Q1 2020 Lexinfintech Holdings Ltd Earnings Call

[music].

Thank you for stunning.

The next Didnt take our squad to drink <unk> earnings conference call. At this time, we participate in listen only mode. I must advise you that this conference is being recorded today I would now like behind the countries or what's your speaker today Mr., Tony Hawk Senior director of capital markets. Thank you. Please go ahead Sir.

Thank you operator, Hello, everyone and welcome solutions first quarter 2020 and thousands.

The company's results were issued earlier today and I posted online. So let me today on the call Mr., Jay shallow founder Chairman and Chief Executive Officer, Mr., President <unk>, Chief Financial Officer, Mr., Lyondell, our chief risk Officer, Mr. Stanley job, our senior financial Directory and other members about me, but today's agenda Mr. shot will provide an old.

You know about leasing performance and highlight the download discuss our financial results that Mr. Bill will discuss our credit performance before we continue I started to our safe Harbor statement and young as best we lose which applies to this call as we will make forward looking statements also please note that this call includes discussions or certain non-GAAP financial measures. Please refer to it.

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 his talk I saw arm that maybe I.

I'll now turn the call although to our CEO Mr. Shao my well it sounds good.

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Hello, everybody, it's under the unusual circumstances environment created by the Kogan 19 outbreak that we were really start first quarter 2020 themselves. Those seems club business operating metrics continued to be stable, which you don't know origination target for the first quarter and our user numbers our revenues another core metrics continue.

Having said that healthy and strong growth rates in the first quarter rushing facilitate a 34.1 billion in loans and increase of 69.5% exceeding the previously stated target of 32 billion registered users reached 84.2 million an increase of 99.7% achieving a record high at the end of the first quarter.

<unk> outstanding loan balances reached 58.5 billion, an increase of 67.2% and first quarter revenues was 2.5 billion, an increase of 40.9% year on year.

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Since you're not going to see if it is easier to him yet to each other total chemicals you told US obviously you have many each in terms of that he says about why yet so I am Central Hall adult club, having somebody trying to tell that la <unk> do you wouldn't continued into a life into easier because we will be through either though too easy to Cleveland, you'll get to value.

Well be but the isn't <unk> associates your the easy we couldn't thoughts on that sometimes itself. So usually doesn't but I'll also discuss this all your <unk> really for the whole who've been dealt with say until it isn't going to go through wait I can call. There wouldn't get my father tool, but there are any ongoing pandemic, we've chosen to employ a more prudent and stable policy through its managed.

And the assets maintaining the stability of our operations and grow at the same time, we proactively reduce cost and piece with the recovery and growth of our ecosystem investing a total of 340 million. There's also donate a 15 million towards the pandemic released happens responding sort of go let's call. It put out 23 and work with consumption coupon.

Since or maintaining stable operations weve allocate a 900 million to prepare for the impact that depends on it which in terms, that's where first quarter loss of 678 million.

Dozens of course is not be equivalent losses, and they represent the company's preparations for the possible consequences of their pembina and it's the actual losses are lower than our provisions somebody amounts will be looking back over time. This vision will help the company's future and help promote stable development [noise].

Well then the way you see me Jim It what do you sense. That's in that she is quite as to what I. What you were tenants with yourself well mental don't sometimes the U.S. critical but less so where does it fit into and she could they tell me a leader in Cellcom, Israel, and I'm going and I kind of you'll do you possible, who said that he sees didn't play a vital using the told you they will than that.

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We believe that interface independently there will be no one that wins by themselves and that it's only by working with our partner ecosystem together through this difficult period of time that will allow our business to emerge towards a sustainable and positive direction outcome. We were selected our responsibilities towards our customers our partners.

Sorry, I wanted to short term, our accounting profits maybe affected in the long term the steps taken to help our ecosystem because of understand then I will bring us close or M. Two more user growth and activity.

Better protect the interest of our founding partners and ensure the stable long term growth of our business. This is consistent with our core values are generating long term value.

Digital woman himself and contract on its own party Teradata Yokels within your wasn't quite so things are people that framework are sold it for Houston.

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You can talk about how you're doing.

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Yeah.

In the first quarter on new consumption platform strategy continues to deliver generating user growth scale and revenues well installment consumption in the first quarter. It seems online offline conns scenarios generated 10.5 billion in transactions and increase of 330, 70% of which offline scenarios were 9.3 billion and.

Increase of 1239% in the second quarter, our growth will be even stronger april's offline transactions increased by 12.7% month by month versus March and most transactions increased by 17.8% versus April it's increasing growth in each passing month.

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Our membership benefits program and paying members related products, how sort of customers nearly 2 million usage times and generate a repeat rate of 63.5% and the second quarter. Our membership benefit programs numbers usage types of transactions prizes demonstrated increases it in April on a month on month basis of 100.

41% to under 60% and 846% for each category respectively.

They weren't getting to forget when it's really terrible for instance, we got told you wouldn't be functions and shot contracts are easier to what I will tell you should really younger fans around here in Q2 argued to concentrate on team BRCA easily hindrances I ever PV TV rate I mean, just hundred she sees are worried so where it seems you're trying to enforce or is it more cairn SPV TV.

You counter if I remember I didn't see people thought you can pretty crazy I hopped I've got normally you vocal cord affordable running in the merchant given all critical that through down pets and go.

I'm going to policy of stable this control our overall asset quality stable with declining rich first quarter 90 day delinquencies reached 3.57%, that's where answer the second quarter asset quality trends continue to improve our first quarter seven day delinquency rate was three point something percent recovering what the domestic Chinese economy as of today.

They are certainly delinquency rate has declined to 2.77% recovering to pre pandemic levels. This strong performance has helped US win the trust of even more partners. Our total number of funding partners continues to increase.

What do you can see why that's the you know what you're helping it really isn't that title portal woman I hear you didn't live without you can kind of say if you do you view towards and good luck in or don't cohort summit Basi Bovie simple will tell what brands as well if you go down to shoot with all the way more part you need that we don't almost a 10 year. One thing you tend to your thought you can bottom.

We are told my team to the worsening of pandemic in China seems to have passed in both consumption unemployment is rapidly recovering and other since I was not recover to pretend that make levels and the second quarter expect loan originations to exceed 38 billion an increase of 46% we expect to return to profitability as well the second quarter and we are confident in our bill.

Let me to achieve our full year guidance of 170 to 180.

She is helping you again since her a lot going into fourth was referring to.

Unions of as we go by working through you know sort of quarter average Italia critical to calibrate basis.

What do you know cookie sounds easy reports on the Mboe deal, but it is having problems somehow Woody Allen Franklin funding. Thanks in part of our country's ankle.

I mean, you care about where they want to fill that came had until we also with DARPA, that's helping it's worth will choose a good other.

So do you hope so she told me he led <unk> General counsel to unite couldn't thought at the end up here.

You consumption and new infrastructure is becoming between engines for driving the recovery of the economy. This year. The government's local quote indicate a strategy of expanding domestic demand driving a recovery in consumption and encouraging financial technology companies to help decreased the cost of financial services. The city IR see has issued a draft guidelines for comments on the loan books.

Allocation model suddenly recognizing the value an importance of Internet finance platforms within society in an environment covering consumption and favorable underlying regulatory policies, we will seek to more rapidly advance those things new consumption platform strategy, Greenland greater room for growth and expansion.

She said I watch out you over the several cracker, that's how things out into the trial, which will do next I'd like to invite our CFO Craig to discuss our recent financial performance.

Thank you, Okay and Hello, everyone.

I'm pleased to announce how do we have once again delivered strong growth in our business as reflected in our strong loan origination volume.

Before we begin discussion of our underlying business [noise].

Performance for the fourth quarter of 2017, I would like to first discuss our recent accounting policy change the how Charles people.

So we had already discussed disclosed and the noted a few months earlier in our 2019 year end result, we fully expected diesel to have a mature impact to our financial for this year and today, everyone can see the impact 12 to not only our results, but also the results of our peers as well.

Many of you have probably noted as well we had also did disclose the many additional details can have certified rectify the impact of accounting change and I have previously communicated with.

