of higher quality borrowers, the ones with more stable repayment behavior and better repeated borrowing performance. On the product side, we are continuing to diversify beyond the online cash loan product. We have expanded into more scenario-based products like our buy now, pay later product, with the local smart shop company and Carousell. That lets us move beyond a single cash loan product into a broader range of consumption and payment use case.

Speaker #1: For example, on the risk side, we have raised our underwriting bar and pulled back on the marginal segment, where risk and returns were not linear.

Speaker #1: Well, growing the share of higher quality borrowers—those with more stable repayment behavior and better repeated borrowing performance. And on the product side, we are continuing to diversify beyond the online cash loan product.

Speaker #1: We have expanded into more scenario-based products like our benefit product, with the local smart shop company and car sale. That lets us move beyond a single cash loan product into a broader range of consumption and payment use cases.

Speaker #1: So we can match our better quality customers with the right credit line, tenure, and product, and then build the lifetime value through repeat borrowings.

Alexis Xu: We can match our better quality customers with the right credit line tenure and product, and then build the lifetime value through repeat borrowings. Zooming out to the overseas business as a whole. The fee adjustment in the Philippines in H1 doesn't change the overall growth trajectory for our overseas markets. That is really thanks to the multi-market viewpoint. The Q2 pullback in the Philippines was largely offset by the strong growth in our Indonesia and Australia market. Heading to H2, we expect the momentum in Indonesia and Australia to continue, and also we expect the Philippines to work through this adjustment period to get back to secure growth. For the full year, we are confident to expect the overseas volume to grow at a double-digit rate year-over-year. Thank you, Jim.

Speaker #1: Now, zooming out to the overseas business as a whole, the fee adjustment in the Philippines in the first half doesn't change the overall growth trajectory for our overseas markets.

Speaker #1: And this is really thanks to our multi-market footprint. The Q2 pullback in the Philippines was largely offset by the stronger performance in our Indonesia and Australia markets.

Speaker #1: So, heading into the second half, we expect the momentum in Indonesia and Australia to continue. We also expect the Philippines to work through this adjustment period to get back to.

Speaker #1: Equational goals. So for the full year, we are confident to expect the overseas volume to grow at a double-digit rate year over year.

Speaker #1: Okay. Thank you.

Speaker #2: Please hold for our next question. The next question now comes from the line of Alex Ye of UBS. Please go ahead.

Operator: Please hold for our next question. The next question now come from the line of Alex Ye of UBS. Please go ahead.

Alex Ye: Thank you for the opportunity to ask questions. I have two questions. The first is about the funding cost. I would like to ask about the recent seven or eight months, what level we see this funding cost at, compared to Q2, and the change. Your judgment on whether this funding cost will continue to rise in the next one to two quarters. The second question is about our capital utilization. With the supply of domestic funds becoming a bottleneck at the moment, will there be some adjustments in the utilization of our self-capital. Related to that, how should we think about the pace of buyback in the coming one to two quarters. Thank you.

Alex Ye: [Foreign language]. Thank you for the opportunity to ask questions. I have two questions. The first is about the funding cost. I would like to ask about the recent seven or eight months, what level we see this funding cost at, compared to Q2, and the change. Your judgment on whether this funding cost will continue to rise in the next one to two quarters. The second question is about our capital utilization. With the supply of domestic funds becoming a bottleneck at the moment, will there be some adjustments in the utilization of our self-capital. Related to that, how should we think about the pace of buyback in the coming one to two quarters. Thank you.

Speaker #3: 感谢观众给我提问的机会。我有两个问题。第一个是关于资金成本这块。想请教一下，近期比如七、八月，我们看到的资金成本大概在什么水平？相比二季度有怎样的变化？以及你们判断未来一到两个季度，资金成本还会继续上升吗？第二个问题是关于资本运用方面。随着国内资金供应成为当下一个瓶颈，在自由资金的运用上，咱们是否会做一些调整？以及相对应的，我们应该如何展望未来一到两个季度的回购节奏？ Translate from a question. First question is about funding cost. So what have been the latest funding costs in recent months compared to Q2, and what's your expectation for the coming one to two quarters?

Speaker #3: Second question is that, given funding supply has become a major bottleneck at the moment, is there any adjustment that the company is going to make with regard to the utilization of your self-capital?

Speaker #3: So, in relation to that, how should we think about the pace of buyback in the coming one to two quarters? Thank you.

