Q1 2020 Yiren Digital Ltd Earnings Call
[music].
The conference calls.
Please continue.
Thank you for your patience.
Once again the conference call East you to begin shortly please continue to standby.
[music].
Ladies and gentlemen, thank you for standing by and welcome to.
This quarter 2020, <unk> earnings conference call.
At this time, all participants are going to listen only mode.
So to speak his presentation, there will be a question and not session.
To ask a question at that time, you'll need to press star one telephone.
I'd now like to hand over to you also speaking today Ms. Lydia.
Thank you. Please go ahead.
Thank you and welcome your in digital first quarter 20, <unk> earnings Conference call. Today's call features the presentation by the founder Chairman and CEO pretty and see if you're in digital Mr.
Yeah. So you can do this whole mr. don't B and C are all your internal Mr. Michael.
Before beginning we would like to remind you that discussions during this call contain forward looking statements made under the Safe Harbor Commission the U.S. Private Securities Litigation Reform Act 1985.
Such statements are subject to a certain he can factor that could cause actual results could differ materially from those campaigns and such thing.
Further information regarding potential risks uncertainties with doctors you concluded that they'll selling the U.S. Securities Exchange Commission.
Yeah, that's how does not undertake any application a big enforcement.
Except as required under applicable law.
During the call, we won't be referring to several non-GAAP financial measures and supplemental.
I agree with you and assess our operating performance.
Non-GAAP financial measures are not intended to be considered an isolation or as a substitute.
Financial information prepared and presented in accordance U.S. GAAP.
A question about these non-GAAP measures and looking at least once it got merger.
Please refer to our own free press release.
I would now patent on twice the opening for opening remarks.
Thank you all for joining our fourth quarter Twentytwenty earnings conference call today.
The fourth quarter or do you have seen I try to do you want as the call no borrowers shocks that can pile global economy.
Doing do I'm pleased you done through time.
Our core businesses remain stable.
Well, we made substantial progress should that were sick box and enrich our business lines and the computing you our business transition.
Try not to be being did you talk personal financial service platform.
We took proactive measures to ensure our business all three to you at a healthy level.
Giving customers the box the service we can offer.
Making our own contribution to fight against that's called the Nike.
Now, let me talk about our quality type business.
To maintain based news revisions and to position ourselves for the long term.
We were focused on three areas in our party pet business this year.
First.
They go lives and you'd poor risk performance.
Second you, but you knew areas as well.
And the search Google <unk> institutional funding mix.
Oh, no talk about our actions in each of these Ah yes.
Our first the Pearlridge, he is stabilizing and improving risk performance.
In the fourth quarter of Twentytwenty loan originations decreased 77% from quite a quarter to RMB 1.8 BT.
As we pull out to be tied to the credits and a decrease the business volumes.
To control quite a bit you light up the Colby Nigeria.
Our fast untimely response allowed us to operate at profitable level in the fourth quarter, despite a challenging micro environment.
Our second focus it's all exploring additional opportunities and that you best in your new areas of growth.
We have recently launched several new credit products. So that's upside worsened by our loan portfolio.
And the to better meet a full spectrum of mainstream consumer credit meats.
The short term deals smaller ticket size.
Revolving loan products.
Offers credit solutions for a wider range of online and offline consumption scenarios.
Including travel lifestyle E commerce, and the mobile wallets.
This product has been very well received.
Well, we more than 100% month over month.
Well these products, we will partner with large traffic channels like Shelby and Opel finance.
Well that we will be able to significantly expand our business with diversified consumption scenarios.
Reduced customer acquisition costs, and you'd pools opt reaching efficiency as well as poor quality.
Last quarter, we mentioned that we'll be rolling out all told loans. This year as auto loans typically how bad the risk profile that unsecured consumer loans.
All told them.
I have shown a visible real momentum seems March and in particular, our all told leasing business. If I estimated to reach RMB 1.5, beating your loan origination in the first half of these yet and we expect these products documents to be one of the main revenue.
You drivers in the second half of this year.
In the second half of the year together with our channel partners. We also hope to build a call assumption platform to read you reach our credit ecosystem.
With a member only online E commerce platform.
Our third area of focus is on growing our institutional funding mix.
Well I'm pleased to report that our institutional funding mix has increased to 40% in the fourth quarter of Twentytwenty up from 14% last quarter and we expect these proportion to inquiries to over 50% into second quarter. This year.
Well also active expanding our institutional partners from bags to trough the companys other license to financial institutions and the consumer finance companies.
Next on wealth management, our online wealth management business has seen strong world.
In particular for non P to P wealth management products and services.
Number of non P to P baxter's increased by 23% from prior quarter too.
Once you see all that 436.
So march 31st Twentytwenty.