As many of you on the likely material offer the impact and a half potentially view on the address forecasts accordingly.

In the interest upon given the fact of lots, we and the multiple mall originally many of our peers have already described and that provided a many details on the accounting change that is the full impact we will just provide a mall off a high level over your offer impact of the change.

The people guidance, replacing existing incurred loss methodology.

And the introduce our forward looking.

Back to the loss approach referred to as occurred and expect quite a lot Cecil mythology.

And there the incurred loss methodology credit losses recognized only one the lost a problem harbor well happy incurred.

Well guarantee in the scope of the ASV 326 20.

And are subject to the diesel mythology as many of you are already fully aware from a high level perspective, the prime difference between the new and old academies standard is essentially a timing differences.

And the new accounting standard guarantee revenues are required to do you recognize over time summa amortized schedule over the life of the off balance sheets loan and the recorded in a separate financial statement line item.

The print probation for the accompanying contingent liability for the loan would it be recorded as a whole immediately.

The inception awfully long in another separate financial statement line item.

This is the in contract to the old accounting standard, where we only need it to book the guarantee liability I'll be while.

Many of you probably already know this change in accounting has no impact for the and aligned probability of alone. It is taking hold a time change in the reclamation with revenue and profit from the loan.

And that's all up you should know the change in the company also obviously, that's not change our underlying business and if not indicated.

Changes to credit performance on or asset quality.

In terms of assets as a causing the underlying assets are still the same quality with similar provisions in facing the same circumstances.

However, as a company that is continuing to grow rapidly under the new accounting standard which require that the elimination of provisions for contingent liability.

We recorded a franchise as a whole new accounting standard effectively penalize faster growth.

At least in the short term by producing higher provisions on the PML relatively to the oldest vendor.

You should also also be noted that the new I'll comment on that or we're not having an impact to our accounting treatment for financial guarantee gerken.

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In the first quarter. We also did foot income its unique challenges as a result up call that 19.

Using cover 19, we believe lots our financial performance could be potentially be negative impacted.

A dynamic in the foreseeable future.

This combined with the fact that we'll see those lifetime mythology required us to take into consideration all microeconomics wearables.

And in particular has an impact of ongoing.

Colgate 19, and that pandemic I'll economics, meaning thoughts we had to incur additional cost cost.

As a result of this combined combination of diesel having covered 19, I mean in accordance with a new accounting requirements.

We decided to pick up a station, whether it's called systems with ongoing uncertainty pace in the markets.

When it comes to our provisions guarantee liability and our financial guidance the guarantee relatives and aware incurred additional RMB 0.9 billing yet in additional costs and the related charges. As a result of combined combination of diesel and a call. This 19.

Now return to off with into our financials in the easiest uptime.

I will now go over line item by line item of our PML for more detailed discussion of our first quarter results. Please refer to our earnings press release.

Total operating revenue for the first quarter reached 2.5 billion.

Driven by strong growth in our financial service income, which reached a 2.0 billing of which long for the patient service fee one.

1.05.

Just as a net loss was 596 million, reflecting our continuing strong growth and performance.

Except to the of the impact to offer the Senate.

Fully diluted knew that adjusted net losses per ATM or 3.3, while we continue to see.

The future potential of our business model in the performance of the customer cohort.

Who we acquired in the first quarter 2015, whose balance is now RMB 12000 that tick.

684, and whose 30 day delinquency rates at approximately 1.4 potential with a quarterly active rates of 30.9 cents.

Our operating leverage operating expense as a percentage off the average loan balances was 3.1% for the quarter and then now advertising marketing advertising G.N., a and R&D was <unk>, 0.7%, 0.9%, probably some concern and apart 80% of average loan balances respectively.

We currently have 84.2 million registered users and the 28.7 million customer its credit line up from 19.4 million in December 3rd December 31st 2019.

We acquired at nearly 965.

Solvent, new active customer in the first quarter.

Overall, our average credit limits was RMB 9008.

Hundreds of 70 wire our average Tenda is now come 0.7 months, our weighted average was 27.1 for Scott.

Income all our funding.

For the quarter no funding for new low automation came from the it's usually have platform and all of our funding from you'll know automation came from our children more funding partners.

The ongoing carbon 19 outbreak has dropped and the continue to bring many challenges to our business. Although we are now see gradually recover we believe that with the gradual recovery MW Carmen effort of our team we may still be able to achieve our previous data guidance on a year.

Matt Ryan will discuss our cabin control right.

That's correct.

We're trying to conditions arise from ongoing covering nine dependent.

You are able to maintain credit Cartamundi fact level.

And the head seeing market the improvement in our press you I've already in credit ethic and the indicative.

During the second half over the first quarter I know, we 40 expect our credit is second to continue to improve over time from ethane cracker that.

I want I think David Crosscutting print and ratio you commentary at the to quantify that.

The we continue to stay stable credit performance as our lifetime charge off ratio is around us be okay.

After getting the pot deals with the ongoing cover in line came pandemic under the high lumbar for new customers, we are private implanting banking.

It's better to being a charge off ratio squadron broker to increased to approximately 3.5% to 4.5, whatever our costs over the next few months.

Before improving its Kirk.

During the conference and we our previous payment and the 40 within our range of expectations and the reporting for the our stable performance continued to impact on me.

It is for the past noted.

And that May offer you'll have already fully aware these assets and cracked et cetera.

Excellent Becky.

Three that I conclude our prepared remarks operator. Please proceed with the question and other cash.

Secondly, ladies and gentlemen, we will now begin the question answer session.

If you wish to Austin aggressive please press star one on your telephone and they seem to be amount.

If you wish to cancel your request at least respond.

[music].

Ask your question in Chinese if you can and kindly repeat the question in English.

We have the first.

Right.

On the line.

Jack is that what China Anderson. Please go ahead.

Hey, grinding halt to found that should go would be which will do well what you Daniel energy sounds good job shop.

Do you go through Chicago, you Chicos guidance. So no it was a shining she.

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Got a whole December one piece, you're going to what Minto Chico switching to go Tonight. Once you do it yard. The wouldn't you may you should trigger you may want to make will contribute to a bunch Johnson <unk> Johnson between seen down to 80, Archie cool I listings people wouldn't <unk>. It sounds like I mentioned, the tell me how many times in fact cheap into your mail you ship.

I would translate my question.

Three questions number one there was about our loan origination Oh.

Now let's look.

So oh, just wondering what what is our underlying.

Assumptions for our second half a loan origination targets Oh, so are we going to increase the customer acquisition efforts.

And just wondering what she's a deep mumbling fucked up April and the main a month or.

Just wondering you can give us a number on that.

And second question it sounds like I said Coetzee suggests our simple I mentioned that are we actually set aside around a night headroom median.

Additional provisioning the first quarter.

And just wondering can't give us some details where we can find oh. This additional provisions in the PML, Oh and in which had some we can we can see the detailed.

And then and the following on Dod fees, which is the being pitched drugs assumptions, we are using in the first quarter.

Last question is about the Hbr issue, so given the U.S. trying attention and and recently a lots agreements is oh concerning the listing issue off the are so just wondering how our management tried to tackle this PC sure. Thank you.

But let me go into or whatever it varies and took place in the guidance that you see that link.

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Well it down to.

Right right. Your sounds like I was told order with a cumulative things other than the you got to go through digital which I'd be interested if any of that got us when we had to be oxygen.

So we're tracking on your question on our guidance and whether or not or we can achieve certain things and obviously as you know into your first quarter. We guided for 32 billion. We exceeded that we achieved 34 and this was course under very difficult conditions, but nevertheless, we did very well and.

Well. This we do have a lot of channels and it's interesting to note that yeah. We have a lot of channels and we have online offline.

The off line was offline. So all we had to rely on without a lot. Nevertheless, we still achieved an exceeded our targets over the second quarter as receive on the best for at least we've given a target of 38 billion. So needless to say for the full year or we're pretty confident and we're pretty confident for a few reasons one of which.