Speaker #1: Okay. Thank you, Alex. Your first question is about funding. We are seeing funding costs tick up in the third quarter relative to the second quarter.

Alexis Xu: Okay. Thank you, Alex. Your first question is about funding. We are seeing funding costs ticking up in Q3 relatively to Q2, up about around 30 basis points in July. We expect the gradually upward trend to continue over the next quarter or two, just given the broader funding environment in China right now. Okay. We believe short-term funding volatility is largely a matter of confidence. Over the long run, we do not see the competitiveness of the quality asset strategy. If anything, it will only get stronger. Your second question is about the capital deployment and the buyback pace. Okay. Recently, the funding tightness from the industry event has meant a lot of financial institutions more focused on the compliance and the capital strains.

Speaker #1: Up about 30 basis points in July, and we expect the gradual upward trend to continue over the next quarter or two, given the further funding environment in China right now.

Speaker #1: Okay. And we believe short-term funding volatility is largely a matter of competence. So, over the long run, we don't see the competitiveness of the quality asset strategy diminishing. If anything, it will only get stronger.

Speaker #1: Your second question is about the capital deployment and the buyback pace. Okay. So recently, the funding tightness from the industry event has made a lot of financial institutions focus more on compliance and capital strength.

Speaker #1: And on our side, we are leaning into our own strong balance sheet and ample cash reserves. Yeah. We have shown the figures before. We are offering solid safety cushions and credit enhancement in our funding partnerships.

Alexis Xu: On our side, we are leaning into our own strong balance sheet and ample cash reserves. We have showed the figures before. We are offering a solid safety cushion and the credit enhancement in our funding partnerships to work with them to build the institutional confidence and speed up the recovery. We are also looking at and exploring the possibilities at the capital injections into our licensed business. For example, the micro-lending company, as a way to diversify our funding sources and improve the stability. So that is for our China business. On the other side, even in the short term, there is some pressures in the China market. Our long-term overseas build-out is already paying off. We are moving into a profit release base. Recently, we have also noticed a lot of our peers accelerating their own overseas business lately.

Speaker #1: To work with them to build institutional confidence and to speed up the recovery. Now, we are also looking at and exploring the possibilities of capital injections into our licensed business.

Speaker #1: For example, the micro-lending company is a way to diversify our funding sources and improve stability. So that's for our China business. And on the other side, even in the short term, there are some pressures in the China market.

Speaker #1: Our long-term overseas build-out is already paying off. We are moving into a profit release phase. Additionally, we have also noticed a lot of our peers accelerating their own overseas business lately.

Speaker #1: But for us, that's valid for two things: that we were ahead of the curve on this, and that the strategy itself was the right one.

Alexis Xu: But for us, that validated two things. That we were ahead of the curve on this, and the strategy itself was the right one. With a mature, skilled overseas business already in pace, we have got a lot more patience and the confidence to navigate the bumps in China. If anything, that has made us even more committed to accelerating investment overseas. For example, the Fondo acquisition in Australia, Q1 last year, also gave us valuable experience entering the new markets through M&A. Going forward, replicating the playbook through the capital allocation may be the smart move and can really help us to drive a healthy and fast growth overseas business. The last on the buyback pace. As we have mentioned, we will prioritize the steady operations in business first.

Speaker #1: So, with a mature, skilled overseas business already in place, we have got a lot more patience and confidence to navigate the bumps in China.

Speaker #1: If anything, that's made us even more committed to accelerating investment overseas. For example, the fund acquisition in Australia in the first quarter last year also gave us valuable experience entering new markets through M&A.

Speaker #1: So, going forward, replicating the playbook through capital allocation may be the smart move and can really help us drive healthy and fast growth in our overseas business.

Speaker #1: And lastly, on the buyback pace, as we have mentioned, we will prioritize steady operations in our business first—the stable business in China and the fast-growth business in overseas markets.

Alexis Xu: The steady business in China and the fast growth business in overseas market. From there, we will keep the flexibility to execute the buyback plan based on the share price and the market liquidity. It will not change our long-term directions on shareholder returns. We will remain committed to return the capital to maximize the long-term shareholders return. Okay. The shareholders return. That is. Okay. Okay, operator, please continue.

Speaker #1: And from there, we will keep the flexibility to execute the buyback plan based on the share price and market liquidity. But it will not change our long-term direction on shareholder returns.

