Q3 2021 Yiren Digital Ltd Earnings Call

[music].

Speaker 1: Good day and thank you for standing by. Welcome to the Year-In Digital 3rd Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone.

Good day and thank you for standing by welcome to the urine digital third quarter 2021 earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one.

On your telephone please be advised this conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your first speaker today Ms cable. He please go ahead. Thank you.

Speaker 1: Please be advised this conference has been recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to our first speaker today, Ms. Kai Wu He. Please go ahead.

Speaker 2: Thank you, Operator. So good evening, everyone. Today's call features a presentation by the Founder, Chairman, and CEO of CreditE, and our CEO , Ms. Ning Chang, and our CFO , Ms. Na Mei, Ms. Xiao Sheng, our SVP, Ms. George Liu, our CRO, and Mr. Raymond Fung, CEO of YearWell, who also joined the presenters in the Q&A section.

Thank you operator.

Good evening no one could have called feature presentation by the founder Chairman Micky, Oh quite a E and now with the Oh.

And I was CFO Neil Watanabe.

Yeah, Sean S E T.

George do you see are all women.

Oh, Yeah, Oh, yeah, well I'll be joined to prevent that in the Q&A session.

Speaker 2: If we're beginning, we'd like to remind you that discussions during this call contained forward-looking statements made under the Safe Harbor Provision for U.S. Private Security Ditigation Reform Act of 1995.

But again as well I have to remind you that discussions during this call contain forward looking statements made and I think how the position you have credit Securities Litigation Reform Act of 90 95, such statements I stopped at Lake uncertainties and thank God. It didn't close after weeks out to get that.

Speaker 2: Such statements are subject to risks, uncertainties, and factors that can cause accurate results to differ materially from those contained in any such statement.

Materially Sandoz can pay any such statements.

Speaker 2: certain information regarding position risks, and certainty or factors is included in our filing with the U.S. Security and Exchange Commission. We do not undertake any obligation to update any forward-looking statement as required under relevant law.

But even making any but I need to go do it I think he spoke back. Then is included you know we're fighting with it you have security and Exchange Commission, we do not undertake any obligation to update any forward looking statements I do quite relevant law.

Speaker 2: During the call, we will be referring to certain non-GAAP financial measures and supplemental measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the US GAAP.

During the call, we'll do with the ranges that are non-GAAP financial measure and so there's nothing I guess Julia and assess our operating performance. These non-GAAP financial my guess and not intended to be considered methylation or other substitute, but if I imagine you've been making to CAD presented in accordance with GAAP.

Speaker 2: For information about non-GAP-type financial measures or recommendations to GAAP measures , please refer to our earnings criteria. I will now pass it over to Ning.

We have been making about those non-GAAP financial measures all regions in Asia, you're getting I guess pleased with that as well.

Yes.

I will now pass it over to my opening remarks.

Speaker 3: Hello, everyone. Thank you for joining us today.

Hello, everyone.

Thank you for joining us today.

Speaker 3: We are delighted to announce a solid quarter with visible increase in profitability and a healthy growth in business scale amid a muted macro environment.

We are delighted to announce a solid quarter with visa Boe increase in profitability and a healthy growth in business scale.

A muted macro environment.

Speaker 3: At the beginning, I would like to reiterate our strategic positioning as a user-centric personal digital financial management platform as our business models continue to integrate and expand.

At the beginning.

To reiterate our strategic positioning as the user centric person no digital financial management platform.

That's our business models continue to integrate and expand.

Speaker 3: In the third quarter, we saw growing interactions and synergies between species lines.

In the third quarter, we saw going interactions than it's been argued between.

This is lane.

For example, the total number of investors.

Speaker 3: For example, the total number of investors who purchased He Jiang's long-term insurance product on Eden Wealth Platform this quarter increased by 37 percent compared with the second quarter this year.

Who purchased a larger long term insurance product.

Wealth platform this quarter.

Increased by 37% compared with the second quarter this year.

Speaker 3: while the number of borrowers cumulatively served with our insurance products as of September 30th grew 33 percent compared with the end of last quarter. So by personal digital

Well the number of borrowers.

They served with our insurance product as well.

September 30th.

But 3% compared with the end of last quarter.

So but person no digital financial monies, but we.

Speaker 3: We mean to serve our customers in the long run and to meet their comprehensive financial management needs, including liquidity management, income generation, financial protection, and the value-enhanced.

We mean to serve our customers in the long run and to meet their comprehensive financial management needs.

Including liquidity management income generation financial protection and value enhancement.

Speaker 3: which corresponds to our credit tax and the wealth management service.

Which corresponds to our pets and the wealth management services.

Speaker 3: Now, I will go through our business updates on Wealth Management.

Now I will go through our update on wealth management.

Speaker 3: As of September 30, 2021, total client assets exceeded RMB $17.4 billion, representing a 19% growth from last quarter and about 250% growth from prior year.

As of September 30th one people, who want total client assets exceeded RMB 17 4 billion roughly.

Representing a 19% growth from last quarter and about 250% from prior year.

Speaker 3: total number of active investors grew 11% quarterly to about 428,000.

Total number of active investors, who 11% quarter due to about 428000.

Speaker 3: More specifically, on EdenWealth platform, we saw accelerated growth in both new investors as well as average client assets.

More but typically you.

You don't wealth platform.

We saw accelerated growth in both new investors as well.

While our average client asset.

Speaker 3: due to our precise targeting acquisition strategy and optimize the services and products.

Due to our precise target team acquisition strategy and optimize the services and products.

In the third quarter, the number of new investors on the platform reached nearly 10000 reps.

Speaker 3: In the third quarter, the number of new investors on the platform reached nearly 10,000, representing a 33 percent increase quarter over quarter, excluding

Presenting a 33% increase quarter over quarter.

Excluding insurance product.

Speaker 3: average client asset per investor reached RMB 259,000.

Average client asset pretty much reached.

Reached RMB 259 solve it.

Speaker 3: representing a 125% annual growth.

Representing a 125% annual growth.

Speaker 3: Particularly, the number of investors with client assets over RMB 500,000 grew almost three times compared with last year. And the trend continues going into the fourth quarter. A clear reflection of our enhanced capabilities to serve a higher segment of our investor sector.

Particularly the number of new investors with client assets over RMB 500000.

Almost a three times compared with last year.

And that the trend continues going into the fourth quarter.

A clear reflection of our in house capabilities.

Served a hottest segments of our investment spectrum.

Speaker 3: Moreover, as our investor education further penetrates and the concept of balanced asset allocation is becoming increasingly accepted, the number of investors holding at least two different asset classes on Eden Wealth platform grew 168% year over year.

Moreover.

Alright Investor Education.

Got it.

And then the concept of balanced allocation.

Call me increasingly accepted.

The number of investors holding a these are two different asset classes Eaton wealth platform School 100 and.

68% year over year.

Talking about precise targeting acquisition strategy.

Speaker 3: Talking about precise targeting acquisition strategy, our Finance Plus Life initiative is worth mentioning.

Finance plus life initiative is worth mentioning.

Speaker 3: Through years of operation, we found common needs in our investors in four specific scenarios, namely health and sport, study and self-improvement, lifestyle and leisure, child education, and parenting.

Ooh years of operation, we found that come with me in our investors and for specific scenarios, namely health and sports study and the self improvement lifestyle in danger.

Education and parenting.

Speaker 3: to better serve our investors and target these common needs. We recently started to offer selective live services and products tailor-made for investors.

To better serve our investors and target these common neat.

We've recently started to offer selective life services and products tailor made for your message.

These non financial services are proven effective to both attract new investors and to enhance our existing users our T V.

Speaker 3: These non-financial services are proven effective to both attract new investors and to enhance our existing users' LTV.

Speaker 3: Through finance plus life strategy, we are building up a broader even wealth community consisted of high quality users who have the common pursuit for better wealth, better self, and a more positive life spirit, which is translating into comprehensive growth in even wealth. And we expect more promising results to come in the following quarters.

Ooh finance cloth lifestyle attitude, we're building up a broader even while community consistent high quality users, who have the common pursuit for a while but herself and a more positive light spirit.

Which is translating into comprehensive book and you're doing well and we expect more promising results to come in the following quarters.

Next onto our hoods young insurance brokerage business.

Speaker 3: Next, on to our He Jiang insurance brokerage business.

Speaker 3: We are pleased to deliver a better than expected growth this quarter.

We are pleased to deliver a better than expected growth this quarter.

Speaker 3: He Xiang contributed RMB 735 million in total premiums, 29%.

Hello, John contributed RMB 735 million in total premiums.

29% quarter over quarter.

And is commission revenue reached RMB 199 million.

Speaker 3: And its commission revenue reached RMB $199 million, up 31% compared with last quarter, and up 95% from prior year.

Up 31% compared with last quarter and up 95% from prior year.

Speaker 3: In the beginning of November , Hexiang had already completed our full year internal target in both premium and revenue.

In the beginning of November caused young had already completed our full year internal targets in both premium and revenue.

Speaker 3: He Jiang is positioned as a national comprehensive customized insurance service provider, and it stands out in this strong capabilities in product innovation and customization.

