Thank you for standing by. Welcome to the Yiren Digital Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypads. At this time, I'd like to turn the conference call over to Keyao He, Investor Relations Officer. Please go ahead.
Thank you, operator. Good morning and good evening, everyone. Today's call features the presentation by the Founder, Chairman, and CEO of CreditEase, our CEO, Ning Tang, and our CFO, Na Mei, our SVP, Mei Zhao. Our SVP, Xiao Shang, and Yiren Select CEO, Raymond Fang, our Head of Consumer Finance Business, Edward Wang will join the presenters in the Q&A session. Before beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the Safe Harbor provisions for Private Securities Litigation Reform Act of 1995. Such statements accepted risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any such statements. Such information regarding particular risks, uncertainties, or factors is included in our filings with U.S. Exchange and with the U.S. Securities and Exchange Commission.
We do not undertake any obligation to update any forward-looking statements as required under the relevant law. During the call, we will be referring to certain non-GAAP financial measures and supplemental 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 the U.S. GAAP. For information about those non-GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release. I will now pass it to Ning for opening remarks.
Thank you all for joining our conference call today. We are pleased to deliver an impressive quarter with robust growth in both revenue and profitability, making the full success of our business restructuring and product optimization despite the volatility of external environment amid the COVID resurgence. As the macro economy starts to recover post the COVID and the industry is heading to a more positive direction, we are looking to an accelerated growth of our business. First, an update on our holistic wealth business. As we previously projected, our insurance brokerage business continued its strong momentum in the fourth quarter 2022. Total premium reached more than RMB 1.3 billion, representing 34% increase quarter-over-quarter and over 50% growth year-on-year.
For the full year of 2022, our total premium increased by 61% to approximately CNY 4 billion, significantly outperforming the industry average of 4.6% annual growth rate. What's behind this rapid growth is our strategies in product innovation and customization, as well as operational upgrades. On product innovation, Hexiang has been strengthening cooperation with corporate partners and insurers and making great efforts to better serve individual and institutional clients through a growing number of diversified products. For example, in order to meet our clients' needs for better financial protection as well as higher investment return, we started to work with the only mutual life insurance company in China and launched the three tailor-made products for our high-net-worth clients months ago, which are rarely seen in the Chinese market with limited penetration. The products have been proven an immediate success right after our launch.
In the fourth quarter alone, those three products contributed more than RMB 200 million premium, the number is still growing. As for our customized exclusive whole life insurance product, that we mentioned last quarter, the premium saw a quarterly increase of 68% to close to RMB 100 million, reflecting its high popularity among our clients. Another example from our property insurance products. As China's outbound investment and construction businesses expand at a fast pace, the demand for relevant insurance protection is on the rise.
Leveraging our advantages in product development and the rich resources within our business ecosystem, Hexiang started to offer overseas construction insurance services in the third quarter last year, which has brought in approximately RMB 40 million premium with large ticket size policies as of the end of last year. Is expected to post continued solid growth in the year of 2023. As of December 31st, 2022, Hexiang Insurance Brokers had established approximately 40 offline branches nationwide and offered over 840 insurance products from more than 100 insurers. Some of our well-known partners include Taikang Life Insurance, AIA, Aviva-Cofco Life Insurance , et cetera, just to name a few. Moreover, on operational upgrade, we have been improving our service quality and building up our elite agent team since last year.
Currently, 10% of our agents in Hexiang are members of MDRT, an independent association of the world's leading insurance, life insurance and financial services professionals. The proportion is much higher than the industry average of 0.2% in China. In October and November last year, the financial regulators issued new rules on life insurance industry, including the regulated cap on commission fee rate and investment returns. The actual impact on our business is manageable, and we have already optimized our product offerings and selections in response to the regulatory directions to ensure 100% compliance. Due to the product mix adjustment, our revenue generated from insurance business in the fourth quarter showed a slower growth compared to the quick ramp up of our premiums.