Speaker #1: We will remain committed to returning capital to maximize the long-term shareholders' return. Okay. The shareholders' value. Okay. Okay. Operations. Please continue.

Speaker #2: Thank you. One moment for our next question. Our next questions will come from the line of Yoyo Fan from CICC. Please go ahead.

Operator: Thank you. One moment for our next question. Our next question could come from the line of YoYo Fan from CICC. Please go ahead.

Speaker #4: 好的，感谢管理层给我这个提问的机会。我是中金公司的分析师樊悠悠。我这边想问一下关于国际业务这一块。因为公司之前也提到今年海外业务的全年经营利润目标，从上半年的分布数据来看，整体进展还是非常 well on track 的。所以想请教一下管理层，如果展望下半年，国际业务的主要利润增长驱动力，能否进一步拆解一下，可能会有哪些。那我这边快速翻译一下。 Thanks for taking my question. This is Yoyo Fan from CICC. My question is on overseas business. We can see that the overseas business is well on track based on the first half-year data.

Yoyo Fan: Thanks for taking my question. This is YoYo Fan from CICC. My question is on overseas business. We can see that the overseas business is well on track based on the H1 data. Looking ahead to the H2 of this year, what will be the key drivers of our overseas profit growth? Thank you.

Yoyo Fan: [Foreign language]. Thanks for taking my question. This is YoYo Fan from CICC. My question is on overseas business. We can see that the overseas business is well on track based on the H1 data. Looking ahead to the H2 of this year, what will be the key drivers of our overseas profit growth? Thank you.

Speaker #4: So, looking ahead to the second half of this year, what will be the key drivers of our overseas profit growth? Thank you.

Speaker #1: Okay. Thank you, Yoyo. Before I get into the specific drivers for the second half, let me give you a bit of context. Looking back at how our overseas business has developed, I would say it has been marked by real foresight and a proactive strategy from the start.

Alexis Xu: Okay. Thank you, YoYo. Before I get into the specific drivers for the H2, let me give you a bit of context. Looking back at how our overseas business has developed, I would say has been marked by a real foresight and the proactively strategy from the start. Back in 2018, 8 years ago, when our China business was still enjoying strong growth, the group, we have already made the global expansion a long-term strategic priority. Over the past 8 years, we have steadily built up our overseas foundation, securing license, establishing the local operations, and building out our funding ecosystem. We proved that the model from zero to one in Indonesia and then replicate the experience in the Philippines and the other countries, and acquired the Fondo and entering the Australia, upgraded the whole approach into what we now call the strategy Glocal Plus.

Speaker #1: Back in 2018, eight years ago, when our China business was still enjoying strong growth, the Group had already made global expansion a long-term strategic priority.

Speaker #1: So over the past eight years, we have steadily built up our overseas foundation, securing licenses, establishing local operations, and building out our funding ecosystem.

Speaker #1: We proved that the model from zero to one in Indonesia, and then replicated the experience in the Philippines and the other countries, and acquired the fundal. And entering Australia, we upgraded the whole approach into what we are now calling the Strategy Legal Plus.

Alexis Xu: As that's the years of deliberate groundwork and sustained investment that allowed our overseas business to become what it is today, a mature second profit engine, delivering steady and meaningful profit for the group. Let me get into the details in the H2. Looking ahead, we expect our three major overseas markets to work together in a very complementary way. Indonesia contributes the bulk of the incremental growth, the Philippines gradually recovers, and Australia continues its rapid expansion. For Indonesia, which is our largest one, it already accounts for more than 50% of both our overseas volume and revenue. Even with the seasonal drag from Ramadan, we still delivered a solid 13% growth versus the H2 2025 in the H1. The H2 tends to benefit from the traditional peak season.

Speaker #1: As last year's deliberate groundwork and sustained investment, that's allowed our overseas business to become what it is today—a mature second profit engine.

Speaker #1: Delivering steady and meaningful profit for the group. Okay. And then let me get into the details. In the second half, looking ahead, we expect our three major overseas markets to work together in a fairly complementary way.

Speaker #1: Indonesia contributed the bulk of the incremental growth, and the Philippines gradually recovered. Australia continued its rapid expansion. Okay. For Indonesia, which is our largest market, it already accounts for more than 50% of both our overseas volume and revenue.