The are you a non P to P products increased 37%.
Sorry, 67% quarter over quarter to RMB 1.7 beauty.
Average Baxter investment a bottoms up not P to P wealth management products has seen steady growth.
65, Kate arm B.
Up from 40, 8-K, RMB <unk> previous quarter.
Driven by both increased by one of them out for single product as well as multiple product selection.
Presenting good progress in our efforts on developing but you better habits, you'd you'd see an asset allocation you investment strategy.
For mutual fund products.
We see in wealth management.
We witnessed strong demand during the fourth quarter.
With you a increasing by 17% and with sales volume increasing by 30% from February to March Twentytwenty.
Driven by all the new product offerings.
We expect this broke trends to continue through the year.
We have also been give busting in investor education through a variety of online courses to help your baxter's develop a long term you about but horizon.
And we also know do a significant improvements in average you a pretty Baxter you'd mutual fund products, which has increased to RMB 36 point 8-K, you'd March twentytwenty.
With that I will now turn the call over to our CFO, John will discuss our financial results for the quarter.
Thanks, Nick.
Hello, everyone.
Our financial update.
I'll focus on key items off our business operation.
Natural.
Performance and you can refer to the detail the financial results earnings release.
Under the challenging operating environment and meet the pandemic into first quarter off of 20 to 20, we maintained profitability and a strong liquidity position.
Loan originations for the quarter once again be 1.8 billion a.
A drop off 77% quarter over quarter.
Mailing driven by the cobot nine can outbreak.
We haven't <unk> offline London busy.
More specifically.
Due to the temporary closure off our physical branches as well as I will call centers. We've kept based one we saw significant drop in loans originated from offline channels as compared to prior quarter.
Total net revenue was and then be one thing.
57% from previous quarter.
Despite significant business a wall him dropped during the quarter.
Our strong cost control and operation efficiency efforts.
Kept our business out of pocket and a good cash position.
The sales and marketing expenses reduced by 45% to again be 660 minutes.
Net profit for the quarter, what human beings 19 million.
Representing a 95% decrease quarter over quarter.
I felt at March 31st pointed 20, our cash and the cash equivalents remained stable.
<unk> 3.2 billion.
We are expecting major business, we bought and a substantial growth.
The second half of the year I saw was shorter term smaller ticket size will quickly ramping up along with other new credit product launch in the second quarter.
Plus a comprehensive consumption finance ecosystem is the being built within reach and diversified external pattern there are various platforms.
A wealth management side I felt from March 31st Twentytwenty.
Yeah, well consists of approximately 2.2, mainly in western cumulatively.
And close to 221000 Westars currently hold at your West, but Oh platform.
The total <unk> <unk>, yeah, well reached RMB 32.2 billion.
That's all from March 31st 2020.
With that I read a perten westar remaining stable and RMB 146000.
[noise] for this quarter.
Account management service food, which is a mainly from our welker people, who wasn't remember you 413, meaning.
Relatively modest decline of a 16% quarter over quarter.
The allowance for Contra assets has declined to.
143 meeting.
<unk> quarter due to the overall lower longwall him.
And along with equivalent to 7.8% of the loan one of them.
That's compared to <unk>, B U 588 million last quarter.
Which was equivalent to 7.4% optimal wallet.
Meanwhile, contributions to the credit assurance program, what at 12% this quarter <unk> adequate coverage.
The decrease of 2% that's compared with the last quarter was the result off a shorter or longer tenors and tightened credit control on new customers.
Our credit assurance program remains adequately funded with a total balance equivalent to 10.5% of the total performing loans.
With that I will now pass it onto Michael our COO flat update from credit risk.
Thank you Andrew.
Hello, everyone for credit performance under the risk management.
For all early delinquencies increased in the fourth quarter and the reached its peak.
March due to the pandemic situation.
Before it quickly decline in April and the rate turnkey near creep when they make label you made.
More specifically.
15 to 90 day delinquency rate stood at eight point the non person that's up from March 34 Twentytwenty.
Compared to 4.8%.
I saw from December 34, 2019.
However.
<unk> expenses dropped quickly moving into April.
Two hour tightened the risk policy or the fish in the risk management.
That's helpful and off my delinquency rates for 15 to 29 base 30 to 59 days under 60 to 89 days.
I had already declined one point is 3% to put a 2% to put a 1% respectively.
And we expect.
Delinquencies to further improve in June.
Meanwhile.
Visible progress has been made in prioritizing our business toward higher quality customers.
Which was reflected in risk performance improvement.
Okay I will then page before this.
We aren't the light to see you essentially improvement trend in 29 team and the we expect a more substantially improved trends in twentytwenty.
I will conclude my prepared remarks here and that gave us to the operator.
