Q2 2022 360 DigiTech Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to day 360 did you cut.

Call It 2022, earning 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. <unk> IR Director. Please go ahead.

Thank you.

Hello, everyone and welcome to our second quarter 2022 earnings conference call.

What you issued earlier today can be.

Oh Wow.

Right.

Joining me today Mr. Shang.

And Raptor.

Mr. Alex <unk>, our CFO and director.

And it means that don't yet our Seattle.

Before we begin our prepared remarks I'd like to remind you of our safe Harbor statement in our earnings press release, which also applies to this call may refer to forward looking statements based on our current plans estimates and projections.

Also this call includes discussions of certain non-GAAP measures.

Please refer to our earnings release, Huawei completion between non-GAAP and the GAAP wise.

Unless otherwise stated all figures mentioned are in RMB.

I will now turn the call over to our CEO Mr. Zhang.

Yeah.

Oh, Jamie.

Regarding the monopoly element as you do that yet.

Thank you to women.

I know you'll have all the time.

Moving to another industry.

Each of them.

Goodbye.

Are you doing.

Somehow the foods I'm sure.

<unk> profile.

Do you guys fit in pushing the time that you could keep it.

Yeah.

And then she does.

Good hand with units.

If you remember when you do that soon.

Indeed.

<unk> <unk>.

Hello, everyone I'm very happy to report another strong quarter.

In Q2.

I was in Asia, and the placebo patient volume.

$98 3 billion.

11% Y O y.

Outstanding loan balance reached RMB 155 billion.

28% Y O Y despite an unusually volatile macro environment with Shanghai locked down and we still get a co pay in multiple cities.

We delivered a solid performance, which once again demonstrated the resilience of our operations and risk management capability facing adversity.

Jim on the timber.

As you look in Manitoba.

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Jim on that.

How would you do with Tim has indeed, Don Hinson guys into it.

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Q4.

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Three seven and Theyre doing a window seat in Portugal.

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Pretax income has yet in that window.

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<unk> got six equivalent home increase either.

And what I'm talking about conducting your conduct Julia codes within Sanofi that's oil.

On the regulatory path.

I forgot the bottlenecks in rectification work Caf farm economy.

Our return on regulatory meetings have Olson a clear signal that the reform is reaching an enviable place.

Going forward Radziwill matrix, we have put the emphasis on driving healthy and sustainable industry development.

Normal like this it will be J.

As the regulatory environment gradually stabilize.

We see clear our guidance.

On July 28.

<unk> policy cut Bureau.

Related party in China that have economic priorities for the second half of the year.

Policymakers patch to promote healthy orderly development of the platform economy com.

Completed the rectification work and the comeback Bachelor for Vijay.

At our fall off making by the PB Oc other spirit, the central Bank with <unk>.

<unk> can't progress major a catwalk rectification.

And neither will urge based companies to complete the whole reputation project placed them on a regular supervision that a more.

Transparent and predictable.

Our results this promote the roll off the platform economy in job creation and boosting consumption.

And with your women Tiguan, the bushel yarchoan humans hung up I believe.

With Hudson vaccines.

Indiana Jones, Jim on woman change in due time now how this would you.

Thank you Jamie.

For me, Jim Jones, Fine sand demand, so illiquid ball since you bought <unk>.

Neither goes home.

Jim wondering could it behind.

Sure.

We have completed most up directly vacation work according to the regulatory requirement.

And now in the stage of Rattler data reporting.

Regarding credit Agency report Julien, we have already submitted our execution plan to regulators and Mantech.

Fantastic close dialogue with that.

All feedback and direction around the regulators, we started to work with other business partners, So employment our cat.

Sure.

Yeah.

John Johan.

Shanghai that Glen Johnson, I'm, sorry, you're saying, you're putting on at that kind of year one.

As of June <unk>.

Do you see this as a holiday.

Yeah.

<unk> either.

Our slogan.

Joe Hogan Susan's departure.

Convincing them.

Okay.

So you guys can do that so many of your content.

Someone's Yo Yo Moshe.

In general yes.

Hum in the usual.

I need them.

So it doesn't make a year, which is helpful.

Rodolfo you broke one solution.

In July the CVI RSV published a notice.

Anthony the management.

Internet loan business, our commercial bank and improving the quality and the efficiency of financial services.

Finally circular number 14.

This document is consistent with earlier guidance, including circular number 24 in 2021, and the Tokyo and number nine in 2020.

With the Grace period extended one year, Jim started 2023.

In addition, the government once again acknowledging the collaboration business model between commercial events and related party Internet lending business we.

We have already implemented, especially thank requirements outlined in the circular in our daily operations.

R&D due to earn through.

You could do that each hotel.

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You guys want to box will allow for that kind of thing.

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Okay.

Stella.

That's what the team does.

Could you since you've done the same and that's why.

Are you open on holiday.

In Q2.

Despite multiple headwinds from the macro economy, and our expected pandemic resurgence.

We remain committed to our strategy.

At the beginning of the year.

In this extremely volatile market, we successfully executed our operational strategy and made great progress in building products with management and the customer base as well as upgrading.

For England.

And then Steve you will follow soon.

Does it go.

Thank you and please give us Sue Cheung, who visit <unk> Glenn has been with some of the fashion that move downtown.

Thank you gentlemen.

Yes.

The Parisian securities.

ABS debt financing.

Good afternoon gentlemen.

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I'm being shut down the.

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Arguably rifleman.

Sometimes the avian flu.

Can you give.

Back in June .

On the funding front, we further optimized our founding factor during the quarter. We added 10 buoy joined Dawson and a major urban and rural commercial bank with over RMB, one trillion AUR.

Which make our phone is applying more about it.

To improve the boundaries of science and the resumption of insurance of ABS.

Finding costs for <unk>.

<unk> driven loan decreased by 21 basis points on sequential basis.

Since the beginning of Q2, we have issued a total of RMB, three 3 billion ABS and average funding cost of 5%.

And that hasn't done so.

But from.

<unk>.

John .

Sitting duck.

Jim when do you think that that's a negligible.

On the product front, we continue to optimize product portfolio and the lower our average price.

This marks our full compliance.

24% regulatory requirement.

And we'll go from there.

Well then.