Is that we have diversified our customer acquisition that we have online. This includes ads. This includes with burrows. This includes natural traffic and we have offline E commerce et cetera, So essentially you're going to one channel and whatever one channel we have actually multiple channels within one channel we have little known can adjust.

And has a pretty confident in our ability to execute on this now that the customer acquisition and second reasons that we do have a very large customer base, we have over 20 million customers and there's plenty of value in room to develop their customers. We acquire last year, there's growth on the space. So hence we already have a very very strong.

The mental base, Oh, and develop them and third reason is that we've managed to maintain.

The quality and we've adjusted our motto Accordingly, so right now when we look at the underlying situation. We have a very balanced model that its alison healthy portfolio. So for the second half in light of the situation, we're planning to strengthen our too and you can see that the first quarter. The marketing expense has been adjusted it has gone down so this out.

Left room, and we're going to apply that to the second half a year to growth.

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What sort of imported assays will treat you didnt change that.

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Jim official I suspect friendly.

The sequential moment when others.

So a little guys through the 900 million square vision well enough. There is the ongoing pandemic and then we believe that need to be conservative or we should I have this in terms or the exact details on where to find a de lever Craig will describe it a little bit later now overall.

As you know the credit trends on what we're heading we're still a pretty stable as mentioned before and were consistent on this we believe that the final vintage charge offs will be about 3.5% to 4.5%.

Oh, good teachers are things that you. It's just want meal total autonomy in high euros own balances on bad offense easier for society.

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John one teacher, yes, sure you're sitting right here in new woman, she decided or they want you to timing on clean water to the also to hone I mean are down what did you address your sound Dave.

Got it does that mean, partially here, but we also the shares related to 91 million. Unfortunately, not signaling north energy not you know maybe you could get your home accessories, you'll see them go down to go through your dog and hold or you're going to go home hemodialysis patients, which I'm going to eke out how to deal with them understand though let me hand off and neutralizing for using dying Saudi actually.

Well I mean, if a cooler can move your answers, particularly also heard from color change Santander advance Itll could you go no defaults enough. So that alone and you are tied down going through a whole nobody yesterday not you don't go to guidance on some of things without even if we're going to block the casualty job because you're not just you want to you.

Just to Patrick strategic yes, or.

No matter how much it won't be able to continue that you can go to kind of machine.

Hi.

Sure John Deysher section, because if we didn't you ought to be interesting two trillion company.

So you're going to eat your shirt truly policyholder dropped about we just took on these are going to the are caught out.

Who trivial taser.

Yes, Hi, I'm sure you would you sort of hit it either for them.

And so I'm continuing from a Ryan mentioned.

Unfortunately, because we do have the unbalanced see off actually model different galaxy liabilities number.

It's definitely not something that you can simply take one line add another line and then put it together out there for modeling and other things will be sure to guide you in the future, but fundamentally what's going on here as you understand is that we have different funding partners that they have different requirements and based on the requirements. The contra.

Racks as written a certain way and then in terms of your auto dealers will review it and do it assume away and treated under a different accounts.

With regards to the 80 our issue after the U.S. Congress went through the year registration west to the legislation sorry, a there then certainly some concerns out there in the market and we have certainly heard from some of our shareholders and investors on this topic and indeed, the Hong Kong.

Listening is a possibility and certainly there are many companies looking at it and some companies have done it already and likewise with examining the possibility among several possibilities and if you look at for example, an article on this excludes apparently based on their assessment only.

22 companies right now were qualified Fortunately, we are one of them and we're certainly going to continue to assess the situation and at the appropriate time do what it takes to protect our investors and shareholders because that is very much a very important to us if the need arises too.

The way a Hong Kong.

This is something that we're looking very carefully and we'll continue to assess.

She their currency neutral thank you.

Thank you.

Can relate to the next question.

We still.

The next question.

On the line Indeed young from Bank of America Merrill Lynch. Please go ahead.

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Sure.

So when you Angie only in the UK sounds.

So my question is up though the customer acquisition strategy.

Hi, Jane mentioned that topping out Mike hole.

Customer acquisition and that was just wondering why don't we view at chose our strategy across different channels in the upcoming couple of quarters. Given our focus is not accretive we are sound management. Thank you.

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So not find what I feel like worried and really the ego, Egypt, which had the to Denver Gonna Yeah, No. So town square to hear the adult does or does it change I was hoping it anyway, just cancel body putting on top of true because if we would obviously be audio Tubeless Union.

Could you talk about Union, that's you sort of just over religious or warmer hires and booking Idaho door in how to go door, they're doing bump it up in high drug to treat people think you go what doesn't go there you go down on the need focal will make like Asia Asia to Thats, not a clean tech always you'd be able to the telco. There's always on can cover yet so that he says it will.

The only other than a year that they were kintyre physical door no whole bundle Nucor Cook. So I'm not just a woman is a little park. So if I can talk to the so you've got you. Okay. They say they say that there's going to be advances in tell you for brinci they'll tell you got even sunken secret something that is a woman and that's how does it with a focus linear they don't fit on child so much.

So that's a sudden from here for a job out either so I'm not I'm going to the two Donna will immediately then to go still doesn't go to industry Archie bunker loudly to two suits was done electricity order that you thought well may have a course of other whether you look underperformed in the right. So well not your daughter cards to see how are you agenda Cotter you go Sarnia wanted to touch.

You're doing it a total or just how does it go to you got turns on the Dallas is simplifying tough so let's say the goal I look at all yet. So it's all grew up pinnacle holiday will oppose here I will tell you, but then they go from an advisory and that's all consumer well here to talk I used to suddenly you go you go up would you.

Yeah. So every year.

I think you're fully understand there, but for the benefit of everybody a different channels, but definitely have different up quality customers and there'll be some very pronounced include references the offline channels as a whole definitely have lower risk. It also has a higher contribution over the long term and.

I can definitely get a better understanding and a more appropriate chosen assessment of the credit risk for the offline customers and then get the customers. They are more appropriate amount of credits now online inherently is going to be a riskier, it's going to be uncertain and it also has.

As a higher incidences abroad. However, we do have a very strong risk control system and we do have accurate assessments of our customers and that's really when we give different assessments are taken into account. These goods and we're just the amounts to credit.

Et cetera, and based on the credit risk level of the customers we acquire online.

Now the first quarter in second quarter was affected by the pandemic and this of course in turn impacted our customer acquisition channels, and particularly offline, but now we can see that as a whole our customer acquisition is recovering uncovering very strongly offline channels will not only recover but it's going to increase.

As last year. So this is one of the ways that we're planning to acquire more customers and the second half of the year. Another way would be our platform, where we help with other platforms to sell including several large platforms, including for example, QQ music and others, who have a traffic and that does matter that we will continue to use.

To acquire customers would be our little rock or which opens up a lot of the offline channels. So these three areas for the year, we're probably all be stronger now ads will be adjusted appropriately. Accordingly as is something along that is something that will always depend on the cost and you have to assess the risk accordingly.

And then in turn it will depend on inventory and also in terms of the situation we have to see what the ads can bring and based on what the a asked can bring which in theory. It could bring a lot of traffic will have an integrated approach accordingly for our customer acquisition.

So hope that answers your question.

And Ah think tank actually Ah, Tony and that you think of that much.

Thank you rehab or next question from the line.

Alex <unk>, yes.

Right.

Okay.

Uh huh.

Great.

A woman thank God.

Yes, I mean.

The people find for Tony.

I wanted to go fund remorse.

HM.

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A woman.

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When I know you don't yet.

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I think.

I mean, theres always a tweet out sort of people on Monday.

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Anthony so.

They go from campus.

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Okay for women Joey shape.

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She said I mean, I got your son finance.

You can't that at the Q either.

So I mean there.

When you look when you look like on it.

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Wishing creep on being that later time.

Since we went out for quite some women.

If I mean, it seems and.

Briefly translate my question My first question about the.

The company's business model.

On a.

Ah partnership with financial institutions. So.

You always have a portion.

The non guaranteed model.

Uh huh.

Sure.

Revenue.

Foundry infusion.

Right and guarantees so just wondering with portion.

Thank you very reassuring business.

Q1, no modem and with our target for the coming one to two years.