We believe that the new regulation benefits us in the market competition given Hexiang's rich and diversified product lines that cover both life and property insurance and both 2V and 2C businesses. Now, moving on to our super app wealth platform, Yiren Select. In order to better serve our mass affluent clients in a comprehensive manner, Yiren Select has put more effort to provide customized products and services in the areas of healthcare and beauty, education and study, lifestyle and luxury, which enhance our client engagement and help drive up our new client acquisition efficiencies. In the year 2022, the number of our clients who made a transaction on Yiren Select or through our institutional partners, saw an increase of 88% year-on-year.
Looking into our holistic wealth business, total client assets reached more than RMB 23 billion as of December 31st, 2022, representing an increase of 21% compared to the end of 2021. Going forward, we expect to continue our high quality growth with competitive profitability as we continue to optimize our products and operations, focusing more efforts on our core business with higher values and seizing new market opportunities. Meanwhile, as the synergies within Yiren Digital's different business lines keep growing, operational efficiencies are expected to further improve. With the micro economy recovering and the domestic consumption rebounding, we expect a healthier business expansion in the year 2023. Now, I will pass it to Mei, who will go through the highlights of our Credit-Tech business for the fourth quarter.
Thanks, Ning, and hello, everyone. Now I will give you an update on our Credit-Tech business. In the fourth quarter of 2022, our total loan volume reached CNY 6.8 billion, representing an 8% increase quarter-over-quarter despite the COVID surge and the inflection peak, post of the reopening in November and December. The momentum is mainly driven by our consumer loan business, i.e., our small revolving loan product, Yi Xiang Hua. In this quarter, our small revolving loan took close to 80% of our total loan volume, compared to 65% in the same period of 2021, reflecting a vivid transition of our product mix upon the completion of the business restructure.
Loan facilitation of our small revolving loan products reached CNY 5.3 billion this quarter, showing a 15% quarter increase and 32% annual growth. As our domestic consumer consumption starts to recover, we expect the momentum to continue in the coming quarters. One highlight I would like to mention regarding this record of growth in our strategy to optimize customer acquisition and traffic operation. Instead of relying on our traffic platform partners, we have been extending our own traffic channels and consistently accumulate our traffic tools. In our fourth quarter of 2022, nearly 90% of the new customer traffic came from our own channels, either via our social media platforms, application markets or our online campaigns. Meanwhile, we have also set up a membership system with exclusive and diversified benefits to increase our customer thickness and engagement.
Through our continued efforts, the number our borrowers served in the fourth quarter enjoyed an increase of the 39% year-on-year, and MAU reached 2 million on our Yi Xiang Hua platform. Consequently, our acquisition costs per user see a visible declining trend, translating into a healthier UE. As for our SME loan business, we're tightening our risk control policy and proactively constrained in the growth of the maintain the overall product mix and assets quality with the proper level and current macro situation. Meanwhile, we also note that a sizable proportion of our existing clients on Yi Xiang Hua platform as more or meaning business owners with high quality credit records. Therefore, we start to offer those customers with a fast track online loan facilitation services to Yi Xiang Hua since December last year, which further help to cut down our acquisition cost.
We will adjust our product mix dramatically in accordance to recover piece of the business activities. On the funding front, as the number of our funding partners continue to grow and the liquidity in the market improves, we expected further decline in our funding cost in the year of 2023. Last but not least, on the assets quality, due to the COVID situation, our delinquency rates show the slight volatility in the fourth quarter with the MTB 30+ delinquency rates reaching 0.67% before recovered to a historical low level in February in 2023. Early indicator have shown our quality continued to improve as our collection ratio increased and the borrower's capability of the repayments recovers. With that, I will now pass it on Na, who will go through the financials for this quarter.
Thanks, Mei, and hello, everyone. For the fourth quarter of 2022, we're able to deliver a strong quarter with both top and the bottom line, realizing a two-digit growth ending the year strong. Now, I will focus on key financial highlights, and please refer to our earnings release and IR deck for detail further. In the fourth quarter of 2022, total revenue reached RMB 1.1 billion, representing a 29% increase quarter-over-quarter and a 7% year-over-year due to our rapid growth in scale. Revenue from holistic wealth management increased by 9% quarter to RMB 320 million, accounting for about 29% of our total revenue, presenting a balance and a stable revenue structure.