Cause youngest position as a nice didn't know comprehensive customized insurance service provider and it stands out in this strong capabilities in product innovation and the customization.

Speaker 3: For instance, this innovative annuity product launched in May enjoyed an immediate popularity with premium of RMB 285 million as of end of third quarter.

Eastern this innovative annuity product long inmate enjoyed an immediate popularity with premium up RMB 285 million.

And the third quarter.

Moreover, hooked young high standard services also gain market recognition.

Speaker 3: Moreover, He Jiang's high standard services also gain market recognition.

Speaker 3: In the third quarter, long-term insurance renewal rate stood at 98%, much higher than the common industry standard of 85%.

In the third quarter long term insurance renewal rate stood at 98% much higher than the common industry standard of 85%.

Speaker 3: Moreover, Hexiang's unique 2B2C business model has proven effective in market expansion.

Moreover, close all unique to B to C business model has proven effective in market expansion.

Speaker 3: By working with 2B channels with a considerable customer base, Hexiang has embedded their tailor-made insurance products into these 2B platforms and the scenarios.

Working with to be channels with a concert considerable customer base.

Close young has embodied their tailor made insurance products into these to be platform and.

The scenarios.

Speaker 3: This is a win-win solution for both He Jiang and our channel partners.

This is a win win solution for both young and our channel partners.

Speaker 3: for Hexiang, we have effectively acquired.

So we have effectively acquired.

Speaker 3: consumers at a minimal cost, while for business channel partners.

Consumers at minimal cost well what business channel partners will help them realize additional revenue stream and enhance their.

Speaker 3: will help them realize additional revenue streams and enhance their customer's LTV.

Their customers L T V.

Speaker 3: Hexiang is currently operating with over 100 insurers and brokers nationwide, offering more than 510 products.

Causalities cutting they all pre team with over 100 in short and the brokers nationwide.

Offering more than 510 products.

Speaker 3: with new products going to hit the shelf in the coming days. We expect a further growth in the quarters to come.

With new products going to hit the shelves in the coming days.

We expect further growth in the quarters to come.

Speaker 3: Now, I will outline some highlights for our credit.

Now I will outline some highlights.

Our credit business.

Speaker 3: In the third quarter, our total loan facilitation volume maintained a strong growth trajectory, reaching R&B 6.8 billion for the quarter, representing an increase of 30% quarter over quarter and 117% year over year.

In the third quarter, our total loan facilitation volume maintained a strong growth trajectory, reaching RMB six 8 billion for the quarter.

Representing an increase of 30% quarter over quarter.

117% year over year.

Speaker 3: Total number of borrowers served this quarter was 548,000, increasing 26% from prior quarter.

Total number of borrowers served at this quarter was 548000, increasing 26% from prior quarter.

Speaker 3: On loan products, Yijianhua, our small revolving loan product, witnessed a continued rapid growth and a clear increase in borrower base due to our enhanced digital operating capabilities and improved the servicing standard.

On long products.

You don't walk our small revolving loan product.

Witness our continued rapid growth and a clear increase in borrower base due to our enhanced the digital printing capabilities and improve our servicing standards.

Speaker 3: In the third quarter, loan volume of Yixiaohua stood at RMB 3.4 billion, accounting for close to 50 percent of total loan volume and representing almost five times growth compared with prior year.

In the third quarter loan volume.

What stood at RMB, three 4 billion accounting for close to 50% of total loan volume and representing almost five times school compared with prior year.

Meanwhile.

Speaker 3: monthly active users on our Yixianghua.com website.

Monthly active users or you don't want.

Speaker 3: at APP reached 1.1 million as of September 30th, jumping 82% quarter over quarter.

A P. P reached 1.1 medium as loves their pets, the September 30th dumping 82% quarter over quarter.

Well the increase in customer activity is expected as we start to embed more diversified consumption scenarios on the platform and the scale up our own traffic pool.

Speaker 3: Further increase in customer activity is expected as we start to embed more diversified consumption scenarios on the platform and the scale up our own traffic pool.

Speaker 3: Moreover, as our repeat borrowing rate continues to rise and our consumption traffic base start to convert into new loans, sales.

Moreover, I saw repeat borrowing rate continues to rise and our consumption traffic base start to come work into new loans.

Speaker 3: We have managed to keep our customer acquisition costs at a low level, translating into healthy product unit economics.

We have managed to keep our customer acquisition cost at a low level.

Translating into healthy product you need to economics.

Speaker 3: Furthermore, I want to share with you our progress on SME loans.

Furthermore, I want to share with you our progress E.

Loans.

Speaker 3: which we started to focus on in the second half of this year.

Which we started to focus on in the second half of this year.

Speaker 3: We are pleased to see robust growth in SME loan business, with its volume increasing by over 400%.

We are pleased to see robust well in SME loan business with volume increasing by over 400%.

Speaker 3: quarter over quarter, now accounting for 25% of total loan volume. It's worth mentioning that small and medium enterprise loans are priced under 24% APR. And as we are on the full swing to dive into this SME market, we expect the SME loan volume continues to grow in the coming quarter.

Over a quarter.

Now accounting for 25% of total loan volume is.

It's worth mentioning that small.

Medium enterprise loans are priced and they're 24% APR.

And as we are on the full swing to dive into this market. We expect the SME loan volume continues to grow in the coming quarters.

Speaker 3: For the optimizing our product mix and the paving the way for us to accomplish compliance transition.

Well, the optimizing our product mix and the paving the way for us to accomplish complying transition.

You bet.

And talking about complying and APR cap requirements.

Speaker 3: and talking about compliance and APR CAP requirements.

Speaker 3: we have been executing three concrete strategies to ensure effective transitioning while maintaining profitability.

We have been executing three concrete strategies to ensure effective transitioning well maintaining profitability.

First.

Like I just mentioned above we are scaling up.

Speaker 3: Like I just mentioned above, we are filling up SME loans to better support real economy and to respond to regulatory direction.

E alone.

That is the port real economy, and then to respond to regulatory direction.

Speaker 3: Second, we have been proactively offering lower price evolving loans to our existing customers with higher credit quality.

Second we have been proactively offering lower price are evolving.

Revolving loan to our existing customers with higher credit quality.

Speaker 3: Thirdly, we have been improving our customer mix and acquiring new customers with better credit performance.

Firstly, we have been improving our customer mix and acquire new customers with better credit performance.

Through our diversified online consumption scenarios.

Speaker 3: through our diversified online conception scenarios.

Speaker 3: Through the combination of these three efficient strategies, we are very confident to be able to complete our progressive adjustment by the second quarter next year.

Through the combination of big fish.

<unk> strategy, we are very confident to be able to complete our progressive adjustments by the second quarter next year.

Moreover, for the new guidelines related to credit score it would have been in close communication with regulators and are exploring different options to ensure our compliance.

Speaker 3: Moreover, for the new guidelines related to credit scoring, we have been in close communication with regulators and are exploring different options to ensure our compliance.

Speaker 3: So far, we have already signed an agreement with the licensed credit rating agency, and we are in the stage of testing detailed cooperation models, which will take some time due to the complexities surrounding operational flow, as well as tech capabilities.

We have already signed an agreement with our licensed credit rating agency and we're in the stage of testing detailed cooperation models, which will take some time due to the complexities surrounding all pushing them flow as was tech capabilities.

Speaker 3: We expect to finish the connection within the guided space grid period. And the relevant costs will be many.

We expect to finish the connection within the guided space Grace period, and the relevant cost will be manageable.

Speaker 3: we will continue to pay close attention to regulatory guidance as well as industry standards and make timely adjustments as needed.

We will continue to pay close attention to regulatory guidance as was industry standards and to make timely adjustments as needed.

Last but not least.

Speaker 3: Last but not least, as we refine our risk management systems and enhance our asset quality, our 15 to 89 days delinquency rate remained low at 2.4%. And we expect our credit performance to remain stable during the transition and to experience an overall improvement in the long run as we continue to optimize our customer mix.

We refined our risk management systems, and enhance our asset quality, our 15 to 89 day delinquency rate.

Low at two 4% and we expect our credit performance to remain stable during the transition and then to experience an overall improvement in the long run as we continue to optimize our customer mix.

Speaker 3: Going forward, we will continue our effort to drive up our business scale and create stronger synergies, not only within our wealth management ecosystem, but also within the whole year in digital ecosystem.

Going forward, we will continue our effort to drive up our business scale and create stronger synergies not only within our wealth management ecosystem, but also within the whole digital ecosystem means.

Speaker 3: Meanwhile, as our investors are showing growing demand for higher investable amounts, we will serve them with more diversified products with bigger ticket size, further driving up.

Meanwhile, our investors are showing growing demand for higher investable, a month, we will serve the more diversified product with bigger ticket size.

They're driving up our profitability.

Speaker 3: Additionally, as our credit tax business continues to move toward higher quality customer segments, there will be growing synergies and overlap between credit and wealth management businesses in the long run.

As our credit tax business continues to move toward higher quality customer settlement, it will be growing synergies and overlap between credit and wealth management businesses in the long run.

