Q1 2021 360 DigiTech Inc Earnings Call

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Ladies and gentlemen, thank you for standing by and will come from that trend and 60 did you take a first quarter 'twenty 'twenty 1 earnings conference call.

Please also note today's event is being recorded a day.

This time I would like to turn the conference call over to MS. Mandy Dong IR Director. Please go ahead and Mandy.

Thank you.

And 1 and welcome to our first quarter 'twenty 'twenty 1.

And this conference call.

A result of what is your area today and can be found a IR website. Joining me today are Mr. <unk>, our CEO and director Mr. Alex <unk>, our CFO and thereafter, and you said, Joe Yeah, a Seattle before we begin to prepare a remark I'd like to remind you of the company's safe Harbor statement, except for historical information.

And the materials discussed here and may contain forward looking statements based on current plans estimates and projections and therefore, you should not place undue reliance on them, but were looking statements and we'll incur a risk and uncertainty the caution that a number of important factors could cause actual results to differ materially for information about a potential risks and uncertainties. Please refer to a company.

The SEC filings also this call includes discussion of certain non-GAAP measures. Please refer to our earnings release for reconciliations between non-GAAP and GAAP, what that unless otherwise stated all FICO mesh and are in RMB.

I'll now turn the call over to us.

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Hello, everyone and very happy to report that a quarter, a basketball and exceeded our expectations across the board the strong growth momentum that we have seen since 2020 Q2 continued in the third quarter and we had another stat of a record breaking operational result.

During the quarter total loan facilitation was RMB $74.1 billion.

For their own 40% year over year outstanding loan balance increased by 38% over a year to RMB 100, and a $1.90 day exceeding RMB 100 billion for the first time.

Total revenue was RMB, 3.6 billion, a 13% year over year non-GAAP net income was RMB, 1.4 billion, a 452% year over year as we execute on a very strategy initiatives and and all of our market demand continues to recover we expect to maintain.

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And <unk> controller, a video and <unk> hydro geological with a pad that you haven't digital.

While maintaining strong growth, we made significant progress and our technology 3 months, rather than upgrading and a transition loans.

Loan facilitation under the capital light model and other tax solution models exceeded 55 zero percent of total for the first time.

This ratio increased further to 55% in recent months.

This marks a fundamental change to the nature of our business.

In addition, our cat empowered a business wide advanced on multiple fronts.

Our smart market marketing service product and <unk>.

And as credit engine Ics delivered a rapid growth.

In April key monthly operating matrix of IC.

Users with a pro credit line transaction volume and outstanding balance dabbled around the 2020 year end levels.

In particular, the transaction volume in April, but by and impressive 200 per day.

And from the 2020 year and levels.

My other our risk management, our <unk> per day.

And at a rapidly.

And now established collaborations with 29 financial institutions under this model and with and not a night in the pipeline.

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In terms of strategy growth drivers.

And I'm very pleased to report remarkable progress in key initiatives.

Such as embedded finance API model, SME finance and a collaboration with Kim from bank of Tianjin and ensure KCB.

We believe we have successfully upgraded our core growth and with more comprehensive and a diversified operations.

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Our embody a finance.

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Very popular among our business target and a connected with more chassis platform during the quarter.

So far we have established partnership with 20, leading traffic platform and further diversified our customer acquisition channels.

As of now and that is finance model is already contributes over 35% of our new customer acquisition.

The pocket.

Due to a credit card product, adding around 1.1 for millennial merchants during the quarter with over RMB, 1.5 billion monthly transaction volume.

And <unk> product continues to lift overall.

Engagement level and a thickness of our customer base.

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We launched our SME finance business and last year and a segment delivered a significant Ken growth in Q1.

Leveraging our risk management and <unk>.

Expertise and consumer finance, we get about a unique <unk> SME fewer a core I am model under this model and SME is evaluated both AD and entrepreneurs and our core sales and that business enterprise.

This substantially improves our risk management capability and efficiency.

SME lending.

Most of our SME borrowers and engaged Inc. Vitale a sale.

And <unk> hotel, F&B, food and beverage and manufacturing.

And the first quarter. The total amount of new approved credit line in SME segment increased 67% or sequential basis.

In addition, our online and offline borrower acquisition channels and expanded rapidly.

So far we have established a collaboration with 28, leading panic.

These protests a mountaintop Anthony Caf, 1 with a broad at the channel coverage.

And our SME loan per that quickly became 1 of the favorite amount per night.

Pricing of SME product is generally below 24% with better with performance longer tenures and a larger ticket size and consumer loans, which result in higher ticket rate around roughly 8%.

With huge market potential more supportive regulatory environments and attracted economy return, we believe SME presents a very promising opportunity for our long term growth.

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Our collaboration with KCB and centrally kicked off in the first quarter.

Our deep rooted strength of a relationship is translating into a strong business without <unk>.

Within just a few months total accumulative loan facilitation volume from KDB reached around RMB $18 billion with a loan balance at around RMB 13 data.

And maybe now has become our largest partner in terms of volume.

Yet our strong strata partnership is more than just a scale of the business.

Fortunately this trusted partnership has boosted operational efficiency for both parties.

And each in.

In times, such as a showcase and help us to improve efficiency when we work with other financial institutions.

We have seen positive demonstration and effects that have led to a notable improvement in our overall efficiency.

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We continue to improve funding efficiency and optimize asset quality.

Above all a or funding costs have been a gradual downward a chance over the last a few credit as it would build a more diversified funding sources.

So far this year, we have issued a total of RMB 2.1 billion of ABS ranking number 4 in a market with an average coupon rate of 5.6%.

Key leading indicators of asset quality further improved and reached a new set of best record in our history.

At this point and 1 collection rate increased to over a 91% and day 1 delinquency rate dropped further to 4.9% the best ever.

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Let me share a few thoughts regarding current and regulatory environment.

<unk> net a guideline of the commercial banks on a lending practice issued by <unk> in July 2020 provided a basic regulatory framework for loan facilitation business.

And that's some very specific practical examples of the loan facilitation model.

We have always conducted our business in strict compliance with this framework.

That is 1 of the reasons why our loan facilitation model as well except at almost a 100%.

100, and financial institution partners, we have a lethal exposure and joint lending and student lending and a stick to our role as a pet empowered a loan facilitator.

Also make sure we did not issue a BS over the leverage limit.

As you May know, we were a amount of 13 major a fintech internet platform net the regulator and invited to meet a recently.

At a meeting regularly to acknowledge the importance of our role in improving the efficiency of financial service, providing service to our Madden Mount and a reducing transaction cost. We believe the meeting was a necessary step to apply a fail in a balance of a regulatory supervision to market participant and a promote the housing.

Development of the platform economy.

Strengthening and supervision of the leading players will increase clarity to the regulatory direction of the industry reduce regulatory overhead and a promote a healthy and more consolidated market space.

Compared to the other Fintech company at a meeting.

Our business models, a relatively simple and straightforward.

We have consistently held our operations to the highest a compliance standards.

Therefore, we are very confident we can meet and new regulatory requirements apply to this industry.

Other regulatory framework becomes more clear, we believe that leading fintech platforms like ourself, well embraced a historical era of growth.

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Yes, and other new apart.

Thank you Don Lindsay will actually manage to that.

Oh Boy, we are very excited that we are off to a very strong start in 2021 for.

For the third time zone Bank top debt over RMB 100 billion and a capital light model contributed more than half of our loan book.

Our scatter initiative elaborate a battle net and expect a result, and there is more regulatory clarity, what a leaping being top half 1.

All of this give us full confidence for our development in 2021 and a beyond.

Okay.

And <unk> CFO, Thank you Tiger and conditions.

With you.

Now, let me turn it over to our CFO and to ramped a little more detail in for.

Okay. Thank you hi, Sean good morning, and good evening, everyone and welcome to a quarterly earnings call for.

For the interest at a time I will not go over all the financial line items on the call. Please refer to our earnings release for the details.

As Sean mentioned, we had experienced robust consumer demand for credit along with further improvement and asset quality in Q1.

As the Chinese economy continued on a steady upward trend and the Chinese.

And related seasonality was muted than normal.

Total net revenue for Q1 was $3.6 billion versus $3.3.4 billion in Q4, and 3.18 billion a year ago revs.

Revenue from credit driven service capital Harry was $245 million.

<unk> 2 to $5.6 billion and Q4, and 281 billion a year ago, the sequential and year on year decline was in part due to the facilitation volume and mix change as cash heavy contribution decreased significantly.

So a recovery in average pricing offsets some of the negative impact on a sequential basis.

During the quarter average pricing was about 26, 6% compared to 25, 3% in Q4, and 28, 2% a year ago going forward, we are expecting a relatively stable pricing environment throughout 2021.

Revenue from platform service capital Light was 1.15 billion.

<unk>, 2.708 8 million in Q4, and 373 minute a year ago.

The robust growth was mainly driven by a 58% sequential growth and facilitation and volume from capitalized.

And other technology solutions.

While the underlying take rate for the platform service where rates were relatively stable.

We expect top line contribution percentage to continue to increase throughout 2021, and eventually accounts for a clear majority of our total volume by the year and.

As macroeconomic activities continued to recover and China demand for Internet traffic also increased significantly along the way.

As a result, we have experienced some uptick in sales and marketing expenses.

Average customer acquisition cost per user.

Was per.

For user was food credit line was RMB 217, and Q1 compared to RMB 198 in Q4.

