Categories Earnings Call Transcripts, Finance

Jiayin Group Inc. (NASDAQ: JFIN) Q1 2020 Earnings Call Transcript

JFIN Earnings Call - Final Transcript

Jiayin Group Inc. (JFIN) Q1 2020 earnings call dated Jun. 11, 2020

Corporate Participants:

Julia Qian — Managing Director – The Blueshirt Group Asia

Dinggui Yan — Founder, Director and Chief Executive Officer

Chunlin Fan — Chief Financial Officer

Xu Yifang — Director and Chief Risk Officer

Analysts:

Craig Irwin — ROTH Capital Partners — Analyst

Sam Atari — Home — Analyst

Presentation:

Operator

Good day, ladies and gentlemen thank you for standing by and welcome to the Jiayin Group First Quarter of 2020 Earnings Conference Call. [Operator Instructions]

Now, I’ll turn the call over to Julia Qian, Managing Director of The Blueshirt Group Asia. Ms. Qian, Please proceed.

Julia Qian — Managing Director – The Blueshirt Group Asia

Hello, everyone. Thank you all for joining us on today’s conference call to discuss Jiayin Group’s financial results for the first quarter of 2020. We released the result early today. The press release is a variable on the Company’s website as well as on newswire services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Chunlin Fan, Chief Financial Officer and Ms. Xu Yifang, Chief Risk Officer.

Before we continue, please note that today’s discussion will contain forward-looking statements made under Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statement involves inherent risks and uncertainties. As such, the Company’s actual results may be materially different from expectations expressed today.

Further information regarding these and other risks and uncertainties is included in the Company’s public filings with the SEC. The Company does not assume any obligation to update any forward-looking statement, except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese RMB.

With that, let me now turn the call over to our CEO, Yan Dinggui. Mr. Yan will speak in Chinese and then our IR Director, Shelley Bai will translate his comments to English. Go ahead, Mr. Yan.

Dinggui Yan — Founder, Director and Chief Executive Officer

[Foreign Speech]

Hello, everyone. Thank you for joining our first quarter of 2020 earnings conference call. Despite unprecedented global COVID-19 pandemic and the rapidly evolving market conditions, we made a significant progress on many fronts.

[Foreign Speech] Most importantly we are close to completing the transition of funding sources to institutions. The proportion of loans funded by institutional investors increased to 44.5% in March. And right now, the number of institutions on the platform was 14, and funding nearly all new loans in Q2. This is a huge accomplishment that puts our business on a much more solid foundation. It is even more impressive, because we did it during the lockdown and the recovery period from the virus. I would like to thank our team for their dedicated efforts to make it happen. Right now, we are still in the process of attracting more financial institutions, as our new sources of funding on our platform. We initiated discussions with additional 22 financial institutions, in which over 70% of them are banks. We are pleased that we achieved some great progress with some of them and we look forward to their meaningful cooperation in the quarters ahead.

[Foreign Speech] Another achievement was keeping Q1 loan origination volume flat with the fourth quarter. This was also quite impressive in a period during which the country-wide lockdown impacted all aspects of daily life.

[Foreign Speech] Furthermore, our optimized business structure enabled us to sustain healthy profitability. Quarterly net income was RMB39.5 million, up 74.9% sequentially. This is a great performance in an environment, where many of our peers suffered losses. These accomplishments demonstrate the effectiveness of our prudent strategy as well as our enhanced risk management system and high asset quality.

[Foreign Speech] We realized this is an accomplishment by executing on our strategy and managing our business with a core set of principles. Since starting our business, we have invested heavily in talents, systems and technology. Our management team is professional and stable. Our risk management system is evolving through advanced analytics, behavior analysis and algorithm-driven credit assessment.

Our credit management has been excellent and our loan book is high quality. In fact, our credit loss adjustment under the new accounting policy is rather minor compared to our peers.

[Foreign Speech] Now, let me turn to developments on the regulatory front. We believe that the regulatory environment for our business is becoming much clear. On May 9, 2020, the Citi IRC published with the Consultation Paper and also administration of the online lending of commercial banks. This is an urgent need for regulators to specify rules, regulating the online lending business in order to promote the growth of the industry in a strong and the compliant manner. That paper clarifies the types of partnerships and loan facilitation service in which banks and online lending platforms can be involved. We believe this is positive and a supportive sign from the regulators.

