Hello, and welcome to the X Financial Fourth Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tanya Wen. Please go ahead.
Thank you. Thank you, operator. Hello, everyone, and thank you for joining us today. The company's results were released earlier today and are available on the company's IR website at ir.xiaoyinggroup.com. On our call today for X Financial are Mr. Kan Li, President, and Mr. Frank Fuya Zheng, Chief Financial Officer. Mr. Li will give a brief overview of the company's business operations and highlights, followed by Mr. Zheng, who will go through the financials. They are all available to answer your questions during the Q&A section. I remind you that this call may contain forward-looking statements on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such statements are based on the management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. Now, it is my pleasure to introduce Mr. Kan Li. Mr. Li, please go ahead.
Hello, everyone. We are very pleased to conclude 2021 with another solid quarter of financial results, delivering profitability for the full year. Both our top and bottom line for the fourth quarter significantly improved over the same period of 2020. Despite the challenging macroeconomy and the regulatory environment in 2021, we have successfully turned our business back on track and maintained a steady growth momentum compared with 2020. The total loan amount facilitated and provided in 2021 increased by 75% year-over-year to RMB 52 billion from RMB 30 billion. With a very focused product strategy and effective cost control initiatives, we turned profitable in 2021, and our bottom line outperformed the full year of 2019, the year before COVID-19 outbreak. During the fourth quarter, our total loan amount facilitated and provided reached RMB 13 billion, an increase of 51% year-over-year.
As mentioned in our previous guidance, we saw a moderate sequential decline in the loan volume in the fourth quarter, which was mainly attributed to the year-end outstanding loan balance requirements of our institutional funding partners. In the first quarter of 2022, the level of available funds has resumed its normal pattern. Since 2020, we have shifted our product focus to Xiaoying Card Loan, which contributed 100% to the total loan amount facilitated and provided in 2021. With this focus on the proven product strategy, we are confident in our ability to sustain steady growth in the loan facilitation business in 2022.
Regarding asset quality, the delinquency rate for all outstanding loans that are past due for 31-60 days as of December 31, 2021, was 1.48%, higher than the 0.96% as of September 30, 2021, and 0.79% as of December 31, 2020. This fluctuation is mainly attributed to the liquidity tightening in the fourth quarter of 2021. Since February 2022, we have seen our asset quality gradually improving as a result of ample liquidity in financial markets and our stricter risk management measures. In 2021, we officially commenced operation of our microcredit business in the third quarter after we received the regulatory approval for our microcredit license. During the fourth quarter, we're further increasing registered capital to RMB 1 billion in compliance with the regulations.
We are on track with our microcredit business and look forward to creating more value for our shareholders. In the fourth quarter of 2021, we invested RMB 315 million and become an indirect minority shareholders of Newup Bank of Liaoning, a PRC company and a non-state-owned bank. We are exploring opportunities to cooperate with the Newup Bank to better serve SMEs, and we are confident that based on our advantage in technology and risk management capabilities, the cooperation with Newup Bank would bring more possibilities to our business to jointly empower and support the development of the economy in China. Heading into 2022, we expect the regulatory uncertainties to subside with clearer guidance from authorities. The Chinese government has affirmed the value of the fintech industry to address people's inclusive financial needs and support the development of SMBs.
We remain cautiously optimistic about our business outlook while being prepared for any macro uncertainty that may emerge in 2022. In order to pass our confidence to the market and increase shareholders value, our board has been timely evaluating based on our current market environment, regulatory policy, and conditions of business operation, multiple ways of returning profits to our shareholders, including share repurchase as well as cash dividend distribution. Recently, our board approved a $15 million share repurchase plan, which reflects our confidence in the company fundamentals, strategy, and a sustainable growth. We are looking forward to an increase of shareholders value in the future. Now, I will turn the call to Frank, who will go through our financials.
