On Thursday, FinVolution Gr (NYSE:FINV) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
FINV reported a 5% sequential increase in group volume to 45 billion RMB, with revenue rising 6% to 3.4 billion RMB and net profit up 1% to 427 million RMB.
The company’s diversification strategy showed strong overseas performance, with operating profit up 17% sequentially, contributing 27% of group revenue.
In China, loan volume increased by 6.5% quarter over quarter, but the company faces headwinds due to a credit incident affecting risk and funding dynamics.
Regulatory and funding challenges in China are being managed by prioritizing quality over scale and maintaining strong compliance and operational practices.
Overseas operations saw a 19% year-over-year volume increase, driven by growth in Indonesia and Australia, while the Philippines experienced a deliberate pullback due to new rate caps.
The company reiterated its full-year revenue guidance of RMB 11.5 billion to RMB 12.9 billion, expecting to land in the lower part of the range due to tightening credit and funding conditions.
Management emphasized strong ESG practices, including fraud prevention upgrades and the launch of a consumer protection system, Golden Sentinel.
Full Transcript
OPERATOR
Hello ladies and gentlemen, thank you for participating in the second quarter 2026 earnings conference call for FINV. 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’ll now turn the call over to your host, Yam Cheng, Head of Capital Market for the company. Yam, please go ahead.
Yam Cheng, Head of Capital Markets
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. 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 Mr. Alexis Hsu, our Chief Financial Officer, will start the call with the prepared remarks and conclude with a Q and 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 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 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 it over to our CEO, Tim. Tim, please go ahead.
Tim Lee, CEO
Thanks, Yam, 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 that’s volatile. That strategy matters more than ever. It let 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 second quarter 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 pullback in the Philippines. That is our diversification strategy working as designed. Let me turn to the results. Given the result in China in the fourth quarter of last year, the sequential trend is a more telling measure.
Group volume rose 5% sequentially to 45 billion RMB, and the revenue moved in step, up 6% to 3.4 billion RMB. Net profit was 427 million RMB, up 1%. 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. Now let me dive into the two segments, starting with our Chinese mainland. At a high level, we booked 41 billion RMB in loan volume, up 6.5% quarter over quarter, a healthy continuation of the recovery that began at the beginning of 2026.
That said, the industry was rattled by an isolated credit incident which adversely impacted the risk and funding dynamics. I will walk you through in a bit. Right now we are watching three priorities closely: asset quality, funding, and regulations. First, asset quality. Coming into 2026 we expected a gradual recovery following the regulatory reset in the fourth quarter of last year. Two quarters in, that played out as we expected through the first half.
Risk continued to ease through the second quarter. C2 M2 came down again from 0.68% to 0.56%. So we grew the book selectively, focusing on the high-quality repeat borrowers. As we know well, the strategies 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. In July, an isolated credit event led institutional funding partners 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 the second quarter.
But beginning in July, we are seeing the industry as a whole tighten 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. Our balance sheet and liquidity give us room, and our asset quality and compliance record matter more when funding partners get selective. We’ve already begun allocating liquidity towards our China funding base and will prioritize funding stability over near-term growth until the environment normalizes.
On regulation, the new fee disclosure requirements took effect on August 1st, and we are compliant. The online marketing rules are to 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. Our overseas segment is performing well. Volume rose 19% year over year and the revenue reached 930 million RMB, 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. 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 balance 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 a 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 continues to lead the growth.
Our partnerships 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 transitions, and 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 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 grade on each borrower. Finally, ESG. In our business, trust is everything. In June we published our 8th 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, compliance and data dashboards to drive consumer protection governance from post-incident handling towards proactive warning, and this 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.
Yam Cheng, Head of Capital Markets
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. Now let me discuss each of the segments. First, China. Macro in China remains in a gradual recovery mode. China’s real GDP growth slowed from 5% in the first quarter to 4.3% in the second quarter on the back of subdued household consumer confidence. For Q2, revenue was RMB 2.4 billion, an 8% accretion rate, a direct result of recovery.
Loan volume during the quarter, take rate stabilized at about 3.2%, in line with the first quarter. On risk/asset quality, our new loans held steady at 2.7%. Early risk indicators show signs of improvement on outstanding loans. 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, C2 M2 improved to 0.56% from 0.68%, below the Q3 2025 level. While disappointed to a portfolio of improving credit quality, we are vigilant on the risk uptick following various industry events since July.