During the pandemic, people recognized the fundamental importance of fintech services and online lending to the developing world. It has an unique ability to extend the financial inclusion, improve the daily lives of people as per our growth. With our platform now fully transitioned to institutional funding sources, we are well positioned to drive net growth. We are optimistic because Chinese consumer demand is recovering and the regulatory requirements are becoming clear.

[Foreign Speech] Now, we open the call over to our CFO, Chunlin to review the financials. Chunlin, please go ahead.

Chunlin Fan — Chief Financial Officer

Thank you, Mr. Yan and thank you everyone for joining us.

As Mr. Yan just mentioned, Jiayin delivered solid financial results in the quarter. In Q1, we continued to operate conservatively and efficiently. As we accelerated the transition from our individual investors to institutional investors, we still strive to reach a good balance between the two.

Our loan origination volume was RMB2.9 billion, flat with Q4 2019. Despite the virus outbreak and the resulting lockdown, we still attracted customers with the right credit profile. Now, China has resumed business operations and we see early signs of recovery. In April, nearly all of our loans were funded by institutions. With this accelerated institutional partnership, we expect to resume growth growing early in the third quarter.

Now, turning to the financial results for the first quarter. Please note that, unless specifically noted, all financial figures are in RMB. In the interest of time, I will not walk through each item by line on this call. Please refer to our earnings release for more details. I would just highlight some of the key points here.

Net revenue for the first quarter was RMB313.5 million, down 57.1% from the same period of 2019, due to decreased loan origination volume. As you may know, since the second quarter of 2019, we purposely decreased the outstanding loan balance, number of investors and the number of borrowers. This was to comply with the government’s so-called triple decline policy [Phonetic].

Meanwhile, we shifted our focus to higher quality repeat lenders and repeat borrowers, which reduced the marketing spending and the customer acquisition costs. In light of significant economic uncertainty during the pandemic, we remained vigilant on cost of control in order to sustain margins and improve our operational efficiency. Again, we remained focus on serving repeat lenders and the repeat borrowers with higher transaction amounts. We were also able to effectively reduce the sales and the marketing expense and the costs related to loan originations.

Total sales and marketing expenses fell to RMB93.4 million, down 45.5% year-over-year. At the same time, the average investment amount per individual investor was RMB91,318, an increase of 37.6% year-on-year. The average borrowing amount of RMB7,809, an increase of 8.1% year-on-year. This further demonstrated our strong brand recognition and the lenders’ and the borrowers’ strong confidence in our protocol.

G&A expense and R&D expenses fell to RMB38.3 million and RMB36.4 million, respectively. This was mainly due to lower share-based compensation expense allocated to G&A and R&D expenses. Due to stable loan originations, tight cost to control and the improved operational efficiency, we were able to sustain healthy profitability.

We posted a net income of RMB39.5 million, up 74.9% sequentially. As Mr. Yan just mentioned, this was a huge accomplishment, given the virus crisis and the temporary reduction in consumption.

Turning to the balance sheet. We ended the quarter with RMB66.8 million in cash and the cash equivalents compared with RMB122.1 million at the end of 2019. The cash reduction was mainly driven by our business transition and overseas strategic investments.

In addition, I would like to talk about our recent accounting policy change, the adoption of CECL. Effective on January 1, 2020, in compliance with FASB requirements, we adopted the new accounting standard ASC 326. This introduced the forward-looking expected loss approach or current expected credit loss to replace the previous incurred loss methodology, Before CECL, credit losses were recognized only when the losses were probable or have been incurred. Under CECL, it is required that the full amounts of expected lifetime credit losses be recorded at the time the financial assets is originated on our clients.

Adjustments for changes in the expected lifetime credit losses are made subsequently, which requires earlier recognition of credit losses that are deemed expected, but not yet probable compared to the incurred loss methodology. However, as of now the adoption of the CECL has no major impact to the underlying profitability of our business. Jiayin has always focused on risk managements and asset quality. The credit loss adjustment impact to us was minor.

The ongoing pandemic has had a material and extended adverse impact on the Chinese and the global economics. We do expect gradual recovery in the second quarter. However, considering our business is in the process of making transition, we expect our loan origination volume in Q2 will be relatively lower, like a similar level to Q1, but we are preparing for renewed growth and attractive results in Q3.

Lastly, I have a statement to make, with regard to our unusual stock price fluctuation yesterday, at making due inquiries, we are not aware of the reason causing such fluctuation. We believe we have been in good compliance with SEC and the NASDAQ rules since our IPO, and that there is no material non-public information to be announced after our Q1 earnings release.