Meanwhile, we also noticed a clear pickup and customers' drawdown activity during the quarter.

As a result, we were able to maintain a stable and satisfy the ROI despite increases in customer acquisition costs.

We will continue to use lifecycle ROI as a key metrics to determine the pace and a scope our customer acquisition strategy.

For 2021 at this point and time, we believe current market conditions support a more proactive approach to accelerate the growth of our business.

Non-GAAP net income was 1 for $1 billion in Q1 versus 131 billion, and Q4 and $255 million a year ago.

And we once again set a new record and quarterly profitability driven by higher precipitation and volume and notable improvement in asset quality.

As we previously communicated to the market with a transition to a more technology driven business model.

A structure of our financial model is gradually changed for Q1, we have seen significant improvement in operating margins as increasing contribution from <unk> and other technology solutions will generally lead to higher margin structure.

We continue to expect the overall profitability growth to be more or less keep pace with a facilitation and volume growth for 2021.

With strong operating results and increased contribution from a capital light model in Q1.

Our leverage ratio, which is defined as a key asset risk bearing loan balance.

Guided by shareholders equity further declined to 5.4 times from 6 points.

6.6 times in Q4, and 9.5 times a year ago, we expect to see continued deleveraging and our business driven by accelerating movement towards capital light model and a solid operating results.

Meanwhile, our provision coverage ratio and reached 554.

In Q1 compared to a 470% in Q4 and a 401% a year ago. This was a highest provision coverage ratio in our corporate history, reflecting a significant improvement in asset quality and our conservative approach in estimate.

Adding provisions.

And as capitalized become a clear majority of our operations in the future and we are deeply in a safe zone in terms of the provision coverage. We believe this metrics become less relevant to reflect our the nature of our business in the future.

Total cash and cash equivalents increased to $9.2 billion and Q1 from 7.7 billion in Q4.

Non restricted cash was approximately $6 billion in Q1 versus $4.4 billion in Q4.

A significant portion of our cash was allocated to security deposits with our institutional partners and the registered capital of a different entities to support our daily operations, while we continue to generate strong cash flow through operation. We will also proactively deployed cash.

And to expand our business invest in key technologies and satisfied a potential regulatory requirement.

We believe that sufficient cash position will not only enable us to compete in this ever changing market, but also position us to capture a potential growth opportunities in a market recovery.

Finally, let me give you some update about our outlook for 2021.

While overall business trend has been stronger than we expected. So far this year, we intend to keep our tradition of conservative approach and providing forward guidance.

Such for now we would like to maintain our 2021 total volume guidance of between $310 billion to 330 billion RMB.

Representing year on year growth of 26% to 34%.

Meanwhile, we expect total facilitation and volume for Q2 should be in the range of 85 to 87 billion RMB.

Representing 15% to 17% sequential growth.

We will reevaluate full year guidance when we report our Q2 results.

As always and this forecast reflects the company's current and preliminary views.

Which is subject to material changes.

With that I would like to conclude our prepared remarks, operator, we can now take some questions.

Thank you.

And you will now begin the question answer session.

Audio participant with a question to post Covid.

Zero 1 on your telephone keypad deadbolt placed in the queue to cancel the queue. Please press 2 for.

For those forecasted Chinese please Kelly ask a question in Chinese first followed by English translation yourself.

In addition in order to have enough time to address everyone on the call. Please.

To 1 question and a follow up and.

And then return to the queue. If you have small question.

Once again.

Net interest to keep it now thank you.

Okay.

Yes.

Our first question is Jacky Cheung from generation. Please go ahead.

Okay. Thanks, guys. Good morning from both you and a consumer lending from chip later a downtown.

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Number.

For a whole.

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And thoughts on Youtube, although a majority of your take rate should that drop off to bank deposits have grown from Q3 growth.

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For fiscal <unk>.

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And I was wondering how you will make sure the whole and a women's cumulative technical change and that you're actually getting a lot and.

And thanks for tablets and ICU Jay.

And from Gosh, ox EBIT too shy.

And as you too and ICT and achieve a satellite and to the balance sheet accounts.

Sure.

Thank you Chuck.

Thanks for taking my question and congrats for a strong results 2 questions.

Number 1 is about our SME.

Non product.

We had a very strong <unk>.

Growth and our SME financing.

And so just wanted to understand what is the APR loan size unit economics.

About this SME financing product and what is our volume.

Volume targets for SME this year and.

<unk>.

Mr. Hu also our CEO mentioned that the take rate.

It is now about 8% so call compared.

Compared with 98% with our overall long long.

<unk> take rate.

And.

Secondly, it's about our tech exports.

Business, which should be ice's.

So just wanted to and spend what is the difference between IC and our other capital light loans.

Patient product what is that.

And take rates and a b.

<unk>.

Bank partners for these products.

So I observed that our reported volume destination.

Change a bit this year at this quarter at Inc starts.

Start to include this ICD.

Volume So just answer a.

Check out at the IC.

And volume for this quarter and last quarter. Thank you.

Thank you for that.

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Andrew Lazar.

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And Mitch with your <unk> initiative.

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John.

Brito and moved out.

Okay.

Okay, great and HIV.

Thank you Hugh.

For the mortgage.

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And to continue to show you didn't see for example, a younger.

Mainly from Asia.

Sure Jackie and let me handle your first question.

Right and we see it.

You need to kind of a well Anthony Disney and the first quarter as you know there at 2 and actually to type 2 types of Anthony product in the market and first pipe.

Actually we believe more with later.

Consumer finance products and most of a lot of peers.

<unk> expanded the existing consumer finance product.

Q and.

1.2.

And to a core.

The management or the owner of a year.

And actually has.

Similar unit economy with.

Consumer finance per.

This is not we are pursuing a second half is actually a what we are doing now is more actually more directly related to SME enterprise itself.

We focus on the operation now.

Matrix.

SME companies.

Hey, Julien.

As a management of SME products with leverage.

And Steve.

In consumer finance and <unk>.

<unk> developed a quarterly for Mac Mac model that means we evaluate this SME 1 that both at all.

It is now also assay Acme enterprise.

Shows a much battery and the economy back a general consumer products.

Federal minimum rate Jojo Moshe share tender.

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So a little bit and Jack.

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And I'll go ahead and getting rid of Dennis.

And then Glenn.

And the debt back from Japan, and who litigation and.

And just briefly mbd.

Sure.

Good day.

Sure.

As we focus on the second half with a some more directly related or other truly Anthony La <unk> has a larger market potential and a battery youll net economy you attack. The average APR of this product is 20% is for it.

For those are more a related to that.

A related and SME La Jolla.

Invoices related to average 8 guys around 16% ticket size of SME loans as debt.

A 20 to 110 and.

And the RMB.

And we measure and their prepared remarks, a take rate around 8%.

Most twice twice double the size of the consumer finance loans.

And our Giaga, Glenn and women Ice's turnkey.

So here's a targeting should have since the time yield a shipyard and particularly you believe that momentum with a true to the house, which enjoyed yet.

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Finish.

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Julien and Tucson, Arizona for a solution.

And we'd be at a good suitable and again, so we'll be day, which under a D. Here.

And then.

Okay.

Okay.

For your second question about a ICU products.

And C is for NAV in power Gen <unk> and Gen.

It is both a small other.

Smart marketing and survey and USB.

We have accumulated a round of wound J, a financial institutions due to the very loud and cooperation with bandwidth now their preference and debt.

And very well and we divided them into different layers. According to their capabilities for risk management for adults, who have been cash and to improve the risk management from <unk>.

A P or they already have a very strong demand for metal capability, we will a belabored the IV product to them.

As a focused 1.

I'd like to just focus on that kept them a position sorry, and therefore as delay compared to a capital light model to I think a model just provided a customer acquisition survey.

Takeaway <unk>.

Comparatively lower.

Thank you and Mcmurdo, the synergy goals and social change and you should ask for Tommy with tradition with a tablet.

And then go to Google and Yahoo, Inc.

Most of those flow.

Non.

And then just on kind of Hollywood a QE.

RSV non target to get into percentages look and a general die.

And ladies and gentlemen.

As we collaborate and various debt high 12 financial institution like consumer finance.

Great and.

Exactly.

There are a lot not much difference Amanda LOE assets a weighted allocated.

And we'll take it.

And we measure and a M.

And our remarks, so last quarter. This broader map ice's reached $2.4 billion compelling, which dabbled a site for last quarter.

Hi, Joe and liquid.

Thanks Jackie.

Thank you we already.

Yes.

Okay.

Thank you Jackie.

Next question is a Richard Xu from Morgan Stanley. Please go ahead.

Well don't you locked on a half and hung.

And so.

And I'm going to either particularly on a year to year.

Thank you Sanjay just for 1 day.

Hopefully in a holiday for a minute <unk> got high and it goes on the air for the O J below a 1 kilograms and Tony Hawk.

Yeah.

And I don't know EMEA led by a dog or hopefully for you got a mission.

Sure.

Funding the Eagle Ford you sure familiar to you and quality.

Women and we work hard in a Shaw, who are going towards a great gentlemen, and I didn't hear in your home.

Sure can go off and then Jacob on the Eagle class whatnot.

And they don't want to go fluctuate a lot.

Do you have a take rate tabby a top down.

Because of a legal entity are under Joshua.

A high surgical young Joseph a go ahead and so what are you a I see this year champion.

Not a J Shannon I'll take a.

I can assure you already there and the reward sure how cohort 1 and then a quick for working on share.

Okay I see you did on champion high share.