Operator, please continue.
Thank you, ladies and gentlemen, if he'd like to ask a question.
Please press.
Telephony and wait for PNM to be announced.
Again that styles to ask a question.
Ask this question comes from Alex.
Yes.
Go ahead.
Hi, good money, but thanks for taking my question.
I have a couple of question about Uh huh.
Credit business from a sensible he's on your traditional notch ticket size Unsecure [laughter] <unk> Jude.
Good money, where there what's your stress you can do [laughter] loans per not going forward. So we have seen youre repeat customer flowing for this quarter is almost you're also going for why you're going to completely Oh, one down [laughter].
Once the strategy on Sunday and.
And also what will it be.
Do you offline or online and I'm concerned about your auto loan. So given you expect that it's going to be a major contribution to your own puts because your modem.
Uh Huh [laughter], a man I, just Uh huh for more color on the core critical once the specific.
Features like use cone, new car market and where you're a couple more.
Sure and turn the Olympic steel and coal mine right.
And so and what was the funding coming from where it went up the funding come from and locks Chris worries about your roaming Oh look for this year. Given you don't go have deal sort of term tenure products.
Just wondering if you could give us some guidance on how you plan to maintain good or go mix in the near term and also from a lot longer term perspective. Thanks.
Okay. Thanks, Alex I'll try to answer your question and then maybe a feature phone can add on any of the point that maybe missing so from the large ticket size a traditional don't we have our strategy right now.
Well the online business working to focus on.
The smaller sized shorter tenure revolving loans as we mentioned.
And its actually getting very good tractions and Dan or for the larger ticket sites traditional business will continue to oh, great, but mainly oh, our offline networks because that does have a unique credit.
Screening process that helped us to improve the quality of the loan I said performance.
The reason that into first quarter. The repeat business was <unk> million lower is that first for the online business, we're moving to.
The higher credit great. So we significantly.
Change.
Customer sentiment patient and Dan.
For the offline.
The airport has mentioned it was impacted by the dynamic situation. So the productivity really dropped significantly.
Recent so that's why we picked in the kitchen is pretty low.
First quarter.
So.
In terms of the ultimate loans, we actually have.
Two type of auto loans business. One is that we had been already upgrading a which is the borrowers that you already have.
Cars, so basically it's a credit enhancements business and that business is actually as we mentioned, it's going to ramping up to a 1.5 billion.
In the first half at this business has shown a quite well credit performance the ticket size and pricing.
It's rather similar to the larger ticket sites traditional consumer loans, we have.
70 or 80000.
For loans 36 months, I 24 to 36 months and Ah Ah.
<unk>.
Relatively similar however be credit performance is actually significant better.
If you think about the proven to charge off is it.
In the mid single digit level, so I, because she's quite well quite profitable business and from funding perspective, we're working with licensed financial institutions for like the.
Something like this type of those loans and then we are starting the second hand.
Car Consumptions basically I point of purchase.
For this its that's you know it's also a offline driven operation are getting the team and they're getting very early good tractions on each of those will be from the auto cars or sell centers Oh, So we're working with some.
On line Oh the channels.
To do online to offline conversions as well and that this business will.
Oh being funded by institutional Sunday.
Ah yes.
And then in terms of the loan mix towards the the year from online perspective, the shorter term.
Revolving loan will be majority going through the year.
And from offline you can think about the alone.
Digital locker ticket size consumer loans happen.
So that will probably reduce overall no tenure to was close to 20 month from previous more 30 month range as we go through beating up.
Volume.
Through the year.
Yeah see if a big when you have any.
To to that.
I think Oh, I'm, sorry, if I really just probably at a one more point.
Oh, a function partners are there a risk appetite to was a a longer tenor of loosen up because this is reduced tours.
[laughter] kissing a lower tenant nodes. So that's why were presented by Dennis We Mark Oh bigger long tenures in Q1, <unk> reduced to 22 months versus Q4, and we foresee the average lieutenant will continue to reduce and so we'll be easier to secure.
Situational funding.
That's all my Uh Huh.
Okay. Thanks.
Okay. Thanks.
Yeah, I just want to.
There's no question.
Sure.
First of all on it'll make so.
Hold on London was off line could you also get coupon.
Kinda on how you I mean to sleep the to can come from over them.
Well this year.
Second.
No short term revolving loan do you have the expectation fountain <unk> current vintage loss rate on that particular <unk>.
And lastly on on the.
You're welcome update on your P to P authorization. So like you also have some funding coming home video Pete do you want and.
What's the current state here on the compliance perspective and.
Would you Uh huh.
Oh look like they do you expect that something called continuing to wrap up this year.
Okay. So I think maybe I can answer the online offline split it's around 50% from dose volume perspective, and it's probably going to maintain that way.
