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LexinFintech Holdings Ltd. (NASDAQ:LX)
Q4 2019 Earnings Call
Mar 24, 2020, 7:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, ladies and gentlemen. Thank you for standing by and welcome to the Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to your host, Mr. Tony Hung. Please go ahead, Tony.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Thank you, operator. Hello, everyone and welcome to Lexin's fourth quarter and full year 2019 earnings conference call. The Company's results were issued earlier today and are posted online. Joining me today on the call are Mr. Jay Xiao, our Founder, Chairman, and Chief Executive Officer; Mr. Craig Zeng, our Chief Financial Officer; Mr. Ryan Liu, our Chief Risk Officer; Mr. Stanley Zhou [Phonetic], our Senior Financial Director; and other members of our team.

For today's agenda, Mr. Xiao will provide an overview of our recent performance and highlights, Mr. Zeng will discuss our financial results, and Mr. Liu will discuss our credit performance. Before we continue, I refer you to our safe harbor statement in the earnings press release, which applies to this call as we will make forward-looking statements. Also this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in renminbi.

I now turn the call over to our CEO, Mr. Xiao, whom I will translate for.

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] Hello, everyone. Thanks to our efforts in the past quarters, our new consumption platform strategy is now entering a phase of increasing growth and we were able to record another quarter of strong growth surpassing our raised guidance in the fourth quarter. For the full year 2019, Lexin's loan origination volume increased to over RMB100 billion reaching RMB126 billion, an increase of 90.6% year-on-year meeting our full year guidance. Our revenue surpassed RMB10 billion reaching RMB10.6 billion, an increase of 39.6% year-on-year. Gross profit was RMB5 billion, an increase of 65.8% and net income reached RMB2.3 billion, an increase of 16%. In the fourth quarter, we originated RMB42.8 billion in loans, an increase of 104% year-on-year with revenues of RMB3.1 billion, an increase of 50.4%; gross profits of RMB1.5 billion, an increase of 59.7%; and net income of RMB518 million. At the end of 2019, Lexin's outstanding loan balance reached RMB60.6 billion, an increase of 87% and our asset quality remained stable.

[Foreign Speech] Our continued investment and deployment, our new consumption strategy. In 2019, we increased our spending in R&D. The total investment in R&D for the year reached RMB416 million, an increase of 29.9%. And for the full year, the marketing and sales fee increased to RMB1.5 billion, an increase of 161%. This strategy has allowed for our registered user numbers to surpass 70 million, an increase of 96.5% year-on-year. New active users were 2.1 million for the quarter, an increase of 244% continuing two consecutive quarters of growth exceeding 200%. Growth in our user numbers will drive our future transaction scale and the continued growth of our revenues.

[Foreign Speech] In 2019, Lexin's new consumption platform strategy...

Craig Yan Zeng -- Chief Financial Officer

Tony, could you let the operator check how many people on line. I got some, analyst called me saying, they could not dial in, because they cannot get the operator. So operator -- can we have the operator checking how many people, online?

Operator

Yes, hello. This is the operator, upon checking, we only have 15 participants connected here on the main room as of the moment and I'm still seeing a lot of participants dialing in waiting to be answered by our operator, sir. This is really apologies due to the sudden huge headcount shortage, sir we're expecting a hold time. We apologize, sir for the inconvenience. This is due to the COVID-19 outbreak. We apologize, sir.

Craig Yan Zeng -- Chief Financial Officer

Can we just wait for a couple of minutes to have people calling, connect people, then we start again?

Operator

All right. Sure, we can do that if you want. We can wait at least for a couple of minutes or if you could give me availability once you're ready to begin your call.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

I think we're ready once all the people that's queued up, have been connected to the call.

Operator

Yes, sir. Currently I already cascaded the message to our operator and they are doing their best to answer all the queues.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Okay. Just make sure that they connect everyone and then once they do that, we'll continue where we left off.

Operator

All right. Once again, sir, we apologize for this inconvenience. Thank you.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Operator?

Operator

Yes. Hello sir. Currently, we already have 30 participants now already connected in the main room.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

How many still need to be connected?