Sure.

And <unk>.

Take a capital light Hasher general capital a heavier share attempting to take a woman from talking to you to tell too sure looking from the basic.

And basically a few questions..1 is in terms of the funding partners.

We're certainly increasing our cooperation with Ginger and bank, but going forward, how do how do we allocate the loan allocation among different funding partners and any major differences on the take rate secondly is in terms of that.

Volume allocation between ICU product and other products certainly a take rate is different so what will be the long term strategic thinking on the loan applications.

Okay.

And.

And do you go and do soon.

100, and the overlap with you.

Well Mohan.

For each of women's and good day.

And 15 <unk>.

The teams and can do the assortment and Qatar.

A woman.

So to the EBIT EBIT and EBIT.

For the whole bank.

You said the woman and Janine.

And the 2.

<unk> sure.

We'll make sure the Syngenta and <unk>.

In new and simple question that led to the pickup and they should.

Secondly.

Ladies and gentlemen.

And time and this year is dual and that good news anymore should a pencil from a mute.

<unk> got some other shipment.

Mindy.

Sure Richard.

And I go through our founding question for.

First off.

And the diversification of funding source is always a goal we are pursuing and and we will keep that they can only for PCB. As you know we have deep rooted a relationship with KCB is very is better the ABB as a shell case and to demonstrate.

Demonstrate to other financial institutions.

In addition, as you see we carry out a lot.

The initiative this year.

It's easier for a factory floor that new products with a PCB collaboration.

Take rate Yahoo.

And you don't see issue issued shipyard.

And we will begin a corridor.

As a policy you have certain class EBIT J C.

Tangipahoa parish in Louisiana pilot.

And we should outgrow the growth and Hugh.

Maybe.

Yes, due to our deep rooted a relationship with KCB there might be sure.

A different compared to other take rate when we cover with other financial indicator, but it would take a longer term deal. We are definitely work with all the hang us a lot.

Still a business plan.

Hello, gentlemen.

And the EOG and belief.

And.

And just as you can get from there a bunch.

A bunch of type.

And you mentioned and engineered wood issues for Ghansham.

And what kind of a agenda student and show rotation that you don't need and we show you.

The fundamental reason is our non productive very competitive in a market.

But even there a shorthand difference between the KCP business plans with as a financial Inc.

And this income can be.

Showcase and in a long time other financial institutions will catch up with the headquarter.

Hum.

Doug.

And I see considerable growth and payroll and the cohort a win for you.

Yeah, well needed to leave and see a doctor training.

And Jim could you Tom Lynch from London, <unk> Han agrees with.

So your woman that Google and David Barcelona.

And with no critical bank teach and Jim is hit with a.

From a lead.

And ideally mineral and Linda.

And we put on as hunting June total knowhow.

And see what we can do this.

And if you go to a degree.

Total value.

And it will be from Shields initiative for me.

And clearly we would actually go and finish it that's a good.

And so therefore it will defend your.

Generally the judge from that.

If we can clean and Lee will move a television.

Don.

Really helpful.

And I guess, it would be a pan European toward a dividend policy and shielded us from <unk>.

Thank you go from the June <unk>. So you can do what you do from there.

Sure.

And so we have always done.

It's been no average, becoming the top class items being had that covered and we.

So average gross debt or average function.

And the whole of business operations, and therefore ask you for your question and how we allocate different assets or a product allow this 100 financial institutions.

And the.

Absolutely look at we.

Look cabin business need from the finance funding for example.

And so on and pioneer.

With a comprehensive.

A.

And then we provide a capital light product.

And the founding partner, a very strong and with Magnus and then we also provide a smart marketing product. If they had already had a very strong stewards of capital then we provide.

Provide the IMS that product for them all in all we provide a service based on the business needs of our plan and pilot.

Sure and look at any other ones you Richard.

Thank you Rachel.

The other point.

Yeah.

Yeah.

Thank you Richard net.

Yeah that Lee from CIBC. Please go ahead.

Uh huh.

And I'm good with a good for you in a few quit and so jenkins thanks for calling from <unk>.

And I would say the only other Germany, but yet and would have been seriously volume goes down when do you see a at some point even.

Even with user growth.

Tien Tsin and Tony if I wanted to go GA.

And we didn't come out.

A hunger games and a woman without a darn good info. So is your assumption that you always have a warm winter you do a phone call Im joined Deutsche All Ultra light duty and Tony a humble guy.

And go into your volume, that's a way that quite a bit during a year.

And that was out there, which I remember you did a little.

And unfortunately is likely to go away quite a quite yet.

So I'll try to answer and so without quality.

And certainly the generic operating itself and in a Jerome necessarily that 1 Doug I know agenda of bundling and the BD without a brochure.

Okay, then with strengthening a question Hello management and thanks for taking my question and congrats to our solid results, so today and how to break questions and for.

First 1 is regarding our strategic partnership with KCB. So I don't know that <unk> has become the largest institution and partner in terms of the LOE and transportation volume. So could you. Please share with us more information on how much contribution actually comes from the KCB in terms of the loan origination and <unk> 21 and.

The second question is about our progress on that as a new low end business. So given our SME loan business has been a while on track. So could you. Please elaborate more on how much contribution comes from the SME loans in terms of the loan origination and you want your 'twenty, 1 and how much contribution.

And we'll be by the end of this year and so much.

Understood.

Okay and syndrome.

Many other rigor for Google.

Pat.

Hmm and.

And to.

<unk> revenue.

And with them a little differently you bypass.

And that's a really usually by a fantasy.

Phase 1.

And then QED and financial capacity.

You bet, a battery tissue total mega funds and the BD, Inc.

For the jugular kind of a lead by a stance with your triple net.

And you changed or are you a pattern.

Patents.

Sure.

Please.

And.

Do you think a belief rely.

Hum syndrome, and sometimes they don't.

And as a you can open a tissue team and board.

The Houston economy here.

And as it gives them the Dunkirk and do it could lead to symptoms and that you don't have a share.

Mendes.

Yes, yes, yes, you are right and you can be in terms of for a business.

This is Bob.

<unk> came out of August a panic.

As a measure in the prepared remarks, thank you Juan.

Jim and the calibrated with KCB total.

18 billion RMB and with low band 13 points to a date and RMB as we further advanced our business initiatives with KCB and we expect to see this number going up and and.

And in the following.

Thiago Squalamine.

The U K.

And with you and that kind of a woman.

Moving from.

And some delays juggled agenda for women.

And a general millennial Youll concur.

Tanker to eat and we should take a against from Congress.

And how women.

English and then November essentially a Fisher and then if I take a mobile Inc. And then go and.

And just a decision this year and swimwear mitigate technical skills and John.

As will mentioned in Colombia, and Youre human and unless you got to put it yes and for Johan and delivered EBIT tempting.

And then in Kenya and moving.

Youre in a Seattle either.

For you would agree more.

Moving a needle.

And India momentum coming and going.

And Nicholas and Geneva, Santayana by either will get a day.

A development and good.

And equity and integrated.

And the segregated the EBIT tweets a good maybe I'll just do need a PD.

Second question about the SME and we mentioned that there are 2 definitions about the SME for the a brother.

Definition data and is at a.

A consumer finance loans related to Aetna and.

And Matt in the last quarter days prior to contribute around 30 to 40 per GAAP and we anticipate a number right now up to around 50% to 80% a year and.

For the second a more strict definition of SME, yes, and that is the debt.

Net of go lay off with Syria.

And that's a more related to the SME enterprises itself at least we hired yet to reach 10 billion lower bad debt and at you.

Recall, our guidance guidance for block.

Total of a volume.

300 and and.

And a 2 or 330 day.

EBITDA and the roughly you can get a.

Contribution ratio.

Okay.

The initial rate.

And once you had for them.

And.

Our debt between business here.

And <unk> had for them.

Dr <unk>.

And you could continue to merchant and that Youll niche and do a critical a bank and tanker couldn't listen that's for sure and beautiful and can be Don could you <unk> Youll do that this year and.

Cohort credit terms to transition a sensor for your ego Barron.

Thanks for the MTV attempting and so you don't have Rami do you want to hear she and attempting a balloon and we took a year without a can do we can do debt issue.

Yeah.

A lot let me add more color about SME.

At a very early stage a based products.

And our multiple a direction to further above a base product for example.

Very premium SME enterprise for us.

Wayne.

And while granting a route 1 million tickets Psi per day, and a a week that to share more of and we see more.

And that's coming out.

Sorry.

CFO.

I'll, probably add a couple of a.

A detailed to your questions first of all regarding the PCB is volume.

As a handful mentioned a.

Up to this.

Most of the April the accumulate volume from KCB is about a 1 of about $18 billion.

But I guess your question is about a Q1 for Q1 Kcb's volume is roughly a.

10 and 8.

8 billion roughly speaking so.

You can use a $10.8 to calculate the percentage ratio there.

And then regarding the SME there because as you mentioned, there's 2 debt definitions and 1 is more narrowly define the other 1 is more kind of.

And of a broad definition, we use the most.

A a restrictive definition for SME, meaning for those and.

Enterprises with.

And so the loans issued to the enterprise.

With the actual operation, which sales received with taxation information and those kinds of things that's the narrowest definition for SME for.

For that.

And the.

The total.

And sort of a loan volume up to a.

And April it's already at.

And that is 5.8.

Yes, sorry.

Alright.

For 2 the first quarter is $5.8.

And.

And RMB and.

The loan balance.

