Victoria Yu; Investor Relations Manager; X Financial
Kan Li; President, Director; X Financial
Fuya Zheng; Chief Financial Officer; X Financial
Noah Kauffman
Ramzi Manner; Analyst; Blackbird Capital
Mason Bourne; Analyst; AWH Capital
Operator
Hello, and welcome to the X Financial fourth quarter 2024 earnings conference call. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Victoria Yu. Please go ahead.
Victoria Yu
Thank you, operator. Hello, everyone, and thank you for joining today's call. The company's financial results were released earlier today and are available on our Investor Relations website at ir.xiaoyinggroup.com.
On the call today from X Financial are Mr. Kan Li, President; and Mr. Frank Fuya Zheng, Chief Financial Officer. Additionally, we are delighted to welcome Mr. Noah Kauffman to our company. He brings 20 years of experience in group strategy, corporate and financial transactions as well as financial and operational improvements in the global financial markets.
Before joining X Financial, he served as Head of strategic, financial planning and analysis at the Intercontinental Exchange where he played a key role in capital allocation and global business strategies. Mr. Kaufman will be responsible for leading our engagement with the US capital markets, including Investor Relations and strategic financing initiatives.
Mr. Li will provide a brief overview of our operations and business highlights, followed by Mr. Zheng, who reviews our financial results. Afterwards, Mr. Li, Mr. Zheng and Mr. Kaufman will be available to answer your questions during the Q&A session.
I remind you that this call may contain forward-looking statements under the provisions of Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and involve known and unknown risks, uncertainties and other factors.
These factors are difficult to predict and many are beyond the company's control, which may cause actual results, performance or achievements to differ materially from those described in these statements. Further information on these and other risks can be found in our SEC filings.
The company undertakes no obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required by law. It's now my to introduce Mr. Kan Li.
Kan Li
Thank you, Victoria, and hello, everyone. We are very pleased to conclude the year with outstanding operational and financial results in the fourth quarter. Total loan volumes exceeded our guidance with RMB32 billion facilitated in Q4 alone, a 24% year-over-year increase for the quarter.
For the full year, total loan volumes reached RMB104.9 billion, reflecting a stable performance compared to 2023. This growth was fueled by disciplined underwriting, strengthened asset quality, positive macroeconomic tailwinds that supported borrower demand and lower funding costs.
In the second half of 2024, China's government implemented monitoring and physical stimulus measures aimed at stabilizing core economic sectors, notably real estate and enhancing market liquidity. These policies lower the funding costs and foster healthy borrower demand in the personal finance market.
As a result, we saw meaningful revenue and profitability growth with Q4 net income more than doubling year over year, strong asset quality performance. Asset quality continues to strengthen significantly throughout the year as the end of Q4, the delinquency rate for known overdue by 31 to 60 days improved to 1.17% from 1.57% a year ago. The 91 to 108 days overdue delinquency rate declined to 2.48% from 3.12% last year.
This improvement reflects effective risk management practices and the disciplined underwriting standards. 2025 outlook and growth strategy. Looking ahead into 2025, the Chinese government iterated the importance of the private sector as a key driver of economic innovation and sustainable growth.
Recent regulatory guidance from the National Financial Regulatory Administration, NFRA further reinforces this stand with policies aimed at expanding access to consumer credit lowering borrowing costs and supporting consumption-driven economic base.
While these developments create a more accommodative environment for financial institutions, our primary focus remains on leveraging technology to enhance financial services efficiency through AI-powered risk analytics, automated underwriting models and embedded fintech solutions.
We continue to empower our financial institutional partners in optimizing loan origination, credit risk management and borrower engagement, ensuring they can navigate this evolving regulatory landscape with precision and agility.
Accordingly, we expect total loan volumes to increase by approximately 30% for the full year of 2025, supported by both organic demand and a more stable regulatory environment despite the usual seasonal impact of the Chinese New Year, we anticipate sequential growth in total loan volumes in Q1 2025 as digital financial solutions become increasingly integral to expanding responsible credit access while maintaining disciplined risk management.
Strategic AI investments. At X Financial, we continue to expand our strategic investments in AI, leveraging cutting-edge models such as DeepSeek Alibaba's and across our operations. AI now powers advanced customer service robots, intelligent agent assistance targeted marketing campaigns, including AI generated show videos for platforms like TikTok, streamline early-stage collection efforts, significantly enhanced efficiency and customer engagement.
In software development, we have implemented AI-driven auto coding tools such as Cursor accelerating development and system optimization. Additionally, our multi-model AI risk management system delivers over 95% accuracy through sophisticated contextual analysis and advanced image recognition technologies to identify early indicators of credit risk.