Through the year as you can see.
A major part of Oklahoma or.
Offline, so that's going to be important portion and plots the traditional a larger ticket size business where continue.
To a two to.
<unk> recover that volume.
I think maybe a micro can actually gave a coming on the.
Credit performance expectation or on the shorter term loans and late wrong. You know, we'll talk about that P to P operation complaint status.
Thanks, then it there let me take another question for the sold her long sought her term revolving loan.
By the performance.
Well this type of a loan we are [laughter] top oh or the performance to be on par to our competitors.
From the vintage performance perspective, it should be in the single digits.
You know because we have a pretty.
While Cree far the while established.
Tightened quite scrutiny personalized out of the acquisition. That's a that's just two years sure our credit performance will be out of the market level.
As to the next question, probably I'd be we'll get back to.
Panic.
About the Peter the accretion.
Yeah, I think from funding mix perspective, as we mentioned worry reached.
More than 50% Oh the.
New sales volume.
Funded.
Fusion and Oh, we have sufficient funding sources and partners that will be able to seeking to be quick portion.
Oh, the funniest part to the business volume.
However at this current molding you know our.
He does he accretion our steel upgrading weve complying with our local regulator. So we'll see.
How.
That's hard regulators.
Requirement.
And then we can always adjust accordingly.
So that we can switch our institutional funding to meet that demand if we need right now is.
More off our own judgment were continuing to upgrade those funding sources in parallel.
Okay got it okay.
Once again, if anyone would like to ask a question. Please press star one on your telephone.
Turning to the now.
Our next question comes from Destiny team from Citi.
Yes go ahead.
Hi, Good morning, simply taking my question. So I'm just two questions for me a especially in this regarding dog volume.
Yeah. So just wondering if you can't give any color on.
Oh, well <unk> lateral loan origination volume are you seeing on I think in a single core huh.
And also a would you happen he.
The guidance on a full year basis and then.
The second question actually getting your account management fee.
That Ah if I understand correctly.
Most of the fees coming from the P to P. A hot that Oh, you basically it you'll get to Angus Frac victory, you're all Oh, Youre actually Congress is the especially kind that youre offering a tree abaxis. So current didn't feel they it's actually quite.
Hi, it's a rise of classes and I I saw feeling a effort he land I'm. So I'm just wondering if you continue to shrink your PDP business, while ramp up the Jinong PDP pot or should we expect this fee rate you think tank and yeah, and I guess you can't Shannon.
It's a fee rate for E. P to P hockey offers us now see a lumpy.
Okay.
Okay. So I will try to answer this question and feature on can at in.
If anything points.
So from the loan volume perspective, as we mentioned before we're still are planned trajectory to recover and ramp up overall loan volume sales volume.
Right.
Back to our 2019 average level by me or later part of second half Oh. This year you can look at our 2019, a quarterly run rate is probably around 10 billion.
Eight or nine to 10 billion level. So anybody by three that's at a monkey wrench read that we're talking about the need of second half that's what we're.
You know.
We don't want to keep a guidance, but you can use that math try to.
Curve. It up a then you probably will can get a estimate assumption.
The.
Our sales volume for the year.
But however, as a you probably also want to look at the revenue side as we have more multiple screens for revenues now that's probably gives you a better sense of our.
And then skill in gross.
In terms of account management service fee Ah, Yes, you're right I think majority up that's becoming from.
The the balance off the P to P. Among s. we are shifting.
More from the P to P investors into more institution.
Testers are actually that the revenue opportunity, it's not missed its just that couldn't be captured from.
The.
Revenue take rate upfront.
So you are so we're not missing that part of revenue of course.
Our new loan origination volume.
Not catch up to the repayment schedule the.
Remaining balance overall ending balance dropping.
Definitely going to impact a disproportionate off the revenue coming in but we think as we mentioned we're in a in the pool was recovering.
Henry back to normal you see that catch up right now.
And then.
From the non P to P business, we are ramping up the nicely.
From those itself volume.
As well as the you a you have seen that eylea actually going versus 30 like quote on quote or more than 60%.
And in terms of the take rate I think the standard will spend and product its a bit that it has a bit of different ski sum up the product would be.
25% sum up the product could be 1%.
You know in particular, if we were able to work with some all the.
Products supplier on the strategic level exclusive base, we can actually get up to 1%, but at the same time I think we have mentioned other than the banks Watzman products Mutual fund products were also introducing the insurance products to our.
Wealth management clients and as you know that.
For the wealth management products the commission rate is rather.
We actually expecting a some good contribution from this business so in the mix, where we'll see where the.
Overall, you a basis will be able to reach.
Longer term definitely we're going to see.