And.

My second franchise.

Our take rate trend.

I notice we have seen some decline.

Right.

From a obviously and increase permission for fall for the credit costs are doing Adam refund that heavily to Oh slower.

Lower take rate during the fourth quarter in particular it no during the prepared remark.

Andrew mentioned that there are some way if you know fees and interest of around 340 million.

To to covert 19, so just wondering how much of this.

You know what Q1.

My last question please.

The competitive landscape, particularly related to our little more cod, So I haven't noticed from Pete.

Also providing protests that allow you should use it to link directly aligned with their Oh, we show any pay to come.

Wondering from any mention something that's some kinda on how we I mean.

Rising competition to future. Thanks.

Or whatever it RP girthy silo and.

He going to require to tie that a little more so on Lily figure that you saw that opinion that you go to phase until the other side is a function. He went to what I'm also thought for the full that so those are the most of the men will then you'll remember material. So we'll go down because the Eagles a woman so that book and Alamosa. He's also a sudden was what's the level of animals.

Well, that's looking I'm thinking that they go to the most other she's been here to tell you cannot do you go to see.

One, but you're saying you're going to undergo resident in the one which I love that doesn't mean the title.

Okay lunch I see Olson go there, although that's under the whole woman so quite dangerous. So we continue that reserve. So this is outside of the sensor, which again is it really without a function.

So let's say the most of the two thirds to you know scene. So important that's about Jim it's kind of the year over the years, you'll see all three times out a bundle them. So we'll look at the start up it kindled between your heads up a notch facility into easy to use another Seville, that's pretty soon there even if you do.

Those are things that people thought.

Hi, guys that either from what you're talking about different or does it easily do I have three seamless in a couple of thanks.

Right right, you've got a sensor well then well minimum would be also doing indeed woman undergo a total billings. So it's let's say the single most of it you just a little mini and say that's the only other telephones are either well known side what are the wet soup and Jim was talking about new the UK sends a yellow to your whole once again says I tell you look it would suggest that since all the people up so.

Why isn't that kinda.

But anyway does or.

To that most of this or do you.

So you will then nice or whatever thinking that you go the hurdle go documents you go you sort of Tesla.

Hi into them was he said until they use all the yodle yeah. What would you know she wants that Doug just how you want to the most of Ecuador, but what they seemed a hotel quoted sorry are you hope would allow that got one in 500, yeah, Yeah, there's little more sort of go so that it will continue so it will take that you've got the woman did however, even if it until we understand if I'm sorry.

Okay. So also your first and third question.

And on the first question Yeah, No facilitation model in particular, the model, where we do not take on the reserves ourselves is a a important strategic direction for the company to sphere and of course, a this is an area where there are several benefits not the least enriches. The fact that we do not have any a cash requirements and we do not need to put together.

So at the banks, it's a basically very straightforward process, where ultimately we get a revenue share or something like 30% to 35%. This particular model, where we do not set aside the rest reserves and we don't take the risk well has made up about 26% of our funding and the first quarter and it's currently.

Picking up about 30% of our funding and I'll go there's a habit reach a 50% by a you're right. So again, it's definitely a important direction for this year and as we open. This up this will allow us greater and greater growth because of the lower capital was.

Another reason why is this is so important is that as you can see from scrap documents and the general direction. This is something that's very much welcome financial institutions themselves and more importantly, perhaps also by the regulators as a future general direction. So this is something that we're definitely going to develop more and more this year.

Oh, what they say what I said differently. When he went a little color no what kind of at least there what kind of answer to the from here womanly seen answers to their citizens of these jobs is what it on something that you have also so tell us how many maturity and she was it just a jump into you know there's little October so each other soil. There's obviously so until that time. It is what are you you line up to easily.

Philadelphia, you're working harder than you know fighting almost 10 years value before you didn't go above and beyond that is usually you didn't get any chance you know so to the time to know if you could say more challenge what are the sit on some lets users directly the engender anyway, even if it's how many but center will do the judges decision to us and into the has he will give them in Canada.

So just cause or you go to Eagle Joey tons that you could slip as a child at least Souffles I tell you that it would have handy countries and go to either.

Similar to tell you the tree they shouldn't go but yes, you hit on a go so those are the cetone, which is a while quantity Neal. This is going to account for more color almost 10 kinda talk about in terms of switching now how you would be my Goody Egovernment kind. She was very pleased to the year, which was sort of that lets switch into sort of up.

Yeah, the logistical Michelle.

So I think it should you quite simply aren't quite as.

So that Susana drilling Tonight, the Joey So lets say this is your panties or that there was a little if you like you said the yoda ego, even until early egovernment. So its Oakland whenever we talk to you got you got all the time game. Because this was house. So that you put up I mean, how easy $1 million, even that is that it is a dumb woman then them policies, Jim just take the year World Trade Center.

As it would have come at the other sort of go according to the need not be my that you got the new material that we interviewed pretty cool would watch how are you on either they're good at you good fortune about.

So it's good it's a little genius is either a billion that's if I'm going to use. So it's always you know city either how this enrollment. So again has a claim quite you can go to the easy right under the financial data. So he'll want me about sort of tied to the holiday if they don't intend to he also will make what you got all that quote element that degree the user.

So onto your third question on the I Love our card well as you know up we were basically the first company out there with this type of product the idea of opening up our credit line and or the about accretive for our customers are to be offline scenarios and as the leader in this we now have probably something like a mill.

Okay and transactions on a daily basis, and 10 million customers using it. So obviously, a very clear leader now I will say that theres definitely difficulties, even I can say barriers for this business, yeah transactions and the payment. They are integrated within this and you need them to be stable. So you need.

Actually sometime they took us quite some time there to ensure that everything run smoothly and that these micro transactions can be facilitated in a very stable matter for all these transactions and other micro transactions. Another fundamentals that were of course, it's the funding partners you need a funding partners to cooperate and be willing to.

These small.

Oh, a transaction sizes. So in order for them to cooperate to allow for this type of stable payment system now fundamentally whenever you have a successful product that's doing very well whenever you have a good product, it's going to attract competition, but we're confident in our ability to continue to provide a better product a good product for our customers.

So this was one of the areas. One reason why we feel strongly that we'll continue to lead in this area. Another area. It's just fundamentally our customer acquisition and our risk control around the customer acquisition as well as you have success. In these particular areas then you're going to be able to maintain certainly lead over the competition because.

They would have as a product so hence a this is another area, where we feel that we definitely have strength and finally I do want to say that well. It's a good market. It's an interesting market and we welcome others to come and helped us grow the market with us so competitions natural and well basically global.

<unk> market together.

Oh rapid.

During the take rate or try to litigate trying to not woman or just changing of how is your fixed rate certainly let go long term as I'm sure you get somebody beyond that.

We eat up and down to a hard about how we want it.

Well I'm supposed to Daniel we should probably a kind your short complained she'd I think she does.

Even though.

So quickly shot at contract also PDP say, how the joshing.

Firstly advertiser charges, because you've got really what about your other show Joe and she will follow and that leads you to cheer like acquaintances.

She goes to Jim Darsey, not to get what I'd also tell us.

Dr. Once all the data should be I opened during his role.

What makes it easier Josh is what I enjoy catch our dealers you saw that they don't regarded on washes lateral fairly ownership general motors, our video and she says that type of any kind it should.

The other shop, sorry, muted entered yet more sure them I think now would you like Saudi that you're sure cheerful and eager to other Java Big data for the traveler. She said I won't go do that Josh to GAAP measure that control that youre kind logic.

Well surety charger for all of his additive to teachers, yet again, the job that direct lending that it'll do that multi $18 on top of the battlefield $4 quarter or not.

Turning to enhance your here seem the exact throughout most of that you may not be involved I think you push when she does show a job I have always drops off fragile because your job so again, we'd get.

Oh, what kind of preferred to have actually you I'm kind of trickle down she left to go more sort of of our phone call I put that she's got regional time, how it'll take rate sounded actual indesit Southern Africa, but dig into Argentina habits from doctors now let me immunity to offer our copying what I do want the G. Someone's got from I think industry tied to the take rate on people denominated.