Vision from <unk>.

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England program in motion.

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Tom.

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Yes.

Quicker than more humid especially on the motion.

Dean.

That just.

Live again critical that women can forget the banks are lending again.

Yeah.

Yes.

On the pension question.

Yes.

Kinder Morgan.

But.

Yes.

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Okay.

Let me hit the symbol.

Then you've got the bandwidth.

Hello My syndrome. It is a go forward with that you should be good shepherds bulk with regard to the use of catching back up towards that <unk> hit the gods of Egypt.

Linda.

On the customer acquisition Frac, we can.

Thank you, Greg our user base during the quarter.

By expanding the coverage of our intelligence market IPA, namely real time API model. We further increased the number of high quality user and the improved overall user quality.

The coverage ratio, our precise targeting arcane in Kuwait from five zero, 50% in Q1 to almost 100% in Q2.

In the online advertising channels, the number of high quality user with granted when line increased by 51% from Q1.

Looking across all customer acquisition channels.

The rate of high quality user increased by roughly 20% accretion basis.

Meanwhile, we continue to enhance effectiveness of targeted customer acquisition.

On one hand, we continuously earthquake our model, but you do quality screening.

We expanded our media networks was joint modeling and Onboarding, new partners such as <unk>.

Well, our existing partners, such as Baidu function and apply so they continue to upgrade our model.

In other areas, we optimize the cost efficiency of use of.

We do ship by upgrading our talent and marketing platform.

We also connected two new user acquisition with doing that.

Baidu open scoring app.

And the Tokyo RPI rate story.

Okay.

If I may.

Women in the each home solar credits with its heritage Hotel.

Although of course, Youll, just cook <unk> Gulf wind units.

Central idea you would see him.

Bob.

You bet.

Our Internet site.

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<unk> syndrome, so at Cedar.

Tom QE, the Bakken just sat.

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Danny.

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SPD sensitive without <unk>.

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Apologize soil.

We shut it down.

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You can see.

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Another key issue.

So you wanted to.

Great.

Got it.

Chairman.

Hum.

Starting with the passenger parcel with your arm.

And up until you have an advantage of positivity and Joe.

In Q2, we quickly adapted our risk the strategies in response to a resurgence of the pandemic.

Including acquiring higher quality customers and gradually cutting.

I wish to use it.

We also completed major upgrades our base model to further leverage on users' data as a result.

With performance of our new loan origination was great.

First payment they want delinquency rate of new customer jumped to three.

1% in Q2 from 356% in Q1.

And the first payment delinquency 30 days with that then 0.25% in Q2.

In the meantime day, one delinquency rate our current loan book gradually went down to $4 seven 1% in June from five 1% in March.

These positive trends continued into July with they want delinquency rates, but that got to $4 six 4%.

<unk> <unk> collateral rights of covered loan book trended up to 86, 9% in June compared to five 2% in March.

So <unk> yeah.

The potential that you see.

The total charter.

And on their behalf.

It was just a syndrome component to that.

Just wondering.

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Stefan when she grew again, Tim on the Tims is a well known which I know some of them sell it.

With the <unk>.

Thanks.

And to be able to jayme Brooks.

Despite the impact of the pandemic.

Our.

Asset quality improved in Q2, especially for new loan origination.

This reflects it.

The adjustments, we made and our ability to counter the pandemic related challenges.

If macro circumstances right.

Rest of the year, we expect our risk management strategy to bring further improvement in asset quality.

And though we can could you said you guys and then if I may.

How do you do.

This year.

Tissue picking up I wonder.

So we can see that spoke up on that.

Could you point to the town center.

The timing of that.

The non QM program finally women.

Good evening, Thank you for your issue.

It goes like England.

Excuse me it was a pension pot smoking pot and fun.

You go from them.

And then one woman argued.

Yeah.

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So keep tuned on with you than where you don't.

John .

For which year punctually.

Okay.

Yes.

Women.

And Tim Glenn in your particular should either because.

In terms of upgrading strategy we.

We may incur that.

Five 7% of the law.

<unk> originated and facilitated with under the capital light model and other test solutions in Q2.

In the long run we plan to modulate, our leading technology into more products and better serve diverse financial institution.

In addition, the China, Kevin of inflammation in the communications have knowledge, namely.

ICT branded among the first batch of covenant under the business security initiatives, namely BSI, together industry giant, including China, mobile and girl Baidu and the schedule.

This was a strong theme at our capabilities and business security management and Tech knowledge.

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Linda toward that.

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Vincent go ahead.

Three other EU hotel with Jabil.

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Each of the bundle.

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Turning to women's <unk> gone so Donna.

Q1 tends upon your scenarios for your Thunder on this impact.

When we're done with tissue, Jason when it <unk> initially.

Awesome.

<unk> could you Johan <unk> with at the end of January .

In Q2.

Navigate to the extreme pandemic situation. Thank you.

<unk> locked down and other multiple macro fluctuation with strong operational and financial results.

Looking ahead into Q3, we will stay vigilant on the macro economy environment and the pandemic environment.

Meanwhile, we have seen in query stable currency environment, and a healthier industry ecosystem.

Well maintain our prudent operational strategy continued to upgrade our technology and customer base and the finish our risks of vacation.

CLS and CFO , Alex did I hear that like the northern tier.

Okay. Thanks.

Hello, everyone. Thank you Ashley and good morning.

Welcome to our second quarter earnings call.

I assume discussed we delivered another solid quarter and the rather challenging period of time from macro economic perspective early.

Early in the quarter Covid Lockdowns in Shanghai, and other regions of the nation noticeably weakened consumer confidence and the altered consumption pattern for many things.

Since the lockdown removed in June .

<unk> some recovery in consumers' demand for credit, although the pace of the recovery are expected to be gradual and modest.

Despite the impact from Covid and the generally soft macro environment, we continue to push for a steady improvement in overall asset quality throughout the quarter and the year.

With optimization of our risk model and the contribution from high quality, new borrowers overall, if they weren't delinquency has been declining sequentially each and every month since beginning of this year.

Even during the peak of the Covid Lockdown in April and May.

It was four 9% for Q2 versus five 2% in Q1 and further declined to four 6% in July .