With that, let’s open the call for questions. Mr. Yan, Ms. Xu, our Chief Risk Officer and I will answer questions. Operator, please go ahead.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we’ll now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Craig Irwin of ROTH Capital Partners. Please go ahead.

Craig Irwin — ROTH Capital Partners — Analyst

Good morning and thank you for taking my questions. The first question that I have is about your sourcing of funding from institutional investors. I should say congratulations. The number in your prepared remarks, if I heard it correctly, 44.5% of 1Q 2020 lending — funded by institutions, that is a strong continued progress, and I think you also said nearly all of 2Q lending backed by institutions. Can you share with us how many institutions are on your platform today, June 11, in the second quarter? And do you expect to continue diversifying lenders over the rest of 2020? Is there a specific number you want to reach this year? And how important is adding institutional lenders to your platform, to your longer-term growth plans?

Chunlin Fan — Chief Financial Officer

Thanks, Craig for your question. And I think our CRO, Ms. Xu will take your question.

Xu Yifang — Director and Chief Risk Officer

This is Yifang Xu. As we have commented on those opening remarks, our overall strategy is shifting from our P2P business model to loan facilitation model. So as you have have recalled that we have started this trend journey, at average, [Phonetic] less than a year ago. You are correct that we are excited to report today, that starting from April, our loan origination is now solely founded by institutional investors. There are 14 institutions that are on-boarded and are working with us in Q1, as of now, we will continue to accelerate this effort to partner [Phonetic] with more institutions. And as of today, 14 is the number that we are reporting.

Now, on the backdrop, we have more than 20 institutions active in negotiation in our pipeline, and a 70% of them are regional and city commercial banks. We continue to receive feedback from our institutional partners, they have been very positive, and the commentaries are, all around, the quality and the stability of our assets are outstanding in the industry. In addition, we are also seeking and deepening our relationship with our institutional partners, leveraging our core strengths and capabilities in online lending and to benefit our institutional partners, including regional and city commercial banks. So, it’s a very important for us to continue to bring on more institutions to our platform to ensure the stabilities and the diversification of our funding sources. So in addition to the loan facilitation models, we are as I said, we are also seeking other possibilities of deepening partnerships with our partners.

Craig Irwin — ROTH Capital Partners — Analyst

Thank you. My second question is about regulatory. So we observe that the Chinese government has released new rules for online lending by commercial banks. Can you talk about what the impact will be to Jiayin Group and the sector overall with these rules out? And do they directly apply to Jiayin and your peers?

Xu Yifang — Director and Chief Risk Officer

So this is Yifang Xu, again, I’m going to take on this question. So we, overall, we view this regulation as a beneficiary to the industry, particularly to the leading players. It certainly promotes a healthier business development environment. The new role in a way legitimized online lending platforms in terms of the business operations and the substantially reduced regulatory overhang. This marks a significant milestone for the online lending industry in China in the loan facilitation business. It shows that regulatory recognition towards the value brought online platforms to commercial banks, in terms of that the online platforms definitely bring values in terms of the better operation — loan operation efficiencies and providing a broader access to the credit for the consumers. So the regulatory development is in line with the anticipation that we are seeing, this is faster than before for both the industry as well as for the JFIN developments going forward.

Craig Irwin — ROTH Capital Partners — Analyst

Thank you. My next question is about the quality of the loan book. So the virus impacting the world seems to have had an impact on credit quality for loans by most of your peers, and many of them had large credit provisions this quarter, the March quarter, also for adopting ASC 326, the new accounting standard. So, our assumption is, may be the quality of their loan books wasn’t as high as many thought. What is the delinquency status for JFIN? Can you talk about any changes to your loan book? And what’s the impact of ASC 326 to JFIN? It seems like it’s actually pretty minor.

Xu Yifang — Director and Chief Risk Officer

So, Craig for this question, I’m going to take it from the credit portfolio perspective. And I’m going to ask Chunlin to comment on the institutions from the accounting standard. As we have talked the last time, and I would say that we at JFIN have always been following a very prudent and resilient approach to credit risk management, it is certainly a core to our business operation philosophy. So, since the very beginning of the outbreak, starting from January, and we have taken pretty cautious and conservative approach to the loan origination, we have pretty focused on customers with better credit risk profiles. Most of them are repeat borrowers.