Operator

I can still see 30 participants, sir.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Three participants.

Operator

20 participants -- 20 to 30 participants.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

You're still missing 30. There's 30 still left to be connected. Okay. Give me a second here. Operator?

Operator

Yes. Hello, sir.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Let's continue.

Operator

All right.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Okay. So, I will continue at the place that I left off.

Operator

You may continue [Indecipherable].

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

Yeah. In 2019, Lexin's new consumption platform strategy's three core businesses developed rapidly. Fenqile's online e-commerce platform's SKUs grew to over 2 million and our full year GMV reached RMB8.1 billion, an increase of 38.7%, much stronger than 2019's industry growth rate of 8%. Offline consumption scenarios also generated RMB20.6 billion in transactions as more and more supermarkets, convenience stores, leisure, restaurants, and other retailers joined our platform. Membership privilege cards and apps and working with leading online and offline players expanded to include privileges with numerous brands to cover leisure, apparel, dining, hospitality, and more. At the end of the fourth quarter, Lexin's paid membership products has already been utilized nearly 1.8 million times. Membership points have opened up both online and offline membership point systems serving over 6.1 million customers.

[Foreign Speech] Thanks to our strong technological base and highly stable and compliant operations and strategy, Lexin has won the trust of many partners. Today, Lexin is cooperating with large scale banks, insurance companies, consumer finance companies and has established partnerships with over 100 financial companies. In this period of rapid growth, we are also committed to our social responsibility. At the beginning of the year, Lexin donated RMB15 million to be used in the protection of frontline medical staff in the current ongoing effort against the current COVID-19 pandemic.

[Foreign Speech] And so our Wuhan operations has been affected by the ongoing pandemic, Lexin has delayed the normal resumption of operations there and our loan servicing has been affected. As a result, we immediately adjusted our customer acquisition strategy and asset management strategy in order to ensure stable asset quality.

Today, the Company has taken many steps and actions and our operations are now at 90% of normal. In the first quarter we expect loan originations to exceed RMB32 billion, an increase of over 60%. As the COVID-19 conditions in China are gradually contained and as the economy recovers and consumption normalizes, we believe that we can return to a rapid path of growth. We therefore feel that currently there is no need yet to adjust our full year guidance of RMB170 billion to RMB180 billion and we will make a determined effort to achieve this challenging goal.

[Foreign Speech] Currently consumption is Chinese economy's stabilizing agent, and in the current environment, new consumption, new infrastructure will become the Chinese economy's twin engines. The Central Government has also clearly expressed that restarting the economy and driving internal consumption will be integrated to drive new consumption and consumption upgrades.

Under the new favorable and encouraging government policies, Lexin's new consumption platform strategy will gain greater room and traction continuing to serve China's real economy, driving China's growth in consumption, providing benefits to millions in China's new consumption generation. We believe in steadfastly adhering to long-term value generation serving the new consumption generation and continuing to open up both online and offline consumption scenarios as well as membership benefits and using point and financial technology to create a new consumption service ecosystem and consolidating our leadership with our customers.

[Foreign Speech] Next I like to invite our CFO, Craig, to discuss our recent financial performance.

Craig Yan Zeng -- Chief Financial Officer

Thank you, Jay and hello, everyone. I'm pleased to announce that we have once again delivered a strong result. In the interest of time, I will not go over line items by line items of the financials. For a more detailed discussion of our fourth quarter and full year 2019 results, please refer to our earnings press release. Total operating revenue for the full year 2019 reached RMB10.6 billion driven by strong growth in our financial services income which reached RMB6.8 billion, of which loan facilitation and service fees was RMB5.6 billion. Adjusted net income was RMB2.4 billion reflecting our continuing strong growth and performance. Fully diluted adjusted net income per ADS was RMB12.5. We continue to see the future potential of our business model. In the performance of the customer cohort whom we acquired in the first quarter of 2015 whose balance is now RMB13,639 and whose 30-day delinquency rate is approximately 1.1% with a quarterly activity rate of -- at 35.2%.