Particularly I think Wednesday for new borrowers in Q2 was well below 4%, indicating continued clear better quality versus existing borrowers.

30 day collection rates remain stable at around 86% in Q2.

Colby clogged us significant Hamburg, our collection operation in April and early May.

30 day collection rates hit the lowest point of the cycle in April and less than 85% then start to recover.

By July it was already above 87% the highest point so far this year.

Again, we see clear outperformance by new borrowers versus existing borrowers.

With new borrowers 30 day collection rate was above 90% in Q2.

These risk metrics continue to support our current user acquisition strategy, we spoke which focus on high quality segment of the market.

Total net revenues for Q2 was $4 2 billion versus $4 3 billion in Q1 and $4 billion a year ago.

Revenue from credit driven service capital heavy was $2 9 billion compared to $2 9 billion in Q1, and $2 4 billion a year ago.

The year on year growth was mainly due to growth in loan volume and longer average tenor of the loans more than offsetting the negative impact from declining in average prices of the loans.

Have to have a facilitation revenue take rate extra improved modestly versus Q1.

Also due to longer loan tender.

Revenue from platform service capital Light was $1 2 billion compared to $1 4 billion in Q1, and $1 6 billion a year ago.

Year on year, and a sequential decline was mainly due to the decline in loan boarding.

And the average price up the capital light loan facilitation.

During the quarter capital light loan facilitation.

And other technology solutions combined account for roughly 56% of the total loan volume.

Given the challenging macro environment, we purposely increased the portion of the loans processed through ice and other technology solutions to further mitigate potential risks so far this year.

Such services typically have different commercial terms compared to regular capital light loan facilitation.

Overall in the long run we will continue to pursue technology, driven business model and expect capitalized and other technology solutions to eventually become a significant majority of our business.

During the quarter average IRR prices of the loans.

Originated and facilitated further dropped to between 22, and 23% well within the 24% rate cap requirement, we expect pricing to be relatively stable for the coming quarters.

Sales and marketing expenses increased approximately 11% sequentially in Q2, mainly because of the increase in high quality user acquisition.

Specifically.

We exclude backend expenses the increase in the average cost to acquire a 360 <unk> new credit line user through third party traffic sources or roughly in line with the increase in the average size of the new credit lines as such the average cost per dollar amount.

New credit line remained relatively stable Q on Q.

As always we will continue to use lifecycle, ROI and LTV as a key metrics to determine the pace and scope of our user acquisition strategy to ensure the sustainability and the profitability of our operations.

Although the overall risk profile of our loan portfolio continued to improve in Q2 due to the contribution from new loans from high quality, new users impacts from micro uncertainty and Covid were still apparent on all loans from existing users. Therefore, we continue to take.

Prudent approach in booking provisions against potential credit loss.

New provisions for contingent liability for loans facilitated in the quarter was approximately $1 3 billion.

With strong operating results and a stable contribution from Tech light model, our leverage ratio, which is defined as risk bearing loan balance divided by shareholders equity was at a historical low of four times.

In Q2 compared to four eight a year ago.

We expect to see rather stable leverage ratio for the time being until capitalized and other technology solutions contribution.

It's become a bigger portion of the business in the future.

We generate $1 1 billion cash from operation in Q2 compared to $1 4 billion in Q1, the sequential decline in operating cash flow was in part due to some COVID-19 related timing issue as Shanghai being gradually reopened in late Q to sum up.

The business and administrative procedures within the financial system, we are still not running as efficient as what normally should be therefore, causing some delays in collecting receivables from some of our financial institution partners.

Total cash and cash equivalent was 11 4 billion in Q2 compared to $9 8 billion in Q1 now.

Nonrestricted cash was approximately seven.

<unk> 7 billion in Q2 versus $6 2 billion in Q1.

As always a significant portion of our cash will normally be allocated to support the security deposit with our institution partners in normal business course.

We continue to generate healthy cash flow from operations. We believe our current cash position is sufficient to support the growth of our business to invest in key technologies and to satisfy potential regulatory requirement and to return to our shareholders.

According to the dividend policy approved by our board last year, we declared another quarterly dividend of <unk> dollars 18.

Her avs for Q2.

The cash dividends represent approximately 20% of our Q2 earnings.

Finally regarding our outlook for 2022.

As we discussed previously we believe 2022 will be a fairly challenging year for the industry as the participants are settling in a new regulatory environment. Meanwhile, the on and off outbreak of Covid as well as associated measures to control the operate added additional uncertainties.

To an already soft macro economy. Therefore.

Therefore, we want to maintain a prudent approach to plan, our business and mitigate potential risk.

At this point in time, we would like to keep our full year loan volume.

<unk> of between.

<unk> 410 billion and RMB 450 billion unchanged representing year on year growth of 15% to 26%.

We view this transitional year as an opportunity for us to further optimize our operation strengthen our technology platform and upgrading our customer base to build an even stronger foundation for future growth.

As always the forecast reflects the company's current and preliminary view, 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 management will now begin the question and answer sections. If you have any questions. Please press zero one on your telephone keypad.

If you need to cancel please press zero two for those who can speak Chinese. Please ask your questions in Chinese first followed by English translation.

Additionally, in order to have enough time to address everyone on the call. Please keep it to one question and one follow up and return to Keeley view.

More questions.

Once again zero one for questions.

First question is yes.

Please go ahead.

Oh go ahead go ahead.

Sure Glenn He works with all the other the whole genome. So he would be willing to kind of tell them quite plentiful that deal with that.

So if you're willing to share kind of assumptions went into 'twenty alcohol, each you'll know kind of what's feeding into Germany.

We have some kind of approval do.

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All forward Hong Kong.

Given that the total amount you really called young cannot.

We like to go with a bulk of your Hollywood, which will you move to like to go quicker.

Visual function.

So if you don't change your way like how.

Did you go Coco you also get as long as the English home, but alcohol coach one day E. G. This is quite interesting.

Future digital format simple fashion lithium.

Okay.

What do you do you want to go through.

Sure.

To cope with it.

Okay, then I'll do the translation part so under the current macroeconomic and the predominate uncertainties. So with most of the retail credit service provider.

Naturally institutions generally it has.

Quanta understood and pressure such as the increase of customer. It's early prepayments the customer acquisition challenges after the pricing adjustment.