On the credit side, total loan facilities this quarter was CNY 6.8 billion, showing a 10% annual growth, driven by our growing borrower base and the strong demand our small and revolving loan are products as Mei just touched on. Revenue from Credit-Tech source stood at CNY 639 million this quarter, increased by about 30% quarter-over-quarter and 4% year-over-year. To realize our mission of financial inclusion and in line with regulatory directives, currently, our average borrower rate capped around 24%. Given the current momentum of our Credit-Tech business, we project a further two digital growth in loan facilitators in the year of 2023. On expense side, we are pleased to see a concrete decline trend quarter by quarter as we finish business transition and continue to optimize our cost structure.
Our total operating expense was RMB 456 million this quarter, decreased by 34% compared with the fourth quarter last year. Sales and marketing expense decreased by 56% to RMB 103 million from the same period last year due to our optimization of our offline business and the improvement of our position efficiency. Under net service and other operating costs decreased by 2% year-over-year to RMB 212 million, which largely remains stable. G&A expense decreased by 29% year-over-year to RMB 85 million as we continue in our entire digital operation, which led to the cost savings for our supporting departments. Despite the rate of loan volume, allowance for our contract assets receivable and others slightly increased by only 7% year-over-year to RMB 59 million due to our optimization of our product mix.
Going on to our bottom line, we deliver a strong profit of RMB 485 million this quarter, increased by a significant 49.7% year-over-year and 18% quarter-over-quarter. In the full year of 2022, total net profit reached RMB 1.2 billion, making an increase of 15% compared to the prior year despite the impact from the close of offline business line that leads the decline in full year revenue. Net profit margin climbed to 35% in 2022 from 23% in 2021. A wide reflection of our full efforts optimize our unit income where business transition under control. Turning to our balance sheet, we maintain a substantial balance sheet with RMB 6 million in total shareholders equity as of December 31st, 2022. Increased by 25% compared to as of December 31st, 2021.
Meanwhile, our cash position grew stronger with useful cash, with RMB 5.2 billion, an 11% increase compared to the end of last quarter, gives a solid foundation for us to expand our business as well as the new opportunity in our future. Looking forward, based on our assessment of our business and the market condition, we've passed our 2023 full year revenue to stand between RMB 3.6 billion-RMB 4 billion, with net profit margin expected to remain stable. This is the company's current and preliminary view, which is subject to change and uncertainty. With that, we conclude our close mark. Operator, we are now open for question. Thank you.
Ladies and gentlemen, at this time, we'll begin the question-and-answer session. If you wish to ask a question, please press star and one on your telephones and wait for your name to be announced. If you wish to cancel your request, you may press star and two. If you are on a speakerphone, we do ask you please pick up the handset to ask your questions. Our first question today comes from Matthew Larson from Fincadia. Please go ahead with your question.
Okay. Hey, good evening. Thanks for taking my call. Good quarter. As you've been doing, you know, very well over the last two years. Got a couple of questions. You've reiterated in previous conference calls, the intention to buy back up to $20 million worth of stock. I don't see a reduction in the outstanding share count. Have you bought back any stock yet based on your goal to do so?
Okay.
Would you like to share it back?
Okay. Okay. Yeah. Yeah. Okay, I will ask you a question about our sales purchase buy. Yes, as we mentioned in our last preliminary year calling, we'll perform our sales buy-back, and after the conference, we'll perform as a client. Until now, we have used about $400 million to perform our share purchase buy. We'll still continue to do this in this opening window. Hope my answer can answer your question. Thank you.
I'm not sure. Yeah, I'm missing something here. You did buy back shares since last quarter?
Yeah.
You did. All right. You said CNY 400 million or? That would be about $5 million or $6 million. I'm sorry. No.
Yeah.
I'm sorry. Can you how many shares did you buy back, I guess is a better question?
Okay. Totally, we will use about $400 million-$500 million to do our share purchase buyback. For the detailed number of the shares, we can collect numbers, and then our Lydia will or Qing Ya will send you later. Okay? We'll summary our total product share purchase.