Thank you, Kan, and hello, everyone. We are pleased to deliver solid financial results for both the first quarter and the full year of 2021. The total net revenue increased by 15% year-over-year to RMB 823 million in the first quarter. We saw a significant improvement in our bottom line with non-GAAP adjusted net income improved to RMB 183 million from a loss of RMB 631 million in the same period of 2020. For the full year 2021, total revenue increased by 65% to RMB 3,626 million. Thanks to our relentless efforts at the cost management and total operating costs and expenses decreased by 36% to RMB 2,315 million.
Non-GAAP adjusted net income improved to RMB 914 million in 2021 from a loss of RMB 1,228 million a year ago. In conclusion, we are greatly encouraged by the strong results we delivered in 2021, which fully demonstrate the resilience and the growth potential of our business. Going forward, we will continue to expand and deepen our cooperation with more institutional funding partners to meet the needs of consumers and SME, and execute our proven strategy to drive sustainable long-term growth and the returns for our partners and shareholders. Now, I would like to brief some financial performance for the first quarter. Please note that all numbers stated here are in RMB.
Total net revenue in the first quarter increased by 15% to RMB 823.4 million from RMB 716.3 million in the same period of 2020, primarily due to an increase in the total loan amount facilitated and provided of Xiaoying Card Loan this quarter compared with the same period of 2020. Origination and servicing expenses in the fourth quarter decreased by 29.9% to RMB 385.8 million from RMB 550.7 million in the same period of 2020, primarily due to decline in the collection expenses resulting from the asset quality improvement and a decrease in insurance fee paid to the insurance company.
Provision for the accounts receivable and the contract assets in the fourth quarter was RMB 19.5 million, compared with reversal of provision for accounts receivable and the contract assets of RMB 13.2 million in the same period of 2020, primarily due to an increase in accounts receivable from facilitation services as a result of increase in the total facilitation amount in the first quarter of 2021 compared with the same period of 2020. Provision for the loans receivable in the first quarter was RMB 40.3 million, compared with RMB 33.7 million in the same period of 2020, primarily due to an increase in loans receivable held by the company as a result of increase in total loan amounts facilitated and provided in the first quarter of 2021 compared with the same period of 2020.
Increase from operations in the fourth quarter was RMB 311.6 million, compared with the loss from operations of RMB 857.3 million in the same period of 2020. Net income attributable to X Financial shareholders in the first quarter was RMB 145.5 million, compared with the net loss attributable to X Financial shareholders of RMB 655.5 million in the same period of 2020. Non-GAAP adjusted net income attributable to X Financial shareholder in the first quarter was RMB 183 million, compared with the non-GAAP adjusted net loss attributable to X Financial shareholders of RMB 630.8 million in the same period of 2020. For further financial information, please refer to the earnings release on the company's IR website. Now for our business outlook.
We expect total loan facilitation amount for the first quarter of 2020 to be between RMB 15 billion and RMB 15.4 billion, and the range of incremental in total loan amount facilitated and provided for 2020 to be from 15% to 25%. This forecast reflects our current and preliminary views, which are subject to change. Now, this concludes our pre-prepared remarks, and we'd like to open the call to questions. Operator, please.
We will now begin the Q&A session. To ask a question, you may press one then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Mason Bourne of AWH Capital. Please go ahead.
All right. Thanks for taking questions. To start, I was hoping you could give more background on your investment in Newup Bank, why now, and your main goals.
Hi, Mason. This is Frank. Thanks for your question. The Newup Bank is one of seven banks owned privately. You know, it is not state-owned, so it's not state-owned bank. The purpose is only one purpose only, as we try to, you know, with this equity interest, we try to explore the opportunity, a new way to develop jointly to develop our SME business, which is greatly encouraged by the government at the current times.
Okay. Go ahead.
You will not see in terms of business value or otherwise, there's not much, and it's more like a long-term strategic investment for us. Thank you.
On the SME side, how do you think about potential profitability of that segment compared to your current business?
