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

Sep 18, 2019 • 08:00 am ET

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

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Presentation
Executive
Xiaobo An

transition period for us. With an uncertain regulatory environment hanging over the P2P industry, the market has remained challenging. We took advantage of this period to begin strategically repositioning our business by developing a loan assistance business to drive future growth, while at the same time maintaining our P2P business.

[Foreign Speech]

With market demand, growing from institutions, we saw an opportunity to expand our relationships with them, to grow our loan assistance business, leveraging our extensive experience in borrower acquisition and strong risk management and operational capabilities. This loan assistance business will operate alongside our property and is expected to drive future growth across our business going forward.

[Foreign Speech]

To grow our loan assistance business and diversify our funding sources, we're working with financial institutions and trust partners, such as Bohai International Trust, Kunming Aotou and Phoenix Intelligent Credit Group, a wholly-owned subsidiary of Phoenix Financial Group, to provide them with access to our high quality underlying assets and borrower base. Our partnership with each of them has already yielded solid results. Bohai International Trust has already extended around RMB40 million and Kunming Aotou RMB30 million to borrowers assessed and referred by us as of June 30, 2019.

Our partnership with Phoenix Finance has also progressed well following our strategic investments at the beginning of this year. We expect total loan volumes for borrower referred by us over the three-year partnership with Phoenix Finance to be about RMB10 billion. We will continue to develop partnerships with other financial institutions, which will greatly extend and diversify our funding sources.

We are very pleased so far with the initial results from this new business. Loan volumes funded by institutional partners during the quarter accounted for approximately 20% of total loans facilitated. We expect approximately 80% of loans facilitated by us to be funded by institutions in the calendar year 2020.

[Foreign Speech]

We have spent several months doing analytical work to carefully customize and fine-tune our risk management systems and algorithms based on Big Data generated by our legacy P2P products to ensure they will continue to be highly effective when assessing borrowers for our microlending loans. While this has strengthened confidence with our partners, the ramp-up period was not quick enough to offset the decline of our P2P business, which has been gradually recovering, but continues to be negatively impacted by a challenging industry environment. There were some bright spots, however, with revenue increasing slightly by 18.6% on a sequential basis.

[Foreign Speech]

Nevertheless, we are very confident about the future of our loan assistance business. We will continue to expand our institutional funding sources, including licensed financial institutions that operate in a highly regulatory and clear framework. They also have strict processes put in place to prevent defaults. Any default under our loan assistance business will be reflected on the personal credit report of the borrower. What's more, demands from our partner institutions is continuing to grow, which we believe reflects their trust in the high quality of