For the this restricted definition, it's roughly 7.5.

5 billion at the end of the first quarter keep in mind. This.

Sort of a narrowly defined SME loans typically has a much longer duration.

And then the consumer loans, so which will result in a pretty fast.

A buildup of the balance as per.

And then goes.

That's my sort of add a couple of points there. Thank you.

Yeah.

Thank you for your Daily next question is Steven from Hi, Tony Benson a please go ahead.

A quick 1 and thank you all.

Hello lenders, a 1 P D J.

And while you're doing a sale.

Thanks Glenn.

And the ban wasn't a nail days a new.

A man and gentlemen, and told US a way to that name and a guy.

Oh DRP and.

And meal DRP and believe it also Oh no growth.

So a genome do dial icon and so we need bend.

Just onto Lynn.

I'm wondering what I'll go to you Bill.

And then I'm going to be telling guys.

Good day and should be done.

Thank you, Steve and 1 day Theres, a 1 day and dunson J&J and <unk>.

And what are you somewhat of a woman condo you do too.

And then we will go to them, but you also have <unk>.

And we like.

Gentlemen, and I won't get from Ben.

We'd like to Tom 1 and got Choosy and go see a horrible way.

Oh, I'm, sorry, and Joe.

I will translate the 2 questions 1 is about a.

A follow up question and on the SME loan facilitation business.

To understand the share of sic code.

SME loans with collateral also to SME loans.

And I'm a <unk> S.

<unk> loans.

So far up to you maybe April and how do you compare the asset quality of SME loans a word.

To the consumer finance loans, we have done.

And so a different.

Asset quality indicators.

The first question and then second question is a.

Could you share with us what why we.

Have a rise in customer access and cost in Q1 on a Q O Q basis, and more will be I'll look on the trend of customer acquisition cost for the rest of 'twenty 1 guidance.

And so.

He is doing for you.

And when you say with once a day here and I get after that.

A woman will materialize as a solid sell it by kind of.

She's a total mayo toward the Atwood that policy.

And I assume this is for Tony you touched on the 2.

So a solid cellular to downplay it yourself as a like home as soon as a tie only.

And that she is what they've shown strong for seafood and Chennai.

So a bit assumption.

So impact and risk off our.

And our SME customary day, Laurel and the overall market.

About 70% to 80%.

Overall level.

And we use a door for Angie.

And Joe the F&B for that risk.

And is that a.

The the enterprise and this honor and a use of the door and income net suitable products other last week.

Probably a small in this owner for that and the video customer net it, albeit a different between individuals and small business, but it will improve.

Yes.

And finally, I'll tell you quite a hard momentum will launch on other cogent and I sure Sumit zone.

Those diets and unfortunately, I'm, the chief setup and deposits agenda for 2016.

Yes.

Okay.

Right.

Okay.

Yes, those are going for.

And then.

And so many weekend and free.

Free cash flow.

<unk> is a barcode settlement and Tennessee.

A question Gordon ensue from your answers a conductor.

Dented, a lighter crudes into the Cushing niche there.

And so and.

And that kind, a hot women and kids.

Either a cohort.

<unk> and <unk>.

And as you can meet your and attrition in.

And that cohort a meager.

Cohort a so in conclusion.

Women and their opinion.

Sure.

And your ego mentioned adhesion.

Good day was unveiled a new goods and it could.

And would be January <unk>, and Houston, So I didn't hear that kind of a minute and make sure you do a quick.

Custodial, how should it be eastern Europe and yogurt.

And as we share with market before.

Before that a lot.

And we actually come to our rail operations. It is not a VC cost a we were looking at is the <unk>.

Return on the investment of cash.

Domestically we are.

And we look at Asbury and the first quarter, we believe a week or a successfully conducted a better customer acquisition strategy.

It's demonstrated by higher customer approval rate and a larger ticket size and improve the ROI.

The total <unk>.

And then each bar caused a huge a cushion.

For clothing.

And can be and gather Chris and John.

And this is a really a question John.

And how does a good a turnkey that didn't come to ally.

A quick dosing cohort.

So you will see is for <unk>.

<unk> oncologic and kind of a woman.

And we'll move quicker that's a good human and will issue a higher would you go.

And essentially crinone as a woman.

Turning to tide, and Persil and conducted a good Concordia.

And click and go to online.

And we extend the SME business, if we purely look at CES and matrix.

Thanks, Anthony and they have larger a kit a.

A ticket size longer tenor and a lower.

And our API and.

On the safety level it will push out for these numbers however in actual business a key.

And with a rate.

And expanding Anthony is a much better business.

And for us and so as a quality battery and a higher ROI and that our unity and not economy.

A few on credit with any other way.

Yes.

Very clear.

Yes.

Steven This is Alex I, just wanted to add 1 follow up point for.

From a high change point Sachin mentioned that as we expand into the SME, 1 and nature of the SMA business is that a larger ticket size longer duration loans, which also associated with a much higher.

Per ticket customer acquisition cost okay.

And.

So that because we are kind of a growing SME business and the <unk>.

Tier 1.

More.

Proactively.

That mix change also result in a little bit higher.

Kind of a per our credit line customer acquisition costs as we reported so if you sort of a good read of SME portion just look at the consumer portion and the change was not as high as well.

We're a reported number so just.

And up to the point thank you.

Sure Joe.

Thank you Steven.

And Thomas Greg ill now hand, the session and back to management for closing day. Please. Please go ahead.

Okay.

Okay. Thank you everyone joining us for the conference call. If you have additional questions. Please feel free to contact us.

And.

That's it for the call. Thank you.

A physical.

Okay.

Ladies and gentlemen this.

Conclude today's conference call. Thank you for your participation you may now disconnect.

[music].

[music].

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to a 2006 day did you take a first quarter 2021 earnings conference call.

Please also note today's event is being recorded at this time I would like to turn the conference call over to MS. Mandy Dong IR Director. Please go ahead and Mindy.

Thank you Hello, everyone and welcome to our first quarter 'twenty earnings Conference call.

I went down for what you showed a area today and can be found on our IR website. Joining me today I missed a show our CEO and director Mr. Alex <unk>, our CFO and thereafter, and you said Joe Yeah, our CFO before we begin to prepare a remark I'd like to remind you of the company's safe Harbor statement, except for historical information.

The material and discuss Qian may contain forward looking statements based on current plans estimates and projections and therefore, you should not place and yogurt and ice all of them, but we're looking and saying that it will incur a risk and they'll start any but caution that a number of important and factor could cause actual results to differ materially for information about potential risks and uncertainties. Please refer to a company.

At SEC filings also this call includes discussion of certain non-GAAP measures. Please refer to our earnings release for reconciliations between non-GAAP and GAAP, what that unless otherwise stated all FICO mentioned RMB I will now turn the call over to our.

Hi, Joe CEO of a company.

Paul see you Monday.

Uh huh.

And I didn't get I definitely down women days, either with a yes.

And just so you go to a Google from me into a total of a woman and you see that you do women and tissue boxes a lot.

So you could see that change and the finance at home from a thanks Tyler.

A shingle.

QE the tons due debt.

Sure.

And $5 shipped by a Saturday.

And that vendors this year.

So it's a tool for each day by.

Got it all in China, and eastern Youll, probably get them done and sandbox.

For me a woman so EBIT.

Total with adults on for Neely.

And can be from Dunbar and just for them.

To me right now and that was just the and indeed can be intended advantages somebody with a shock.

So I don't look good John and Tony is for sure that again with you and Christmas and showed a median NAV.

Well, maybe that's a good chunk in the Tinder and should have a highway.

Tissue.

Hello, everyone and we're happy to report that a courtyard basketball and exceeded our expectations across the board the strong growth momentum that we have seen since 2020 Q2 continued in a third quarter and then we have another stat of a record breaking operational results during the quarter total loan facilitation.

And the RMB $74.1 billion.

And for their own 40 prevent you know over a year outstanding loan balance increased by 38% year over year to RMB 100, and a $1.19 and exceeding RMB 100 billion for the first time.

Total revenue was RMB, 3.6 billion, a 13% year over year non-GAAP net income was RMB, 1.4 billion.

452% year over year, as we execute on a very strategy initiatives and and all of our market demand continues to recover we expect to maintain this robots a growth momentum in 2021.

So you would see a tangent and done that for me.

Linda could you tell me a turnkey.

She told us from pushing that agenda.

And then she was a time down at the phone calling them.

So it's a total revenue of a ship.

So can you give your debt on the backup and <unk>.

So you will consider it even from a human pathogen.

Alright.

And could you for women and children and the east.

The other things and you thought about and fits Hudson loans, CVA Assembly and the actual for the time here, so humans and Sean.

Joe you a quote that you a dose bathrooms and by the Tinder.

So don't tell you, there's always a English as a counterbalance and done better than debt.

And so I don't.

No from whom the gentlemen.

Yes.

And what's your young controller I'll leave you with that and when do you go hydro geological with a pad that you own and digital.

While maintaining strong growth, we made significant progress and our technology dreamer and rather than upgrading and a transition loans.

And for delayed Haynesville under the capital light model and other tax solution models exceeded 55 zero percent of total for the first time.

This ratio increased further to 55% in a waste of money.

This marks a fundamental change to the nature of our business.

In addition, our cat empowered a business why advanced on multiple fronts.

Our smart market marketing service product and Canada, as a crowded and Jen I think you leave on the rapid growth.