And so on your second question, Alex on take rate trend, a long term, it's definitely going to be a stable and feel that the key to our profitability is not going to be so much offer this but rather the scale of our business because we do see that in the long term again to take rate should be stable.

And we do focus very much on the long term not the short term so I'm a whole concept or cost of funding. If you will if you think about it in the past 'em, we started off with Pete of India. As many other platforms did the cost of funding there was 8% to 9%, but nevertheless, we took the long term due to open up some more funding partners and to expand to more funding.

On those and at the time when we opened up these channels to the banks, where we're talking about 10%, Ohio in terms of a funding costs, but clearly we're the first to do at the for many many others to pursue at this particular Avenue in China now naturally at the beginning when we're doing this.

We were suffering from higher funding costs as a result, well consider PDP.

Now currently in terms of what we're developing we're developing.

Increasingly the revenue sharing or rather the banks take on the list reserves themselves model, which frankly, we were probably the first our last year to do this at the beginning of the year and this is something that we're going to increasing focus on overtime due to the development and due to increasing trust one about funding partners we were.

Turning to a eight or 9% because just like the PDP before so offensive Linda contracts over the long term, we were able to lower the cost and secure our future now naturally when you continue to develop funding partners, you're gonna have to give up some profitability some profits to them, but we believe that in the long term.

Our profit our take rate et cetera will be stable and that's really going to be a matter of scale that continues our growth and profitability.

Okay operator.

Your next question comes from the line.

Marching month.

Please go ahead.

I could tell me why didn't know nickel was three years when they're Marty Oh tell what we would you got your Youre she didn't know what.

Do you go through sure. It worked on Monday, good people typically dumb things like do you get as either a each inquiry appropriately.

He or she don't use your.

Sure sure arguments will take a blood based video Miss So now I'll call you know it's a good do utiba trends you you to what you need to use your smaller towns that you either will be not too much I know, it's important on I cannot soon with each NCC, but all the European shoulder kindred essentially to the trend tools and training or whatever.

Thank you for me once you just how does he got equal Honeywell bunch of internal country. That's one thing that you like kinda horrible month I tell people should be sure. We say they just keeps you see on the you got to her she won or could be above it just what deal and what the arm in future calls on Monday.

[music].

Ah two for me the Red Dog I'll get you could assume they go Q2 through a joint anybody parties to insurance companies and guarantee companies to connect.

So the phone by both here in school, who Nicola Hamilton's quite young.

Taking a hotel vintage I think Oh goodness I wish to sound somebody's not seen a things you attribute should grow should model I can make good.

Restricted to consider seem that is as Cindy you can be seen does it gives you some life's much UBI.

He keeps I'm not here to who cannot which isn't dominic good.

And what kind of seasonal or two or so I'm looking TTB would.

You could pvt Yahoo.

Just a year ago grew and they are two of your weighted average interest rate of easy to California partners I totally shibu the whole it sounds interesting when something when they got a is if you can you help smooth, but should we hear how young you wouldn't it.

But what you're doing and how does he will make a coupon on kind I do think about your possibly who they use or are you going there or are you hear a keyboard equal to the much but [laughter] what can they got Shenya Union looks you see the one I assume it should be the hoganson. They go through didn't should be at home, but we don't see the sure Supernus ammonia you.

Oh, not down things, Oh, Wow or fighting how what they are just wouldn't you bought.

My first question is on.

Statements in the first quarterly report that due to.

From an old Cobank Kobe, Nitin autonomy impact Oh, I'm, especially on the only a on the I frankly, the impact on the Chinese and the global economy I think he's an additional viewpoints nine RMB 2.9, leaving again.

Additional credit cost.

One of the and the agreeing to you can't looking into the second quarter decreased 19% me.

It's not finished and then even though in China. The pen and then it has been largely under control and the second question is on.

The new the new the new lying on the balance sheet, there's a new line core the imported to insurance companies and the guarantee accompanies so just the one there what what.

I just wonder what is that like on the Wendy's difference between these line and they just didnt care centers treated and reported.

And the third question its own the ppt it on the lesser PBT I really just on the website on page 13, there is a cost of funding a this quarter, a which is the recorded at around 8% which is different from.

The 9.7% in period, you better to be piece. So I just wonder what is the difference between to buy there why there is but there is a 2%, but if it's between the current this quarter and that previous to this point. Thank you very much.

Okay, well, that's the guidance I'll make a economic conditions events.

Sure. So you want that you see the provisions to virtual machines and we don't.

Make will come from what you can call Gulfport make essential reaching five states or take a duel Masters CECO.

Switching to synergies Cecil woman budgets that are key to them, but again I said that.

Yes, so oddly especial provision so long story short they definitely consider the U.S. situation the global situation in China situation. So, it's probably a a onetime especially event and the way. So right now we don't see any reason why were we would need to do it again in the second.

Corridor.

The latter Suniga thing how many high 50 got Iowa that you are not that one IPO. This whole woman that we ought to be able to fuel gallon. So industrial I mean is repeatable Russian rubles incumbent how can you help guide anytime youre onto out of the geologically controlled out. So when you were kind of larger which we'll do that much time I'll direct you to rally over there.

So you take a solution that you've got no anyone with a future concomitant takes.

So it doesn't look on a go can now on the front obviously shop.

So I think what you were looking up before it's more without the love. If you will weigh on that type of up cost of funding and now we switched to a more oh type of cost of funding presentation, which I think a better reflects the reality of our underlying business.

Okay to deal with them.

I would you got your should they go and you've really got just deposit on the other on insurance manhood trigger teachers use or even when he was able to looks like a lot has shown in the U.S yeah.

Between not truly not.

Take a few answers will litigate equally hey, Mike I think restrict cash what was your hands element will mean, you how can you touch on the fine here, so I'm not going on and he did not have injury that haven't gone. So here with US are also either you or even the logical prostitute hybrids defeated on each one of them for that you have everything that's anywhere to three mile.

Got it.

Yeah, So I'm on your question.

On the deposits with the different.

Insurance companies and identity companies, Yes, you could deal with that as a kind of like restricted cash from before.

Actually it's a reflection of the different type of funding mottos cooperation we have out there. So for example, a founding partner may not want us to lead the money at the bank they want us to a happy our money instead as a deposit at for the US, namely account at the insurance company had again see company. So it's simply a.

Well reflection of that.

What I shouldn't negotiation is on seeking accretive nigger.

No we're not to make the when teachers youngsters Dominic.

It wasn't as you go off balance sheet and take a moment that you're going to make sure about anymore.

But you also know to Ah Ah intermediary payments on the guaranteed cost and not <unk> told me I got hit with them.

It's not yeah Jake.

Trigger won't be material way here, well thought out Nicole Miller owning intermedia neighboring operator, you could actually make.

Okay.

So she can I really appreciate your Cheniere automobile mail finally, though there are some of them and if I know you show shutdown modifications yada Yada Yada yada model, but some articles I'm at levels that models.

Hi, coming activities that you're trying to top distributors or just kind of come from I'm huh.

Yeah. So I'll translate your question for you so essentially.

Obviously, the authors, 8% as a measure and.

Well, if you add back the other thing so we've taken out.

Such as the guarantee cost et cetera, or would it be and that Craig answer was well you can't exactly do that precisely.

To get to kind of their clear answer because it very much again depends on the founding partner depends on the model and the requirements of the funding partner. So for example, after funding the partner does not require an external guarantee you company then it's one number if the funding partner require the Nexstar no guarantee.

There are typically the external guarantee partner tried to say for example, a 1% so essentially can add center that but it really depends and might not the shall we say I present, a accurate picture.

Oh, the hunt for younger too.

Thank you can be moved to the next question.

Absolutely.

The next question comes from the line as Sanjay Jane ALLETE. Your capital. Please go ahead.

Oh, hi, everyone. Thanks for the presentation.

Two quick questions. So.

First one would be so quick depends on you.

So as I understand you have four categories or types of loans within your loan book.

Josh subject to three different types of accounting policies.

And again as I understand only about 40%.

If your loans.