Okay, I guess I'm misunderstanding you because, again, I'm looking at the share count, shares outstanding.
Sorry.
Uh, at-
I'm sorry. I, excuse me. Sorry. I'll correct my number. Our user count is not $400 million. It's $4 million. Yeah.
$4 million. Okay. You bought back, what?
Yeah. Sorry.
2 million shares or, you know, you bought back 4 million of the 20 million.
Yeah.
that you plan to. Okay.
Yeah.
All right. You did buy back a few. Okay. $4 million.
Yeah. Yeah.
Because your book value must be, book value has got to be above $9 now.
Yeah.
You have, a lot of, you know, a lot of cash. What sort of interest have you been earning on the cash? I haven't really looked over the quarter. You know, I just looked at the news release. With, you know, interest rates higher, most places around the world, that could be a very good source of income. What sort of return are you getting on that cash?
Yeah. Our have the strong the cash deposits and except we use our cash to perform our share feedback line. Now all of the banks is consider the risk and the liquidity purpose where the bank deposits and our interest is about 3%-4% annualized. Of course, as you mentioned, we have the strong cash position, and we also want to use our cash efficiently to set other any opportunity to improve the new business opportunity and to hope to get the higher cash deposits, the annual rate in term.
You're getting 3%-4%, which is very good on the amount that you have, $600 million+. It was a very good quarter. Congratulations. Your stock though remains, you know, extremely undervalued by any measure. You know, it's 1x cash flow from what I can see, and a little over 1x earnings. What plans do you have to, I guess, get a greater recognition by more people about your company so that you could generate greater investor interest in it? Have you thought about getting some research coverage or some public relations people who can put the word out about how well you're doing? If you could address that, I appreciate it.
Yeah, thank you for your suggestion. Yeah, we will try our best to attract more investors to recognize our contribution to our company and to recognize our market value. Thank you.
We'll talk.
Okay.
to the
Pardon?
analysts, to the investor community.
You are talking more with the investor community?
We'll try to do better. Obviously, not enough.
Yeah. Okay. I mean, I do remember, frankly, I remember when you went public through Morgan Stanley back in December of 2015. I bought on the IPO. Of course, your stock was quite a bit higher over the years, before some of the regulatory changes made peer-to-peer lending, you know, a business that was not recognized. You've been able to pivot quite well, so that your business is a lot more diversified, not just loans, but of course, the insurance and things like that, the wealth management. You're doing a very good job. It would be nice to see the stock reflect that. I think it should be worth several times where it is.
It would be worth your while to try and get some research coverage, or go to some conferences or what have you, to get greater awareness of it.
Thank you again for your trust, many years ago and today. With COVID over us, we'll do more travel. Yeah, indeed.
Okay. Thanks for your time.
Thank you.
Ladies and gentlemen, once again, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We do have an additional question. This comes from Ethan Yu from First Trust China. Please go ahead with your question.
Thanks for taking my question. Congratulations on your outstanding quarterly performance, especially with your strong margin. Thanks for the previous investor to answer one of my question is about your stock repurchase program. I have another kind of question that I'm interested in knowing how your overseas business development is progressing. Thank you.
It's about, our overseas, business development, right?
Yeah. Just your overseas business development.
Yes.
You mentioned-
Yes. Last quarter, we started to do business in Southeast Asia, to be specific, in the Philippines. It's in the early stage of, yeah, business operations. We do see it become a bigger and bigger portion of our Credit-Tech business revenue. Yeah. We will go from the Philippines to other countries, other markets in Southeast Asia and potentially other parts of the world, leveraging our Fintech capabilities established in home market. Yeah. It's still in early days, but we are very hopeful that, yeah, it will become a key part of our business. It's very strategic for us to do this, yeah, capability expansion, right.
We have a team in the Philippines, and we did our first loans, yeah, last quarter in the Philippines.
Great. Great, great. Thank you. I have no more question.
Ladies and gentlemen, in showing no additional questions, we'll conclude today's question and answer session, as well as today's conference call. We thank you for attending today's presentation. You may now disconnect your lines.
Thank you.
Thank you.