In April and key monthly operating matrix of IV that Chad users with a broad credit line transaction volume and outstanding balance Dabble, just from the 2020 year and level.

In particular, the transaction volume in April, but by and impressive 200 project from the 2020 year end levels.

My other our risk management and that product expanded a rapidly.

We have now established collaborations with 29 financial institutions under this model and with and not a lot in the pipeline.

So assume consistent on debt. So you could tell me a year with a comp.

Go ahead and a candle.

Churn was a genius.

So we'll continue to you how net resort.

And with those should at some.

Net income.

Well, maybe only a quantified and could you just you don't need human touch and minda buoy and Washington.

In terms of strategy growth drivers, we are very pleased to report remarkable progress in key initiatives.

Chad and battery and finance API model SME finance and the collaboration rate came from bank of Tianjin issuer KCB.

We believe we have successfully upgraded our core growth and with more comprehensive and a diversified operations.

<unk> was a human species at all and then for local bank nearly a finance.

This is still within the Lula and tenure and ways that you can schedule a ikea.

Well good tenure and the Dalian fab.

Good.

And so they'll take Inc.

Ladies and Sydney, Hemo, and kind of a weighting higher <unk>, and then <unk> system and that simple.

Sure.

And women cohort there was a year.

The total non cope with a new issue.

The original Mckenna for xenon.

I believe a downtime and we won't.

And we can dial up and central.

And they seem familiar.

Our embody a finance a.

And model remains very popular among our business target and a connected with more chassis platform during the quarter.

So far we have an established partnership with 20, leading traffic platform and further diversified our customer acquisition channels.

As of now and that is finance model and already contributes over 35% of our new customer acquisition.

The pocket.

Credit card product, adding around 1.14 million new merchants during a quarter with over RMB, 1.5 billion monthly transaction volume.

<unk> continues to lift overall.

Engagement level and a thickness of our customer base.

And when would you shall we read a lot easier.

Do you do a lot.

To avoid a neutral view.

From a company.

Women's I was hoping you know when a utility from from dealership Buthaina judge.

Yeah that sounds and we came from Computershare by you guys, Joe each year towards a country you accumulate a jive and consumed.

Thanks, Hello, Andre shall we deal with a symbion Amit for me.

And I wish you a cohort margin from a.

Hi, guys.

So we should have a coding so to a soccer team.

And 1 year.

If you assumed and sourcing do assembly a sound like you do and it's been done.

What about from video to cheat.

So and try and change out you don't yet for the lessons we can done for me.

Everybody ought to a book critical event since the time zone forget you don't do on a competitively.

Well, Linda hunting Sidoti Q2, a 23 to a finding them.

So it hasn't been netting down and those that are a feature.

Your phones, you have indeed, TJ and sundry judge from.

And we've got that take attempting day takes great and the other in Japan.

So you will sit on Greenway has a total vision titles.

Obviously, you've got a fifth answered it through debt.

And that this issue.

We launched our SME finance business and last year, and a segment delivered a significant Kent well in Q1.

Leveraging our risk management expertise.

Expertise and consumer finance, we did about a unique oh no class SME fewer core I am model under this model and SME is evaluate it both as an entrepreneur and our core sales and that business enterprise.

Substantially improves our risk management capability and efficiency.

<unk> lending.

Most of our SME borrower engaged Inc. Macau, our sales hotel, F&B food and beverage and manufacturing.

In the first quarter, a total amount of new approved credit line and SME segment increased.

67% on sequential basis.

In addition, our online and offline borrower acquisition channels and expanded rapidly.

So far we have established a collaboration with 'twenty, a leading planet. These protests a mountaintop SME caf 1 with a broad at the channel coverage and.

And our SME loan per that quickly became 1 of the favorite and Mount Panic.

Pricing of SME products is generally below 24% with better risk performance longer tenures and a larger ticket size and consumer loans, which results in higher ticket rate around roughly 8%.

And with huge market potential more supportive regulatory environments and attracted economy return, we believe asset and you presents a very promising opportunity for our long term growth.

Well, thank you continuing on that book.

And that has done.

And then do the town and machine and Glenn for you. It seems that way you could do it a bit in China.

<unk>.

Tons and tons a year when he came to me and this year, because we'll fund client dialog and bypass switch and the U a.

EBIT for Samsung you can win more siang Chin for agents and we will maintain our debt go global event women's again.

And just if I knew exactly the way Moshe consumer.

Since it only Shannon and thank you and I will.

And then Virginia and show you the execution sitting.

And Keith Hinton sits and how are you Doug.

And as you go to a headway towards.

And for what you soon.

From a phase <unk> and then gone total dividend and we will maintain CEO nutrition.

Other hurtful.

Our collaboration with pace a bit in central and a kicked off in the first quarter, our deep rooted relationships and translated into a strong business results.

Within just a few months total accumulative loan facilitation volume from KDB reached around RMB $18 billion with a loan balance at around RMB 13 data.

<unk> now has become our largest partner in terms of volume.

Yet our strong strata partnership is more than just a scale of the business more importantly, this trust a partnership has boosted operational efficiency for both parties.

And each in.

In times, such as a showcase and help us to improve efficiency when we work with other financial institutions. We.

We have seen positive demonstration and effects that have led to a notable improvement in our overall efficiency.

Goldman tissue total.

It's a handful and I mentioned, a day, which you Shaun.

The incumbent teams with the agenda.

And within Johnson, and lagged and the door Yankee Sydney, and we do a b escalate the vascular Rte change and you can you and you do that.

Thank you, Matt and sensors and <unk>.

Chemo and that's all good.

And we came back here, Steve with Shanghai.

And it seems for Ya man and media please.

And so nutritional beverages and Youll see day 1.

Could you share agenda and yesterday.

No.

<unk> hundred and tremendous seasonality, it's a hydrogen.

Okay.

We continue to improve funding efficiency and optimize asset quality of a O.

Or a funding cost has been a gradual downward a chance over the last a few Quebec as it would build a more diversified funding sources.

So far this year, we have issued a total of RMB, 2.1 billion and ABS and <unk>.

And number 4 in a market with an average coupon rate of 5.6%.

Key leading indicators of asset quality further improved and reached a new set of best record in our history.

At this point and 1 collection rate increased to over a 91% and day 1 delinquency rate dropped further to 4.9% the best ever.

Joe for you guys.

Glenn and Gen y and they'll come back.

And.

To that I think I said, you and John.

Even though he and top of the Sarnia, you're putting on debt from 1 of your bumper sugar and casino and Jim It's really a mirror when you take a moshe the thank you for me for my younger and don't take a.

Like had a co living for a minute Moshe in bad debt and when do you go a jojo.

And when the NGO poorly and Kodak with Roche and debt.

Wish you talk on GAAP passion ABS debt, yes.

So could you put other EBIT rate.

And so you can directly you're going to a dollar general and implement the focal 1 and that need a suzanne GAAP.

And headwinds for taking that Johan.

And Tim on momentum against a consumer.

Yes.

And we showed a year, which is either for you.

And Joe you gentlemen, talk with Antonio Antonio.

Just for you guys.

Sure.

And Jim Brown.

Switching Kim head of finance and feet on the onshore.

And we're doing a honeywell Kim Kim hang onto the Jin Guan Jia.

Could you how youre doing thats non cash.

Yeah, let me a change.

And we should engine.

Again, Jim Zone.

And then Sam.

Sanjay.

So it's really a year.

Ladies and.

And I'm a door.

To that you will need a bulk so let's say a got a could we build rate.

Installment for a time, you were thinking and that our timberland and behind <unk>.

Ladies and gentlemen should that mainland class.

Total loans that junk rate and a lift in a harsh acute.

Let me share a few thoughts regarding current and regulatory environment.

Net net a guideline of the commercial banks are lending practice issued by a CV IRC in July 2020 provided a basic regulatory framework for loan facilitation business. It affects some very expensive a practical example of the loan facilitation model we.

We have always come back to our business in strict compliance with this framework.

That is 1 of the reasons why our loan facilitation model as well accepted and almost a 100.

100, and financial institution partners, we have a lethal exposure and joint lending and student lending and a stick to our growth as Ed had a empowered a loan facilitated with.

And also make sure we do not ensure avs over the leverage limit.

As you May know, we were a amount of 13 major a fintech internet platform net the regulator and invited to meet recently.

At a meeting the regulator acknowledge the importance of our role in improving the efficiency of financial service, providing service to our map and Mt and reducing transaction cost. We believe the meeting and was a necessary step to apply and fail and a balance of a regulatory supervision to market participant and promote the healthy day.

<unk> of the platform economy.

Strengthening and supervision of the leading players were increased clarity to the regulatory direction of the industry reduce regulatory overhead and a promote a healthy and more consolidated market space.

<unk> to the other Fintech company at a meeting our business model is a relatively simple and straightforward.

We have consistently held our operations to the highest compliance standard.

Therefore, we are very confident we can meet and new regulatory requirement apply to this industry.

Other regulatory framework becomes more clear, we believe the leading fintech platforms like ourselves will embrace a historical era of growth.

And what kind of lag.

If you think a cage.

And so a bit and any woman foundation.

And litho tools.

Sure.

Thank you.

And then Moshe so it's a 2 for 1 of our newest share.

Kind of a heel gets utilized hopefully you see the Fontana.

King 1 day at Harpoon sedan.

And other Miller.

Thank you, Don Lindsay will and similar to that.

Oh Boy, we are very excited that we are off to a very strong start in 2021.