Object to the new.

We see two six and then you have a interest income on the on balance sheet loans and you have you see six or six on the rest.

So.

I don't know how.

Alright.

I'm finding it.

Incredibly complex or unnecessary be complex.

Right working out.

Can you help us give us some they work.

Some some some way.

Getting out how the full year window, and maybe next year because again this year is.

Do you still have the 677 million every quarter, but haps Oh carry forward from last year. So.

My back of Don will not be.

The same profit number is not yet but can you help us.

Something.

So on.

Ah, Yes, sounder I'll translate your question for you, but first Oh, we probably need to do something maybe similar to like a modeling day with everyone in the future since as you mentioned in your 100% correct.

This is a.

Complicated situation to say to lease so a himself.

Definitely a into set something up accordingly.

Let me translate your question for the team and that has shown a I never come down a couple of minutes ago silo that can comment how good enough I was out sooner when they come partner illnesses owned and a decline owner Yonah sangre the quite to the motion.

Yeah, Hi, John This is like I feel by then do Suji there so for young down ever going to see you know Sandler O'neill, although not Atlanta I own a inside that sooner on balance sheet, Oh Irish in a way to go down there. So they will say no central to this was realized roadmap from partner.

I would go down or when we don't know about five minutes.

I've ever go outside the US news Dimitry by there's just went through either.

Because I'm proud that guys funds will either.

How should the managing and the thing we would like entry lender, that's how the door because it feels good about million Nelson I apologize.

Uh huh.

She just wants to know that you made it for a woman as he sees that you've heard me on the subject Communists hi.

Yeah, you apply gigahertz.

Oh Wow, how to talk show Hum male Kenai. These the IR team with a better luck energy.

Josh meeting or do you give me a hockey I'm those home embodying the kinds of our knowledge and actually seriously you cannot rely on many of them because it's obviously going nowhere lifeway.

We tell me what means I should be allowed the our managers dollar one goal. So now you're short time going on her so long term like youre not usual them each of the higher value not just forgot to yeah. We're one of a finite finance what are you able now.

Hi, Jay account I wouldn't want give his home home tone behind the future.

I don't know margins without a you know we should consider formula one religion on for John I'm, Anaheim and it just wondering how that young woman or a company how many for about 10 Central valley over the upcoming tell me if we get idea that's yamana Dave.

Particularly to know what mostly diverticulum about trigger for very much on caltrans half of that this agenda for male bilateral James I want to your question I should be valleys.

He's asking you go more should Oh Gee why some some finally I'd say that it'll be off of that now on Jamal in bound rheumatology volatility Fisher a whole me on one real quick of May.

You may buy on its like a modeling day Rami owning a home you for a woman.

Reporting human the for CGI JC Penney drama waning Sheehy down here. Okay got you go geological modeling that Jay.

Let me answer to the modeling for constituted woman home.

[noise] digging into the as an African or geographies operating now these are real and they'll be on why you are bundled up and going into tier surgical procedure.

Richard Mutual fund assets or should they won't get up I can figure out you can push on Russia.

I wish to just trying to figure out how he answered yes, we had I wouldn't be able moshe.

Q on what those numbers are we continue to get Nfone since you get Hanukkah I doubt.

Oh sure Sunday I May and then you're absolutely right and obviously, it's not only you I think everybody out there it's having a these issues if you will and unfortunately that there has been changes if you will.

She says approach on some of these accounting in the recent past that's become a complex, but based on what we've heard from a the FCC apparently nothing else is ah forthcoming, whereas some of the more recent things this year last year.

They were kind of in discussions and 2018. So on that note overall issued at the very minimum get more stable. If you will overtime longer term issues, yet a little bit easier and then of course, we have to also distinguish between the short term and the long term loan term as Jay mentioned as a team.

Mentioned, we're gonna have more and more of the model, where the reserves taken by the banks, so enhanced or that will become a very very sizable part of the business and that should hopefully in terms simplify things a little bit as well accounting and otherwise in the short term again, you're absolutely right. It is complicated.

Is this our choice absolutely not we wish that it was a lot simpler but for a variety of reasons not the least of which is you can say this is a new business. You can say this is a very unique environment in China with different operating model you can say that there is inherently complicated.

It accounting that was in a state of shift literally the FCC and you can say that all this combined so frankly make this a lot more complicated than anybody wants and certainly we don't want it to be so complicated so hence I think.

What we will talk to get to do is something with all of you ideally before the end of this month, where we will help investors and especially our covering analysts understand this all but.

With a very formal a modeling day with myself, Tony as well as the Stanley Our senior financial director and they've been asked him to help explain the them how to do this and again as you can imagine.

Apologies for the complexity, we wish it wasn't so complex we wish we did have a these things occur but it should also be I guess said for our case that we were probably one of the first is not the first guys out there to say that distinguish csos coming and that it won't be complicated.

And we help many people show up with understanding that it will be complicated is having an impact so hence I think.

We should have some credibility from that and again.

We certainly wish that it wasn't work and ideally it will get a simpler in the near future.

So.

Hope that helps.

Okay. Okay. So [laughter] okay. Thanks.

My second question is on the.

This john's for loans.

Legally on paper that Youre seeing the banks that reserves.

But I know you have always been skeptic Oh.

Through this transfers.

Looking at the.

Experience of Oh, gosh, such as it stands for loans in one of your competitor.

I'm just wondering.

Who on.

Other partners.

These loans with you as opposed to Green loan specification.

I'll be the team.

What do they see.

Are you, giving them quite a bit good economics.

Just on Standalone come back.

Oh, sorry.

For syndication.

The loan.

I mean, I cannot believe that those guys.

Going forward, but it sounds like normally because it has some show high Mark.

No problem Sunday, let me translate that for you a first.

So it has so nothing is a figure nothing about functions like encounter no motion well pad with canola lottery handling of the Luna will then the noise at home so other than a whole lot sort of follow the softened as you're switching.

Okay. That's on the has begun to have helped you know I'm sorry, it's the same digest. This yeah. So somebody on the goes with also gun shukarno, although not at the Shana sitting founder Jamar, Oh, a sort of sooner when they're not going anywhere if not sooner it couldn't do other kind of how the leawood Oh my.

Okay, that's out there and actually messing around with it it had yet another country broken into it it was a winter and then switching younger.

So you know the governor treating so say losses, so now under magical.

Well take out any kind of Detroit auto show at home etiology their knowledge out so eager to your own could equals the full year, how not supporting higher levels in your prepared for critical well that so the only had was running you how on for John What gives you a long they took out more sure cannot machine or what it should have more services as well.

Pushouts actually food gigawatt of game and push out that shoot.

So the units yes, that's true you how long can you show woman unlocking high homes are all.

Okay. So again, but answer most asking so that's how they saw will not go the only had a really if you answered my Patrick Williams off so you get on washes out well bring about okay.

Earlier today, our referral woman, there's no basis, you're planning for the wonderful yes sure warm as she sees what you are seeing all of that would have to me like the only included a hockey maybe that is high enough chunky, Doug do you find out.

So first I think or want to emphasize that as I said in fact company.

But responsible if you're willing talking about this I think you know unlike some of the or other language that perhaps you have heard in the past one elsewhere you can't just basically cost transfer or whatever you want to call that risk off sort of banks are you just inherently it doesn't work that way it's not possible.

Your work with the banks and they accept the risk because they trust you. They trust that you have the risks under control and hence that's basically the premise or the foundation for doing this model that you do have the ability to control the risk and that you have good quality assets and that together you can control the.

On this.

Yeah, it's definitely not a situation where do you can just simply transfers the a risk in that sense or it's going to be an area, where you share the risk and the only reason why the banks assess this is because of the fact that they trust your credit quality and your risk control.

Or whatever so whenever she will take the also said that have gone so.

She's a encounter shopping center also then as a hint towards M&A Toby She's a correct.

You got all the political that's supposed to go because only a little worse.

So Oh I told you that wasn't high whatsoever, so suddenly most of what.