Our operating leverage. Operating expense as a percentage of average loan balance was 5.2% for 2019 and our advertising -- marketing, advertising, G&A, and R&D was 1.2%, 2.2%, 0.9%, and 0.9% of average loan balance, respectively. We currently have 73.3 million registered users and 19.4 million customers with credit line, up from 10.5 million in the December 31st, 2018. We acquired nearly 2.1 million new active customers in the fourth quarter. Overall, our average credit limit was RMB9,700 while our average tenor is now 12 months. Our weighted average APR was 26.8%.

In term of our funding, for the quarter no funding for new loan originations came from our Juzi Licai platform and all of our funding for new loan origination came from our institutional funding partners. The ongoing COVID-19 outbreak has brought and continuing to bring many challenges to our business, but we are now seeing a gradual recovery.

We believe that with the gradual recovery and the determined efforts of the -- of our team, we may still be able to achieve our previous stated guidance for the year. We are also pleased to announce that we now expect the total low origination for the first quarter 2020 to be over RMB32 billion.

Next, Ryan will discuss our credit situation. Ryan, please?

Ryan Huanian Liu -- Chief Risk Officer

Thank you, Craig. We continued our stable credit performance in this quarter. In spite of the challenging conditions in the market, our credit quality continues to be high and within expected levels. And we fully expect our credit statistics to continue to perform well and at the expected levels. Our 90 days plus delinquency ratio remains low at 1.56% and we continue to see strong credit performance as our lifetime charge-off ratio is approximately 3%.

Due to the credit performance and the number of new customers as well as the ongoing COVID-19 situation, we expect the vintage charge-off ratio to our loan portfolio to increase to approximately 3.5% to 4.5% over the course of the next few months before improving in the third quarter. This is falling within our range of expectations and we fully expect our stable credit performance to continue in 2020.

With that, I conclude our prepared remarks. Operator, please proceed with the questions and answer session.

Questions and Answers:

Operator

Thank you so much, presenters. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Jacky Zuo from China Renaissance. Your line is now open, Jacky.

Jacky Zuo -- China Renaissance -- Analyst

Hi, good evening management. Maybe just for the interest of time, I will just ask in English. So, first question is about our first quarter guidance. I saw the first quarter guidance is actually stronger than market expected so just was wondering if management can give us more color on the recent situation regarding the virus and how's the recovery in the recent weeks and also the asset quality situation regarding the virus situation?

And second question is about our take rates. I observed that if we just use the loan facilitation fees divided by our loan origination, the take rate actually went down in Q4. Just wondering what is the reason behind. Is it because of our higher credit cost assumptions? What is our credit cost assumptions currently? And the third question is about our upcoming accounting change. So, can you share some color about the impact of probably acceleration of credit cost in the coming change of this accounting rule? Thank you.

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] So Jacky, with regards to the first quarter numbers and situation, well, I mean obviously it's already the end of March so you can say that we probably more or less accomplished the numbers that we have given out for the first quarter. The operations right now, they are recovering pretty well. Overall it's coming back and it's increasing daily. As mentioned earlier, we're at 90% of our normal levels. And our customer acquisition is also about back to normal and we are becoming increasingly confident.

Now on the risks on the collections. As you know that we have a major collection center unfortunately at the epicenter of the pandemic, so the staff there had to work remotely, which unfortunately also meant that they were not as effective. But on that note, they are definitely catching up. There is a bit of a backlog, but it's going to need some time in order to achieve that. And for the second question, I think Craig would like to answer.

Craig Yan Zeng -- Chief Financial Officer

[Foreign Speech] Yeah. So Jacky, on the take rate or the overall probability, I think there's a couple of important points that Craig wanted to make. One because a number of new customers who were testing, there were certain reductions that occurred from their early repayment. So what they would do is that they would discover our product, they would use our product, they would like the service, and then they would repay early. So, in turn that impacted the numbers a little bit.

As you know since the third quarter and into the fourth quarter, we had on a quarterly basis 2 million new active customers each time. So, the new customers definitely behaved differently than the mature customers and now that they are a larger proportion, they have a bigger impact. And of course also their risk levels because they are new, they haven't matured yet are also higher.

