Hexindai Inc. (NASDAQ:HX) Q1 2020 Earnings Conference Call - Final Transcript

Sep 18, 2019 • 08:00 am ET

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Hexindai Inc. (NASDAQ:HX) Q1 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Josh Vogel from Sidoti Investments.

Please ask your question.

Analyst
Josh Vogel

Thank you. Good evening, everyone. I have four questions, please. The first one is, can you please talk about the percentage of borrowers that were acquired from online channels in the first quarter and how that compared to a year ago? And if there was any change, why so? Thank you.

Executive
Kerrie Rui Zhang

Thank you for your question. In terms of volumes facilitated, we acquired 42% of our borrowers online and 58% of borrowers offline in this quarter. During the past two quarters, we began strategically repositioning our business by developing loan assistance business to drive future growth. Our partner institutions have shown strong interest in investing in underlying assets that are short term and in small amounts, which closely matched the profile of the high-quality microfinancing loans we facilitate.

Borrowers for our microfinancing loan products are acquired purely online. Microfinancing loan products accounted for approximately 22% of total loan volume during the first quarter of fiscal year 2020 and significantly contribute to the overall percentage of borrowers acquired online during this period.

We have spent several months doing analytical work to carefully customize and fine-tune our risk management system and algorithm based on big data generated by our legacy peer-to-peer products to ensure our system continue to be highly effective when advising borrowers for our microfinancing loan products. As we continue to put more efforts and resources into developing our loan assistance business, the proportion of borrower acquired online will continue increasing.

Analyst
Josh Vogel

That is helpful. Thank you. It's nice to see you diversify into the loan assistance business. Can you please discuss some advantages that you see in loan assistance compared to the P2P business?

Executive
Kerrie Rui Zhang

Thanks. This is good question. With uncertainty in regulatory environment and over the peer-to-peer industry, the market has remained challenging and short of funding from the individual investors. We took advantage of this period of uncertainty to begin strategically repositioning our business by developing loan assistance business. Regardless of what regulatory environment finally emerge for the peer-to-peer industry, this loan assistance business will operate alongside our peer-to-peer business and is expected to drive growth across our business going forward.

Loan assistance business has several advantages when compared to peer-to-peer business. Firstly, demand for good investment opportunities is still strong. There is a massive amount of funding available for investment in the market, but investment options were limited. Institutional funds have shown great interest in investing in loans facilitated by customer finance companies.

Second, we will continue to develop partnerships with other funding partners that are licensed financial institutions that operate in a highly regulated and a clear framework. Given the regulations governing licensed financial institutions are very clear. This will allow us to operate loan assistance business without regulatory uncertainty, and they ensure that sustainable development on our loan assistance business.

Furthermore, licensed financial institutions have strict process