Looking ahead, we remain committed to further integral AI into our strategic decision-making process, particularly in risk modeling and credit policy to continue enhancing operational effectiveness and customer experience. With that, I will now pass the call to our CFO, Frank Zheng for detailed financial results.
Fuya Zheng
Thank you, Kan. Good morning, everyone. We are pleased to report strong financial results for the fourth quarter. The total net revenue increased 43% year over year to RMB1.7 billion. The net income grew 104% year over year to RMB386 million.
Throughout the year, our top and bottom lines expanded quarter over quarter brings full year total net revenue to a record RMB5.9 billion, full year net income to RMB1.5 billion.
Strong balance sheet and capital returns. Our balance sheet remains strong with total shareholder equity at year end increased by 19% year over year. Leveraging this solid financial foundation, we returned approximately USD76 million to shareholders in 2024, including USD6.5 million in cash dividends, USD9.2 million in our tender offer and USD50.3 million invested in share repurchase.
Dividend announcement. Additionally, our Board of Directors has approved declaration attainment of a semiannual dividend of USD0.25 per ADS, reinforce our commitment to delivering shareholder value.
Share repurchase program. In Q4, we repurchased 38.4 million Class A ordinary share. 6.4 million ADS, USD49 million for full year 2024, total repurchase reached 52.2 million shares with 50.5 million in ADS, amounting to USD59.4 million. As of today, our 30 million and USD20 million repurchase plans are fully utilized.
We have USD15.9 million remaining and our USD50 million repurchase program effective through June 30, 2026. 2025 outlook. Looking ahead, we remain optimistic about our growth credit -- for the first quarter of 2025, we expect the total loan amount facilitated and originally to be between RMB33.5 billion and RMB34.5 billion.
This position us to achieve a full year total loan amount facility and original between RMB134.4 billion and RMB138.4 billion.
Closing remarks. As we progress to 2025, we remain confident in our strategic direction supported by robust underwriting standards, disciplined risk management. Operational efficiency improvements with a strong financial foundation, disciplined capital allocation and a creation commitment to enhancing shareholder value we are well positioned sustainable and profitable growth.
Thank you for our shareholders, partners and especially our dedicated employees at X Financial. We are appreciating your trust and support as we execute on our strategy and driving long-term value creation. We look forward to delivering continued growth and the success in the quarters ahead.
Victoria Yu
Okay, operator, we can transfer to the Q&A session now.
Operator
(Operator Instructions) [Ramzi Manner], Blackbird Capital.
Ramzi Manner
Congratulations, guys, on a great quarter and happy to be a shareholder. My question is during the fourth quarter, the company repurchased approximately 6.4 million million ADSs on December 16. However, the share count on the financial report as of December 31, does not fully reflect the reduction. So I'm not sure if this is an accounting discrepancy. And if you could clarify that, that would just be better for me.
Fuya Zheng
I'd be happy to answer your question. And since we bought our share back in the last quarter of 2024, but the share count calculation is the same weight average. So say you own that share in '24 among 300 days out of this 365 days. So that share count of still will be account for 300 days. So that share count of capital ratio is we average.
That is why you seem to not see the big reduction in the year end because it's is way on average. So in '25, you will see that those shares totally disappeared from the share count. I hope I answer your question
Operator
Mason Bourne, AWH Capital.
Mason Bourne
I guess just to start, it sounds like you have someone new who joined the company is on the call. Could you just talk about that a little bit, please, in his role.
Kan Li
Well, why don't we ask Noah to tell you himself.
Fuya Zheng
Yes. Noah, could you answer that question by yourself?
Noah Kauffman
Yes, sure. Yes. And thanks, Mason, for the question. Yes, I'm excited to be here and join X Financial. I'd also like to thank Victoria for the introduction and express appreciation that Kan and Frank for their entire leadership.
From my early conversations deeply impressed with the strategic vision of the team and the foundation they built. X Financial sustained profitability and growth speak for themselves and I look for we're deploying a role and strengthening that.
My focus is going to be on deepening our engagement with US capital markets. I'm sure Mason will be speaking to you in the near future and enhancing investor relations, driving strategic financial initiatives, and I'll be working closely with the leadership team to optimize the financial strategy and capital allocation and ensuring the continued delivering of long-term value for shareholders.
Mason Bourne
Great. Well, welcome to the company. I had a couple more. Just to start, it sounds like pretty strong loan volume growth is expected for 2025. Could you just talk about drivers behind that and how you expect that to impact profitability this year?