Secondly, in terms of the loan portfolio as a whole, we have to report that COVID-19 impacting our business is modest, primarily due to the geographic diversity. So most of our customers are not in the pandemic center. But as we are looking back, we have to say that during the most devastating period, mostly in the February and especially the early-February, we also faced some mild operations, particularly in the collection operations challenges, in terms of getting our employees back to work, as well as keeping a high standard — high health standard to protect our employees. So as a result, we did see a modest uptick in the delinquency rate in that particular month. But as the market recovers from the aftermath of the coronavirus, we are now glad to report that, all the risk metrics have shown steady improvement back to normal, even better than the previous levels. So in all, from the business side, with all these actions taken and how we manage through this challenging time period, overall impact from the virus outbreak is modest on our business.

Chunlin, do you want to comment on the accounting standards point of view?

Craig Irwin — ROTH Capital Partners — Analyst

It seems we might have lost Chunlin.

Chunlin Fan — Chief Financial Officer

Sorry about that. I was just muted, and I just spoke to myself for a couple of minutes. Alright, I will start again. Okay.

Yeah, Craig, I will give you more color about the ASC 326, the new accounting policy, just required by the SEC. And just as our CRO, Ms. Xu mentioned, the asset quality of JFIN has improved over the past one year, since our IPO. And we have been investing in risk management system, since beginning of our business, and our continued prudent business operation and ever-improving risk management process and the data, behavior analytics-driven credit assessments, advanced collection system have generated a high quality loans. And our credit quality of our book. I think it’s very sound and the credit losses were very limited, even with the new ASC 326 accounting standard, I think we are still in a very good position. As you know, in our Q4 2019, we have reassessed all our loans and then we made a sufficient provision with good effort from our auditor, Deloitte. And thus, the actual provision for our Q1 provision is very limited compared with our peer companies. So that’s a very good numbers for us, which also proved that our asset-quality management and risk management capability is first class.

Craig Irwin — ROTH Capital Partners — Analyst

That is a very impressive. That is very impressive. My last question is regulatory, but more related to the U.S. market listing and some of the things that may be a reactionary going on in the United States right now. But the Senate approved a bill requiring Chinese companies have its auditors submit to inspection by PCAOB, and then the NASDAQ has proposed certain rule changes that really seem to be targeted towards many Chinese companies. I know the PCAOB regulates auditors, not public companies and Jiayin Group is a very conservative company. Can you maybe discuss with us, what you see, the current status as representing the proposals, I think have three years as far as time to comply or resolve. But do you have a potential view on how you would handle things if they were to proceed as currently suggested?

Chunlin Fan — Chief Financial Officer

Yeah, so Craig, this Chunlin, I will take this one. And the relationship between China and the U.S. is so exciting, right now. Everybody is concerned about this and everybody care about this. And regarding the particular area in the capital market, I believe that the bill will pass House of Representatives and be signed President Donald Trump to become the law down the road, right, because in the Senate, I think both the Democratic and the Republic they kind of vote — or anyway agree that they will anyway pass this bill. So I don’t doubt that the law, the bill will pass the House of Representatives and be signed by Donald Trump. But the proposed law, I think they were to provide three years to resolve the issue of enabling the companies to comply with the PCAOB audit requirement. And the issue of the inspection, I think is not controlled by the companies, I mean companies like Jiayin, we are kind of too weak to voice ourselves, given that the PCAOB, they have jurisdiction over audit trends. So, at the end of the day, I think it’s pretty much like betting between CSRC and SEC, and it’s a betting between China and the U.S.

So since the total market cap of Chinese companies listed in the U.S. is almost like $2 trillion, we hope and we believe for the mutual interest of the U.S. and China, a mutual agreement will be reached on both sides eventually. And we are working very closely with our auditor, Deloitte to keep monitoring the situation and the progress. The thing I can tell you is, that JFIN will do everything we can to fully comply with U.S. accounting GAAP and all the SEC rules. All in all, I think that there is a lot of uncertainty down the road, but we will remain positive and will I think remain confident about the capital markets outlook in U.S. and China.

Craig Irwin — ROTH Capital Partners — Analyst

Excellent. I’ll jump back in the queue now, and let other analysts and investors ask questions. Thank you.

Chunlin Fan — Chief Financial Officer

Thank you, Craig.

Operator

Thank you. [Operator Instructions] We have our next question from Sam Atari [Phonetic] of Home [Phonetic]. Please ask your question.

Sam Atari — Home — Analyst

Hi, can you hear me?

Chunlin Fan — Chief Financial Officer

Yes.