For the third time loan balance top debt over RMB 100 billion and a capital light model contributed more than half of our loan book.

Data initiative de Levered Battle net expect a readout and there is more regulatory clarity for the meetings being top half 1.

All of this give us full confidence for our development in 2021 and a beyond.

And then <unk> CFO, Thank you Tiger and good luck.

Thank you this with you.

Now let me. Thank all of a 2 hour example, Alex to last a little more detail in for.

Okay. Thank you hi, Sean good morning, and good evening, everyone welcome to a quarterly earnings call.

For the interest at a time I will not go over all the financial line items on the call. Please refer to our earnings release for the details.

And as Sean mentioned, we had experienced robust consumer demand for credit and allow us further improvement and asset quality in Q1.

As the Chinese economy continued on a steady upward trend and the Chinese.

And related seasonality was muted than normal.

Total net revenue for Q1 was $3.6 billion versus $3.3 4 billion in Q4, and a 3.18 billion a year ago revs.

Revenue from credit driven service capital heavy was $245 million.

<unk> 2 to $5.6 billion in Q4, and 281 billion a year ago, the sequential and year on year decline was in part due to the facilitation volume and mix change as cash heavy contribution decreased significantly.

So a recovery in average pricing offsets some of the negative impact on a sequential basis.

During the quarter average pricing was about 26, 6% compared to 25, 3% in Q4, and 28, 2% a year ago going forward, we are expecting a relatively stable pricing environment throughout 2021.

Revenue from platform service capital Light was 1.15 billion compared to $788 million in Q4, and 373 minute a year ago.

And the robust growth was mainly driven by a 58% sequential growth and facilitation and volume from capitalized.

And other technology solutions.

While the underlying take rate for the platform surveys, where rail and were relatively stable.

We expect top line contribution percentage to continue to increase throughout 2021, and eventually accounts for a clear majority of our total volume by the year and.

As microeconomic activity continues to recover and China demand for Internet traffic also increased significantly along the way as a result, we have experienced some uptick in sales and marketing expenses and.

Average customer acquisition cost per user was for.

For user was food credit line was RMB 217, and Q1 compared to RMB 198 in Q4.

Meanwhile, we also noticed a clear a pickup in customers' drawdown activity during the quarter.

As a result, we were able to maintain a stable and a satisfied ROI despite increases in customer acquisition costs.

We will continue to use lifecycle ROI as a key metrics to determine the pace and a scope our customer acquisition strategy.

For 2021 at this point and time, we believe current market conditions support a more proactive approach to accelerate the growth of our business.

Non-GAAP net income was 1 for $1 billion in Q1 versus 131 billion and Q4 and 255 million a year ago.

We once again set a new record in quarterly profitability, driven by higher facilitation volume and noticeable improvement in asset quality.

As we previously communicated to the market with a transition to a more technology driven business model.

A structure of our financial model is gradually changed for Q1, we have seen significant improvement in operating margins as increasing contribution from <unk> and other technology solutions will generally lead to higher margin structure.

We continue to expect the overall profitability growth to be more or less keep pace with a facilitation and volume growth for 2021.

With strong operating results and increased contribution from a capital light model in Q1.

Our leverage ratio, which is defined as a key as a risk bearing loan balance divided by shareholders equity further declined to 5.4 times from 6 points.

6.6 times in Q4, and 9.5 times a year ago, we expect to see continued deleveraging and our business driven by accelerating movement towards capital light model and a solid operating results.

Meanwhile, our provision coverage ratio reached 554.

In Q1 compared to a 470% in Q4 and a 401% a year ago. This was a highest provision coverage ratio in our corporate history, reflecting a significant improvement in asset quality and our conservative approach and estimate.

And provisions.

As capitalized become a clear majority of our operations in the future and we are deeply in a safe zone in terms of the provision coverage. We believe this metrics become less relevant to reflect our the nature of our business in the future.

Total cash and a cash equivalents increased to $9.2 billion and Q1 from 7.7 billion in Q4.

Non restricted cash was approximately $6 billion in Q1 versus $4.4 billion in Q4.

A significant portion of our cash was allocated to security deposits with our institutional partners and registered a packed house of a different entities to support our daily operations, while we continue to generate strong cash flow through operation. We will also proactively deployed cash.

And to expand our business invest in key technologies and satisfy a potential regulatory requirement.

We believe that sufficient cash position will not only enable us to compete in this ever changing market.

Also position us to capture a potential growth opportunities in a market recovery.

Finally, let me give you some update about our outlook for 2021.

While overall business trend has been stronger than we expected. So far this year, we intend to keep our tradition of conservative approach and providing forward guidance.

Such for now we would like to maintain our 2021 total volume guidance of between $310 billion to 330 billion RMB.

Representing year on year growth of 26% to 34%.

Meanwhile, we expect total facilitation and volume for Q2 should be in the range of 85 to 87 billion RMB.

Representing 15% to 17% sequential growth.

We will reevaluate and full year guidance when we report our Q2 results.

As always this forecast reflects the companys current and preliminary views.

Which is subject to material changes.

With that I would like to conclude our prepared remarks, operator, we can now take some questions.

Thank you.

And you will now begin the question answer session.

Audio participant with a question to pose.

Zero, 1 on that and just to keep it well placed in the Q2 kinds of queue. Please press deal true for.

For those forecasts speak Chinese please ask a question in Chinese class.

Total by English translation yourself. In addition in order to have enough time to address and 1 on a call. Please.

To 1 question and a follow up and.

And then return to the queue, if and we have small question.

Once again.

Net interest and keep it now thank you.

Okay.

Our first question is Jacky <unk> from China region. Please go ahead.

Hello.

Guys. Good learnings from both you and a consequent income she believes the ASEAN chunky.

Would you say you Lindsay chunky Elisa.

<unk>, a woman <unk> quite a bit.

Thanks, and I'll tell you what you do.

<unk> got a good future.

And what are you guys from batch, which again will be a good chunk kido APR.

And with that and see the loan sites for the June.

Marching through Yonder.

For a whole.

And we will continue and reach.

And that's 1 that moved out from beyond us.

Thoughts on Youtube all open interest you take rate should that drop off to a bank deposits have grown from a tree.

And at that point actually book itself with the accounts.

Yeah, sure Corning and the woman sequel.

Q4 from food EPS.

And I see Chico.

And you guys have hung Coleman chief how did you guys seem from a crew that obviously, we're trying to for younger people.

And then particularly a take rate.

I was wondering how you will next year.

And a woman cumulative a technical teams and Daniel actually a J P and a lot.

And thanks for tablets and ICU, Jason Thanks.

Thanks for Kelly's Oxy, with Youtube, and Shanghai, and ICT and achieve a satellite and to the balance sheet from Cowen.

And what I thought.

Thanks for taking my question and congrats for the strong results I have 2 questions.

Number 1 is about our SME.

Non product.

We had a very strong growth.

Growth from our SME financing.

And so just wanted to and extend what is the APR loan size unique color makes.

Deposits SME financing products and what is our volume targets for SME This year and Inc.

Mitchell, who also our CEO mentioned that the take rate.

And is now about 8% so.

Compared with 58% with our overall loans.

Don't take rates.

And.

And secondly spots our exports.

Exports.

<unk> business, which should be ice's.

So just wanted to understand what is the difference between IC and our other capital light.

For patient product outlets to take rate and Abbvie.

Bank partners for these products.

And Sir Thats, our reported volume.

And destination.

Change a bit this year at this quarter I think a.

Start to include this IP.

Volume so just.

Check or IC from volume for this quarter and last quarter. Thank you.

Okay.

So when a language.

And I wouldn't say.

Sydney and women.

And you and integration.

Yeah with a sense of it.

As a financing.

And then.

And until I'm in.

And I know you Andrew Lazar did take a year.

And I know, that's what you're suggesting.

And just a different view here.

Moving to <unk>.

So it depends on which Jim will need to go cohort.

Yes.

And as Jeff has a mood.

So we see a day to go go.

And again, Patricia attach a charity that pattern.

But in a year with each and every.

A year with Eagle.

And you don't want renewal rate has come from Mexico City and <unk> with you.

And that is obviously.

And do you.

And tangible ROI payback.

We did a deal.

No.

And again with you. So obviously you can counter each other EBIT for your share.

And then the each theater teams with you.

As a risk events and can do a redundancy and good evening.

And Joe.

Sure.

Good day.

And Mitch for you a quickie initial team coaches with you and food.

And in general the assortment.

Non-GAAP 3 show, they're moving out.

And what didn't work out a bit growth.

And with you.

And as you go.

Okay.

And it can be.

And to continue to show you could do so for example, a younger.

Thank you John.

Sure Jackie and let me handle your first question well.

Absolutely right, we see you need to kind, a well Anthony Disney and the first quarter. As you know there are 2 actually 2 type 2 types of Anthony product in a market the first time.

Actually we believe more related to consumer finance products.

A lot of peers.

And expanded the existing consumer finance product too.

<unk> any 1 to 1.2.

The non demand or the owner of a year.

This actually has quite a similar unit economy.

Okay, So a more finance.

Perhaps this is not we are pursuing a second half is actually a what we are pursuing now is more actually more directly related to SME enterprise itself.

We are focused on the operational.

And matrix.

SME companies.

Hi, Julien.

And risk management.

SME products with leverage this debt.

A key in consumer finance and.

Uniquely developed the billed quarterly for management model and that means we evaluate this SME 1 that both at <unk>.

<unk> is now also assay Acme enterprise.