Separately, funding cost 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 cost holding at an attractive level, that brought our overall customer acquisition cost 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. One priority for our overseas segment is to balance profitability with growth. By its nature, this business recognizes customer acquisition cost and credit loss upfront, 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. We managed deliberately against that dynamic, ensuring we deliver profit even as we scale. The second quarter was a case in point: $15.4 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, up 29% sequentially. Offline Buy Now, Pay Later 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 continue to absorb the impact of the industry’s new interest rate cap. We proactively scaled back originations 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 app experience. Going into the next quarter, we continue to be mindful of the macro, such as oil price, may impose on currency as well as credit quality in market. 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 assets impairment of RMB 64 million.
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 is set at 2.1 times, the historical lows. That balance sheet strength gives 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 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. Based on information currently available, we set that revenue conservatively at the start of the year given industry volatility. Our first-half performance tracked ahead of our internal plan; that gives us cushion. 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. 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 go into the third quarter clear-eyed about the funding and the regulatory pressure ahead and committed to the same 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.
OPERATOR
Thank you. We will now begin the question-and-answer session. If you’d like to ask a question, please dial star-one-one 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.
Cindy Wang, Analyst at China Renaissance
Thanks for taking my call. I have two questions here. First, following the J2 platform incident, what business adjustment did the company make to ensure risk control? What is the current funding supply situation, and will the recent exit of small-size platforms lead to a resurgence of industry risk? And what are the recent changes in the company’s early risk indicators? Second, what is the current interest rate adjustment situation in the Philippines, and will they affect the growth rate of overseas new loan volume this year?
Thank you.
Yam Cheng, Head of Capital Markets
Thank you, Cindy. I will take your questions. I think you have two questions, and your first question is a very big multi-part question, so I will break it into different pieces. Okay, let’s start with what we are seeing on the funding side. After the J2 event, the credit and the liquidity issues at the individual platform did trigger some broader volatilities in the funding across the loan facilitation industry. So the first impact is the tightening risk appetite of the financial institutions.
The event raised concerns among the financial institutions about the safety and the compliance of the platform. Since July, a lot of institutions have launched internal self-checks and done some reviews for their partners. Some of them paused the business during that process, took a wait-and-see approach. So that led to a fairly 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 China volume was down around 50% in July, and looking at August, we believe institutional confidence has started to stabilize, but the funding recovery is still coming back at a slower pace. And what we have done to adjust our business for the challenge: first is transparency. We have worked very closely with our financial institution partners, given them visibility into our fund flows and the repayment pass, kept everything a very clear closed-loop, complex process.
We believe it will help to ease their concerns. And secondly, during this period we have prioritized quality over scale, further refined our customer segmentation, raised the underwriting bar, and prioritized the funding for our high risk-quality customers. And 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 are compliant, well capitalized, and have a strong risk track record.
That’s where we sit. I can share some figures. In the second quarter we had RMB 6.4 billion in cash and short-term investments. Cash flows stayed solid through July and August, and the latest number is a balance of RMB 7.5 billion. And on top of that we have got roughly RMB 5 billion in highly liquid assets. I mean those cash we can recover very quickly in the near term. So the aggregate number is RMB 12.5 billion in total. That gives real resilience and forms the foundation for our leading position in this industry and our long-term relationships with the funding partners.
We think 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 fixes. 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, tail-end SS keep exiting, and assuming there is no new extreme event.
In that case I would expect risk appetite and confidence to gradually come back with the self-checks wrapping up. And last I will talk about our early risk indicators. This round of funding tightening also overlapped with the regulator action in the collection industry at the end of July. So collection resources got tighter and recovery efficiency took a bit of a hit. 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 the second quarter. 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 tightening the acquisition spend. All our goal is protecting our unit economics. Okay, so that’s my answer for your first question, and your third question is about the Philippines.
Tim Lee, CEO
The Philippines rolled out a new interest rate cap effective from April 1st. So heading into that, we took a pretty deliberate, cautious approach in the first half. We actually slowed down originations on purpose to give ourselves room to adjust the business. Yes, 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 path of recovery typically takes about two or three quarters.
So we expect the Philippines business will return to growth in the third quarter, and after the adjustment, the new regulatory framework, 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. 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.
For example, on the risk side we have raised our underwriting bar and pulled back on the marginal segments where risk and returns were not linear, while growing the share of higher-quality borrowers, the ones with more stable repayment behavior and better repeat borrowing performance. And on the product side, we are continuing to diversify beyond online cash loan products. We have expanded into more scenario-based products like our BNPL product with the local SmartShop company and Carousell.
That lets us move beyond a single cash loan product into a broader range of consumption and payment use cases 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. Now, zooming out to the overseas business as a whole, the fee adjustment in the Philippines in the first half changed the overall growth trajectory for our overseas markets, and there is really thanks to our multi-market footprint.
The Q2 pullback in the Philippines was largely offset by the strong growth in our Indonesia and Australia markets. So heading to the second half, 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 sequential growth. So for the full year we are well confident to expect the overseas volume to grow at a double-digit rate year over year. Okay, thank you.