And of course also on the overall profitability, as you know, we made many long-term investments in the fourth quarter whether it was in customer acquisition of other areas. And as you know from our model and our model involves growing with our customers, these are long-term investments that will generate long-term returns. Now in the future, we'll take additional steps to mitigate different things. Ryan may talk about a little bit of the steps on the risk side. But certainly one of the things we may be doing is that for the newer customers, we might give them smaller lines so that way that when they repay, it will be a much more minimal amount. And we think that over time, their behavior will return to being more normal.

And on the third thing on the new CECL or the application. This of course would be industrywide. This is SEC requirement and we're certainly working very hard on getting 100% clarity on it. Once we have clarity on the exact impact, we'll be sure to communicate that to everyone.

Operator

Our next question comes from the line of Lucy Li from Goldman Sachs. Your line is now open, Lucy.

Lucy Li -- Goldman Sachs -- Analyst

[Foreign Speech] The first question is a follow-up on asset quality. Just wanted to clarify whether the changes in the vintage line or the changes in write-off assumptions will be also reflected on the fair value change line in the P&L. If so, should we expect to see a huge negative number in 1Q given the worsening asset quality? And secondly, it's on the client perspective. Do we observe any changes in clients' credit demand? And related to that, how are we adjusting our clients' acquisition strategy in the first half of the year? And lastly, just wondering how do we see the pure facilitation model and are we going to put more emphasis to transitioning to such model? Thank you.

Craig Yan Zeng -- Chief Financial Officer

[Foreign Speech] Yeah. So Lucy, I'm sure you understood all that. I think we had a little bit of a different situation with the new customers and this year certainly we're changing and there may be some one-time things of course that result from that. So, certainly it's not necessarily something that we expect to continue.

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] So Lucy, regards to your questions on the consumption, well, it's fair to say that obviously the events in the first quarter has suppressed consumption in China significantly, effectively freezing all the offline consumption activities and clearly this is also reflected in our QonQ numbers if we compare our first quarter guidance versus our fourth quarter numbers. Now it's also fair to say that gradually the pandemic is being contained.

We can see for example in Shenzhen, pretty much all the offline venues are coming back or have come back already and this includes in fact certain high risk areas, if you will, such as movies and otherwise. They are coming back and increasingly normal as well. And as we mentioned earlier, we are probably looking in terms of our daily operations of being back at around 90% or above. Now with regards to the customer acquisition even before the ongoing pandemic, we already were adjusting our customer acquisition.

Obviously the acquisition of customers online presents higher risk, we have to make certain adjustments. So ever since the second half of last year, we've been reducing the approval rates, adjusting the model, but also continuing to make sure that we keep the customer acquisition cost stable and consistent with the numbers we've mentioned before under RMB200 per customer. So overall, we're looking at probably a stable situation when it comes to the customer acquisition.

Now in terms of our overall situation as a result, because of the actions last year and because of the customer acquisition, we are not under pressure to acquire customers this year so it could be more stable. And with the existing customers, we should be basically within the range with a lot of effort of achieving our guidance on loan originations. Now on your third question on the asset light model, well, for this year, I think we're looking to increase that significantly possibly by a factor of possibly by one-time. So basically, yeah, it will be significantly higher in that respect as compared to last year.

Ryan Huanian Liu -- Chief Risk Officer

[Foreign Speech] So Lucy, Ryan want to clarify that. It's definitely not 100 basis points. It's more like 50 basis points, but this is the 50 basis points on top of the already anticipated increase and the increase, again the core of it will be because of the new customers. So, you see some of these things in the fourth quarter that arises due to the new customers and this is just a matter of time them going through the system and maturing.

Now we did certain challenging things occurring in the industry as a whole back in November. So since then, we've certainly made adjustments, some of which Craig talked about. We adjusted our model, the approval ratings and conditions where they've come down, and we are doing certainly adjusting for longer-term analysis, and more distinguishing between our new and old customers. But certainly the credit quality or it's not -- or the vintage charge-off is not increasing by that much.

Lucy Li -- Goldman Sachs -- Analyst

[Foreign Speech]

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Operator, can you go to the next question?

Operator

Your next question comes from the line of Sanjay Jain from Aletheia Capital. Your line is now open.