Now I will pass it on to not who will provide this quarter's financial update.

Speaker 3: Now, I will pass it on to Matt, who will provide this quarter's financial update.

Some came in your analysis and your restaurants go any forgets called her conagra RK I'm going to focus on key financial highlights for hover teach outs for our financial performance, you'll kind of referring trigger teach all hung actually golf Army released attack that Husky post our Oh I'm sorry.

Speaker 2: Thank you, Ning. Dear analysts and investors, good evening. For this quarter's financial update, I will focus on key financial highlights only. For further details for our financial performance, you can refer to the detailed financial results in our earnings release and desk that has been posted on our IR website.

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And we're happy to share with another phone call time with strong growth across revenue profit and I try and fresh while our year on year base after accounting, you'll see strong constant rocky Mount from financial management.

Speaker 2: I'm very happy to share with you another solid culture with strong growth of the gross revenue, profit, and transaction volume on a year-on-year basis, as we continue to see strong consumer demand for our financial management service.

Speaker 2: Total revenue in the third quarter was RMB1.2 billion, increased 20% year-over-year.

Total revenue in the so called her what's going be one contractor or beating increased 20% year over year, just called her revenue how welcome Michael Maselli accounting for close to 30% of our total revenue, becoming a significant revenue driver I've quantified total loan facilitated called her what's your M D.

Speaker 2: This quarter, revenue from Wealth Management Service accounted for close to 30% of our total revenue, becoming a significant revenue driver. On the credit side, total loan facility this quarter was RMB 6.8 million.

608 meeting I for one country, and the 17% year over year and revenue from loan facilitation increased to 48% from poorly Konkani now for 30 patients around you would take a very deep clean year on year due to ships with a shoutout Atlanta known put us at the launch schedule.

Speaker 2: of 117% year-over-year. And the revenue from loan facilitation service increased to 48% from prior year accounting.

Speaker 2: Loan facilitation revenue take away declined year on year due to shift to the shorter lender loan products as well as due to price decline as we adjust our loan portfolio to below APR 24%.

The cost absolutely shocked I dunno portfolio took allow AEP or 24% to stream. All printing is pass decreased by 10% year on year to M. D C punk eighth meeting.

Speaker 2: Q3. Operating expense decreased by 10% year-on-year to RMB 0.8 million. Sales and marketing expense decreased by 16% from private year to RMB 407 million. Join by increased consumer acquisition efficiency.

Mark Pete Petit decreased by 15% from prior year, excluding the 407.

Seven meeting.

Increased customer acquisition efficiency.

Speaker 2: Our original and service expense decreased 22% from prior year to RMB 187 million, mainly due to the import collection efficiency.

All right then I'll.

It has to be close to 22% from prior year of Twilio and be 100, and if you sell them, meaning they need to go to the input collection efficiency, allowing us more comfort as receivable and others well shouldn't be 83 positive meetings this quarter equivalent to run kind of stroke for fans.

Speaker 2: Allowance will come to assets receivable and others with RMB 83.6 million this quarter, equivalent to 1.2% of loan volume as compared to 1.8 last quarter. The deep clean was largely enjoyed by improved asset quality as the change of products made.

As compared to 108 lots of Qatar, but they claim or marketing triumph to improve quality at the change after that.

Speaker 2: Net income grew three times year-on-year to RMB 0.3 billion, reflecting a net income margin of 26%. Mainly due to our continued efforts in cost control and increasing operating efficiency.

God in pounds goes three times year on year between D zero pounds straight, beating reflecting a 19 Hagen off 26%, mainly due to our functional efforts at cost control and increasing operating efficiency is probably playing a tea or coffee on loan pricing, but also have confidence in being able.

Speaker 2: Despite applying APR costs in our long pricing, we also have confidence in being able to maintain health growth and profitability in the transitional year of 2022 and resume to a more robust profitability growth upwards.

To maintain house gross profitability in the transitional year of 'twenty to 'twenty, two and then they seem to a mall or a path to profitability growth upwards trend.

Speaker 2: Turning to our balance sheet, we ended the quarter with RMB 2.3 billion cash and cash equivalent, up 6% from prior quarter, leaving us with sufficient resilience to seize any new opportunity.

And while finished she and Dave you called out what you're going to be to penetrate beating patch on a kind of equivalent axis profound upon client culture. Afterwards proficient with that of course is I mean your opportunity is.

Speaker 2: This concludes our closed remarks. Operator, now we are open for questions.

It's kind of across all comes from that all.

Operator, now well open for questions.

Yeah.

Speaker 2: Hello, Greta. We are open for Q&A session, please. Thank you.

Oh, great Kathleen Okay for Q&A session. Thank you.

Secondly, participants who wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you would like to withdraw your question. Please press the pound or husky.

Speaker 1: Certainly. Participants who wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

Speaker 1: If you would like to withdraw a question, please press the pound or hash key. It's star followed by one to ask a question. Thank you.

Star followed by one ask your question. Thank.

Thank you.

Your first question comes from the line of bar at Haynes from Equinox capital. Please go ahead.

Hi, Thank you for taking my questions good evening, and very nice quarter, I'm I have a number of questions.

Speaker 4: Hi, thank you for taking my questions. Good evening and a very nice quarter. I have a number of questions.

Speaker 4: uh... what with the uh... a p r for loans initiated in the quarter and what was the average loan

What was the APR for loans initiated in the quarter and what was the average loan tenor.

Yeah, Hello, it's not I would ask all your questions.

Speaker 5: Hello, this is Ma. I will ask you a question. Our average, the tenure of the loan is about 20 months, but we suppose in line with our product, the tenure will be shorter to about 10 to 12 months by the year of this year.

Our our attitude to pan out off the law, it's about her truncate months, although I suppose.

Well I wish I forgot to ask the Pandora will be felt or two about the time to trough months back at yard house.

Speaker 5: And our total, the 24% APR, account for about 30% in the quarter, this quarter. And we're supposed to about 50% by the year of.

And Oh, a total of 24% APR.

I was talking for Samsung Intel Qatar, Qatar underway for pumps to about 50.

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Okay and can you discuss how your business has been progressing so far in the fourth quarter I see that you did not provide a a much guidance.

Speaker 4: Okay, and can you discuss how your business has been progressing so far in the fourth quarter? I see that you did not provide much guidance.

With that.

You did say that our that the economy has been muted.

Speaker 4: You did say that the economy has been muted. So if you could just.

So if you could discuss that that would be great. Thanks.

Yeah actually my friend.

No.

For our regular ocean catheter safe lots of dialogue after safety or a factor of isolation our C. O M P scraped.

And Nokia and Qatar.

Yeah, no. It's a decrease or increase the last thing I need to cancel and last a year or so.

You know the 1% forgotten here.

And you know better for this quarter is still kind of off the 24% and Oh actually fall off on the long run if the pricing is below the 24% even below 80%. So we think that for US you know I always thought with the Polish off the army alone in quite sometime.

So if you are if it is much lower and lower by the end of Andy Yeah. Nothing really like is that we think it's all part of the same for the patient to our client quality I think that's a well matched our class a mall a racecar five months and I think that's at least our belief about how at least from that.

Speaker 4: is much lower and lower by the end. And yeah, another reason is that we think if our purpose is to pay attention to our client quality, I think that will much collect the more risk assessment. And I think that with our risk better, we should activity to low our price to collect the more risk client. So we think that we can increase our APR 2014 potential, but as I mentioned that the regular dialogue is the best year. So we will focus on the regulation improvement and we'll adjust our strategy planning step by step. So that's all, yeah. So given that the competition for

Activity to slow our path to clock or a mountain climb.

So I think like Oh.

We can increase our accounts on page 14.

Propulsion Gotcha, I can imagine that the regular dialogue.

That's a year or so we will folk songs.

So it's a recognition of improvement.

Well I got to take all our strategy plan you've spent I stopped.

Speaker 6: So, that's all.

Oh yeah.

Speaker 4: So, given that the competition for higher quality borrowers is increasing,

So given that the competition for higher quality borrowers is increasing.

Speaker 4: Can you, and also with the interest rate cap kicking in additionally, can you talk about what your outlook is for pre-tax or operating margins given those pressures?

Can you and also with the interest rate cap are kicking in and Additionally, can you talk about what your outlook is for a pretax or operating margins given those pressures.

Speaker 5: Yeah, for our, currently our cost revenue is about 20%.

Yeah for us off of our fault current limiter or cross rolling out it's about a 20% under our activation cost at all.

Speaker 5: And our acquisition cost is 2% or 3%. Our operating cost is 1% to 3%. And we hope that all our operating costs will be decreased about 1% or 2% in our first quarter.

3% of all the operating cost is one two or three.

8% underlying hope that all of our operating costs will be declining about one 2% and you all have called her well also you.

Speaker 5: And it will also enhance our cost efficiency in the next year. I think this is another driver for our profitability.

From a cost efficient means of nice D. R. I think these are not going to cause.

So I want to follow profitability, Yeah mhm.

Hmm.

