Q3 2020 Yiren Digital Ltd Earnings Call

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And then thank you for standing by and welcome to yearend Digital's third quarter 2020 earnings Conference call.

At this time all participants are in a listen only mode. After the speakers presentation and there will be a question and answer session at which time. If you wish to ask a question and you will need to press star one on your telephone please be advised with todays conference is being recorded.

I would now like to hand, the conference over and he'll be a yu. Thank you. Please go ahead.

Thank you and welcome to <unk>.

Third quarter 2020 earnings conference call today's call speakers, the puts and takes and by the founder chairman and C. or could it be.

And see all your development spending how do you Oh your and your home this non day and see our off your interest call and Mr., Michael GI net no doubt senior VP up yet you guys could just hold and Mr. Jones, Tom director of younger and whats going to put that hurts and acuity and what the.

Getting like from the mines either discussions during this call contain forward looking statements made I noticed safe harbor public and but the U.S. private Securities litigation and we from 1995, such statements I supposed stuff, that's true, but I'm doing it and factors that could cause actual results to differ materially from those campaigns any such statements.

And ladies and according to Petrobras uncertainty for factors is included any interest Sally the U.S. Securities and Exchange Commission.

No. It does not undertake any obligation to update any forward looking statement, except as required under applicable [noise].

During the call, we will be before and several non-GAAP financial measures and simple that held back.

And with you and assess our operating performance these non-GAAP and I can makers or not and kind of be considered and isolation or as a substitute orphaned and so as you make and that's right and put them in accordance with the U.S. GAAP for.

For everybody and about these non-GAAP measures and reconciliation to GAAP measures sleep for parts or any pets and I will.

And I'll pass it onto moving for opening remarks.

Hi, everyone.

Third quarter Twentytwenty earnings conference call today.

I'm pleased to be.

The quarter and.

We continue to make progress in our business transitions and the strategic repositioning assets.

Wealth management business interest scale and.

Oh, and you probably talk product.

Product offerings.

We have achieved the profitability and the meaningful growth and.

Oh, and wealth management and credit card fees as lines.

For our wealth management business.

Seeing promising growth momentum.

Mines and products and services and other.

And remain strong.

And so end of September total anyway.

Management products increased by 71%.

And over quarter, two and be 4.3 billion and that.

Total sales volume.

Wealth management products increased by 110 per cent quarter over quarter to RMB 4.6 billion.

And last herself wealth management products and eat well and this quarter.

Oh.

58002 hundred representing a 255 per cent world compared to last quarter.

More specifically mutual fund products continue to enjoy strong and popularity among customers with a you ate reaching RMB 1.4 billion up 34% from last quarter.

The average you eight per your master for mutual funds stewed add on B 58000.

Increasing by 15% from prior quarter.

It's worth mentioning that our fund portfolio products see remarkable popularity among investors, which took more than 80% of the total fun and sills volume this quarter and are becoming a strong driver off our wealth management business.

As we continue to make strong efforts into new product design and sourcing.

Meanwhile, our insurance business has gone and rapidly exceeding our expectations.

As mentioned and our last call we completed the acquisition and all the insurance broker Celeste and I saw September month and sales.

Sales volume and the revenue of this segment has already exceeded our full year target and.

And then began to contribute meaningful income.

And to our wealth management businesses.

His life and the property insurance offerings.

And accelerated growth is expected to our insurance business as coach and begins operation and this full swing.

Furthermore, our securities business and his final stage for product and service launch and will provide our investors. This quality stock trading service and easy access to both Hong Kong and the U.S. Kapito and the financial markets soon.

Apart from that well also established and online Investor Education channel.

Well for other and reach our wealth management and full spectrum service offerings to our mass affluent investor base, and Ito and wealth platform.

Next.

True onto our quite and type business.

Me highlight three key initiatives as we continue to drive our sales volume growth.

First our new product offerings and expansion.

Our new products continue to show strong growth as we shift towards small revolving loans and auto secured loans.

Other small revolving loans, we have seen other quarterly increase of close to 100%.

Accounting for 19% of the total loan volume off the quarter.

Meanwhile, auto secured loans grew 76% compared to the last quarter and took almost half of the total sales volume.

Leveraging our nationwide offline network to provide high quality services to this customer segment, we expect our auto secured loans to continue their strong growth in Q4 and will be the main growth driver to our credit Tac revenue was superior credit.

<unk> performance.

And our borrower acquisition strategy.

We are continuing to strengthen our cooperation with large traffic platforms, such as Xiaomi and the 58 and I'll call.

We also begin to work closely and this channel partners to provide customized the small revolving consumption loan products.

And to potentially expand our partnership from C.P.S. based model to profit sharing model.

Other diversifying our product offerings and to eat and reaching consumption scenarios of the credit ecosystem.

Driven by the effective channel partnerships, we have cut our online customer acquisition costs due to low single digit percentage of loan volume in the third quarter.

Secondly on.

From a transition to financial institutional funding and.

I'm pleased to announce that starting in September we funded 100% other long business with financial institutional funding.

Successfully completed the full transformation of our credit business into loans facilitation model.

