20-F: Qifu Technology Files 20-F Annual Report for Fiscal Year 2024

Qifu Technology, Inc. has filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, detailing its financial performance and operational activities.

Summary

• Qifu Technology, Inc., a Cayman Islands holding company, has filed its Form 20-F annual report for the fiscal year ended December 31, 2024.
• The company conducts its operations in China through PRC subsidiaries and VIEs.
• Revenues contributed by the VIEs accounted for 92%, 94% and 95% of the company's total net revenue for the years of 2022, 2023 and 2024, respectively.
• As of December 31, 2024, there were 283,981,320 class A ordinary shares issued and outstanding.
• The company intends to declare and distribute a recurring cash dividend on a semi-annual basis, starting from the first half of 2023, at an amount equivalent to approximately 20% to 30% of its net income after tax for the previous six-month period.
• In 2024, the WFOE made dividend payments of RMB8,476.0 million (US$1,161.2 million) to the company's Hong Kong subsidiaries and paid related withholding income tax (net of tax refund) of RMB405.6 million (US$55.6 million).
• In 2024, the Hong Kong subsidiaries made dividend payments of RMB7,954.3 million (US$1,089.7 million) to the holding company, Qifu Technology, Inc.
• The 90 day+ delinquency rate for all loans facilitated through the platform was 2.09% as of December 31, 2024.
• The company cumulatively issued ABSs and ABNs of RMB46.2 billion (US$6.3 billion) as of December 31, 2024.
• The company's shelf registration of ABSs and ABNs with a total value of issuance amounting to RMB19.1 billion has been approved by the Shanghai Stock Exchange and Shenzhen Stock Exchange and National Association of Financial Market Institutional Investors, as applicable, as of December 31, 2024.

Sentiment

Score: 7

Explanation: The document presents a balanced view of the company's performance, highlighting both positive financial results and potential risks. The sentiment is cautiously optimistic.

Positives

• The company maintains a semi-annual cash dividend policy.
• The company has a diversified funding base, including financial institutions and alternative funding initiatives like ABSs and ABNs.
• The company is focused on optimizing risk performance and enhancing profitability.
• The company is expanding its user base and building a comprehensive Credit-Tech service platform.
• The company is actively managing and adjusting its credit standards to address macroeconomic headwinds.

Negatives

• The company operates through VIEs, which involves regulatory and enforcement risks under PRC law.
• The company faces uncertainties in the interpretation and enforcement of PRC laws and regulations.
• The company's ADSs may be prohibited from trading in the United States under the HFCAA if the PCAOB cannot inspect the company's auditors.
• The company is subject to significant oversight and discretion by the PRC government.
• The company's loan facilitation volume decreased from 2023 to 2024.

Risks

• The Credit-Tech industry is rapidly evolving, making it difficult to assess future prospects.
• The company has a limited operating history and is subject to credit cycles.
• The company is subject to uncertainties surrounding regulations and administrative measures of the loan facilitation, micro-lending, financing guarantee, and credit reporting businesses.
• Fraudulent activity on the platform could negatively impact operating results and reputation.
• The company relies on its proprietary credit profiling model, which may be flawed or ineffective.
• The company is subject to complex and evolving PRC laws and regulations regarding data privacy and cybersecurity.
• Changes in international trade policies and rising political tensions, particularly between the U.S. and China, may adversely impact the business.

Future Outlook

The company plans to continue its efforts to capture long-term growth opportunities, focusing on retaining current borrowers, attracting new borrowers, and developing and refining loan products.

Industry Context

The Credit-Tech industry in China is highly competitive and evolving, with increasing competition from traditional financial institutions and other Credit-Tech platforms.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• However, it mentions competition from other Credit-Tech platforms, including those backed by large internet companies.
• It also notes that traditional financial institutions may invest in technology and enter the consumer Credit-Tech market.
• The document does not provide specific details about the performance of competitors or industry benchmarks.

Legal Proceedings

• The company and certain of its current and former directors or officers were named as defendants in a putative shareholder class action filed in federal court, captioned In re 360 DigiTech, Inc. Securities Litigation, No. 1:21-cv-06013 (U.S. District Court for the Southern District of New York, amended complaint filed on January 14, 2022).
• The court granted the company's motion to dismiss the Amended Complaint without prejudice, and Plaintiffs deadline to appeal the judgment has lapsed.

Related Party Transactions

• The company has established a strategic partnership with 360 Group, one of its affiliates, and collaborates across multiple areas of its business.
• The company has entered into a framework collaboration agreement with 360 Group, setting out the terms of collaboration, especially those related to cloud service and security, user traffic support, and trademark licensing.

Stakeholder Impact

• The company's performance and regulatory compliance directly impact shareholders.
• The company's ability to provide affordable credit solutions affects customers and SMEs.
• The company's relationships with financial institution partners are crucial for funding and business growth.
• The company's data privacy and security measures affect users and their trust in the platform.

Next Steps

• The company will closely monitor regulatory requirements and take applicable measures to ensure compliance.
• The company will continue to invest in technology infrastructure and research and development to enhance its technology capabilities.
• The company will continue to explore alternative funding initiatives, including through standardized capital instruments such as the issuance of ABSs and ABNs.

Key Dates

Keywords

Qifu Technology, 20-F Filing, Annual Report, Financial Results, Credit-Tech, China, VIE, ADS, Delinquency Rate, ABS, ABN, Dividends, Share Repurchase