The non PDP wasn't under business to become the significant revenue contribution in 2021 and beyond.
Okay.
Once again, if you'd like to ask a question. Please press star one on your telephone.
No I said the questions come through just a final call. It is a one if you'd like to ask a question.
We have no set of questions at this time I will pass back to management for closing comments.
Okay.
Thank you very much that conclude the call.
Thank you, ladies and gentlemen that does conclude the call today. Thank you for attending you may now disconnect.
[music].
[music].
Thank you and welcome to <unk> first quarter 20, <unk> earnings Conference call. Today's call features the presentation by the founder Chairman and CEO critically ill see all beyond that it's called the standing tall CFO up your either <unk> Mr. Dong B and C. R O younger and older Mr. Michael.
Before beginning we would like to one might your discussions during the call contain forward looking statements made under the safe Harbor provision the U.S. private Securities litigation.
1985.
Such statements are subject to a guy and he can fight.
That could cause actual results could differ materially from those keeping any such thing.
Further information regarding potential risks uncertainties go backwards.
Included in there that they'll selling the U.S. Securities Exchange Commission.
Yeah, that's what does not undertake any application update any sport.
That's required under applicable law.
During the call we won't be referring to several non-GAAP financial measures a couple of until merger. So what do you want to service our operating performance.
Non-GAAP financial measures are not intended to be considered an isolation.
As a substitute.
For a financial information prepared and put something and of course, the U.S. GAAP.
You mentioned about these non-GAAP measures.
Sure it's gotten larger please refer to our around earnings press release.
I'll now pass an entre fielding for opening remarks.
Thank you all for joining our sports quarter Twentytwenty earnings conference call today.
The fourth quarter up this year has to be in a challenging one pass the call no Barnabas shock the entire global economy.
During this I'm pretty sure Duncan type.
Our core businesses remain stable.
Well, we've made substantial progress should that what's your thought and reach our business lines and the comps you knew our business transition.
To China's leading digital personal financial service platform.
We took proactive measures to ensure our business all three to you at a healthy level.
Even customers the boss the service we can offer.
Making our own contribution to fight against that called the Nike.
Now, let me talk about our quality taxes news.
To maintain business medians and to position ourselves what the long term.
We were focused on three areas in our party tech business this year.
First stabilized and you have to reduce performance.
Second you invest in new areas of growth.
And the third world Albright institutional funding mix.
I will now talk about our actions in each of these areas.
Our first the priority is stabilizing and improving risk performance.
In the fourth quarter of Twentytwenty loan originations decreased 77% from quite a quarter to RMB 1.8 billion.
As we pull out to the heightened the quite and a decrease the business volume.
No control quite a bit in light up the Colby Nigeria.
Our fast and timely response allowed us to operate at profitable level in the fourth quarter, despite a challenging micro environment.
Our second focus it's all exploring additional opportunities and that you basking in new areas of growth.
We have recently launched several new cardio products. So that's what's diversify our loan portfolio.
To better meet a full spectrum of mainstream consumer credit needs.
The short term deals smaller ticket size.
Revolving loan product.
Offers credit solutions for a wider range of online and offline consumption scenarios.
Including travel lifestyle E commerce, and the mobile wallets.
This product has been very well received.
Well, we more than 100% month over month.
Well this product will partner with large tropic channels like Shelby and OPO finance.
So that we will be able to significantly expand our business with diversified consumption scenarios.
Reduced customer acquisition costs, and improve operating efficiency as well as portfolio quality.
Last quarter, we mentioned that we will be rolling off auto loans. This year as auto loans typically how bad the risk profile that unsecured consumer loans.
All told them segments have shown a visible world momentum since March and in particular, our all told leasing business. If I did make it to reach RMB 1.5 billion loan origination in the first half of this year and we expect this products document.
One of the main revenue drivers in the second half of this year.
In the second half the year together with our channel partners will also hope to build a call assumption platform. So read in reach our credit ecosystem.
With a member only online E commerce platform.
Our third area of focus is on growing our institutional funding mix.
We are pleased to report that our institutional funding mix has increased to 40% in the fourth quarter up twentytwenty up from 14% last quarter and we expect this proportion to inquiries to over 50% in the second quarter. This year.
Well also actively expanding our institutional partners from bags to trough the companys other license to financial institutions and the consumer finance companies.
Next on wealth management, our online wealth management business has seen strong world.
In particular for non P to P wealth management products and services.
Number of non P to P investors increased the by 23% from prior quarter too.
Once you see all that 436.
So march 31st Twentytwenty.
They are you a non P to P products increased.
37%.
Sorry, 67% quarter over quarter to RMB 1.7 bidding.
Average basket or if that's been a bottoms up not P to P wealth management products has seen steady role.