Sanjay Jain -- Aletheia Capital -- Analyst

Hi, everyone. Can you hear me?

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Yeah.

Sanjay Jain -- Aletheia Capital -- Analyst

Congratulations on good results. Three questions and allow me to ask them one by one. First is on asset quality and just reconciling the numbers. So in the delinquency the vintage chart, I see the highest delinquency being 3.5% or close to that for the third quarter 2018 vintage, which would I assume -- I'm always confused about how you report delinquency and how it translates into the loss rate. But suppose it translates into around 7% loss rate, on the on-balance sheet if I look at the fourth quarter provisioning divided by the average loan, it works out to 21%. How do you reconcile the -- if it is 7% overall versus the 21% on the on-balance sheet?

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] Yeah. So as Craig mentioned, basically I think there is the on-off distinguishment so when you look at the balance sheet and the amounts there, you can't necessarily get to the right numbers. Now on the delinquency, it's worth noting that there is a way to do it, but to note that it's installment payment. So, obviously you need to make certain adjustments given the fact that it is installment and there is a way in which you can then translate using the math to get to the 3.5%. And I think some of these things may just take a little bit of time to run-off. And I think Ryan might have something that he also wants to add on this.

Ryan Huanian Liu -- Chief Risk Officer

[Foreign Speech] So, the 2018 Q3 vintage was definitely impacted by the events in the P2P sector there. But you can see that quickly in the subsequent quarters and thereafter, things have improved. So, we certainly made some adjustments accordingly.

Sanjay Jain -- Aletheia Capital -- Analyst

Okay. My second question is on the recent customer behavior. When we spoke in February, you were saying that you are extending some relief to the customers who were calling for deferment of the February installment. So if you can give us some numbers around that, how many or what percentage of customers called? Did you defer for all of them? Do they know that they have -- that installment has been added to the end of the loan period, which means they have to pay? And as a follow-up or kind of like asking the same thing in a different way, what percentage of your customers are now at 80% or higher utilization and whether you have gone ahead and cut credit lines for any of the customers you identify as risky in the current environment?

Ryan Huanian Liu -- Chief Risk Officer

[Foreign Speech] I think I might miss some of various numbers there. But in the first quarter, we did see that there was an increasing risk so we actually tightened and made some adjustments and we distinguished between new customers and old customers. Some of the things that we did is we lowered some of the lines so actually the total amount of credit lines we lowered was probably the equivalent of something like 2.1 billion if I got my numbers right. And we do see actually now there are improving credit conditions. But certainly again we noted based on the behavior of some of the customers that we may need to make some adjustments and we certainly did that in the first quarter actually.

Sanjay Jain -- Aletheia Capital -- Analyst

And what percent...

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] So, what Ryan said was actually the -- I suppose this is the way that we would look at the numbers. In terms of the number of customers that would enter the arena where the collections team will need to start contacting them and pursuing collections, it's only increased by about 10%. So, it hasn't actually increased significantly and we do see that it's coming back and coming down. Now for very specific locations like Hubei the epicenter, which is also about 6% of our portfolio. Obviously we need to be even more careful about it and then of course the numbers there can be worse. But overall there hasn't really been that significant a change in terms of how we look at it, maybe only about 10% or so.

Sanjay Jain -- Aletheia Capital -- Analyst

Okay. Thank you. And my third and last question is on the CDs. Do you have a put option on your CD as well? And where is the cash, is it still sitting overseas and where do you plan to use it?

Tony Hung -- Senior Director of Capital Markets and Investor Relations

You mean do we have the right to call the CD?

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Speech Overlap] We have a four years put option.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Yes. They can put to us. We can't get it, if you will, but they can put it to us after a few years.

Sanjay Jain -- Aletheia Capital -- Analyst

So is it in 2023, is that correct?

Tony Hung -- Senior Director of Capital Markets and Investor Relations

It's certainly year for us, yes, 2023. We'll have the right to put [Indecipherable].

Sanjay Jain -- Aletheia Capital -- Analyst

Okay. And the cash is still sitting overseas?

Tony Hung -- Senior Director of Capital Markets and Investor Relations

I'm not sure. Only a portion.