Speaker 4: Just a last question, and this is about a possible share repurchase or dividend. Do you have cash that's offshore that could be used right now to repurchase shares given that the ADS is trading?

Just a last question.

And this is about a possible share repurchase or dividend.

Do you have cash that's offshore that could be used.

Right now to repurchase shares given that this the the the a T. S is trading well below book value and at very very low valuations.

Speaker 4: well below book value and at very, very low valuations, it must be...

It must be.

Speaker 4: It just would seem to make a lot of sense here to start aggressively repurchasing shares.

It just would seem to make a lot of sense here too to start aggressively repurchasing shares.

No.

Speaker 5: Uh, yeah, yeah, I can, I can suggest something and if there's something as a supplant patient, we can, for hours, they, they all talk to me.

Oh, yeah, Yeah, I can I kind of a surprise something on it used to be honest with something either for client patient, we can sit for hours and staying on top of them.

Speaker 5: Yeah, as you mentioned, we have kept the deposits about 2.3 billion on hand.

Yeah. So my simple way half will keep the keep holidays about the true consciously building our hands, our our market value is much lower power CAC itself.

Speaker 5: However, our marketing value is much lower than our catch, so as common sense, we should repurchase ourselves. Actually, in the second quarter after our ER, we have performed a little more repurchase style in the marketing.

How many times the wastewater reproduction without actually are in the second quarter. After our yeah. We have a po for my song on May two mile a repurchase of stock in the marketing of it out faster.

Speaker 5: But considering our future business strategy, I think there's still many uncertainties for our business. So we still think we should keep enough cash on hand for our future business development.

For the company, it's only our field trial.

I think there are still many uncertainties for our business. So we still think we should kick songs like enough catch backup a handset for our future business to be one of them are of course as Joe mentioned that we still are in and kind of get past about any other strategies such as a push.

Speaker 5: Of course, as you mentioned, we're still in internal discussion about any other strategies such as the report on Shell or pay the dividend, but I think that the first of all that to keep our strategy and to keep our performance through development.

Yeah, I'll take the dividend.

So first off I'll find that keep our strategy on the pecan farms through development. So I think copied or uncertainty Ah. We think we have cable obviously inflation doesn't catch deposits. Although we have some kind of oculus attractions. Thank you.

Speaker 5: So I think, considering the uncertainty, we think we have to keep out the efficient detached deposits. But we have in some plan about your suggestion.

Speaker 4: Okay. Great. Thank you very much and good luck in the coming year.

Okay, great. Thank you very much and good luck in the coming year.

In Q.

Speaker 1: Once again, participants who wish to ask a question, please press star 1 on your telephone.

Once again participants who wish to ask a question. Please press star one on your telephone.

Your next question comes from the line of Alan Young Golden Drug called Dragon. Please go ahead.

Speaker 1: Your next question comes from the line of Alan Young from Gold Dragon.

Speaker 7: Yeah, thanks. And congratulations on the good results. We've discussed the topic about the shift to lower pricing earlier. Can you elaborate a little bit more on the pace of pricing shift towards 24 in 2022? I know by we're targeting around 50 percent, 24 percent loans by the year end.

Yeah, Thanks, and congratulations on the good results.

We've discussed the topic about the shipyard to a lot of pricing.

Earlier.

Elaborate a little bit more on the pace of pricing shaped towards plenty for me plenty of tiny too I know by probably around 50% kind of corporate debt alone by the year end.

Speaker 7: And the second question is, what is the tick rate outlook in 2022 as we complete the shift of pricing, and how do we arrive at such tick rates, for example, credit, funding?

And the second question is what is the take rate outlook in 2022 as we complete to the shipyard prices.

And how do we arrive at a peak.

Okay, Great Dumbo crowded funding.

Yep.

Yeah.

[noise] yeah. Thank you I guess or not we'll answer your question. The question for the first question. So pissed off lower API pricing are actually as I mentioned in the intro pricing question I I I like pro forma.

Speaker 5: Yeah, thank you. This now will answer the question. For the first question, the piece of lower APR pricing, actually, as I mentioned in the previous question, we're performing some regulation from the current pricing to the 24%. You also mentioned that currently, our gross revenue is about 20%.

I'm from the account of pricing to the 24% you actually imagine center olive parents like our glass rounding it's about 20% and a further 24 price of castle, we still have confidence in our path part D. D T a coffee towards a better quality and lower funding costs and lower placement cost.

Speaker 5: And for the 24 price cap, we still have confidence in our product's profitability, considering the better access quality, lower buying cost, lower acquisition cost, and cheaper operating cost savings. For example, compared to the 20% gross revenue currently, 24% cap rate, the gross revenue rate will increase about 4% to 5%.

I kept my operating cost savings for example are comprised with a turnkey profound across wrong, you're currently accounting for a person to calculate across round duration will increase about 4% to 5%, but will also impact the race car the funding costs and acquisition costs decreased 3%, 1% under one per fabulous.

Speaker 5: but also impact the risk, the funding cost, and our acquisition cost will decrease 3%, 1%, and 1% respectively.

Speaker 5: So that we still have the confidence that the light around the margin will still keep the stable. Yeah. Compare now. Yeah. Okay.

So that Oh, I still have the confidence that its a lot around the market still kept stable yeah. Comparing now yeah can answer your question.

Yeah.

Sure.

Speaker 3: Yes, and this is Ning, and I'd like to add that, you know, our business model is quite differentiated. Yeah, we have a credit type of business.

Yes, and this is mean and I like to add to that.

Our business model is a quite a differentiated yeah. We have a party type of business. We also have our insurance and wealth management.

Speaker 3: We also have insurance and the wealth management business.

Business, which is a significant part of our.

Speaker 3: which is a significant part of our revenue and yeah, value. And my sense is it's really like a much safer business model. We talked about like the regulatory uncertainty and so on. Yeah, my view is a monoline business.

Revenue and yeah, our value and my sense is a it's really a like a much safer business model.

We've talked about like the regulatory uncertainty so long yeah. My view is the mono line business is a very good.

Speaker 3: is very risky in such an uncertain environment.

Such a uncertain environment, but you can.

Speaker 3: but you can think of us as a kind of three pillars.

Think of us as a kind of.

A great healer, yeah, so a much more stable and a good thing is as far as I can see each of them.

Speaker 8: Yeah, so much more stable.

Speaker 8: And the good thing is, as far as I can see, each business line

Business lines.

Speaker 3: represent a very big market opportunity growing very fast.

It represents a very a big market opportunity growing very.

Very fast yeah, with a high quality.

Speaker 8: So I think that's a really differentiated strategy. And we don't do these three things just for the sake of doing more things. It's because there's strong synergy among.

And I think that's a really really differentiate fees a strategy and we don't do these three things are just for the sake of doing more things.

Because I'm a very strong synergy.

Among the businesses, yeah between a credit to our pets.

Speaker 8: yeah, between credit, tax, and wealth management, and insurance. So as I highlighted in the first part of my presentation, yeah, this synergy is becoming more and more obvious.

And our wealth management and insurance so as I.

In the first part of my.

Presentation, Yeah. This synergy is.

Becoming more and more obvious.

Speaker 8: Yeah, all that makes our customer acquisition cost relatively speaking, probably, you know, the lowest. Yeah, and the RTV, the highest. Yeah, I think that's how my colleagues and I look at our business. Thank.

Yeah, Oh that makes our customer acquisition cost.

Relatively speaking probably you know the lowest yeah and the our T V.

Yeah, I think that's all of my colleagues and I look at.

Our business. Thank you.

That's her last name called as a comprehensive insights.

Speaker 7: Thanks so much, Ming, for this comprehensive insight. And one more question is on the funding side. About our funding strategy as we shift to lower APR, what will be that about funding sources?

Hey, guys.

And Oh.

My question is on the funding side about our funding strategy as we shift to a lower APR what it'll be about.

About funding sources.

[noise] Oh, we got you.

Speaker 3: Thank you.

So Susan Yeah, knockdown pretty yeah.

Speaker 5: Okay, sorry. Yeah, I think, as you mentioned that, I think with our client, the quality is better for the 24%. We think that there is still a different space for funding to create.

[laughter], Okay. It's all right Yeah, I think I also mentioned that I think I'll leave our classic Clammed up our call today is the better forthright talking for the first time that we think that it does feel sick pay for funding took place.

Speaker 5: In 2021, our main funding partner is including banking, trust and microfinance companies and the financial aid company. And we suppose we will get more relationship with our funding partner. And we suppose they were about one or two and the least percent to lower for our funding, yeah.

In in 2020, one our main founding partner, including banking Trust, one microphone iced coffee.

Pumping and the rest of pulse Oh wait while we are getting more relationship based off an impostor underway the pulse Oh they were.

About a while all are true at least per center a slower funding yeah.

Yeah.

Yeah.

Thanks, very much that's all from my side.

Okay.

Yeah.

Thank you.

Once again, if you wish to ask a question. Please press star one on your telephone.

Speaker 1: Once again, if you wish to ask a question, please press star 1 on your telephone.

Yeah.

Okay.

Yeah.