65, Kate RMB.
Up from 40, 8-K RMB in previous quarter.
Driven by both increased evaporation them out for single product as well as multiple product selection, representing good progress in our efforts on developing but do you bad habits.
You see an asset allocation investment strategy.
For mutual fund products.
Within wealth management, we witnessed strong demand during the fourth quarter.
With a you eight increasing by 17% and with sales volume increasing by 30% from February to March 2020.
Driven by our new product offerings.
We expect this broad trends to continue through that yet.
We have also been getting busting in Investor Education.
But right Tee up online courses to help investors develop a long term you about been horizon.
And we also know did a significant improvement in average April eight Karti Bhatt, Sir your mutual fund products, which has increased to RMB 36 point 8-K, you'd March 2020.
With that I will now turn the call over to our CFO, John will discuss our financial results for the quarter.
Thanks, Matt.
Hello, everyone.
Our financial update.
Our focus on key items off our business operation.
Financial.
Performance and you can refer to the detailed financial results our earnings release.
And there's a challenging operating environment and meet the pandemic in the first quarter off a 2020, we maintained profitability and a strong liquidity position.
Loan originations for the quarter once again be 1.8 billion a.
Drop off 77% quarter over quarter.
Mainly driven by the cobot nine can't outbreak.
Which have really hit our offline lumpy in prison.
More specifically.
Due to the temporary closure of our physical branches as well as our call centers. We've kept based Juan we saw significant drop in loans originated from offline channels as compared to prior quarter.
Total net revenue was and then B one thing.
57% from previous quarter.
Despite the significant business a wall him tropic during the quarter, our strong cost control and operation efficiency afterwards.
Kept our business at a profit and a good cash position.
The sales and marketing expenses reduced by 45% to again be 616 million.
Net profit for the quarter, what's going to 19 million.
Representing a 95% decrease quarter over quarter.
I felt from March 31st Twentytwenty, our cash and the cash equivalents remained stable.
And then B 3.2 billion.
We are expecting major business, we borrow and substantial growth in the second half off the year as our shorter term smaller ticket size loans up quickly ramping up along with other new credit product launch in the second quarter.
Plus a comprehensive consumption finance ecosystem is that being built with reach and diversified external partners on various platforms.
Oh, well management side I saw from March 31st Twentytwenty.
Yeah, well, Patrick so approximately 2.2, mainly in western cumulatively.
And at close to 221000 West Coast Kirkland Lake hold at your west, but on our platform.
The total annual eight for either well reached RMB 32.2 billion.
That's all from March 31st 20 point.
With an average eight per westar remaining stable and RMB 146000.
For this quarter.
Account management service food, which is a mainly from our Walker evening.
We will be a 413 million.
Relatively modest decline of 610% quarter over quarter.
The allowance for Contra assets has declined to.
143 million.
I'm proud quarter.
Due to the overall lower loan volume and a launch was equivalent to 7.8% off the lows want him.
That's compared to.
588 million last quarter.
Which was equivalent to 7.4% optimum wallet.
Meanwhile, contributions to the credit assurance program West at 12% this quarter to ensure adequate coverage.
The decrease of 2% as compared with the last quarter West as a result off a short term loan tenors and tightened credit control our new customers.
Our credit assurance program remains adequately funded with a total balance equivalent to 10.5% of the total performing loans.
With that I will now pass it onto Michael.
Seattle flat update on credit risk.
Thank you John.
Hello, everyone for credit performance under the risk management.
Overall early delinquencies increased in the fourth quarter and the reached its peak at the end of March due to the pandemic situations.
Before it quickly decline in April and the return to near pre combined make level you may.
More specifically.
15 to 90 day delinquency rate stood at 8.9% that's up from March 34 Twentytwenty.
Compared to 4.8%.
As of December 34, 29 team.
However.
The big Quincy's job quickly moving into April.
Two hour tightened the risk policy or the fish in the risk management.
So I love My delinquency rates for 15 to 29 days 30 to 59 days and the 60 to 89 days.
I had already declined one point, a 3% to put the 2% to put a 1% respectively.
And we expect.
Delinquencies to further improve in June.
Meanwhile.
Visible progress has been made in prioritizing our business toward higher quality customers.
Which was reflected in risk performance improvement.
Looking at our vintage performance.
We aren't the light to see essentially improvement trend in 2019, and we expect a more substantially improved trends in twentytwenty.
I will conclude my prepared remarks here and that gave us to the operator.
Operator, please continue.
Thank you, ladies and gentlemen, if you'd like to ask a question.
Please press.
Telephony and wait CNN to be announced.
When that's going to ask a question.
Ask this question comes from Alex <unk> from <unk>. Please go ahead.