Just wondering in the context of these uncertainties.

Any changes.

Neither of our bank partners operated without and are there any changes in the funding cost the customer acquisition costs and also the actual borrowing demand of our potential customers and if there were some certain challenges.

Our plans and how are we going to overcome it.

Management.

Yeah.

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Yes.

I will answer your question, yes. Thank you.

Resolution is correct.

Due to the impact of macro economy financial institution.

Some pressures however, thanks to our number one accumulated quite a buzz in the market.

Our consumer loan business number two.

Financial institutions pressure from other asset class.

<unk>, our high quality consumer loan asset is in high demand.

From a financial institution that is reflected by the drop in funding cost that we already discussed.

In July and August we are seeing.

Trending down our funding cost it further.

Well second question as Florida kept in our acquisition activity.

Due to the dropdown of pandemic of offline activities.

Our customer drawdown activity is to some extent negatively impacted.

Thanks to our.

Series of counter measures that Lee.

<unk> more per site.

Customer targeting that.

The drawdown activity our music Apple Inc.

Have done a lot work in Q2.

Asking to see the work bearing fruit in Q3.

Okay.

Hey, Dara.

Yeah that woman.

Another one here.

They don't seem to kind of youre getting from what would have been met with you how the winter you akshay.

Okay.

Okay questions Thomas Chong from Jefferies.

So while it does all of that.

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Typically.

Thank you.

Hi, Brad.

Sure.

<unk>.

Okay.

Thanks management for taking my questions.

My first question is about our SME strategies, given the current macro backdrop.

Scaled back the pace of our <unk>.

<unk> business as well as the offline sales team and my second question is about the average ticket size.

Given the uncertainties of the macro environment.

In.

The formalized.

Getting a lower ticket size and they are getting a bit more than in globally. Thank you.

Santa Monica.

We're connected to India.

Do you guys acquire music.

Women.

Thank you Dan.

It's a good question.

Correct.

I'm in the east and the confirmed what the Showa Tinian to whom we can count.

No woman balance at June until the other.

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Sure.

And if you could tell we don't think Julia.

Arguably Jim Fowler.

In yogurt.

Sure.

Kind of give me an idea you bet that you typically do that got you guys.

Yes.

You're going to be a data you can show it to them.

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Charles already the good foundation and women.

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Yes.

How do you do now.

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The woman Peyton good very good.

Okay.

You can see it's an entitlement.

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Yes, Rick.

According to new business naturally is this a more recurring called down our consumer loan business.

We take a more prudent approach only benign we have tightened our.

David.

For this business as you can see the total loan origination for the state of a patient in the SME business in Q2 peak.

<unk>, Inc.

This is number one for the second point as Florida, Panama City decent channel or external channels that we have less control we used to go after volume and <unk>.

I will focus on our direct sales team off of my head.

<unk> obligation.

Yes.

The English obvious initial Bendigo TD five.

Women just to kind of pool.

This average issued Val <unk> shutdown.

We benefited from our guidance.

Yes, absolutely.

And will the Macondo.

They are telling them that kind of a mutual sensitivity.

To kick a little Asia bigger social.

Sure.

Yes.

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Because you know that <unk> had for years.

And then can do listen what we can do it.

Continent, Youll, just cope with eager to distribution.

Cook unifying the ticket sizes and anti seizure, but do keep in back financials. It doesn't go through transition that women can send you that kind of thing.

New fashion.

You could demonstration.

Yes Thomas.

Nation that customer consumption governance jobs due to the impact of pandemic is correct.

We believe that feel counter magic number one it's Lee.

Lee.

We tightened our credit standards that means right.

The approval rate is lower and material, we focus more on the high quality customers, which bring more value to the business to measure scan that makes our ticket side rather.

Relatively stable.

Okay, Thomas just add a couple more points there.

On the SME.

As John mentioned.

If you look it up.

Earnings release this.

This quarter.

The.

Credit line, the new credit line granted to Smes.

$4 9 billion.

And the actual long.

Facilitate our originate to SME is about seven 8 billion roughly.

Third to last quarter that longwall in what's a little bit over $10 billion. So thats the numbers there, but just wanted to make sure.

When we talk about SME and we're talking about it rather.

Narrowly defined SME, so, meaning like if thats real.

As opposed to some of the.

Players talking about more broadly defined SME, so that's that.

Makes a difference.

Secondly regarding the ticket size.

If you look at the for example average drawdown, we look at for Q2.

<unk> increased by roughly 5% sequentially.

Sequentially.

That's just added points to your <unk> comments.

When we pass through the Lockdown period, we actually see pretty.

Still see a pretty notable growth in terms of the.

Ticket size in consumption.

Thank you.

Thank you.

Okay.

As a reminder, please press zero one for questions.

Our next question is Alex <unk> from UBS.

Okay got you wanted to do quite well there.

Okay great.

Q2 <unk>.

Joe.

That's all it all have a sense of Gen Z.

Obviously the Piedmont.

Yes, and also up a bit.

So John that you've got.

Thanks.

Yes.

Advertising.

Okay.

Thank you.

Good Sam.

So on data content. So my question is mainly on the take rate outlook.

You mentioned that your average <unk> during the quarter with 22.

The 23% and debt to remain stable going forward.

You also mentioned, you're putting cost is improving and your credit.

Also stabilizing so I'm wondering.

If we could expect some months ago.

Okay.

Our equivalent to you all take away going forward. Thank you.

Sure Alex.

Let me take your question here.

You're generally youre right given that we have already reached a point in terms of the <unk>.

Pricing go.

Based on the regulatory.

<unk> lines, so we don't see really too much pricing downward trend.

Going forward.

For the remainder of the year.

With that in.

The overall take rate.

I would say you probably will see a more stable take rate.

If anything there could be some improvement.

There but.

Of course other factors you need to consider is the number one the microenvironment.

And.

That will have a <unk>.

I would say more.

More impact than usual, if we have a rather stable macro environment than all of the assumptions, we can assume it will be a stable to.

Maybe modestly improved take rate.

But if there's some something unexpected.

Unexpected happening on the macro front then there will be another another question there.

From funding cost as Hudson mentioned sure.

Second quarter were six 8%.