Speaker 1: But there are no further questions at this point of time. This concludes our conference for today. Thank you all for participating. You may all disconnect now.

If there are no further questions at this point of time.

This concludes our conference for today. Thank you all for participating you may disconnect now thank you everybody joining.

Thank you.

Okay.

Thank you.

Speaker 9: The.

[music].

[music].

[music].

Good day and thank you for standing by welcome to the Euro in the third quarter 2021 earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one.

Speaker 1: Good day and thank you for standing by. Welcome to the year-in digital third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode.

Speaker 1: After the speaker's presentation, there will be a question and answer session.

On your telephone please be advised this conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference like your first speaker today Miss cable hates. Please go ahead. Thank you.

Speaker 1: Please be advice. This conference has been recorded. If you require any further assistance, Please pre toar zero. I would not like to have the conference. Or if you first speaker today this K able he Please go ahead? Thanks.

Thank you operator.

Speaker 2: Thank you, Operator. Good evening, everyone. Today's call features a presentation by the Founder, Chairman, and CEO of CreditEase, and our CEO , Ms. Ning Chang, and our CFO , Ms. Na Mei, Ms. Xiao Sheng, our SVP, Ms. George Liu, our CRO, and Mr. Raymond Fung, CEO of YearWell, who also joined the presenters in the Q&A session.

Good evening, everyone difficulty cancer presentation by the founder Chairman and CEO of credit <unk> and now with the Oh.

And I was told me why May mean, Xiao Shang, our SVP make Georgetown L. P. R. O I missed a women's fall, yeah, yeah, well, well I'll be joined to prevent that any kidney bucket, but they gave me well I have to remind you that discussions during this call contain forward looking statements made and I think have a good vision you asked quite a bit here.

Speaker 2: If we're beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the Safe Harbor Provision of the U.S. Private Security Ditigation Reform Act of 1995.

He did he gave you in April of 90 95.

Speaker 2: Such statements accept the risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any such statement.

It meant that the risks uncertainties and factors that can cause actual results to differ materially from those can pay any such statements.

Speaker 2: setting the major regarding position risk. Uncertainty or factors is included in our filing with the U.S. Security and Exchange Commission.

So I think the major ones that need to go do it and then he is.

It is included in our filings whether you have security and Exchange Commission, we do not undertake any obligation to update any forward looking statements I do quite relevant law.

Speaker 2: We do not undertake any obligation to update any forward-looking statement as required under relevant law.

Speaker 2: During the call, we will be referring to certain non-GAAP financial measures and supplemental measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the U.S. GAAP.

During the call, we'll do with the ranges that are non-GAAP financial measures and so they most of them I guess Julia and is that all operating permit they've now got finished and I guess I'm not intended debate because he doesn't alkylation ooh I've, a substitute, but if I imagine to make into a cab. Okay does it in accordance with a U S. GAAP.

Speaker 2: For information about those non-GAP-type financial measures or recommendations to GAAP measures , please refer to our earnings criteria. I will now pass it over to Ning.

We have been making about the NASDAQ financial Omega Oh listen in Asia, you'll get Mega pleased with that as well I mean gradually.

I will now put the older Janine the opening remarks.

Hello, everyone.

Speaker 3: Hello, everyone. Thank you for joining us today.

Thank you for joining us today.

Speaker 3: We are delighted to announce a solid quarter with visible increase in profitability and a healthy growth in business scale amid a muted macro environment.

We are delighted to announce a solid quarter with visible increase in profitability and a healthy growth in business scale.

A muted macro environment.

Speaker 3: At the beginning, I would like to reiterate our strategic positioning as a user-centric personal digital financial management platform as our business models continue to integrate and expand.

At the beginning.

To reiterate our strategic positioning as a user centric person no digital financial management platform.

That's our business models continue to integrate and expand.

Speaker 3: In the third quarter, we saw growing interactions and synergies between species lines.

In the third quarter, we saw growing interactions than the synergy between.

This is lance.

Speaker 3: For example, the total number of investors who purchased He Jiang's long-term insurance product on Eden Wealth Platform this quarter increased by 37% compared with the second quarter this year.

For example, the total number of Investor.

<unk> purchased a larger long term insurance product, you're gonna wealth platform this quarter.

Chris the but 37% compared with the second quarter this year.

Speaker 3: while the number of borrowers cumulatively served with our insurance products as of September 30th grew 33 percent compared with the end of last quarter. So by personal digital

While the number of borrowers cumulatively served with our insurance product as of September 30th.

What are your 3% compared with the end of last quarter.

So but person no digital financial monies, but we.

Speaker 3: we mean to serve our customers in the long run and to meet their comprehensive financial management needs, including liquidity management, income generation, financial protection, and the value-enhanced.

We mean to serve our customers in the long run and to meet their comprehensive financial management needs.

Including liquidity management income generation financial protection on them.

Value your husband.

Speaker 3: which corresponds to our credit tax and the wealth management service.

Which correspond to all the party tax and wealth management services.

Speaker 3: Now, I will go through our pieces updates on wealth management.

Now I will go through our business update on wealth management.

As of September 30th one people, who want total client assets exceeded RMB 17 4 billion roughly.

Speaker 3: As of September 30, 2021, total client assets exceeded RMB $17.4 billion, representing a 19% growth from last quarter and about 250% growth from prior year.

Representing a 19% growth from last quarter and about 250% from prior year.

Speaker 3: total number of active investors grew 11% quarterly to about 428,000.

Total number of active investors, who 11% quarterly to about 428 solve it.

Speaker 3: More specifically, on EdenWealth platform, we saw accelerated growth in both new investors as well as average client assets.

More specifically.

You don't wealth platform.

We saw accelerated growth in both new investors.

While our average client asset.

Speaker 3: due to our precise targeting acquisition strategy and optimize the services and products.

Due to our precise targeting acquisition strategy on <unk>.

Optimize the services and products.

Speaker 3: In the third quarter, the number of new investors on the platform reached nearly 10,000, representing a 33 percent increase quarter over quarter, excluding

In the third quarter, the number of new investors on the platform reached nearly 10000.

Representing a 33% increase quarter over quarter.

Excluding insurance product.

Speaker 3: average client asset per investor reached RMB 259,000.

Average client asset train bus it reached RMB 259000.

Speaker 3: representing a 125% annual growth.

Presenting a 125% annual growth.

Speaker 3: Particularly, the number of investors with client assets over RMB 500,000 grew almost three times compared with last year. And the trend continues going into the fourth quarter. A clear reflection of our enhanced capabilities to serve a higher segment of our investor sector.

Particularly the number of new investors with client asset over RMB 500000, or almost a three times compared with last year.

And that the trend continues going into the fourth quarter.

A clear reflection of our in house capabilities.

Third a hottest segments of our investment spectrum.

Moreover.

Speaker 3: Moreover, as our investor education further penetrates and the concept of balanced asset allocation is becoming increasingly accepted, the number of investors holding at least two different asset classes on Eden Wealth platform grew 168% year over year.

I'll, let you know that the education for the panel.

And then the concept of balanced allocation, it's becoming increasingly accepted.

The number of investors holding a these are two different asset classes either wealth platform go 100 and.

68% year over year.

Speaker 3: Talking about precise targeting acquisition strategy, our Finance Plus Life initiative is worth mentioning.

Talking about precise targeting acquisition strategy.

Speaker 3: Through years of operation, we found common needs in our investors in four specific scenarios, namely health and sports, study and self-improvement, lifestyle and leisure, child education, and parenting.

Two years of operation, we found a common need in all the investors in four specific scenarios, namely health and sports, Saudi and the self improvement.

<unk> style in danger.

Trialled education and parenting.

Speaker 3: to better serve our investors and target these common needs. We recently started to offer selective live services and products tailor-made to investors.

To better serve our investors and target these common neat.

We've recently started to offer select people live services and products tailor made for your investors.

Speaker 3: These non-financial services are proven effective to both attract new investors and to enhance our existing users' LTVs.

These non financial services are proven effective to both attract new investors and to enhance our existing users our T V.

Speaker 3: Through finance plus life strategy, we are building up a broader even wealth community consisted of high quality users who have the common pursuit for better wealth, better self, and a more positive life spirit, which is translating into comprehensive growth in even wealth. And we expect more promising results to come in the following quarters.

You will find a cloth lifeblood of D. We're building up a broader even while community consistent high quality users, who have the common pursuit, well better well that herself and a more positive light spirit.

It's translating into comprehensive book, and you're doing well and we expect more promising results to come in the following quarters.

Speaker 3: Next, on to our He Jiang insurance brokerage business.

Next onto our hoods young insurance brokerage business.

Speaker 3: We are pleased to deliver a better-than-expected growth this quarter.

We are pleased to deliver a better than expected well this quarter.

Speaker 3: He Xiang contributed RMB 735 million in total premium.

Hello, John contributed RMB 735 million in total premiums.

Speaker 3: up 29 percent quarter over quarter and its commission revenue reached RMB 199 million, up 31 percent compared with last quarter and up 95 percent from prior year.

29% quarter over quarter.

And is commission revenue reached RMB 199 million.