Sanjay Jain -- Aletheia Capital -- Analyst

Okay. You don't plan to use it at least temporarily for on-balance sheet lending or something?

Craig Yan Zeng -- Chief Financial Officer

No.

Sanjay Jain -- Aletheia Capital -- Analyst

Okay. Thank you very much.

Operator

Your next question comes from the line of Alex Ye from UBS. Your line is now open, Alex.

Alex Ye -- UBS -- Analyst

[Foreign Speech] So, I have a couple of follow-up questions. First one is on the take rate outlook for the next couple of quarters, could you give us some color on what could be the positive drivers and what could be the negative drivers? And secondly, could you give us some update on the progress of your application for consumer finance license? And lastly on the customer acquisition strategy given you're probably going to take a more cautious approach on online traffic customer acquisition so which would be the other customer acquisition options that you would be more focused on this year? Thanks.

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] So Alex, on the take rate. As you know, there's various components to that; our pricing or APR, our cost of capital, our level of the risk, and then maybe some other costs. In terms of our pricing or APR, that's currently about the same, but in the future might come down a little bit. In terms of our financing cost as the team mentioned earlier, it might drop just a bit in the near future. Finally on the risk, well, it's definitely going higher right now, but we do also see that it's getting better, it's recovering a bit so it will probably normalize sometime in the future.

[Foreign Speech] So Alex, on the customer acquisition, this year we're probably looking at stable customer acquisition process or stable growth. In general there probably wouldn't be too many changes. But certainly, as mentioned earlier, and this is actually extension of things that occurred last year as mentioned earlier. We'll control the higher risk channels. We'll control basically what we do on those channels and of course those channels tend to be the online channels.

On the offline side, historically, this has been a very stable channel with very good asset quality and we will probably continue to do more on it and focus a bit more on it this year. And of course also now as we are growing in strength in terms of our brand, we have increasing natural traffic and also our e-commerce brand is getting greater recognition. So, we'll probably get additional growth from that as well. So, overall we're probably looking at a situation of stable growth, certainly stable customer costs consistent with what we said before.

And given the growth that we've done last year, basically we're in a position where we know that this year that will lead to better operations and certainly some better numbers and as a result, we don't need to focus as much on customer acquisition this year. Now on your second question on the consumer finance license. Well, basically there's certainly no new news at this time that we can give. But the minute that we hear something, we'll be certain to make sure that everybody is aware of it.

Operator

Your next question comes from the line of John Cai. Your line is now open, John.

John Cai -- Morgan Stanley -- Analyst

[Foreign Speech] So I have three questions. The first one is on the exposures of those relatively high risk customer that we acquire online. Just wonder in terms of the outstanding balance and outstanding customer, what portion are they accounted for as a percentage of the whole portfolio? And the second question is about the tenor, because you also mentioned in the fourth quarter the tenor declined quarter-on-quarter due to some trial behavior done by these new customers and because in this year we expect those new customers we acquired last year will contribute to increase in volume. Just wonder if that put structural pressures or downward trend on the tenor structurally this year.

And the third question is about risk and provision. As Ryan just mentioned that loan outstanding is to be collected, that ratio has already stabilized. Just wonder what's the recovery rate of the collection efficiencies or to put it the other way, how is that trending currently? And then in terms of the reserve, I look at the liability -- the guarantee liability on balance sheet and that accounted for around 3% of our off-balance sheet loan and 2 times of our 90 days delinquency. I just wonder if that's a proper understanding of our current usage level? Thank you very much.

Craig Yan Zeng -- Chief Financial Officer

[Foreign Speech] Tony, maybe you first.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Yeah, sure. So John, on the customers, well, we don't quite disclose it that way, but we do disclose the new active customers. So obviously you know the new active customers, you know the active customers, you know the loan origination, so you get a good sense of what's happening. Now in terms of the loan balance, obviously we don't disclose that. But obviously again new customers would have a lower amount so you can really get an idea. Now it is also worth pointing out that while we talked about it certainly earlier, the new customers may not necessarily be high risk but just need time to develop. And of course the channels that we have, they can probably now provide at least 1 million in terms of new customers a quarter. On the guarantees, I think you can't calculate it that way; but in the future maybe we will arrange a time for you to discuss with Stanley on how to get to the numbers.