And right now we're sitting at about $6 five so there's maybe still a little bit room to go in terms of.

Lowering funding costs given the current money supply is pretty.

<unk>.

Pretty.

Available out there.

There may be some still some room to go but overall I would say from a modeling perspective, we are.

Conservatively yoga motto, a rather stable take rate.

If you want to add some to it modestly that's also fine.

Yeah.

Okay. That's okay. Thank you.

Okay. Thank.

Thank you.

Our next question is Richard <unk>.

And as Tony.

Okay.

Congrats on.

Maybe what mentioned that.

Sure.

And then Dave can.

Now you can do what you have in getting <unk>.

So that would be the simple economics again it.

Two questions on the $10 and I think that in general valuations.

Then David.

Hi, John .

How are we seeing on material costs.

Cambodia easier overlap.

Basically my question is on the company.

Relative to the environment in China at the moment given.

360, <unk> is also aiming for a low risk.

Bars basically it's also some overlap with.

<unk>.

Targeted customer by like and banks et cetera, So what's the competitive landscape at the moment.

Okay.

But I think.

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The solution that a woman that ensure the delivery of <unk>.

Vishal.

The whole account women.

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Doing that will be implemented this year.

Sure.

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We tend to MGE can you can do the dig overlap.

And more than 20 years.

No no.

Sure.

So he wanted to get a sense of what of that.

I know you guys just with adequate.

So and then getting them.

This is judd unusual woman.

Could you listen to them.

And kind of how should those will continue.

Turning to the other.

Hum.

Youtube revenues.

Understood.

Sure.

No no.

Couple of quick ones.

<unk>.

We're maniacally.

And what you actually did it go.

Thanks, John .

So we don't want to put it in.

Richard.

Yeah.

So just kind of get you to women.

Sure.

Typical aluminum lithium.

Medicare for.

We put on are going to see a balloon.

You might even want to do with that.

Okay.

Sure.

Gentlemen, I can do the C code in Chengdu.

<unk> when we didn't include one funding if we weren't absolutely tiny.

<unk> connect those at the 100 gigabit growth alright.

I'm Gonna make dilutive this year.

101.

With Olympics and liquidity within the target.

Retention degree.

And if you could give.

I think in the Columbia.

Yes, Richard.

Right. After we did all our average.

Price.

That of <unk> with other.

Either Brian like Joe mentioned at our bank.

That increased a little bit however, we do not see the direct head to head competition with Ben There were a few arena number one the consumer along market is.

Grant Warren with Martin layers going downhill banks, they have 10% price product and has 15% our price range as we discussed previously it retained 22% to 23%.

Number two we believe different companies can survive and prosper.

Based on their unique competed for example, and test that Jeff about their unique ecosystem.

We do not have any e-commerce pass through on E. Commerce ecosystem. Therefore, we can collaborate with them over the past I mean, the Montana that covered both becca.

Customer growth.

Sure.

Okay. Thank you.

And our next question is Hassan.

NSA.

Hi, Dan.

That's the only thing I would say I would say at a high.

Josh I'm not going to sit on the windshield.

She's got encoding Centinela Shaw I'm wishing, Ken <unk> question, which I think frankly I forgot it.

And then Scott it sounds <unk>. So what you guys are launching.

Bumpy the highest with C U E.

You just mentioned.

Hey, guys.

So it sounds like.

You may begin.

So how should you always hear you should know to qualify them and want us to do that.

Minimal.

Do you guys have I think what you'd see is that you guys have any good.

Yes.

The only concern <unk> woman that Joseph Tien delinquency bucket, which I assume most of which indeed.

Steve do you guys want the warranty so let me translate so my question is more about ash quality.

Management, just mentioned that would be looking to the second half, we're going to see improvement in overall risk indicator.

Mike My question is more about how do we see the path of this improvement is it like a graduate bumpy one or like a notable options.

Especially regarding the Colgate.

<unk> recently in across many cities.

And also when do we expect the 90 day.

Delinquency ratio to peak, yes. That's my question. Thank you.

When you zoom in Lasalle Asia.

Hi, Doug.

Sure.

Next slide this early in launch.

Let's see the culture.

So Nancy Elliot, Yes chinalco.

Yes.

It's really a woman.

Yes.

In its initial guidance.

For a more synergy together so the element.

The Cook with chewy.

She's going to choose a bank.

Yes women.

Sandburg Huntington talked about Acs would you want to leave elements with tailored shingles.

Samsung kitchen really replicate similar.

The homeless.

101 million since relating borrowing short.

<unk> yeah.

Does it still have slipped a little down mostly lithium aqua.

Yes sure.

You want to cover a CBS CBS .

<unk>.

So thats, where most of your solo two data mostly.

So the element that you are.

Conducting so much you did that this year with a triple.

It is unclear.

Yes women gaming.

It's too soon for us to cope with the <unk>.

Thank you.

Sure.

Does this year.

So hopefully you will see on the Internet.

Thank you again and congrats again.

Well my current dose, which will add the extra business within <unk> Suisse second diagnostics.

Sure.

Civitas Empire, some thoughts and sat down and you got cheated.

Great.

And Luckily Lewis with <unk> Suisse.

Ladies and gentlemen.

And then <unk> that's helpful.

Yes.

One last one.

We'll maintain that this kind of cleanup.

Buffalo Thunder.

Lindsay.

Suddenly they said things so differently.

Thanks, Jeff.

Yes.

Sure.

So to this day.

Jabil she's on itself.

With intrusive while.

Well Michelle can have.

Thanks Anatol cheap.

She sits on stability, but could it be D C.

Tom This is Dan this is Jim.

Jason will then.

<unk> will add equivalent latching manhole Thompson EMEA Kishore.

And hopefully that will update us on that sheet.

Our team when they check out.

That's where we are now underway.

Yes.

Jimmy Chin.

Moving to the streets.

Right.

And then secondly.

So thats indeed element.

This is clearly a bunch of business development and border. Thank you.

So PD partnership with John Let's just.

Chip.

We have some cases it is is that if we sat down with him.

She is an FTE sensitive businesses that I'll, let Lisa.

EBIT, but nonetheless.

Great.

Doug.

I'll now turn to the Google search social element.