That side is kind of tough. You know, that market is quite different from us, but have some overlap with the current business, with our current the market we serve. We mainly serve right now, you know, consumer market for the individual, mainly up to, like, 80% or whatever. The overlap is about, you know, somewhere, anywhere between 10%-30%. But, you know, the bank is, they are, you know, especially for the small banks, they mainly lack of technology, you know, ability to develop their SME market.
They have their own market, but they are kind of reaching that market, you know, in a very traditional way. It's mainly by person, you know. By this cooperation, we try to leverage each other's advantage from us. We are mainly providing some maybe technical approach, you know, to their thing, and their Newup maybe provide some other, you know, market access to marketplace for us. But I'll be cautious. Any outcome at this stage is very preliminary, as we would not strongly advise anyone should not give any forecast or projection regarding, you know, the result about it.
Okay. Great. On your guidance, you provided total loan volume expectations. How do you think about profitability in 2022?
We are kind of, you know, not just us, our competitors all kind of cautious in general for the outlook for this year. We gave, like, a 15%-24% increase in terms of volume for this year, and did not give, you know, any earnings forecast at this time, mainly because even though from the regulatory side it's, you know, We believe it will be in a quite stable situation in 2022. You know, from the economic side is quite uncertain, especially in the current right now is zero tolerance on COVID-19.
Right now, you know, the biggest city in China, like Shanghai, is right now in a total lockdown. Not just Shanghai, you know, many cities in the COVID situation is prevalent, you know, is quite spread, you know, among the 27 provinces. Many cities are kind of in semi, you know, they're doing the testing, the COVID test every day, you know. Just otherwise just, you know. So there's a supply situation and some industries affect a lot like restaurant, travel, entertainment, you know, all greatly affected. People, a lot of people in those industries are kind of in furlough status. You know what I mean?
Those employees in those industry, I think is some kind of related to our you know our business, they are the people we serve, you know. We serve you know a subprime market, basically, you know. You know what I mean? We kind of all cautious, did not give. That's the main reason we did not give earning at this time. One thing we are pretty sure and we will be profitable substantially this year, but not maybe not as big as much as last year.
We are kind of reluctant to provide the exact figure at this time. Thank you.
I can appreciate that. Lastly, it's good to see, buyback put in place. Could you talk more about how you think about capital allocation going forward?
You know, just as we stated in the press release, we will do the buyback from time to time. But we are not trying to so-called correct the so-called very severe undervalued share price situation. That I think we are not in a position to correct that situation by us alone. It's an industry-wide situation. It's many, many other things. But we definitely will do when we think it's very much out of line in terms of share price.
We will still use our mainly and use our cash to explore the new business opportunity and acquire more customer and growth, you know, grow our business, basically. You wanna say something, Leonard? That's our intention.
Great. Thank you.
Thank you.
The next question comes from Matthew Larson with National Securities. Please go ahead.
Okay. Thanks for taking my call. You know, do you have an explanation why your company plus some of your, I'll call them competitors, whether it's 360 or even to a certain extent, YRD and FINV. You know, you're trading at 1x or 2x earnings, and yet your earnings are growing. You face the same headwinds that any lender has, you know, uncertainty about the economy, delinquencies, where your underwriting has to be strong, and regulatory issues. We've experienced those for years here with our lending companies, whether they're payday loan companies or peer-to-peer lenders. You know, there's a company called Upstart which trades at probably 50x your multiple.
It seems to have a very similar business model. I think the share buyback, you know, is very smart because your volume has dried up and you know, you really could make a difference by putting a floor in the stock and it's very, very accretive, of course, also to be buying your stock down here, and you could buy it even up quite a bit. Do you have any explanation why your industry groups trade at, you know, essentially some of them trade below cash on the balance sheet? I mean, is that just an anomaly because U.S. investors have lost interest or or is there something else out there?
Mr. Larson, thank you for your question. I believe this is your first time joining our call. I think that if we get like a cash value for our share, we'll be very happy actually, we are actually much lower than cash, okay? But, you know, the short answer for your question is because our industry right now difficult future, you know, for our industry, you know, because the regulatory environment that's, I will put it very bluntly.