Kan Li
Sure. I'll take that question. The reason that we forecast a 30% increase in terms of the loan volume really is coming from the two strengths that we are creating in the past year. The first one is the way that we are able to reach better and more consumers, customers by ourselves.
This obviously has always been the key focus of our acquisition strategy. The second part is that during the -- also in 2021 actually continue into 2025 that we are able to partner with more partners, more platforms that based on our track record, they are more willing to cooperate with us. So basically, open a new acquisition channel for the company. That's why I combined with the two strengths that we foresee a fairly good increase in our loan volume.
Fuya Zheng
Mason, did I answer your other question. If we're making some products you repeat that, I will -- I will answer for you.
Mason Bourne
Yes, just the last part of it, I was asking, you expect the loan volume growth to translate to profitability this year. If there's any more items to think about?
Kan Li
Yes, I will mention that even though that we don't give the forecast of the profitability, but as the -- for our company as a whole, that we always focus. I think our number one focus has always been the profit. So not guarantee anything, but we think that our profit will be increasing at the same pace as our volume.
Fuya Zheng
Mason, if you're looking 2024, and I would basically have almost the same volume as '24 and '23, just also a little bit down a few or something like that. And -- but we are, leases almost RMB300 million on net income.
And the reason is mainly just by two factors. One is, if you remember back in 2004 and the beginning of 2004, it's our sector on the industry is at the highest level. We are managing from a risk level on a quarterly-by-quarterly basis, already to manage to lower that credit risk. That's why we have more profitable than originally much sold.
Another big factor is funding cost. Its funding cost is down on a yearly basis in '24, it's down more than 2%. And looking to 2025, and the trend is more or less the same, the funding costs we're not going to lower, but more and less remain in the low level as currently right now and risk effect profile also more or less remain the same.
But also visibility maybe short, maybe one quarter or two quarter, we cannot guarantee the full year, but that's basically as the situation right now. So as as the situation based on the current situation, we are very comfortable in which a very meaningful growth both in volume and profitability in 2025.
Mason Bourne
That's very helpful. Last thing for me. Really appreciate the capital return to shareholders, both through dividends and buybacks. You're still fairly low on the dividend even after the raise as a portion of net income, but I know you're returning a lot through buyback activity.
Just wondered how you think about capital allocation priorities going forward, whether you continue to expect more on the buyback? Or if you would maybe lean into the dividend more, that's all.
Kan Li
Yes. Mason, I thought you would ask that question. I am ready for you. You see -- when we iterated the dividend like 0.70 annual yearly and 0.34 a year. At that time, our stock has been in mild around about $3, $4 range for several years.
And so -- and we pay like 0.34 for less than $4 stock price. Basically, we try to tell all the investment and potential investors if you buy our stock, we pay you more than you can get some short-term US treasuries.
And we definitely don't know when that stock price will appreciate. But in case of stock pricing, you will have a double game and double suite, something like that. So -- but since last end of September because Chinese government policy change and the stock price basically from around $5 to up to $8.
Then after there's then the major event excited by DeepSeek and the whole Chinese assets, especially technology or revalue at the time, it's just like suddenly for no particular reason, besides the DeepSeek, all the concerns remain issue, which tapped our Chinese stock and very -- the big low level all being blow away.
So I don't know. So -- but that's what happened. So now based on this situation change, we want to give the stock since last September, our stock is up almost more than 2%. We want to give them extra kick.
So which means we want to put the more stock buyback, less -- a little less on from dividend payout. And you see in 2024, we -- in combination of both 76, and we hope we can accomplish even more percentage. 34% is about over 30% payout for in terms of earning earnings for 2024. And '25, we hope we have a big payout combination of both, but more weight on share buybacks.
And I think even though our stock has been appreciated 200%, our stock still is very, very cheap. I just give you one number, and you see '24, our earnings per share in US dollar is $4.83 and our stock is based right now of $13, something like that. And the trend I challenge anyone who have around $4, $5 range earnings per share, you find that much -- not going to find much stock in the US for all sectors below like 100.
So we believe our stock still very -- have a long way to go. So we will have more emphasize on share payback I hope I answered the question.
Operator
(Operator Instructions) This concludes our question-and-answer session. I would like to turn the conference back over to Victoria Yu for any closing remarks.
Victoria Yu
Thank you, everyone, for joining us today. If you have additional questions, please reach out to our Investor Relations team directly. We appreciate your interest and look forward to speaking with you again. Operator, back to you.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