She said approaches are putting this all right that's what I want to cover quite as well. This is what we're looking at bundled up why hotel will the public private fund out just hazard to the to the thing that you got you got that Oh, well then okay getting down to 10 denim with certain number Washington, something other than it was all for me the seem to us or that was.

I don't know dopey, the most Hassan attack woman to go portfolios or whether you go.

Yeah.

Sorry, I forgot the robot.

Good old tape out no mention is a lot higher but instead of Sunil will look like so forget the hot so got anything in somebody does it here not saying.

Well you called out any hope they tell us a woman so give us and got a you've you've got muscle. So that he got even tell me. He got a fundamental Mozilla can know what I would not want because this is like I think the insights into how so let's see I don't want to justify what she's a woman Labbadia thing because then they hit the top but then that you guys didn't when she told us or whether it's almost others will she says that said.

Most of them yet Thomas Cook, you can't know can go to <unk>.

Certainly there's always a woman she somebody funds that are either title will know punch it up into that you guys. So but in general has informed with only two of an initial well located element to it. It's still it's how does that either Tim could you. The entire look what I can just 'cause that's what it'll continue.

Yes, again, what we're going to function. So the single most of that she's a surgeon tier two kinda quake type it gets into the two little doesn't matter for the motion.

Well in terms of the funding partners and who are working with I think Jay wants to that I mean, it was certainly work with banks, we certainly worked with consumer finance companies and we work with trust and quite often actually we do have two models with them literally one where they take on the up reserves himself and.

And our motto also where we take on the reserve.

Within that context, I mean, I think it think about it from a standard motto. Its really a simple question of let's say, there's a 24% NPR alone we get the funding partner, 8% and then afterwards, we get the remaining 60%, which we need to buy to reserves, our costs et cetera and.

That's our profit this would be something like 30% to 35% Leon ongoing model now if we reverse it into the model where basically the banks pick on the with reserves what happens.

This almost literally reverses itself in a sense that we become the parties that 68% they get the 60%. So do they make more money from this yeah, absolutely so unless the risks or if that's correct and do we get anything from this well absolutely.

Because this is a asset light model for us where we are not capital constrained and we can have a cleaner system. If you will be also more complying with potential future regulatory direction and hence a it's very much a a win win situation for both parties I think again, it's basically.

The predicated on a cooperation trust and fundamentally that the economics that we just talk about working if they don't work then you can't do this.

Okay. So so just to be clear.

You just before.

James reply, you did say that there was some risk sharing.

Just to be clear.

They weren't laws happens.

These loans they.

Entirely on the bank.

Nothing which comes back to you.

So let me translate that for you.

Good.

The insurance.

So about function lunch franchise income.

So the numbers once in a lot better quickly.

They take a woman she loves to focus a bill you may was harmful to you.

The whole foods and whether to centered on the $5 literature that David listen I talked to them also take what seemed like a one comes out yet you cut off.

So why doesn't it all about when somebody.

And to be a very very clear on this up it is a revenue sharing model it as a matter where the banks and take on the risk and ER in accordance to these contracts or what is the worst case scenario. According to the contract a one or we won't get the revenue share.

And to the cooperation will stop in accordance with the contract.

Let me take the most of them with a focus anyway you me.

You can call, but you don't see go public you told me he made high pace I don't want sitting in front of control the chair well, it's how you doing your attendance saipan's unfolding.

Now and the best way why does this motto exists, it's because banks and the trust et cetera. They are motivated they are motivated by the proper motors and they can make more money under the circumstances under this model.

Operator.

Yeah.

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Hi, there Tony high margin family.

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Question any color you always I'm going on your question a couple of days I'm going to sequentially on a go from Citi Sanquin behavioral Chico you hold as you're looking for it.

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Oh, just kind of being Valentino entrepreneurial type what kind of a bunch of why you will you said he said I don't know how conditions for now.

Subscriptions, reaching your clashes with a a single quarter, how would you from into the whole could it so not sensitive.

Oh, well symphonies activity going on a year with someone already answered Tsum Tsum I.

I have several questions related to the business operations provisions and our restocking in the future supposed to be honest since operations I would like to follow up on the the the profit sharing on revenue sharing model.

I'm, just wonder what kind of the Oh <unk> as sets, Ontario.

You know transfer in the risk for the funding promised at the moment and also we heard from some peers that are there could be a situation that when barack could have fun. Several items. Some of them is guaranteed Patterson and some of them just restrained renewals just wonder what's how a model on on that front.

And also about the low Hong Kong I've heard that its also contributing to the new customers up because from my previous understanding is that is mostly for existing customers just wonder what's the contribution of new customer from go up high and how is the outlook.

Well, there's nobody would outweigh dialogue to the point it a little you got a federal most of US you know what Mr., Liu who will take anything John is a gold manipulating gases public probably top level. Given will then says you know you hold a woman with entry into the Yoko somebody that can if you go through a couple the altschul, who didn't seem to have that you got something well wouldn't be mail thoughts there definitely was affiliates.

You know you got there was there something yeah, yeah, what country hits, an incident, probably yelchin conveying you're supposed to the involuntary I told you the need any leukemia, you'll that's again probably go tool you may ask about maybe there was electricity output. So instead of told you sort of email tokens and that didn't tell the truth and not the money.

Nobody is going to.

Just a little then says that you got either.

Oh, the Judy why is it just feels it feels like well they realize there's a you're right well much a catalyst of what you see yourself I said alcohol legal that's it as the year women that sort of like what are your were quite what did you read the consumer so based on what they want to talk on notice or does that all told on site what are the Coca Cola she's.

It's a global Tobin Little box was if I missed what are the cohort. So this is a pretty young look what current how does it look whatever copel doesn't go the young to your cost of doing them. Yet. She has held at the time isn't it could be kind of course, if we didn't do the enjoyed thousand because you will join type one and youre going to touches the.

Got it I'd say you could you would have been good Joe did a PV couldn't see me on the model. That's also just wouldn't you actually not even if I could you talk to them I don't see.

Okay Vinci, let's use a big the yourself is how would you look up and don't see the simple. There's somebody told me that usually either done it's I mean, I couldn't really for the couldn't daughter, you'll sort of walk on her and she is a woman which is that opens on kind of Chicago I just saw a woman's I'd say why NIM kintex, what doesn't kind of trouble here. When I mean, you said you're not seeing that's understood one is unfair.

What I find teletype on their phone number.

Going to it so if I'm a here we just have a bunch of that isn't he comes into.

No wonder what kind of limited the K 12, little pecan trees might tell me if I read says the is it time here well, maybe even a djokovic tennis hopefully diseases that are either Yahoo. I don't have autopsy. We'll show you get a show. So says we'll go back onto the telco. It's a woman continue hopefully they seem that's been done until the evil.

Yeah.

I'll be a revenues area I think basically you might see actually quite similar pricing, saying pricing nothing I'm shall we say separate or different ultimately, it's gonna be based and determined based on the customer as well as the financial institution.

Providing the financing.

Just on a if you will any specific set of revenue. So I mean for the financial institution. They may have certain requirements on the HP arsone type of credit customers, we have somebody preferences. So ultimately a its determined on those basis would be though.

Maybe a little card and it's definitely going to end up becoming also very much a core part of our customer acquisition strategy. This year I think a area for example for commercials out their ads out there on loans, you're going to have a one thing that we find that lavaca, you're going to have the better returns because you're providing people the ability.

To go anywhere where did and also led to a spend on any platforms and when you work specifically with different platforms on it and you provide loans it may or may not as high as me wheel or well to their ecosystem are spending whereas for them, but we discovered that it seems to a time much better, especially.

Really if you attach a benefits to it so it's definitely going to become a core part of our strategy for customer acquisition. This year.

On the holifield concentrate I'm going to shoot on another concedes hunters wouldn't you don't see that you've had to leave us yourself, you're talking to someone at that memberships are traditional hock you probably get a trend into Italy, yet you wouldn't be think although you did weaken guy that's what you're able to tell you don't know Haji essential into your them up I'm not not not wouldn't count you go to send a job of friendship people pay Entresto woman you will count.