Sam Atari — Home — Analyst

Yeah. I made a big investment yesterday, when it is going above 700%, and the kind of recovery I’m looking at right now, I don’t see anywhere, where I can get back my money. So do you have any anything on that? I mean?

Chunlin Fan — Chief Financial Officer

Yeah, sure. Sam, I think the Company, the management team, we are also confused as you are. But with regard to our unusual stock price fluctuation yesterday, after the marketing due inquiries, we are not aware of the reason causing such fluctuation. We believe we have been in good compliance with the SEC and the NASDAQ rules since our IPO, and there is no material non-public information to be announced after our Q1 earning release. We don’t know why stocks traded as of [Phonetic] yesterday. All the material information that should be released have been released according to the SEC rules. So as I said, we are as confused as you are. So, we need the answer as well. We need the answer from SEC and the U.S. government.

Sam Atari — Home — Analyst

Okay. So what do you want me to continue to do? I mean, I lost like a $20,000. So…

Chunlin Fan — Chief Financial Officer

Are you based in U.S. or in China?

Sam Atari — Home — Analyst

U.S.

Chunlin Fan — Chief Financial Officer

Okay. I mean in U.S. it’s a free country, right. And now the investment you do is upon to your own decision. So from the Company’s view, we disclosed all the information we need to disclose and that investment decision will be made by yourself. And I’m really sorry, about your loss, but frankly, I don’t know how to say.

Sam Atari — Home — Analyst

Okay. I think I missed the first part of the session. Are we reporting an EPS of — what is the EPS number?

Chunlin Fan — Chief Financial Officer

Say again, sorry about that. Say again? Beg your pardon.

Sam Atari — Home — Analyst

What is the estimated earnings per share as per today’s call?

Chunlin Fan — Chief Financial Officer

Okay. Our net profit for this quarter RMB39 million, right. So you can do the simple calculation by yourself. So, I will say this is not a great quarter for us, if we look at our history. But we are very confident that given the regulatory policy becoming warmer and warmer, and our efforts on the risk management control, and we are going to regrow our business in the second half of this year. So our EPS or our net profits or our profit margin will be better than today. That’s what I can tell you. But with regard to other detailed information, I don’t think it’s the right position for me to give you more guidance.

Sam Atari — Home — Analyst

Okay. But if it is declared as something fraud, can I go ahead and claim something? Is it something that I can proceed with?

Chunlin Fan — Chief Financial Officer

I don’t know. As I just said, I’m not sure, for example, I have never talked to you before this call and I don’t know what’s your kind of opinion or your outlook about our Company coming from, right. So you should talk with…

Sam Atari — Home — Analyst

Not just this Company. Okay, I am just looking at some fraudulence recently, and I think, it’s mostly attacking Chinese companies for some reason. So I will — yeah.

Chunlin Fan — Chief Financial Officer

I’m sad about your loss. But I think the mechanism for the investment in U.S. is somewhat is not correct, because as I said, we have not kind of — we have disclosed all the information we have disclosed. And we are also very confused about the stock price fluctuation yesterday, all right. So, I think, maybe you can connect with your lawyer, and regarding the transition loss. And for me, yesterday, I talked with the NASDAQ representative, and I tell him everything about the position of the Company, we disclosed everything we want to disclose. And I don’t know what kind of information you have to get. But for me, that’s all I can tell you, all right. Thank you.

Operator

Thank you. Next question is from the line of Craig Irwin of ROTH Capital. Please go ahead.

Craig Irwin — ROTH Capital Partners — Analyst

Thank you. All right. So just, it’s something that the prior questioner may want to know that’s just securities industry mechanics, right? A 100% of the situations like what we saw yesterday in JFIN stock are investigated by both the NASDAQ and FINRA as a part of their market surveillance obligations. And if there’s anything nefarious they can track down, they would obviously look to take action. So that’s why we all have to be super-compliant. Any small wrong step leads to enforcement actions.

Charlie, my question for you is that, I didn’t ask before, I thought somebody else might want to ask it. We’ve moved beyond the the worst of COVID in China. The virus seems to be tapering down as far as its impact. Your origination volumes may have been down 56% year-over-year, but they were basically flat, essentially flat in the March quarter versus the December quarter. Can you talk a little bit about how this progresses over the next couple of quarters? Do you expect a rebound and resumption of growth in loan origination volumes? And what do you see as key drivers of this? Is this the economic recovery in China? Or is this the on-boarding of institutions that grows that volume?