31% compared with last quarter and up 95% from prior year.

Speaker 3: In the beginning of November , Hexiang had already completed our full year internal target in both premium and revenue.

In the beginning of November close young had already completed our full year internal targets in both premium and revenue.

Speaker 3: He Jiang is positioned as a national comprehensive customized insurance service provider, and it stands out in this strong capabilities in product innovation and customization.

Of course, you're always position as a national comprehensive customized insurance service provider and it stands out in this strong capabilities in product innovation and the customization.

Speaker 3: For instance, this innovative annuity product launched in May enjoyed an immediate popularity with premium of RMB 285 million as of end of third quarter.

Well Houston is innovative annuity product launched in may enjoy an immediate popularity with premium up RMB 285 million.

And the third quarter.

Speaker 3: Moreover, HeXiang's high-standard services also gain market recognition.

Moreover, her jump high standard services also gain market recognition.

Speaker 3: In the third quarter, long-term insurance renewal rate stood at 98%, much higher than the common industry standard of 85%.

In the third quarter long term insurance renewal rate stood at 98%.

Much higher than the common industrious Thunder up 85%.

Speaker 3: Moreover, Hexiang's unique 2B2C business model has proven effective in market expansion.

Moreover, because they're all unique to b to C business model has proven effective in market expansion.

Speaker 3: By working with 2B channels with a considerable customer base, Hexiang has embedded their tailor-made insurance products into these 2B platforms and the scenarios.

Working with to be channels with a cost there considerable customer base.

Hum embody their tailor made issuance products into these two b platform.

In this scenario.

Speaker 3: This is a win-win solution for both He Jiang and our channel partners.

This is a win win solution for both of those young and our channel partners.

Speaker 3: For Hexiang, we have effectively acquired

Yeah, we have effectively acquired.

Consumers at minimal cost well for business channel partners will help them realize additional revenue streams and their.

Speaker 3: consumers at a minimal cost, while for business channel partners, we help them realize additional revenue streams and enhance their customers' LTV.

Their customers L T V.

Speaker 3: Hexiang is currently operating with over 100 insurers and brokers nationwide, offering more than 510 products.

Causalities cutting the operating with over 100 insurers and brokers nationwide.

Offering more than 510 products.

Speaker 3: with new products going to hit the shelf in the coming days. We expect a further growth in the quarters to come.

With new products going to hit the shelves in the coming days.

We expect further growth in the quarters to come.

Now I will outline some highlights.

Speaker 3: Now, I will outline some highlights for our credit.

Our credit business.

Speaker 3: In the third quarter, our total loan facilitation volume maintained a strong growth trajectory, reaching RMB 6.8 billion for the quarter, representing an increase of 30% quarter over quarter and 117% year over year.

In the third quarter, our total loan facilitation volume maintained a strong growth trajectory, reaching RMB six 8 billion for the quarter.

Representing an increase of 30% quarter over quarter.

117% year over year.

Speaker 3: Total number of borrowers served this quarter was 548,000, increasing 26% from prior quarter.

Total number of borrowers served at this quarter was 548000, increasing 26% from prior quarter.

All loan products.

You don't walk our small revolving loan product.

Witness our continued rapid growth and a clear increase in borrower base due to our enhanced the digital printing capabilities and improve the servicing standards.

Speaker 3: In the third quarter, loan volume of Yixiaohua stood at RMB 3.4 billion, accounting for close to 50% of total loan volume and representing almost five times growth compared with prior year.

In the third quarter loan volume.

What stood at RMB, three 4 billion accounting for close to 50% of total loan volume and representing almost five times book compared with quite yet.

Meanwhile.

Speaker 3: Monthly active users on our Yixianghua app, APP, reached 1.1 million as of September 30th, jumping 82% quarter over quarter.

Monthly active users or you don't want.

A P. P reached 1.1 medium as of September 30th.

82% quarter over quarter.

Speaker 3: further increase in customer activity is expected as we start to embed more diversified consumption scenarios on the platform and scale up our own traffic pool.

Well the increase in customer activity is expected as well.

Start to embed more diversified consumption scenarios on the platform and the scale up our own traffic pool.

Speaker 3: Moreover, as our repeat borrowing rate continues to rise and our consumption traffic base starts to convert into new loans, sales,

Moreover, as I'll repeat borrowing rate continues to rise and our consumption traffic base start to come work into new loans.

We have managed to keep our customer acquisition cost at a low level.

Speaker 3: We have managed to keep our customer acquisition costs at a low level, translating into healthy product unit economics.

Taking into healthy products you need the economics.

Furthermore, I want to share with you our progress on your.

Speaker 3: Furthermore, I want to share with you our progress on SME loans.

Loans.

Speaker 3: which we started to focus on in the second half of this year.

Which we thought he took focus off in the second half of this year.

Speaker 3: We are pleased to see robust growth in SME loan business, with its volume increasing by over 400%.

We are pleased to see real box as well.

S M E business with volume increasing by over 400%.

Speaker 3: quarter over quarter, now accounting for 25% of total loan volume. It's worth mentioning that small and medium enterprise loans are priced under 24% APR. And as we are on the full swing to dive into this SME market, we expect the SME loan volume continues to grow in the coming quarter.

Quarter over quarter.

Now accounting for 25% of total loan volume.

It's worth mentioning that small.

Medium enterprise loans.

Twice and they're 24% APR.

And as we are on the full swing to dive into this market. We expect the SME loan volume continues to grow in the coming quarters.

Speaker 3: For the optimizing our product mix and the paving the way for us to accomplish compliance transition.

Further optimizing our product mix and the paving the way for us to accomplish complying transition.

You bet.

Speaker 3: and talking about compliance and APR CAP requirements.

And talking about complying and APR cap requirements.

Speaker 3: we have been executing three concrete strategies to ensure effective transitioning while maintaining profitability.

We have been executing three concrete strategies to ensure effective transitioning well maintaining profitability.

First.

Speaker 3: like I just mentioned above, we are filling up SME loans to better support real economy and to respond to regulatory direction.

Like I just mentioned above we are scaling up.

E alone.

That is support real economy, and then to respond to regulatory direction.

Second we have been proactively offering lower priced are evolving.

Speaker 3: Second, we have been proactively offering lower price revolving loans to our existing customers with higher credit quality.

Revolving loan to our existing customers with higher credit quality.

Speaker 3: Thirdly, we have been improving our customer mix and acquiring new customers with better credit performance.

Thirdly, we have been improving our customer mix and acquire new customers with better credit performance.

Speaker 3: through our diversified online consumption scenarios.

So our diversified online consumption scenarios.

Speaker 3: Through the combination of these three efficient strategies, we are very confident to be able to complete our progressive adjustment by the second quarter next year.

Through the combination of big.

Wish you fishing strategy, we are very confident to be able to complete our progressive adjustments by the second quarter next year.

Speaker 3: Moreover, for the new guidelines related to credit scoring, we have been in close communication with regulators and are exploring different options to ensure our compliance.

Moreover for.

The new guidelines relating to credit score it would have been in close communications with regulators and are exploring different options to ensure our compliance.

Speaker 3: So far, we have already signed an agreement with the licensed credit rating agency, and we are in the stage of testing detailed cooperation models, which will take some time due to the complexities surrounding operational flow, as well as tech capabilities.

So far we have already signed an agreement with the license the credit rating agency and we're in the stage of testing detailed cooperation models, which will take some time due to the complexities surrounding all pushing they'll flow was tech capabilities.

Speaker 3: We expect to finish the connection within the guided space grid period and the relevant costs will be managed.

Back to finish the connection within the guided study grace periods and the relevant cost will be manageable.

Speaker 3: we will continue to pay close attention to regulatory guidance as well as industry standards and make timely adjustments as needed.

We will continue to pay close attention to regulatory guidance as laws industries centers and to make timely adjustments as needed.

Speaker 3: Last but not least, as we refine our risk management systems and enhance our asset quality, our 15 to 89 days delinquency rate remained low at 2.4%. And we expect our credit performance to remain stable during the transition and to experience an overall improvement in the long run as we continue to optimize our customer mix.

Last but not least as.

We refined our risk management system and enhance our asset quality.

Our 15 to 89 days delinquency rate.

Low at two 4% and we expect our credit performance to remain stable during the transition and then.

To experience an overall improvement in the long run as we continue to optimize our customer mix.

Speaker 3: Going forward, we will continue our effort to drive up our business scale and create stronger synergies, not only within our wealth management ecosystem, but also within the whole year and digital ecosystem.

Going forward, we will continue our effort to drive up our business scale and create stronger synergies not only within our wealth management ecosystem, but also within the whole digital ecosystem.

Speaker 3: Meanwhile, as our investors are showing growing demand for higher investable amounts, we will serve them with more diversified products with bigger ticket size, further driving up

Meanwhile, our investors are showing growing demand for higher investable, a month, we will serve the more diversified product with bigger ticket size.

They're driving up our profitability.

Speaker 3: Additionally, as our credit tax business continues to move toward higher quality customer segments, there will be growing synergies and overlap between credit and wealth management businesses in the long run.