Shows a much battery and the economy back a general consumer Kodak.

Payroll minimally total moshe share tender.

And the huge Anita and we'd had a cushion quickly.

You might take a as we continue.

Cool.

Yes.

Mortgage had a vigor.

And just with him and balance sheet.

And Uh huh.

And the opinion, and API and conditions, thereby and geography.

And thank you Sue, which I'll touch with your debt.

Net income in Ventura LNG.

So a little bit and Jack.

And how does it.

And in total.

And for you.

Okay and had a negative provision.

And then go ahead.

And the debt back from Japan.

And the whole integration, obviously and with I guess food pack and just firstly mbd.

Sure.

Wendy.

Sure.

And I believe a focus on the second half with a for more directly related or debt truly SME loans <unk> had a larger market potential and a battery youre net economy recapped. The average APR of this product is 20% is for it.

For those are more a related to a that tax related.

The law or the invoice related to average 8 guys around 16% ticket size of SME loans as debt.

A 20 to 110 and.

1000 to RMB.

As we measure and their prepared remarks, a take rate around 8% and later on.

Most twice twice double the size of the consumer finance loans.

And women Ice's turnkey.

So here's a hagen and should have since a high yield a shipyard and particularly.

Particularly you open and we've had to do.

And the sales which enjoyed yet.

And so you are women.

And by women and do the mood.

And talented.

Q2 inventories.

And.

Finish.

From a human need and cities and I know that gets a little and needed to critical tissue.

For the EBIT shortfall.

<unk>.

And do a boost.

Assortment and integrate it.

Sales in Tucson, Arizona for a solution suite.

And would be a suitable and so it will be a crescendo here.

And then.

And.

Okay.

For your second question about the ICU product and you can see is for NAV in power Gen credit and Jan for again it's.

It is both a small smart marketing and survey and you will see we have accumulated a round of <unk> a financial institution due to the other longtime corporation with debt with no. They a preference and depth of a therapy very well and Lee divided them into different layers. According to their a couple a bit.

And for risk management for del Toro has been cash and to improve their risk management for <unk>. They already have a very strong risk management capability, we will a belabored the IV product to them.

And just get focused owned and leased you got a focus on the tectum acquisition and so therefore as do we come out for a capital light model with I think a model just provided monthly because of it.

Takeaway capacity.

Comparatively lower.

So you almost as though the thing when you go and so.

You should ask me a tradition with a carrier.

And then go to <unk> and <unk>.

Tony.

And when the Glenn Fogel and just on kind of a Halloween day QE obviously.

Obviously, not a tad to get them to be a sound that you would look into a general value.

And Betty and get them done.

As we a cooperated various debt high class financial institution like consumer finance.

Right and exactly.

That helps.

There is not much difference Amanda.

As a delayed allocated.

Okay.

And we measure and a M.

And then remarks, so last quarter. This brought them up Ice's reached $2.4 billion compelled we establish a site for our last question.

Hi, Joe and thanks Jackie.

Hi, guys and thank you we are again.

Yes.

Okay.

Okay.

Thank you Jackie.

A question is a Richard Xu from Morgan Stanley. Please go ahead.

Well don't you left on a half and hung.

Okay and here you go to even if you're a fan and I'm going to either particularly on a year to year.

Whats you actually I'm glad you charge a good just for a woman.

A hopefully in a holiday from any <unk>.

And at Google and the Ash without a J.

And Tony Hawk flow.

You've got a you have to meet.

Now EMEA led by a dog and hopefully as you go out on a mission.

The funding.

<unk> funding the Eagle Ford you sure familiar Ching Kwan.

Women, who work hard in a short going towards a try telling me that didn't have anyhow.

Sure.

And Jacob on the Eagle Ford.

They don't want to go quickly here net when we got a take rate tabby a topped up.

Legal entities and other Joshua.

Hi, surgically and Jos will go ahead, and what are you a IC this year temkin.

And Jay Shannon particulars won't take rate right now sure you already that reward sure how cohort 1 and then a quick for working on and I see they don't try and pin.

Sure.

<unk> take a capital light hasher.

Capital a heavier share champions League a woman from talking to you to tell too sure looking from that.

And basically a few questions..1 is in terms of the funding partners.

We're certainly increasing our cooperation with Ginger and bank, but going forward, how do how do we allocate the loan and allocation among different funding partners and any major differences on the take rate secondly is in terms of value.

Volume allocation between ICU product and other products certainly a take rate is different so what will be the long term strategic thinking on the loan applications. Thank you.

Oh sure.

And can you go and do soon.

And they will have with you.

Well Mohan.

And for each of women's and good day.

And fitting for do it do you go to deploy a while.

The teams and can do those 2 women.

That's a woman.

For 2 of the EBIT number.

Hey, guys.

She says that woman and opinion.

And the 2000 and hunting.

Yes.

We will Miss you out there and <unk>.

And you intend to a question that led to the pickup and.

For sure.

So I can do for us.

Louis just a moment.

And over time and time and this a year is doing and that good news anymore should a pencil on mute and touch.

<unk> got from other shipment.

Monday.

Sure Richard Let me address your funding question.

First off the.

The diversification of funding sources always a goal we are pursuing and and we all kept that they can only for a PCB.

As you know we have deep rooted a relationship with KCB is very is better and <unk> as a showcase and debt.

And to demonstrate to other financial institutions.

In addition, as you see we carry out a lot.

The initiative this year.

It's easier for our factory floor that new products with a PCB collaboration.

Okay great.

Tangent on day issue issued shipyard essentially a woman and again there for Luke.

As a part so you guys just a flat EBIT Egypt.

And tangible dumping and with MTF.

And we should have to go to a cushion here.

And India.

Yes, due to our deep rooted relationships with case a bit there might be sure.

A different compared to other tick rate when we are covered with other financial institutions, but it will take a longer term deal. We are definitely work with all the hangers or sell a business class.

And Linda.

And that should have been and Sandra EOG and Denise.

So a 2.

And just your opinion from debt Oncotype.

And 2 tactical UAS and engineer issues, we've got and Sean So did you share.

And what kind of agenda, David and he showed you teach and that you don't name and show you.

The fundamental reason is our non produced a very competitively in a market.

And even there a shorthand difference between and the KCG business plans with as a financial institution.

This income KCB can be a.

Showcased and in a long time other financial institution will catch up with the equipment.

Okay.

Yes.

Glenn and I see a turnkey Robertson and payroll minda cohort a windshield.

No well needed to leave and see a double trigger.

And Jimmy could you send a minutes, you're going to London and <unk>.

So your woman that Google from Google bought shallow.

And the critical bank teeth, and Jimmy kit with a.

And the leap.

And until the middle and Linda.

And we put a limit hunting June total knowhow.

And you see what we can do this.

And if you go to a degree should hold true value.

And it will take time.

So the shields and Institute.

And clearly we'd have to go and finish it adds a good for therefore, it will do for them too.

And the agenda and a judge from that if we can clean and Lee will move a television.

And to do.

You can put a with you that day to really helpful.

And I guess, it will be a pan European toward a dividend with D. A.

When we take a dividend.

From the June done on terms.

So you can do it you can get your take on debt.

Sure.

And so we have always done a.

And now average, becoming the top key items being tab that cover debt.

So average process or average function.

And the whole of business operations and therefore.

For your question and how we allocate different assets or for.

Our GAAP amount and this 100 financial institution.

The rate absolutely look at we.

Look Kevin the business need from the final funding.

For example.

And so on empower now they need a comprehensive.

And then we provide a capital light product.

A founding partner.

Joey and with Magnus and then we also provide a smart marketing and product if they have already have a very strong stewards of capital.

And we provide a <unk> product with them or in a.

And we provide a service based on the business needs of our bond and pilot.

Hi, Sheila.

Q and look at any other ones you Richard.

Thank you Rachel.

Yeah.

The other point.

Thank you Richard next question Ali from CIBC. Please go ahead.

Okay.

From day 1.

It's a good for you and a few quick so simple.

If you go to the other routes and don't yet and is there anything there yet and what.

And so usually all around growth that went through some and some quiet since they always have.

You go into supporting you and the U K.

And it seems to me if I wanted to join.

As always and coming out can you didn't hear me a hunger games and a woman without a J and good info figures and it's always helpful and whatever you do a banquet and I was wondering with Deutsche Bank.

And obviously likely you think Tony a Honda Jaguar and future volume, that's a way that quite a bit during the year.

Turning to guidance.

And when you dig a little upon that with only a portion of a.

So we.

And so without a quantify that and soon either during a busy a itself and Jerome necessarily that 1 Doug I know agenda of bundling and the BD a without a washout.

Okay, and then with strengthening a question Hello management and so all taking my question and congrats to our solid results for <unk>.

Good day, how 2 great questions and the first 1 is regarding our strategy day partnership with KCB. So I don't know that <unk> has become the largest institution partner in terms of the <unk>.

Low and patient volume so could you please share with us more information on how much contribution actually accounts from the KCB in terms of a loan originations and 121 and the second question is about our progress on that as a new loans event and so given our anthem and you've OMB that has been a while on track. So could you. Please elaborate more on <unk>.

How much contribution comes from the SME loans in terms of the loan origination and you won't do a 'twenty, 1 and how much contribution.

And will be by the end of this year and so much.

And then.

Okay.

Hey, Bob.

A global bank.

From a.

And to QE.

<unk> been with MLD, a different kind of EBIT partially.

Switching and.