Well this quarter, 98% of our loans were funded by financial institutions compared to 63% of last quarter.

And we are further diversifying our partner base.

Lastly on risk performance.

With our product mix mix shifting to inherently lower credit loss product offerings and ongoing effort to upgrade our borrower base and tighter credit policy.

We have seen significant improvement and asset quality and the sharp decline in delinquency, which already outperforms the pre and.

Dynamic level.

Looking into the fourth quarter ended the year ahead, our top priorities will be to grow our online and wealth management business into scale with multiple product and service offerings to provide a holistic investor experience to our mass affluent customer base and.

Execute our credit cards business transition into financial institution funded business model with strong channel partnerships for customer acquisition, well migrating our borrower base to better credit quality spectrum to optimize our product pricing and credit.

Formats.

The large going market opportunities in both wealth management and credit attack businesses, we believe eat and digital is well positioned as chinas, leading digital platform, providing comprehensive personal financial services.

With that I will now turn the call over to our CFO non who will discuss our financial results for the quarter.

Thanks.

Hello, and while false and that will happen and focus on key items all fees operation.

From.

Okay and far to the beach off and.

Non.

And that that has imposed and all by itself.

Well, Matt and I saw September 17, 20 times, yeah well.

Two questions and getting license and related to me.

Right well hunters and.

Thank you for sales and lifetime Hans Anyhow.

And last month and class.

And I saw September 30 tons and tons.

Total.

Yeah, well and.

The 25.5 meeting Aussie basically.

For wealth management corridor, which is closed all legacy people people go sense and 1% from haven't called her to him before kind of true, beating as on September 17th and he plans.

Other class B side no other.

Other.

Called her lisenbee injury claims from meeting fees.

And Chris especially per se.

Hotter and hotter.

All too long.

Oh, and your small and while income assumption loans, Florida continues to be the main driver of our loans O'neill growth this quarter together.

Thanks and close so.

Sales of loans, that's anything off.

I'll follow him well.

And these kinds of programs and transition to and loan from anything from Aldo I Patently financial institution.

98% our loans will follow.

Financial institutions and called her I'm, asking you haven't passes and I shouldn't all loans facility and September well I'll, let him well into the fold and my financial institution.

Onto our financials total revenue once and be less beating index that's called her.

And one and clean up 36% from haven't called her.

No other loud and clear and says 8%.

And called her and.

Total homes and then.

And they see any meaning.

I didn't give that level of wealth management assets.

The fact that tour and unusual from [noise].

That's kinda Mckee home loans.

Hanjin and eight and five meetings and calls huh.

Presenting 15.1% dollars O'neil from 5% to 21.2% and last quarter.

<unk> increased customer acquisition and efficiency and I went back and how sometimes from.

Loss from Hamzah, I says and then the CMO and Btwenty fees.

Greetings and contest and quick.

Total sales on 8% off loans O'neil aside from him. He wanted to understand from not eating master content, which was equivalent to 7% loan volume Im for batteries and couple of from ours.

Now you can come from this quarter once again 18 meeting.

For example, a net income margin of 7.8% and.

As complex and that's mouse and the 200 and since he told me last quarter.

And they compete all of this and this transition master here, please and I'll coffee tea and you for <unk>.

As we transition to higher margin products.

He'll onto the other price side, and the insurance products, which Dan Hi commissions revenue as we continue to let up other wealth management.

[noise], Oh zone, the macro environment in China.

They lack.

Lacking and deep life.

And you have to take up how 17th.

Latin and south.

To dealers and 12, MYDICAR aside from France, and me and that standpoint, and performing called her to each other.

And he couldn't college, all cash access program and most.

That's pretty funny and total.

Total balance.

Moving on to sanction, possibly percentage of the total performing loans.

I suffered from Hamlin setting and he time zone.

The balance sheet, that's all have for patients and is strong and sequencing, beating a patch and Shelton Westland and.

September 17th and he told me.

And now has to our COO Michael.

And quite humans.

Thank you and.

Hello, everyone and.

And at a performance, we continue to execute a prudent risk management strategy and the delinquency rates have a show a continuous and.

15 to 90 days delinquency has decreased to 4.4% that's off the converse 30 2020.

From five and half per sub as of June Thirtyth Twentytwenty.

This quarter.

Our team focused on the phone and actions.

We completed the restructuring of our collection team.

And the continued to drive new innovative collects and projects.

Which are expected to result in a decline eat and C.L. by over 50% as cash.

Compared with.

Our projection at the beginning of the year.

We continue.

Optimizing our acquisition risk matched with models.

Particularly for our small loans and the auto finance businesses by minimizing the fraudulent risk.

In the fourth quarter and going into a 2021.

We will continue to price tiers of prudent risk management and strategy and.

And ready to adjust and that.

And has admitted in light of the micro economic and regulatory environment.

I will conclude my prepared remarks here and that EBITDA to the operator operator.

Operator, we are ready for the Q and a.

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And just a reminder, if you wish to ask a question you May press star one on your telephone keypad.

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Yeah, Thanks, and have an ever growing same day. Thank you.

Thank you read yet ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now all disconnect.

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