Since it is sitting at two two.

<unk> chicken rollout thank you.

We will now play, but the good better than we do.

Thank you Jim.

Hi.

It comes up on my phone.

Sure.

Okay. So our risk management team has been working with other teams globally to make several adjustments in the second quarter, firstly, improving the quality of newly acquired customers with a comprehensive coverage of Rte the integration of the pay model the number of our robust quantity.

Kathy Murray has been doubled compared with the first quarter.

Secondly, improving the data mining from People's Bank of China call David.

We have set up a joint project team and design with 18000 factory is now remote.

Quite a good lunch covering the optimization of its number of models.

Including competitive offer exploration high quality customers evidenced vacation bad customers Edification carrier model income annualized LG <unk> has shrunk.

And in the Meanwhile, way is that our customers the way support quite a performance more cautiously.

Thirdly, we improve the resource allocation to high quality customers on the operations side.

Including pricing credit lines and promotion.

With these actions the credit performance of new transactions has been improved we have seen that the SPD 30 days Q2 dropped by about 20% comparing to the first quarter.

And to maintain a downward trend in July and August where.

Where the epidemic outbreak, we can lower our risks, which truly demonstrates the resilience of our team and our assets.

Now the results of some action mention above have not been fully reflected at some actions on pilot testing, we need to absorb long term performance.

Therefore with fully adoptions of these actions we are very confident to maintain stable performance in the future.

As for 90 day delinquency rate it will be lower in the third quarter as we focus more on 30 day delinquency rate. It has been the lowest in July and our future targets will be more than two 5% to 8%.

This concludes by your question.

How do you guys think.

Okay.

And this is the end of our question and answer sections and now I hand back to management for conclusion.

Okay. Thanks again for joining US conference call. If you have any additional questions. Please feel free contact us offline. Thank you.

Yeah.

Okay.

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to day 360 did your pet's second quarter 2022 earnings conference call.

Please also note today's event is being recorded at.

At this time I would like to turn the conference call over to MS. <unk> IR Director. Please go ahead Mehdi.

Thank you.

Hello, everyone and welcome to our second quarter 2022 earnings conference call.

Our results were issued earlier today and can be found.

Our web site.

Joining me today are Mr. Zhang our CEO and Raptor.

Mr. Alex <unk>, our CFO and director.

And it means that don't yet our Seattle.

Before we begin our prepared remarks I'd like to remind you of our safe Harbor statement in our earnings press release, which also applies to this call may refer to forward looking statements based on our current plan estimates and projections.

Also this call includes discussions of certain non-GAAP measures.

Please refer to our earnings release for reconciliation between non-GAAP and the GAAP one.

Unless otherwise stated all figures mentioned are in RMB.

I will now turn the call over to our CEO Mr. Zhang.

Okay.

Okay.

Regarding that may not be having them as you do that yet.

In general women.

You bet.

Well given that honestly.

Sure.

And within that bound to occupy.

Argued to continue the olden days it sounds.

Sounds like a futon.

Sure.

The bump up.

I think if accomplishing coming are you going to do.

Yeah.

Good morning.

And then she got a good hand with units.

It's been humbling.

That's it that's been a woman.

<unk> fusion in the coming year with a China issue.

Hello, everyone I'm very happy to report another strong quarter.

In Q2 total loan originations and associated patient volume.

Alrighty, $98 3 billion up 11% Y O y.

Outstanding loan balance reached RMB 155 billion.

28% Y O Y despite an unusually volatile macro environment with Shanghai locked down and we still get a co pay in multiple cities.

We delivered a solid performance, which once again demonstrated the resilience of our operations and the risk magnet capability facing adversity.

So the gentleman was demanding for 10 months.

As you look at that that's all the pool.

Okay.

Jim on that.

How are you doing with Tim has indeed.

Sure.

But the agenda.

So I wonder as you guys doing wonderfully.

I mean, some guys in junior with AR.

Okay. So it's Edwin.

So judy on that again.

So we don't buy that Jim.

Cause you Jen <unk>.

When you think that could sustain at Yahoo.

I'll, let Jim Webb.

They want to kind of sticking on switch.

And when I talk to them they've been got attrition.

<unk> talked about half coming on to energy. Please.

Siobhan imaging, even though you mentioned Q4.

Trading income hedging to prevent Gen con so as you've had that long term Jim has gone ahead and got <unk> tend to have my agenda.

Yeah, Doug Hi, Arnie shopping and they're going to be.

We have been in there doing the window in Portugal.

And your banking team has yet been guy Boondock Shadow grocery shop.

With a total <unk> chairman, Jim got Sears' equivalent home increase either.

Doing well.

And I'm talking about connecting you conduct your ear hurts with each of its oil.

Oh and the regulatory Frac.

Further debottleneck in rectification work Caf Army columns.

A recent regulatory meetings at all again, a clear seasonal net of risk for this region and the insight.

Leaning forward Radziwill matrix, we have put the anthracite.

<unk> healthy and sustainable industry development.

Normalized for BJ.

The regulatory environment gradually stabilize.

Be clear our guidance.

On July 28, the Central policy cut Bureau of Docomo related party in China that have economic priorities for the second half of the year.

<unk> patch to promote healthy orderly development of the platform economy.

Completing the rectification work and the comeback Bachelor for Vijay.

As a follow up meeting by the POC on August 3rd.

The central Bank with.

Neither can progress major a catwalk rectification.

And neither will urge based companies to complete the whole rectification project place them on the revenue of the provision that a more centralized transparent and predictable.

As a result.

It promotes the roll off the platform economy in job creation and the boost in consumption.

And with your women Tiguan, the push with <unk> you mentioned.

I believe you that with Hudson back indoors.

Shannon came on government changing how this what you're posting.

Got it thank you.

Jim Jones fine sand demand for liquid bulk Cynthia belak ship quickly and why that's a huge need to go home.

And with your own mind, I'll generalize and put it behind that what we're tweaking.

We have completed most of the rectification work according to the regulatory requirement and now in the stage of granular data reporting.

Regarding credit Agency reform plan, Julien, we have already submitted our execution plan to regulator and.

Maintain close dialogue with that.

Based on feedback and direction around the regulators, we started to work with other business partners to implement our plan.