And a USD by a finishes.

Stay tuned.

And when we <unk>.

And I should keep a city.

You bet, a battery of tissue that total.

From a and B.

And that's when you average out to a like kind of a highly bi.

Honestly between the each day that you George Patton.

Thank you.

Other PD.

Do you think a believe realized.

And so no.

And sometimes they don't.

And has the Oklahoma tissue can improve.

Keith and the credit issue.

Or does it gives them that they can do and could lead to some times and that you don't have a share.

Index.

Yes, yes, yes, you're right and there can be in terms of a.

Our business model to be already come out a lot of it.

As a measure in the prepared remarks and Q1.

Jim and the calibrated with KCB total.

18 billion RMB with Wombat, and 13 points to a beta RMB as we further advanced our business initiative with KCB and we expect to see a big numbers going up and.

And then in the following.

Yes.

And.

Shall we say a year.

And with you and that kind of a woman.

The momentum.

And some delays juggle agenda for women.

And then a millennium.

Sure <unk>.

And what's your total gains from Congress.

And that kind of element.

And then download and essentially the Fisher and then if I take a mobile Inc. And then go and.

Just a decision this year and so when we mitigate type of Covid and then John.

A women's engine and they have been.

And a human and unless you got to put it yes and for Johan and deliver attempting.

And then and Kenya and mortgage.

<unk> EBIT.

And for you would agree more.

And women and needed to get.

And.

And India momentum.

And Nick I think Dave Santee, and everybody will get a tour.

And good.

And Tecogen index.

And the segregated of EBIT tweeted, maybe I'll, just do need a PD.

Second question about the SME and we mentioned that there are a clear definition about the SME with a brother.

Have a mission that is.

A.

A consumer finance loans related to Aetna and events.

In the last quarter days prior to contribute around 30 to 40 per GAAP and we anticipate a number right now up to around 60% to 80% a year and for the sector.

And a more strict definition of SME, yet and that is definitely a call a layout for Syria.

That's a more related to the SMB enterprise and itself at least a target to reach 10 billion a local back a year.

And at <unk>.

And if you recall our guidance guidance for block.

A total of a volume is up.

310, and 2 a 330 day.

<unk> EBITDA and a roughly you can get the cash.

Contribution ratio.

Thank you Michelle.

<unk> had for them.

Okay.

Our debt between business you didn't even show a year and wish you had for that will need a.

And <unk>.

<unk> here, so a merchant and that Youll have a niche and do a hurdle for a bank and Duncan mentioned net Fisher and beautiful and can be done.

Could you and Toby Youll do that this year and.

Cohort credit and ship transitioned a sense of what your ego Barron TBA.

And so <unk> and so you don't have if you wanted to hear a human attempting to cope with and we think a year without a can do we can do debt issue.

A lot let me add more color about SME and although it's a very.

A very early stage of this product.

Try and multiple a direction to further build a big project for example for that.

A premium SME enterprise for us.

Wayne.

While granting a route 1 mill and ticket by product and a week that to share more and when we see a more results coming out.

Sorry.

CFO.

I'll, probably add a couple a.

A detailed to your questions first of all regarding the Kcb's volume.

As a handful mentioned.

Up to this.

Most of the April the accumulate volume from KCB is about a 1 about $18 billion.

But I guess your question is about a Q1 for Q1 Kcb's volume is roughly.

10 and 8.

8 billion roughly speaking so.

And you can use that 10.8 to calculate the percentage ratio there.

And then regarding the SME there because.

And Jim mentioned, there's 2 debt definitions and 1 is more narrowly defined the other 1 is more kind of.

And of a broad definition, we use the most.

A a restrictive definition for SME, meaning for those and.

Enterprises with.

For the loans issued to the enterprise.

With the actual operation, which sales received with taxation information and those kinds of things.

That's the narrowest definition for SME for that.

The.

The total.

And sort of a loan volume up to April.

And already at.

And that is 5.8.

Yes, sorry.

Sorry, not to a dollar to the first quarter is 5.8.

And.

RMB and.

And the loan balance.

For the restricted definition, it's roughly 7.5.

<unk> 5 billion and of the first quarter keep in mind. This.

Sort of a narrowly defined SME loans typically has a much longer duration.

And then the consumer loans, so which will result in a pretty fast.

A buildup of the balance as time goes.

That's my sort of add a couple of points there. Thank you.

Yeah.

Thank you for yet Ali next question is Steven from Hi, Tony pension up. Please go ahead.

And so Glenn and thank you all.

And those are lumpy.

I was just enjoys a while you're doing let's say a lead time.

Hi, Colin.

And <unk> been wasn't a nowadays.

The man's and Telemundo and this helps to that name and a guy.

Hi.

Yes <unk>.

Gordon meal DRP and believes that guys just also.

No real growth.

So a genome due.

And do that you like Honda, So we need bend.

And then.

Wondering what I'll go to you Bill.

And then got beat our guidance.

Good day and should be done.

Thank you so diesel 1 day, there was a 1 day and dunson and.

Sanjay.

What are you somewhat of a woman condo you do too.

And then they will go timber and you also <unk>.

And we like.

And I won't go Tim.

We learned a ton 1 and got chassis and guys see a high boy child.

And Joe.

A.

And I will translate the 2 questions 1 is about a.

A follow up question and on the assay.

Loan facilitation business I would like to understand the sale.

And the SME.

SME loans with collateral of the pill, SME loans and on the pill and.

SME loans.

So Bob maybe a pill and how do you compare the asset quality all for it.

SME loans relative to the consumer finance loans, we have done.

And so a different.

Asset quality indicators.

That's the first question and then second question and is.

Could you say have and that's what why we.

Have a rise in customer access and cost in Q1 on a Q O Q basis and more.

And we'll be I'll look on the trend of customer acquisition and calls for the rest of 'twenty 1.

Yes.

It's Steven.

And with once a day.

Got it.

Other.

Well listen I, suppose a solid sell it by kind of.

She is a total mayo tool at the Atwood policy.

And assume that that this is for Tony Chantal.

L. A sell it sell a year 2 thumbs leave yourself as a like how im assuming thats a tie only.

And that she is with a chance.

<unk> for a second.

So a bit a country.

Okay.

So impact half hour.

A customary for loral and overall market.

About 70% to 80% of overall level and we use a door Paul and Jane.

So until a day F&B for that which means for that.

The the enterprise class and a pulmonary and you adopt a door and income net.

And third boat product otherwise.

Small in net owners for that and the video customers.

It is albeit they are different between individuals and small business.

Yes.

And so you're quite a horrible and then we will launch on other closing and I swore Susanne.

And those suicides and unfortunately that shifted up and deposits agenda you go from here.

Victory.

Hum.

Okay.

Yes.

Okay.

Yes, I'll go for Glenn.

And then.

And.

How many weekend for example.

<unk> will enable is a back over to Linda and Tennessee.

Good quarter news flow from.

As a consumer should dented the ally.

And I couldn't see the coaching and discipline.

And that's on a kind of hot women.

And carried a cohort.

And as you can make indication for <unk>.

A cohort.

Co.

Cohort a so in a conversion.

Women and their opinion evolution, b share and you're going to media and that Houston.

And that was under a minute.

Indeed, it would be January and media and kitchen. So you didn't see that kind of a woman who make sure your debt.

So do you how should it be eastern European yogurt.

And as we share with Mike and before that.

And we actually come to our rail operations. It is not a day because the way we are looking at is the.

Return on the investment.

Cash domestically.

Yes.

And we look at.

In the first quarter, we believe a week or a successfully conducted a better customer acquisition strategy.

It's demonstrated by higher customer approval rate and a larger ticket size and try and prove the ROI.

<unk>.

And Egypt.

<unk> was a huge a cushion.

Okay.

And we can be and got a cookie.

A question John.

And as a shall read a question John.

And how does a good and see that didn't come to a highlight.

A quick charge and cohort 3.

So you will see some leakage oncologic and kind of op will move quicker that's a good human and will issue a higher would you go.

And it sounds to me from them as a woman.

U K and.

We continue to target and pancreatic and that is a good deal.

Right click and go to online.

And we extend the SME business, if we're purely look at financing matrix since they.

And they had a larger ticket size longer tenor and a lower.

And our API and 1 day.

Stacey level it will push out for these numbers however in actual business a key.

Question with the rate.

Expanding Anthony is a much better business.

And for us and so as a quality battery and a higher ROI and that our unity and economy.

Perhaps you and Corey that when you have day 1.

For a clear.

Okay.

Steven This is Alex and I just wanted to add 1 follow up point for.

From a high change point as Sachin mentioned debt as we expand into the SME 1.

Major of the SMA business is that a larger ticket size longer duration loans.

And also associated with a much higher per.

For ticket customer acquisition costs.

And so that because we are kind of a growing SME business in the Q.

Tier 1.

More.

Proactively.

That mix change also result in a little bit higher.

For a credit line customer acquisition cost as we reported so if you sort of a good read of SME portion just look up a consumer portion and the change was not as high as well.

We're a reported number so just on the.

Add up to the point thank you.

And this is Joe.

Thank you Steven.

And Frank ill now hand, the session and back to management for closing day. Please. Please go ahead.

Yes.

Okay. Thank you everyone for joining us for the conference call. If you have additional questions. Please feel free to contact us.

And.

That's it for the call. Thank you.

A physically.

Sure.

Ladies and gentlemen this.

That concludes today's conference call. Thank you as a part.

Participation you may now disconnect.