Sure well chico's neutral and going after his role she goes through the onto two wheel Eagle. We Mahoney lead you to would you wait on no. The whole going if you don't rule woman Chico's will probably not on your book you called entry into one two potential for sure as you go onto the will you go right at the.

Oh women treated with each of you can someone it will be on what you should put on the minimum to.

And this would you need so she can follow on question essentially you'd see fashion much on that you feel you go to you.

The whole Chico employees are being too.

Sure sure Paycom offend somebody who coffee Josh on Chico controls you go Oh guarantee they monitor novitas rule of thumb as you go take a financial guarantee changing the sand when she doesn't seem to be these two tradition.

You know you suffer usual.

It was if I use.

So just quick follow up on the auto Hong Kong and is as I said from the the press release.

As I mentioned about around 10 billion on BITA transparency survey data consumption scenario was not sure. If that's all about how competition other products.

And it seems to the portions are quite high confidence he likes comes to one sort of out total mortgage origination.

Second.

Questions, it's about a provision and industry see from the release that the company expense some decent profit in the second quarter. So and there's also a mention about.

That you don't expect any incremental a provision related to community in second quarter. Just wonder if there is a troms offshore wind back and about the ER.

Nine BD and Carefusion I'm not sure, but if the company can tell us how much has already been incurred and what I was and how how much is expensive and also is there any college.

Metrics that accompany Ken.

If I add some color about maybe the guaranteed my comp or maybe.

Most of you suffer usual thank you.

Oh sit down a tick.

I will mention I feel model. We also won the relied on the open Julie you queued up.

I'd say you do the so I'm kinda all that you go back nimble utilities.

Well with 19 or somebody you go you changing for sure you go Crazy.

She quickly if we got beginning with our usual you involved for like before they go you see how should you actually get targeting superficial you got to shoot applied to feel I mean, she's visual voicemail, you'll see too and if we were trying to be on waters for platelets. If you could you touch on cheating cheap Atara me like Google for all our drug Florida, just got a unified.

With you on alcohol tobacco huh.

Now I will should or should we own controller.

Yes, Yes, you are just again financial actually in Charlotte, So who goes off a way has actually does that sound young shoppable them in some young to teach you want me.

Probably make operation saw woman Gigante phone can send that are you going into the.

So you don't want Brisa Securities you put your to do that and that's what you should use onshore Patrick what should that be was actually and what does that sound for countries along with our partner Shahar claw team here, what's actually happening we're talking about eating but should you have to wait I didn't digital for you today give me a process actually not it'll be a high 58 home.

Generally team. So you have pushed off quickly ego you got you had not to be a hard currency to what you do today, we can be seen sure your essentials.

No not digital Axoguard. She okay patterns I think it's really a shallow well.

It was on home, Jason Hi, Josh a woman, reflecting the occupancy.

And John So I think there you understood that basically for the benefit of everyone on the C. So fundamentally it's a policy that requires you to look into the future assessment the long term future assessment.

The impact and of course, a in the first quarter, we had a very unique situation that perhaps has not been seen before in literally 100 years with cobot 19, and when we look at the long term implications of course. This includes the recovery so hence when we look at the situation.

Long term.

It's not going to lead to shall we say any short term much changes any future or adjustments.

Will depend on our long term forecast, but certainly developments occur or certain grades and some of the things that you mentioned, maybe possible and it may be possible that we make assumed adjustments accordingly.

Also worth noting that onto your provisions you can say that its not just about the first two or as we mentioned it is very much about the loans as a whole under the current environment and how they're likely to develop and change.

Our assessment undersea, so we'll need to reflect that accordingly.

Oh operator.

Yes.

Right.

Hi.

HM.

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Hi.

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Yes.

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Yes.

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My first question is regarding.

Ah.

Sure one registries.

Sean.

So I just wonder.

Okay.

Uh huh.

Yeah.

She is and on a full year basis.

Next.

The people.

And since you mentioned.

You do have.

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Yes.

So that's it means that honestly.

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And the second question this week that independent.

I just wanted to check opportunities.

In Asia.

On that.

Coming out.

Do you see Aggie hockey.

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Partnership I wish it back.

Yeah.

Sure.

And also do you see.

Uh huh.

Uh huh.

Got it.

Thank you.

Oh, it's similar to whatever so what are your focus it even just the easy door, which is a $10 and going to use Oh, we're going to Sunoco, who will yield I can't really depends on as it was it depends on a topical don't hesitate to insulin data. So just as it doesn't sound like wasn't going to so well look I couldn't though titanium that unless you know yet.

Well, that's another you're gonna be venture your has approximately.

There was it a woman the letter you girlish Tommy via the then go to evaluate their mother in law Yokota Gardasil and it wasn't all the time be they let up on this I suppose.

But you don't look I know, it's usually seen in the easy door, but what I moved him is a well into the field force that I really there will be did that with it up at Nashville say assortment users and go to you or do you go.

Well its ended the multifamily here like it would have culture has a big although nothing alone would it be do something has what I do and then the Sunoco who heads up between in the Gulf also has a yield you usually sounds good.

So let's hope on you answered well then thats it literally cheese sort of company any other we'll look to doug's quarter. He said Oh, well then she will conduct silica level. We can you tell billionaire because I know they go to be neighborhoods within equity production units. If you must you know what would it be there.

So I'm not concerned about go parties displays and really the hotel one type of running about how to simply to say that they have you had English similar way too. She said to you version as well see the lease achieved the G theater, Here's what I'd say at least synergies to the when does that say Centurion God, what I call at all with a museum located so down I know it.

As you go to lessen so yeah Finch open more military with little or nothing can sit at all what does the Todd I wish I had a her she just I don't think turns into the using both see simply couldn't get that this is on somebody said, yes. So that's always a teacher relative energy. So those tumor Tonight I will Miss It includes also if they don't always thinking that this important dollar.

She's a your data when they got a little bit less instrument that I, even if they're not all the city. So it's almost a result is a well my wouldn't really show, which is Oh, you want to go door teams, which wasn't Chen sometimes unfortunately hundred local media headwind, so that service or whatever it is a woman kittila. They said when you go how many what to do you also by sounds like ourselves.

She owned by then.

So many kinda lets elements related to use Copacabana palace suddenly go getting go mentality.

So if you didn't have never thought starboard starts to let you go by what do they forgot what was that the people who doesn't have let you go either either things out. So don't want Miller 18 years and said what it does it without a gen. One up on this I mean, they're going to switch into a phase until I guess I think would it will take time, yeah. What are they say time, just senior has or the other one.

Yeah. So on the first quarter in terms of the new customer growth it frame primarily from a natural traffic and how your question on the new I know customer I think when you look at the new customers, Dave perhaps contributed about 20%.

Two alone or in the first quarter. So that's actually a lower than last year. So at this year. We definitely are right now looking at a trend where the old customers are contributing more.

In terms or the new customer acquisition.

Hopefully as we continue to watch things recover NSN year plays out a gradually the do customer work well well because I'm a little bit more like what we had last year as things develop now on your second question with regards to a bigger banks are being more willing to cooperate.

With us as well as lower funding costs, well, we're very happy to say, that's not just the bigger banks big small all sizes, all the banks out there, they're looking to work with us.

We're seeing a lot of cooperation a lot of initiatives a lot of every well a very forthcoming and proactive buff cooperation and set up that are coming from the different financial institutions, which in turns up last let us to a situation where funding is clearly plentiful and there is definitely the a.

To me the up to a lower cost. So it's basically very broad cooperation and as you know big Bang. Some IC be so he has been well that's very very long time, and the banks themselves actually never mind us negotiating with them. They often our proactive way coming to us in saying that they will lower there.

On the cost to us for access to the assets that were provided so quite often were hearing something like 7% customer funding.

Certainly a lower or Ah right from some of the funding partners of say a 50 basis points is a very common so I think a under current conditions and the current macro environment. We're definitely looking at us very favorable situation, where plentiful funding and the opportunities to lower funding costs.

Thank you.

Thank you.

Right.

[noise] very much.

Thanks, operator, so thank you Matt that does conclude the conference call. Thank you also participating you can all disconnect.

Thank you.

[noise]. Thank you.

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