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] Yeah. So on the early repayment, I think we've taken steps and we've reduced some of the credit and also made other limits. So it's something that we think that will very quickly return to more normal levels.

Operator

Your last question now comes from the line...

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech]. So yeah, John, as mentioned earlier, the amount of people entering delinquency in which our collections team has increased by 10%. But in terms of the people coming out, it's basically 2% to 2.5% or so behind the normal levels. But even there we can see that it's -- we're turning gradually to normal. So hence there is a positive trend there.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Yeah, operator.

Operator

Yes. Your final question comes from the line of Daphne Poon with Citi. Your line is now open, Daphne.

Daphne Poon -- Citigroup -- Analyst

Hi, management. Thanks for taking my question. So, just a few quick follow-ups.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Daphne, If you want, you can ask the question in Chinese and then just translate.

Daphne Poon -- Citigroup -- Analyst

Okay. [Foreign Speech] So, the first question is about the take rate outlook. Just want to confirm whether that has taken into the consideration of the new accounting policy, the CECL model and whether that will like lead to a lower sustainable take rate compared to the previous year's level. And the second question is regarding our current approval rate. Just want to get a sense on the magnitude like how much it has dropped versus a normal level. And the last question is for the capital-light model, whether we see a big change in the attitude from our financial institutions partners that with rising rate across the sector, whether they are preferring to switch back to the guaranteed model.

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

[Foreign Speech] So Daphne, on the take rate, I mean we talk about it and obviously, the fourth quarter numbers are still on the old standard so hence when we talk about these things, it's still very much on the old standard. On the impact from CECL itself, right now, it looks like ultimately, it's just a bit of a timing issue. Ultimately, we will make the same amount of money and the CECL is just basically making it more conservative in this sense that more of the things will occur at the front and there will be less income recognized upfront, but that will be made up for more income being recognized toward the end of the life's loan. So actually over time it's -- essentially it's exactly the same, it's just a timing issue.

[Foreign Speech] So obviously we have online and offline teams, but the offline team is offline right now so it's just online. And hence right now getting straight to the answer, it's probably down 20% in terms of the approval rate for online.

[Foreign Speech] So, maybe a little bit surprising to hear. But as Jay mentioned, what has been the impact of the COVID-19 and the pandemic on the institutional side for us. It's actually been limited impact or no impact or actually kind of a positive impact in fact because there is now a lot of macro policies because the macro policies now are pushing the financial firms to support the real economy. As a result, all the financial institutions have plenty of cash to deploy and limited places to deploy them. So, clearly we see now that our assets are not enough to meet all the demands from our funding partners and this in turn has allowed us to gain benefits whether it's on the leverage or guarantees, we're getting good terms. So for example for certain new financial institutions that we work with, they no longer require deposits or security guarantees.

Now, with regards to what some folks would maybe call a no guarantee or may -- or open platform, we do see that in general be bigger banks that are slower to adopt this. But for consumer finance companies and smaller institutions, they are very, very welcoming to the model. And as Jay mentioned earlier, we're definitely looking to increase this significantly this year to be maybe something like one-time or rather doubling what we had in terms of the amount last year. Hope that answers your question. Operator?

Operator

There are no questions at this time. Presenters, you may continue.

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Okay. I think then we can conclude the call.

Operator

[Operator Closing Remarks]

Duration: 85 minutes

Call participants:

Tony Hung -- Senior Director of Capital Markets and Investor Relations

Jay Wenjie Xiao -- Founder, Chairman and Chief Executive Officer

Craig Yan Zeng -- Chief Financial Officer

Ryan Huanian Liu -- Chief Risk Officer

Jacky Zuo -- China Renaissance -- Analyst

Lucy Li -- Goldman Sachs -- Analyst

Sanjay Jain -- Aletheia Capital -- Analyst

Alex Ye -- UBS -- Analyst

John Cai -- Morgan Stanley -- Analyst

Daphne Poon -- Citigroup -- Analyst

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