Sure Nick.

Shang Johan.

I'll follow up Glenn Johnson, I'm, sorry, yes.

What do you want that kind of year, one is in Q4 to show that.

And Youll see this as a whole it similarly.

Yeah.

So if either.

Our slogan.

Hey, Joe Hogan Syngenta books.

Contingent ventana assisted our cordless.

Contiguous.

The convening that signing the contract what do you want that one.

Some months ago.

And when you can only achieve without question.

Okay, great. Thank you <unk>.

I need them.

So don't mistake. The Yost is ultimately intelligent data that you can sell Russia.

In July the CVI RSV published a notice on.

Designated our management, our Internet business of commercial bank, and improving the quality and efficiency of financial sorry.

Mainly circular number 14.

Payments is consistent with earlier guidance, including circular number 24 in 2021 and the circular number nine in 2020 with the Grace period extended one year pure gym, Turkey 2023.

In addition, the documents once again acknowledging the collaborative business model between commercial bank and the related party Internet lending business we.

We have already implemented <unk>.

Thank requirements outlined in the circular in our daily operations.

R&D to consumers.

And when you could do with each hotel.

What do you guys want to be.

Box will allow for that kind of thing.

Cool.

Let's say for example, the Nims were tuning the go John Dean.

But what we do.

Uh huh.

So I didn't want to attempt.

Uh huh.

Yes.

What's what the tinder.

Could you since you've done the time, you guys where.

You opened in holiday.

In Q2.

Despite multiple headwinds from the macro economy, and our expected pandemic resurgence.

<unk> committed to our strategy.

At the beginning of the year.

In this extremely volatile market, we successfully executed our operational strategy and made great progress.

Funding program with management, and the customer base as well as upgrading.

No.

England.

Women Steve.

Hello, Daniel.

If you go there you.

Hugo.

Thank you, Steve and John Griffin.

Glenn has been with you some of the bonds in the Luzon com.

Hey, good I don't want to forget.

And the other two.

They're just within the Tunisian specialties, the human ABS debt.

<unk>.

Somewhat to that instrument.

Thank you.

Can be shut down.

So <unk>.

Arguably like women can move parking lots all the time.

Yes.

Can you give me the battle.

One the founding brand we further optimized our founding sector. During the quarter. We added 10 buoy joined Softbank and a major urban and rural commercial bank with over RMB, one trillion AUR.

Which make our foundry is applying more about it.

To improve the boundaries of science and the resumption of insurance of ABS.

Finding cost for credit driven loan decreased by 21 basis points on sequential basis.

Since the beginning of Q2, we have issued a total of RMB, three 3 billion ABS and average funding cost of 5%.

And that hasn't done so.

<unk> for the Johan <unk> zero.

Sandy I'm sitting down.

Jimmy one for Jim when do you think that that's negligible.

On the product front, we continue to optimize product portfolio and lowered our average price.

This marks our full compliance.

24% regulatory requirement.

And we'll go from there.

Well then.

And then could you since you've done that.

Towards this end.

Sundar in telecom was here.

Got it.

Jamie would.

You want to Cushing, Oklahoma.

Anything with a T cell.

While <unk> syndrome program in motion I just forgot.

So I'm curious.

Sure.

Goodbye.

So luminaire colon unlike huh.

Sure the user cohort is this woman.

This is sebastian quite familiar with.

So so it can cope with some QE and Gallup and Wuxi.

Tom on the southern Sudan.

So at that time.

When a user could you missed it out.

Q2 <unk>.

So we don't want but on the corporate agenda.

Yes.

It quicker than most of them that especially on the motion.

Let me begin with.

You didn't.

Live again wanted to get a critical that women didn't forget the Bachelor degree.

Yeah.

Yes, that's a little about baidu.

Baidu patient death.

<unk> done it yet.

The Kinder Morgan.

The.

One of them has already hit the <unk>.

I mean thats in Atlanta.

Ladies and.

These are the window.

Hello, My Indonesia, it as it goes.

So that should be good.

Okay.

These are catching rung up towards ordinarily hit the <unk> yet.

On the customer acquisition front, we continued to upgrade our user base during the quarter.

By expanding the coverage of our intelligence market IPA, namely real time API model.

We further increased the number of high quality user and the improved overall user quality.

The coverage ratio our precise targeting arcane.

Inquiry from five zero, 50% in Q1 to almost 100% in Q2.

In the online advertising channels.

A high quality user with granted when line increased by 51% from Q1.

Looking across all customer acquisition channels, the credit approval rate of high quality user increased by roughly 20% accretion basis.

Meanwhile, we continue to enhance effectiveness of targeted customer acquisition.

On one hand, we continuously upgrade our model, but you do quality screening.

On the other hand.

We expanded our media partner network was joint modeling and Onboarding, New partners such as <unk>.

Well, our existing partners, such as Baidu Thompson and our price up.

Continue to upgrade our modeling.

In other areas, we optimize the cost efficiency of use our position by upgrading our talent and marketing platform.

We also connected two new user acquisition with doing that.

Baidu open scoring app.

And the Tokyo RPI rate story.

And so when they're thinking about that.

The woman in the each home solar credits with a total shutdown.

Although puts EOG, the shinko combo with <unk> gasoline units.

Some of the larger would hook on to him.

So you can look at the top.

Yes.

Our Internet site.

She wasn't frontline that's only came to us yet should benefit hampered for the shovel.

<unk> syndrome, so at Cedar.

Tom QE the Bakken.

Shut down they'll kill other and understand their needs.

Sure.

Sure.

SPD <unk>.

Bob Evans.

Counter soil.

Before we shut down some time you are in the passenger E. <unk> ended up having this frequency.

Yeah sure sure of it.

Team without issue.

They wanted to it was really great.

Great.

Yes.

Cheng.

<unk>.

Summing up on the passenger parcel with your arm.

And up until you have an advantage of pollutants.

In Q2, we quickly adapted our risk the strategies in response to a resurgence of the pandemic.

Including acquiring higher quality customers and gradually tightening.

Hi, with the users.

We also completed major earthquake, our base model to further leverage on users' data as a result risk performance of our new loan origination was great.

First payment they one delinquency rate of new customer jumped to three.