OPERATOR
Please hold for our next question. The next question now comes from the line of Alex Ye of UBS. Please go ahead.
Alex Ye, Analyst at UBS
First question is about funding cost. What have been the latest funding costs in recent months as compared to Q2, and what’s your expectation for the coming one to two quarters? 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, and related to that, how should we think about the pace of buyback in the coming one to two quarters?
Thank you.
Yam Cheng, Head of Capital Markets
Okay, thank you. Your first question is about funding. We are seeing funding costs tick up in the third quarter relative to the second quarter, up around 30 basis points in July, and we expect the gradually upward trend to continue over the next quarter or two, just given the broader funding environment in China right now. We believe short-term funding volatility is largely a matter of confidence. Over the long run, we don’t see the competitiveness of the quality asset strategy weakening.
If anything, it will only get stronger. Your second question is about capital deployment and buyback pace. Recently, the funding tightness from the industry event has made a lot of financial institutions more focused on compliance and capital strength. 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 credit enhancement in our funding partnerships to work with them to build institutional confidence and speed up the recovery.
We are also looking at and exploring the possibilities of capital injections into our licensed business, for example the micro-lending company, as a way to diversify our funding sources and improve stability. So that’s for our China business. On the other side, even in the short term there is some pressure in the China market, our long-term overseas buildout is already paying off. We are moving into a profit-related base. We have also noticed a lot of our peers accelerating their own overseas business lately, but for us that validates two things: that we were ahead of the curve on this, and the strategy itself was the right one.
So with a mature, scaled overseas business already in place, we have got a lot more patience and confidence to navigate the bumps in China. If anything, that’s made us even more committed to expanding investment overseas. For example, the Fondo acquisition in Australia in the first quarter last year also gave us valuable experience entering a new market through M&A. So going forward, replicating the playbook through capital allocation may be the smart move and can really help us to drive healthy and fast growth in the overseas business.
And last, on the buyback pace, as we have mentioned, we will prioritize steady operations in business first—the steady business in China and the fast-growth business in overseas markets. 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. We will remain committed to returning capital to maximize long-term shareholder value.
Okay. Operator, please continue.
OPERATOR
Thank you. One moment for our next question. Our next questions will come from the line of Yoyo Fan from CICC. Please go ahead.
Yoyo Fan, Analyst at CICC
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. So looking ahead to the second half of this year, what will be the key drivers of our overseas profit growth? Thank you.
Tim Lee, CEO
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. Back in 2018, where our China business was still enjoying strong growth, the group had already made global expansion a long-term strategic priority. Over the past years, we have steadily built up our overseas foundation—securing licenses, establishing local operations, and building out our funding ecosystem.
We proved the model from 0 to 1 in Indonesia and replicated the experience in the Philippines and other countries, and acquired Fondo and entered Australia, upgrading the whole approach into what we now call the strategy, legal plus. It is the years of deliberate groundwork and sustained investment that allowed our overseas business to become what it is today: a material second profit engine delivering steady and meaningful profit for the group. Looking ahead, we expect our three major overseas markets to work together in a fairly 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 second half year 2025 in the first half. So the second half tends to benefit from the traditional peak season, so we would expect some further improvement in growth. We are also continuing to build out offline BNPL products through our motor finance license.
The customer segment tends to be higher quality, longer tenor, and larger ticket size, which will help us to keep improving our overall customer mix and drive healthy unit economics. On the Philippines, in the first half 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 stabilizes, we would expect the Philippines volume to start recovering in the second half.
As the share of high-quality customers keeps rising, that will continue to bring risk down and support ongoing improvement in unit economics. For Australia, as the new star 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 second quarter, unique borrowers were up 22% quarter over quarter. It drove the volume to 70% sequential growth.
So we would expect Australia to keep going, quarter-over-quarter double-digit sequential growth in the second half. Given Australian customers tend to have larger ticket sizes and better risk performance overall, we think Australia’s contribution to overseas profit will keep increasing as the customer base grows and more of our acquisition shifts to our priority apps. So that’s for our three major overseas markets. In summary, our overseas business is no longer dependent on any single market.
Instead, we have three engines working together, and maybe in the near future there will be more countries added, broader product diversification, continued customer mix upgrade, and our legal 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 better regulate shifts in any single market and stay on track toward the long-term goal. You know we have an ambitious target.
By 2013, we expect the overseas revenue will reach more than 50% of the total group revenue. That’s all for my answer. Thank you.
OPERATOR
Questions now I’d like to turn the call back over to the company for closing.
Tim Lee, CEO
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 concludes the conference call. Thank you for your participation. You may now disconnect your lines. Thank you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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