Oh, sorry. I think what Frank trying to say is that in some of the investor sides that this industry has no future, right? I think it's very difficult to comment on why other people think that this industry should be valued like this. We as a management team, we certainly think our stock is undervalued. That is why we put in this repurchase plan, as you just mentioned. We think that at this moment it's just a natural move for us to buy back some of our shares. I think in the end, it's really the risk, right? Different people associated different industry as with different risk levels.
In our particular case, I think that one is this industry is still. I would say, even though with lots of governance, it's still not very clear how this industry will be going, how this industry is gonna develop going forward. Another one, of course, is the relationship between China and the U.S. is not. I wouldn't say it's not great, right? I think that when investors are thinking about Chinese companies, that they naturally will put some discount on it. I think that in the end, it's really nobody knows what the correct valuation is. You probably have a feeling of where it should be, and at this moment we certainly think that we are lower than where we should be.
Well, well, I'd like to just comment on that. I'm sorry. Go ahead.
Yes. I think there's two issues for this. With all the Chinese companies listing in the U.S. caught up in a trade war between China and the U.S., as you all know. There's a PCAOB issue. I'm sure you're all aware of that. That is a question whether all Chinese-listed companies or Chinese companies could continually be listed in the U.S. is in doubt right now. We hope that will be solved sometime one way or another. But for our particular industry, I think another answer is very simple.
The visibility is almost zero because the other regular environment and the regular uncertainties for our industry. I also believe you are all aware, you know, for our industry. I think that's the answer for your question.
As a long-term investor, obviously I'm interested in growing my investment. Your company's done very well. It's had a couple of runs at considerably higher prices and, you know, hopefully that'll occur again. I guess I would say that the share buyback is a very good thing to do because it's a large enough buyback, you know, 7% or 8% of your market cap, and I don't know what percentage of the float, but I just would be very, for me, you know, just looking at, you know, how accretive it is and you have enough spare cash on the balance sheet to do such a thing.
I mean, you could really put a bid in this stock and we could get not only this company and others to really, you know, see some upward trajectory after being kind of just forgotten. You know, they just, they've been orphaned almost because investors kind of ignore stocks once they get down to the share price that your stock has been at $2 or maybe $3 if we're lucky.
I just hope you continue to see ways to not only continue to show good operating earnings, and, you know, do well within your industry, but find a way to elevate your stock because you could easily trade it twice where it is now, which would give it still a small earnings multiple and a big discount to book. You would bring in more investors if the stock were to get above, say $5, which is a minimum for many investors. That would be a goal to do it one way or another besides just the obvious, which is to continue to operate your business in a very profitable manner.
I look forward to you guys being aggressive with share buybacks, particularly at the price where it is now, where it's extremely attractive and accretive. I mean, you're trading at less than 2x earnings, trailing earnings, you know, which is. You would never find that in the United States. Thank you for listening to me and, congratulations for the quarter and I like the guidance going forward.
Oh, thank you, Mr. Larson, and thank you for your question. That's exactly you know, regarding to the share buyback, that's exactly what we try to do. We try to basically set the floor for the share price. But as you know, the floor is not that big. I'm afraid we probably there's no ability to you know buy a lot of shares unless we get the price very big way.
You know, that's also not something we want to do because, you know, we are in that industry, everybody is trading below the 5 times PE, something like that. You know, we are kind of very low, but we can improve a little bit, but we are definitely not deserve like a 10 times earning, a PE earning trade at 10 times PE earning. You know, that's kind of the same. We basically do something as you expect. Thank you for your question again.
All right. Thank you.
Okay. This concludes our Q&A session. I would like to turn the conference back over to Tanya Wen for any closing remarks.
Thank you for joining us on the call today. If you haven't got a chance to raise your questions, we will be pleased to answer them through the follow-up contact. We look forward to speaking with you again in the near future. Thank you.
The conference has now concluded. Thank you for attending today.