Chunlin Fan — Chief Financial Officer

Yes, sure. I will give you a little bit color and maybe Ms. Xu can add on. And for us, as usual, we will not give the guidance, but then you just mentioned that our Q1 origination volume was flat compared with Q4 and it’s a bigger decrease compared with in Q1 last year. But there was a reason for that, right. For the triple decline policy, which was — both in China and we’re trying to comply with the regulation policies. So, we tentatively decreased our transaction volume for the Q1 quarter. But the good thing about us is, we almost finalized our transition period, and now in Q2, I will say, maybe 90%, 80% of our funding will come from institutional fundings. And for Q3 and Q4, definitely it will be 100%.

And since now it’s already June and I can tell you for our Q2 loan origination volume, which will probably be flat or maybe a little bit lower than the Q1 numbers, but for Q3 and Q4, we definitely will regrow our business. The reason for that is, while Q2, we have a lower loan origination volume compared to the Q1. As I said, our Q1 origination volume was not impacted by the coronavirus too much, but for the institutional funding business actually, Q1, we cannot do anything, because all our business development team, they just stay at Shanghai, and we cannot go out and reach out to our banks and financial institutions. So, for the funding business from the financial institutions, I think we will regrow in Q3 and in Q4. So, what I can tell you is, for the second half of this year, we are going to regrow our business. And in terms of loan origination volume, revenue, operational margin and then our net profit margin.

Yifang, do you want add to my opinion?

Xu Yifang — Director and Chief Risk Officer

No more to add on. It’s certainly that Q2, we’re likely to see at levels slightly lower, but definitely on modest growth in — starting from Q3 and then further growth in Q4.

Craig Irwin — ROTH Capital Partners — Analyst

Thank you. My last question is about cash. So at the end of March, at the close of the first quarter, you had cash of RMB69 million, that was down RMB53 million over the December cash position. Can you talk about the cash, where we stand now in June? And what the probable outlook is for the June quarter? Do you expect to generate cash? Or can you potentially consume cash over the course of this quarter?

Chunlin Fan — Chief Financial Officer

Yeah, Craig. This is Charlie. I know that the bank and the cash position decreased a lot in our Q1 period. And the reason is, I think due to, although the loan origination volume in Q1 is similar to Q4 2019, right, but the portion of the institutional funding part of business has increased. So the overall revenue take rate for the institutional funding business actually is lower than the individual funding business. Thus, the revenue generated by the loan origination volume actually is a lower in Q1 compared with Q4. And that’s one of the reason. And in addition, we also inject more capital to our overseas markets like Mexico, Indonesia, India, in there because we always consider the Southeast Asian market and the Mexican market, as market for our business. So that’s why our cash position decreased as of the end of Q1, and we are expecting that the cash position will become better in the second half of this year as long as we keep growing our business in the second half of this year, and the management team is confident that we will generate revenue at a high level and maintain a very healthy cash flow position.

Craig Irwin — ROTH Capital Partners — Analyst

So, but the second quarter, Charlie, would you expect to be maybe down a little bit more? Is that fair, as you continue to invest in your overseas growth initiatives?

Chunlin Fan — Chief Financial Officer

Second quarter, I would think it would be largely subject to our investment in our overseas market, and let’s say the cash position will probably will be at the same level or slightly lower than the Q1 level. But we still want to keep our cash position at a very healthy level.

Craig Irwin — ROTH Capital Partners — Analyst

Okay, okay. And then last question on this subject. The RMB53 million decrease in cash for the first quarter over the fourth quarter, what portion of that would you approximate was related to your international growth initiatives?

Chunlin Fan — Chief Financial Officer

Yeah, actually the cash generated from our operating activity, which is a very closely related to our revenue and the loan origination volume, probably will be around RMB20 million, right. So the rest of them will go to our expansion in overseas markets.

Craig Irwin — ROTH Capital Partners — Analyst

Excellent. Thanks again for taking my questions. Congratulations on the really impressive progress with the institutional funding.

Chunlin Fan — Chief Financial Officer

Thank you.

Operator

Thank you. And seeing no more questions in the queue, let me turn the call back to Mr. Chunlin Fan for closing remarks.

Chunlin Fan — Chief Financial Officer

Okay, thank you, operator and thank you all for participating on today’s call and thank you for your support. We appreciate your interest, and look forward to reporting to you again next quarter on our progress.

Operator

[Operator Closing Remarks]

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