Hi, good money, but thanks for taking my question.
I have a couple of question about.
The credit business.
Sensible he's on your traditional lunchtime ticket size unsecured.
So could you.
On the weather, what's your strategy on deal specific loans per not going forward. So we have the youre repeat customer falling for good quarter. It's.
Almost you're also going for why do you go into completely a.
One time to me.
I want to spend here on Sunday and.
And also what will it be.
Steel offline or online and second concerned about.
Alone so given your except that it's going to be a major contribution to your loan books attention modem.
Uh Huh [laughter] I, just Uh huh for more color on the books and who wants to specific.
Product features like the used car, new car market, and where work or a couple more.
I should trend Olympic steel many offline right.
And so and what was the funding coming from where it went up that's something come from and and my last question is about your LMIC Oh locomotive, yes. Given you also have deal sort of term tenure products.
Just wondering if you could give us some guidance on how you plan to maintain your or grow mix in the near term and also from a lot longer term perspective. Thanks.
Okay.
Thanks, Alex I'll try to answer your question and then maybe a few Joan can add on any of the points that maybe missing so from the large ticket size a traditional long we have our strategy right now at that for the online business work into focus.
The smaller sized shorter tenure revolving loans as we mentioned in our remark.
And it's actually getting very good Tractions and then for the larger ticket size traditional business will continue to upgrade but mainly our offline networks because that does have a unique credit screening process that helped us to.
The quality of the loan asset performance.
The reason that in the first quarter the repeat business what sets it can really lower.
With that first for the online business, we're moving to the higher credit great. So we significantly change at the customer segment patient and then for the offline as CFO has mentioned it was impacted by them and dynamic situation.
The productive team really drop I think that me Oh no question.
That's why I do it kicked in the kitchen as is pretty low.
This quarter.
So.
In terms of the ultra loans, we actually have.
Two type of auto loans business. One is that we have been already upgrading a which is the borrowers that you already have.
Cars, so basically it's a credit enhancements business and that business is actually as we mentioned I spend a ramping up to a 1.5 billion in the first half at this business has shown a quite well credit performance the ticket size and the pricing.
It's rather similar to the larger ticket sites traditional consumer loans, we have 70 or 80000.
For loans.
36 months, I 24 to 36 months and Ah Ah the fees.
Relatively similar.
However be credit performance is actually significant better.
If you think about the proven to charge off this.
In the mid single digit level. So as you can see quite well quite profitable business and from funding perspective, we're working with licensed financial institutions for like the.
Funding for this type of those loans and then we are starting the second hand.
Car Consumptions basically at a point of purchase for this it's as you know it's also a offline driven operation.
Leading the team and they're getting very early good actions.
On the China was that will be from.
The auto cars or sell centers are also we're working with some online oh the channels that we hope to do online to offline.
Version as well and then this business will oh being funded by institutional funding yes.
And then in terms of the loan mix towards the the year from online perspective, the shorter term revolving loan will be majority going through the year.
And from offline you can think about the out along.
As usual larger ticket size consumer loans Uh huh.
So that will probably reduce our overall loan tenure to was close to 20 months from previous more 30 month range as we go through beating up.
Volume through the year.
Yeah see if they don't have any at two to that.
Well I think Oh, I'm, sorry, sorry, just probably.
One more point.
Well, our founding partners for their risk appetite tours are longer tenor alone significantly reduced towards.
'cause it.
<unk>.
Lower 10 or loans. So that's why were presented by Dennis remark Africa long tenures in Q1.
Reduced to 22 months versus Q4, and Weve closely the operator Lieutenant will continue to reduce and so we'll be easier for us to secure situational funding.
That's all my Uh Huh.
Okay. Thanks.
Okay. Thanks.
Yes, just wonderful.
There's no.
Sure.
Hold on it'll make so.
Hold on London works it offline could you also get coupon.
Hello, how are you planning to split the too.
In terms of volume.
Well this year.
Section.
And your short term revolving loan do you have a expectation about that.
Correct.
Vintage not right on that particular prototype.
And.
Lastly on on the.
He also give an update on your PDP operation So.
Like you also have some funding coming from Q1 and.
And what the current status on the compliance perspective and.
Would you.
Took like them to you expect that something called continue into wrap up this year.
Okay. So I think maybe I.
I can answer the online offline split it's around 50% from sales volume perspective, and it's probably going to maintain that way or through the year as you can see.
The major part of the algorithms or kind of deciding offline, so thats going to be important portion and plots the traditional a larger ticket size business where continue.
Two or two to ramp up recover that volume.
I think maybe Michael can actually be comments on the.
Credit performance expectation or on the shorter term loans and later on you know won't talk about the P to P operation and complain status.