Speaker #1: Even with the seasonal drag from remittance, we still delivered a solid 13% growth versus the second half of 2025 in the first half. So the second half tends to benefit from the traditional peak season.

Speaker #1: So, we would expect some further improvement in growth. We are also continuing to build out offline binoculate products through our multi-finance lessons. And the customer segment tends to be high quality, longer tenure, and larger ticket size.

Alexis Xu: We would expect some further improvement in growth. We are also continuing to build out offline BNPL-related products through our motor finance license. The customer segment tends to be high quality, longer tenure, and larger ticket size, which will help us to keep improving our overall customer mix and finally drive the healthy returns. That's for Indonesia. On the Philippines, in the H1, we made a deliberate choice to tighten up in response to the new interest rate cap, to raise our underwriting standards and clean up our customer mix. After the new price environment stabilized, we would expect the Philippines volume to start recovering sequentially in the H2. As the share of the high-quality customers keeps rising, that will continue to bring risk down and support the ongoing improvement in the unit economics.

Speaker #1: This will help us continue improving our overall customer mix and ultimately drive healthy returns. Okay, that covers Indonesia. As for the Philippines, in the first half, we made a deliberate choice to tighten up in response to the new interest rate cap.

Speaker #1: To raise our underwriting standards and clean up our customer mix. So, after the new price environment stabilized, we would expect the Philippines volume to start to recover sequentially in the second half.

Speaker #1: And as the share of high-quality customers keeps rising, that will continue to bring risk down and support the ongoing improvement in unit economics.

Speaker #1: And for Australia, as the new start in our overseas expansion, it's a very high compliance, high value, developed market, and the growth has been fast since we consolidated at the end of last year.

Alexis Xu: For Australia, as the new stars in our overseas expansion, it's a very high compliance, high value developed market, and the growth has been fast since we consolidated at the end of last year. In the Q2, unit borrowers were up 22% quarter over quarter. It drove the volume to 17% sequentially. We would expect Australia to keep going, put up the double-digit sequential growth in the H2. Given the Australian customer tends to have larger ticket size and better risk performance overall, we think Australia contribution overseas profit will keep increasing as the customer base grows and more of our acquisition shifts to our partner apps. So that's for our three major overseas markets. In summary, our overseas business is no longer dependent on any single market.

Speaker #1: And in the second quarter, unit borrowers were up 22% quarter over quarter. It drove the volume to 70% sequentially. So we would expect Australia to keep going, put up the double-digit sequentially Ally growth in the second half, given the Australia customer tends to have larger ticket size and better risk performance overall. We think Australia contribution.

Speaker #1: Overseas profit will keep increasing as the customer base grows and more of our acquisition shifts to our partnering apps. Okay, so that's for our three major overseas markets.

Speaker #1: And in summary, our overseas business is no longer dependent on any single market. Instead, it's built on three things working together. And maybe in the near future, more countries will be added in.

Alexis Xu: Instead, it built out three things working together, and maybe in the near future, it will be more countries adding in. Broader product diversification, continued customer mix upgrade, and our Glocal Plus global platform. Together, we have built a cross-regional growth structure that is really resilient through the cycle. That's what gives us the ability to bear the regulatory shifts in any single market and stays on track toward the long-term goal. We have ambitious target by 2030. We expect the overseas revenue will reach more than 50% of the total group revenue. That's all for my answer. Thank you.

Speaker #1: Border product diversification continues, the customer mix upgrades, and our legal plus global platform. So, together, we have built a cross-regional growth structure that is really resilient through the cycle.

Speaker #1: That's what gives us the ability to weather regulatory shifts in any single market and stay on track toward the long-term goal. We have an ambitious target by 2030.

Speaker #1: We expect the overseas revenue could reach more than 50% of the total group revenue. Okay, that's all for my answer. Thank you.

Speaker #2: Questions now. I would like to turn the call back over to the company for closing.

Operator: Questions now. I would like to turn the call back over to the company for closing.

Speaker #3: Thank you. Thank you once again for joining us today. If you have any further questions, please reach out to the Investor Relations team. Thank you very much.

Yam Cheng: Thank you. Thank you once again for joining us today. If you have any further questions, please reach out to the investor relations team. Thank you very much.

Operator: This conference call, thank you for your participation. You may now disconnect your line. Thank you.

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Q2 2026 FinVolution Group Earnings Call

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