Additionally, our credit tax business continues to move toward higher quality customer segment, it will be growing synergies and overlap between credit and wealth management businesses in the long run.

Speaker 3: Now, I will pass it on to Matt, who will provide this quarter's financial update.

Now I will pass it on to not who will provide this quarter's financial update.

Thank you I mean, your analysis and in your restaurants go evening for this quarters financial update I will focus on key financial highlights only for hover teach outs for our financial performer, you'll kind of refer to the detailed hung actually golf you know Arnie released attack that Husky post it all out.

Speaker 5: Thank you, Ning. Dear analysts and investors, good evening. For this quarter's financial update, I will focus on key financial highlights only. For further details for our financial performance, you can refer to the detailed financial results in our earnings release and desk that has been posted on our IR website.

Fat.

Speaker 5: I'm very happy to share with you another solid culture. With strong growth, achieve the gross revenue, profit, and a transaction value on a year-on-year basis. As we continue this strong consumer demand for our financial management service.

And we're happy to share with you another Sony Qatar with strong growth across revenue profit and attract freshwater eel.

On your base after accounting, let's say strong comps from Rocky Mount from financial management.

Speaker 5: Total revenue in the third quarter was RMB 1.2 billion, increased 20% year over year. This quarter, revenue from Wealth Management Service accounting for close to 30% of our total revenue, becoming a significant revenue driver. On the credit side, total loan facility this quarter was RMB 6.8 million.

The so called her what's going be one contour, beating increased 20% year over year, just called her revenue, how Ralph Michael Maselli accounting for close to 30% of our total revenue, becoming a significant revenue driver.

How do you fight total loan facilitated called her what's your M. D C H, meaning I for one country and the 17% year over year and revenue from loan facilitation storing and points to 14, 8% from poorly Konkani.

Speaker 5: of 117% year-over-year. And the revenue from loan facilitation service increased to 48% from prior year account.

For many patients around here and take away the clean year on year.

Two ships with a shoutout to plantar long put us at a large scale to price the cost absolutely shocked I dunno portfolio took allow a P. R 24%.

Speaker 5: Q3. Operating expense decreased by 10% year-on-year to RMB 0.8 million. Sales and marketing expense decreased by 16% from private year to RMB 407 million. Joined by increased consumer acquisition efficiency.

Q3 operating expenses decreased by 10% year on year to M. D. C. We're a punk eighth.

Eighth meeting itself.

On a mark to your pets decreased by 15% from private you're trending 400, and or seven meeting driven by increased customer acquisition efficiency, our Arlington, all unnecessary pass decreased 24% from prior year or toward M. D 100, and if you sell them, meaning they need to go through the income collection efficiency.

Speaker 5: Our original and service expense decreased 22 percent from prior year to RMB 187 million, mainly due to the import collection efficiency.

Fee.

Speaker 5: Allowance will come to assets receivable and others with RMB 83.6 million this quarter, equivalent to 1.2 percent of loan volume as compared to 1.8 last quarter. The deep clean was largely enjoyed by improved assets quality as the change of products make.

What kind of assets receivable and others. What's your M. D 83 positive meetings this quarter equivalent to one 2% of royall as compared to 108 lots of Qatar, but they're playing with logging and drive for improved asset quality as a change out for that can make.

Speaker 5: Net income grew three times year-on-year to RMB 0.3 billion, reflecting a net income margin of 26 percent. Mainly due to our continued efforts in cost control and increasing operating efficiency.

Net income grew three times year on year between zero punctuate, beating reflecting I'm not in a margin of 26% mainly due to our functional efforts at cost control and increasing operating efficiency.

Speaker 5: Despite applying APR costs in our long pricing, we also have confidence in being able to maintain health growth and profitability in the transitional year of 2022 and resume to a more robust profitability growth upwards.

Pipeline APR coffee on loan pricing, but also have confidence in being able to maintain <unk> growth and profitability in the transitional year 2022 and then they seemed to a mall or a path to profitability gross up north.

Speaker 5: Turning to our balance sheet, we ended the quarter with RMB 2.3 billion cash and cash equivalent, up 6% from prior quarter, leaving us with sufficient resilience to seize any new opportunity.

Turning to our balance sheet, well I'm going to call. It how is it going to be to penetrate eating patch on a kind of equivalent axis profound upon client culture. They are after.

Please proceed she was that I'm still sees any new opportunity is.

Speaker 5: This concludes our closed remarks. Operator, now we are open for questions.

It's kind of course, I'll close remarks, operator, now well open for questions.

Yeah.

Speaker 2: Hello Priyanka, we are open for Q&A session, please. Thank you.

Hello, Okay, Kathleen Okay for Q&A session. Please thank you.

Secondly, participants who wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you would like to withdraw your question. Please press the pound or husky.

Speaker 1: Certainly. Participants who wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

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Star followed by one ask your question. Thank.

Thank you.

Your first question comes from the line of Barton Haynes from Equinox capital. Please go ahead.

Speaker 4: Hi, thank you for taking my questions. Good evening and a very nice quarter. I have a number of questions.

Hi, Thank you for taking my questions good evening and very nice quarter.

We have a number of questions are what.

Speaker 4: uh... what with the uh... a p r for loans initiated in the quarter and what was the average loan

What was the APR for loans initiated in the quarter and what was the average loan tenor.

Speaker 5: Hello, this is Na. I will ask you a question. Our average, the tender of the loan is about 20 months, but we suppose the tender will be shorter to about 10 to 12 months by the year of this year. And our total, the 24% APR account, about 30% in the quarter, this quarter, equals to about 50% by the year of this year.

Yeah, Hello, it's not I would ask all your questions Oh, our attitude on the panel after la it's about 28 months, although I suppose Oh.

You know I always talk about Pandora.

Pandora will be felt up to about 10 to 12.

12 months backlog at yard House, Crazy, and and Oh long total so 24% APR account about 30% in Qatar, Qatar analyst of pumps to about a 50 foot signed up I think you know what I'll say at the end.

Speaker 4: Okay, and can you discuss how your business has been progressing so far in the fourth quarter? I see that you did not provide much guidance.

Okay and can you discuss how your business has been progressing so far in the fourth quarter I see that you did not provide a a much guidance.

For that.

You did say that our that the economy muted.

Speaker 4: You did say that the economy has been muted. So if you could just.

So if you could discuss that that would be great. Thanks.

Speaker 5: As you mentioned, there is no four-hour revolution cap if not the deadline of this year. But as you mentioned, our CEO , Yinki's script

Yeah, that's where my sense that there is now a four hour on revenue Ocean, Kathy lots of dialogue and safety, our Bachelor of isolation, our C O M P scraped.

Speaker 5: You can notice that our SME loan has increased significantly. Last year, there was only below 1% for that year. The SME loan for this quarter has come down to about 24%.

Cannot outside Qatar.

I was on mute loan, it's a decrease or increase the last significant in last a year or so.

Oh, Thank you know the 1% for that in Europe I found you know back or for this quarter is still kind of hop off the 24% and Oh actually fall off on Elong is right. If the pricing is below the 24% even belongs getting precise. So we think that we filed with the Polish off the army alone creates.

Speaker 5: And actually, for all of our IME loans, its price is below the 24%, even below the 18%.

So if you are if it is not to lower and lower by the end of Andy Yeah, and that's one reason that we think it's all on poker for allocation to our client quality I think that's a well matched our class a mall REIT costs last month and I think that's what we saw loss rates go bad how at least without.

Speaker 5: is much lower and lower by the end. And yeah, another reason is that we think it's our purpose is to pay attention to our client quality. I think that will much collect the more risk assessment. And I think that with our risk better, we should activity to low our price to collect the more risk client. So we think that we can increase our APR 2014 potential, but as I mentioned, the regular dialogue is next year. So we will focus on the regulation improvement and we'll adjust our strategy planning step by step. So that's all, yeah.

Activity to slow our path to cloud for a moderation clients always thinks that or are we kind of increased our APR 24 14.

Propulsion, Pfizer I can imagine that the regular dialogue.

That's a year or so we will folk songs.

So recreation improvement.

Speaker 5: and we'll adjust our strategy planning step by step.

Well I got to take all our strategy plan you've spent I stopped.

So that's all yeah.

Speaker 4: So, given that the competition for higher quality borrowers is increasing,

So given that the competition for higher quality borrowers is increasing.

Can you.

Speaker 4: Can you, and also with the interest rate cap kicking in additionally, can you talk about what your outlook is for pre-tax or operating margins given those pressures?

Also with the interest rate cap kicking and Additionally, can you talk about what your outlook is for a pretax or operating margins given those pressures.

Speaker 5: Yeah, currently our cost revenue is about 20%.

Yeah for us off of our fault current limiter or cross rolling out it's about a 20% under our acquisition cost at four 3% of all other operating cost is one to answer.

Speaker 5: and our acquisition cost is 2 or 3 percent, our operating cost is 1 to 3 percent. And we hope that all our operating costs will be decreased about 1 or 2 percent in our first quarter and will also enhance our cost efficiency in the next year. I think this is another driver for our profitability.