Thanks, Dennis So let me take another question for their selling her long sought her term revolving loan.
Credit performance for this type of loans, we are [laughter] drop off or the performance to be on par to our competitors.
From the vintage performance perspective, it should be in the single digit.
You know because we have a pretty.
While clarify the while established.
Tightened quite a squinting performance out of acquisition. That's a that's just two years shore our credit performance will be out of the bargain level.
As to the next question, probably Ivy, we'll get back to.
Panic.
About the PDP operation.
Yeah, I think from funding mix perspective, as we mentioned worry reached.
More than 50% Oh the.
New sales volume fine.
By the institution and.
Yes.
Efficient funding sources and partners that will be able to see can that be increased stock portion.
After funding of our total business volume.
However at this current moment.
Our.
PDP operation, our steel upgrading weve complying with our local a regulator so we'll see.
How.
That part regulators.
Requirement will evolve and then we can always adjust accordingly, so that we can switch our institutional funding to meet all that the man if we need right now is.
A more off our own judgment.
Our continued to operate both standing sources in parallel.
Hi.
Okay got it okay.
Once again, if anyone would like to ask your question. Please press star one on your telephone and we see your name to the now.
Our next question comes from Daphne pain from Citi. Please go ahead.
Hi, Good morning, essentially taking my question. So just two questions from me.
Question is regarding dog volume yeah. So just wondering if you can if any color on.
Oh well.
Lateral loan origination volume are you seeing on I think in a single core huh.
And also a would you happen to be a rough guidance on a full year basis.
And then.
The second question is regarding your account management fee that if I understand correctly.
Most of the fees steel coming from the P to P.
Pop that.
38, you'll get your Angus rack victory, you're all Oh, youre actually retransmission fee, especially kind that youre offering to investors. So current didn't fee rate is actually.
Hi is oh factors not annualized.
I appreciate you land I'm sure I'm just wondering if you continue to shrink your PDP business, while ramp up the.
Jinong PDP, how should we expect this fee rate should be kind and yeah, and if you can't Shannon well, it's the fee rate for the PDP hockey offers its now see a lumpy business okay.
Okay. So I will try to answer this question and.
Feature phone can at any.
Later on if anything points.
So from the loan volume perspective, as we mentioned before where steel.
Our plan trajectory to recover and ramp up our overall loan volume sales volume a run rate.
Back to our 2019 average level by me or later part of second half up this year. If you look at our 2019, a quarterly run rate is probably around 10 billion.
Eight or nine to 10 billion level. So if you buy the by three that's at a monkey run rate that we're targeting.
By the need of second half.
As for full year.
We don't want to give a guidance, but you can use that math try to.
Curve. It up a then you probably will can get an estimate assumptions on the.
Our sales volume for the year, but however, as you.
You probably also want to look at the revenues site as we have more multiple screens for revenues now that's probably gives you a better sense are business and skill and gross.
In terms of account management service fee, yes, you're right I think majority up that's becoming from.
The the balance off the P to P amount.
As we are shifting.
More from the P to P investors into more institution investors are actually that the revenue opportunity. It's not missed its just that wouldn't be captured from.
The.
Revenue or take rate upfront.
So you are so we're not missing that part of revenue of course.
Our new loan origination volume.
Not catch up to the repayment schedule the.
Remaining loan balance overall ending balance dropping.
Definitely going to impact this portion of the revenue coming in but we think as we mentioned we're in a in the progress of recovering.
Henry back to normal you will see that catch up later.
And then.
From the non P to P business, we are ramping up nicely.
From those itself volume.
As well as the CEO a you have seen that eylea is actually going versus 30 like quote on quote or more than 60%.
And in terms of the take rate I think the standard will spend product its a bit of it has.
A bit of different ski some of the product to be.
25% or some not the product could be 1%.
You know in particular, we were able to work with some all the.
Products supplier on the strategic level exclusive base, we can actually get up to 1%, but at the same time I think we have mentioned a other than the banks Watzman products Mutual fund products were also introducing the insurance.
Products to our wealth management clients and as you know that.
For the wealth management products the commission rate it's rather.
We actually expecting a some good contribution from this business so in the mix, where we'll see where the.
Overall, you a basis will be able to reach.
Similar level, but.
Longer term definitely we're going to see.
The non PDP was managed business to become the significant revenue contribution in 2021 and beyond.
Okay understood. Thank you.
Once again, if you'd like to ask a question. Please press star one on your telephone.
No I said the questions come through just just final call. It is one if you'd like to ask a question.
We have no further questions at this time I will pass back to management for closing comments.
Okay.
Thanks very much.
That concludes the call.
Thank you, ladies and gentlemen that does conclude the call today. Thank you for attending you may now disconnect.