8% I know my hope that all of our operating costs would be about a one 2% and you all have called her well.

So you have a cost efficient means of nice P. R. I think these are not going to fly one of our profitability Yeah mhm.

Hmm.

Speaker 4: Just a last question, and this is about a possible share repurchase or dividend. Do you have cash that's offshore that could be used right now to repurchase shares, given that the ADS is trading well below book value and at very, very low valuations? Yeah. Yeah. Yeah.

Just a last question.

And this is about a possible share repurchase or dividend.

Do you have cash that's offshore that could be used.

Right now to repurchase shares given that this the the the a T. S is trading well below book value and at very very low valuations.

Mike.

Speaker 4: uh... it it would it just would seem to make a lot of sense here to to start aggressively repurchasing shares

It just would seem to make a lot of sense here too to start aggressively repurchasing shares. Thank you.

Yeah, Yeah, I can I kind of said that something on it used to be honest with something either for client patient we can for our M C.

Speaker 5: Uh, yeah, yeah, I can, I can suggest something and if there's something either for plantation, we can for hours, they, they all talk me.

On top of them.

Speaker 5: Yeah, as you mentioned, we have kept the deposits about 2.3 billion on hand.

Yeah. After my shouldn't away half of Capesize, So I apologize about the true consciously building our hands are.

Speaker 5: However, our marketing value is much lower than our catch, so as common sense, we should repurchase ourselves. Actually, in the second quarter after our ER, we have performance on a little more repurchase share in the marketing.

Our our mantra millennial, it's much lower our taxes, so it's kind of a constellation with a refreshed with algebra actually are in for a second I called her up to our yeah. We have will perform a song on me tomorrow as it approaches a shot in the marketing of it out that's a bottleneck for the company's already our field.

Turkey is a striking I think there are still many uncertainties funky things and so we still think we.

We should keep songs like enough cashback on a handful of our future you can see one of them Oh off cause actual Ashland that we still are in and kind of get past about any other strategies such as the pushout of shell I'll pay the dividend.

Speaker 5: Of course, as you mentioned, we're still in internal discussion about any other strategies such as the report on Shell or pay the dividend, but I think that the first of all is to keep our strategy and pick our performance through development.

So first off I'll find that to keep our strategy on the pecan farms through development. So I think coffee doors, I'm still getting a wasting a week.

Speaker 5: So I think, considering the uncertainty, we think we have to keep out the efficient detached deposits. By the way, we have a plan about your subtraction.

Cable, obviously inflation does tax deposits, although we have some kind of oculus attractions. Thank you.

Speaker 4: Okay, great. Thank you very much and good luck in the coming year.

Okay, great. Thank you very much and good luck in the coming year.

In Q.

Speaker 1: Once again, participants who wish to ask a question, please press star 1 on your telephone.

Once again participants who wish to ask a question. Please press star one on your telephone.

Yeah.

Speaker 1: Your next question comes from the line of Alan Young from Gold Dragon.

Your next question comes from the line of Alan Young go to drug called Dragon. Please go ahead.

Yep. Thanks.

Speaker 7: Yeah, thanks and congratulations on the good results. We've discussed the topic about the shift to lower pricing earlier. Can you elaborate a little bit more on the pace of pricing shift towards 24 in 2022? I know by, we're talking around 50%, 24% loan by the year end.

Congratulations on the good results.

We've discussed the topic about the shaped out to a lot of pricing.

Earlier can you elaborate a little bit more on the pace of I couldn't shaped towards 24 in plenty of time to I know by probably around 50% plenty for per se alone by the year end.

Speaker 7: And the second question is, what is the tick rate outlook in 2022 as we complete the shift of pricing, and how do we arrive at such tick rates, for example, credit, funding?

And the second question is what is the take rate outlook in 2022 as we completed the ships off pricing.

And how do we arrive at our take.

Okay great.

I'm Paul credit funding.

Yep.

Yeah.

Yeah.

Speaker 5: Yeah, thank you. This will answer your question. For the first question, the piece of lower APR pricing, actually, as I mentioned in the previous question, we're performing some regulation from the current pricing to the 24 percent. You also mentioned that currently our gross revenue is about 20 percent.

Yeah. Thank you Oh.

I'm sure you'll class the question for the first of the question a little pissed off lower API pricing are actually I think I mentioned that in the in the pricing question.

And I think pro forma for regulation from funds.

Pricing to the 24% you also mentioned that our.

Currently our glass rounding, it's about a 20% and a 24 hour price of capital and we still have confidence in our path part D. D T. A coffee towards a better quality and lower cost a lower acquisition cost I'll keep our operating cost savings. For example are comprised of about 20% of the Clos wrong, you're currently at 24.

Speaker 5: And for the 24 price cap, we still have confidence in our product's profitability, considering the better access quality, lower buying cost, lower acquisition cost, and cheaper operating cost savings. For example, compared to the 20% gross revenue currently, the 24% gross revenue rate will increase by about 4 to 5%.

For a person to calculate across around duration will increase about two 5%.

Speaker 5: but also impacts the risk, the funding cost, and the acquisition cost will decrease 3%, 1%, and 1% respectively.

Also impact the race car the finding cost under our acquisition costs will decrease to 3%, 1% under one person respectfully so that Oh I still have the confidence that from that around your market still kick the stable yeah. Comparing now yeah can't answer your question.

Speaker 5: so that we still have the confidence that the natural learning module will still keep the stable, compared now. Can I answer your question?

Yeah.

Sure.

Speaker 3: Yes, and this is Ming. I'd like to add that, you know, our business model is quite differentiated. Yeah, we have a credit card business.

Yes, and this is me I like to add to that.

Our business model is quite a differentiated yeah, we have a quite a type of business. We also have our insurance and wealth management.

Speaker 3: We also have insurance and the wealth management business.

Business.

Speaker 8: which is a significant part of our revenue and yeah, value. And my sense is it's really like a much safer business model. We talked about like the regulatory uncertainty and so on. Yeah, my view is a monoline business.

Which is a significant part of our.

Revenue and yeah value and my sense is a it's really a like a much safer business model.

We've talked about like the regulatory uncertainty. So yeah. My view is the mono line business is a very good gains.

Speaker 8: is very risky in such an uncertain environment.

Such a uncertain environment, but you.

Speaker 8: But you can think of us as a kind of three pillars. Yeah, so much more stable.

You can.

Think of us as a kind of.

A great healer, yeah, so a much more stable and a good thing is as far as I can see each of them.

Speaker 8: And the good thing is, as far as I can see, each business line

Business lines.

Speaker 3: represent a very big market opportunity growing very fast.

It represents a very a big market opportunity growing very.

Very fast yeah, with a high quality. So I think that's a really really differentiate seize them.

Speaker 3: So I think that's a really differentiated strategy. And we don't do these three things just for the sake of doing more things. It's because there's strong synergy among.

And we don't do these three things just for the sake of doing a more things.

Because I'm a very strong synergy.

Among the businesses, yeah between a credit to our pets.

Speaker 8: yeah, between credit, tax, and wealth management and insurance. So as I highlighted in the first part of my presentation, yeah, this synergy is becoming more and more obvious.

And our wealth management and insurance, so as I I liked it.

In the first part of my.

Presentation, Yeah. This synergy is becoming more and more obvious.

Speaker 3: Yeah, all that makes our customer acquisition cost relatively speaking, probably, you know, the lowest. Yeah, and the RTV, the highest. Yeah, I think that's how my colleagues and I look at our business. Thank.

Yeah, Oh that makes our customer acquisition cost.

Relatively speaking probably you know the lowest yeah and the our T V.

Yeah I think.

That's all of my colleagues and I look at.

Our business.

Yeah.

Speaker 7: Thanks very much, Ming, for this comprehensive insight. And one more question is on the funding side. About our funding strategy as we shift to lower APR, what will be that about funding sources?

That's her last name called as a comprehensive.

Yeah.

And Oh, sorry, one more question is on the funding side about our funding strategy as we shift to a lower APR what it'll be about.

About funding sources.

[noise] Uh huh.

Speaker 3: Thank you.

So.

Susan Yeah knockdown.

Yeah.

[laughter], Okay, sorry, Yeah, I think I also mentioned that I think I'll leave our classic clog.

Speaker 5: Okay, sorry. Yeah, I think, as I mentioned that, I think with our client, the quality is better for the 24%. We think that they're still in a different space for funding to create.

Our call today is the better for it so I'm talking from a first time that we think that it does still seem indifferent painful funding credits.

Speaker 10: In 2021, our main funding partner is including banking, trust, microfinance companies, and financial aid companies. And we suppose we will get more relationship with our funding partners. And we suppose they were about 1% or 2% or at least 2% to lower for our funding. Yeah.

In in 2020, one our main founding partner, including banking Trust on micro finance companies and know how naturally his company and I wish to pose a way where we are getting more relationship based off an impostor support they were about a while all are true at least per center.

Lower funding yeah.

Yeah.

Thanks, very much that's all from my side.

Thanks.

Thank you.

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Once again, if you wish to ask a question. Please press star one on your telephone.

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Yeah.

If there are no further questions at this point of time.

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