1% in Q2 from 356% in Q1.

And the first payment delinquency 30 days with that then 0.25% in Q2.

In the meantime day, one delinquency rate our current loan book gradually went down to $4 seven 1% in June Brown five.

Five 1% in March.

<unk> positive chance continued into July with day, one delinquency rate, but that dropped to $4 six 4%.

The Overwore M. One collateral rate of covered loan book trended up to 86, 9% in June compared to five 2% in March.

Yeah.

Yeah.

The total charter that ended up being home.

Susan.

Just wondering.

Sure.

In terms of 800 to each other.

Stefan when see again Q1 <unk>.

Well remember, which I know some of them sell it.

With that Stephanie it's easy to do that.

If we hit the Delta team for Ghansham.

Despite the impact of the pandemic, although all of our asset quality improved in Q2.

Battery for new loan origination.

This reflects it.

Net of adjustments, we made and our ability to counter the pandemic related challenges.

If macro circumstances stand out right.

The year, we expect our risk management strategy to bring further improvement in asset quality.

And then we can could you said you guys have done if I may.

How do you do.

This year.

Tissue picking up I wonder what should we consider spoke up on content.

Could you point to that uncertainty.

The timing of that kind of well then they non QM pools and finally women.

And liquidity with a cheaper youll ship.

Gotcha, England by women the excuse me it was 101.

When do you go from them.

And then one woman argued luciana is simply yet.

And contingent to herd DSI.

So keep tuned on what.

Even when you don't know.

For this year.

Sure.

Uh huh.

The woman.

And Glenn you particulars leader you guys.

In terms of upgrading strategy.

<unk> heard that.

Five 7% of the loans originated and of course, they did take it was under the capital light model and other test solutions in Q2.

In the long run we plan to modulate, our leading technology into more products and better serve diverse financial institution.

In addition, the China Academy of information and communication technology, namely CAE ICT branded among the first batch of companies under the business security initiatives, namely BSI together industry giant, including China mobile and <unk>.

Baidu and essential.

This was a strong statement of our capabilities and business security management and technology.

$32 million to the good order from Linda talk that J D.

In the human boiler issue from sources here.

Vincent answer question three other EU Hotel would you bill.

Some of them tangible women's Omnichannel bundle one portal.

Yes.

Men's women's and youth and toddler.

<unk> been in the tens of one year scenario, where you find the highest impact.

When we're done with tissue, Jason when JD and necessarily pass your line is on <unk>.

New.

<unk> at the end of January .

In Q2, we navigated through the extreme pandemic situation up 50 wide lockdown and other multiple macro fluctuation with strong operational and financial results.

Looking ahead into Q3, we will stay vigilant on the macro economy environment and the pandemic debottleneck.

Meanwhile, we have seen.

Very stable pricing environment, and a healthier industry ecosystem.

We will maintain a prudent operational strategy continue to upgrade our technology and customer base and the finish our risked suffocation pack.

CLS and CFO , Alex Mandel at the northern tier.

Okay.

Thank you everyone. Thank you Ashley and good morning.

Yes.

Welcome to our second quarter earnings call.

As I just discussed we delivered another solid quarter and there are other challenging period of time from macro economic perspective.

Early in the quarter Covid Lockdowns in Shanghai, and other regions of the nation noticeably weakened consumers' confidence and altered consumption pattern for many things.

Lockdown removed in June we have observed some recovery in consumers' demand for credit although the pace of the recovery are expected to be gradual and modest.

Despite the impact from Covid and the generally softer macro environment, we continue to push for a steady improvement in the overall asset quality throughout the quarter and the year.

With optimization of our risk model and the contribution from high quality, New borrowers overall day, one delinquency has been declining sequentially each and every month since beginning of this year.

Even during the peak of the Covid Lockdown in April and May.

It was four 9% for Q2 versus five 2% in Q1 and further declined to four 6% in July .

Particularly day delinquency for new borrowers in Q2 was well below 4%, indicating continued clear better quality versus existing borrowers.

30 day collection rates remain stable at around 86% in Q2.

Colby clogged us significantly hampered our collection operation in April and early May.

30 day collection rate hit the lowest point of the cycle in April at less than 85%.

And start to recover.

By July it was already above 87% the highest point so far this year.

Again, we see clear outperformance by new borrowers versus existing borrowers.

New borrowers 30 day collection rate was above 90% in Q2.

These risks metrics continue to support our current user acquisition strategy, we spoke which focus on high quality segment of the market.

Total net revenues for Q2 was $4 2 billion versus $4 3 billion in Q1 and $4 billion a year ago.

Revenue from creditor in service capital heavy was $2 9 billion compared to $2 9 billion in Q1, and $2 4 billion a year ago.

Year on year growth was mainly due to growth in loan volumes and longer average tenor of the loans more than offsetting the negative impact from declining in average prices of the loans.

Have to have a facilitation revenue take rate actually improved modestly versus Q1 also due to longer loan tender.

Revenue from platform service capital Light was $1 2 billion compared to $1 4 billion in Q1, and $1 6 billion a year ago, the year on year and a sequential decline was mainly due to the decline in loan volume and the average price up the capital light loan facility.

Patient.

During the quarter happened like loan facilitation highs and other technology solutions combined account for roughly 56% of the total loan volume.

The challenging micro environment, we purposely increased the portion of the loans processed through ice and other technology solutions to further mitigate potential risks so far this year.

Such services typically have different commercial terms compared to regular capital light loan facilitation.

Overall in the long run we will continue to pursue technology, driven business model and expect capital light and other technology solutions to eventually become a significant majority of our business.

During the quarter average prices of the loans.

Or you originated and facilitated further dropped to between 22 and 23% well within the 24% rate cap requirement, we expect pricing to be relatively stable for the coming quarters.

Sales and marketing expenses increased approximately 11% sequentially in Q2, mainly because of the increase in high quality user acquisition.

Specifically, if we exclude backend expenses the increase in the average cost to acquire a 360 <unk> new credit line user through third party traffic sources or roughly in line with the increase in the average size of the new credit lines as such the average.

Cost per dollar amount of new credit line remained relatively stable Q on Q.

Initial for the time being until capitalized and other technology solutions contribution.

Become a bigger portion of the business in the future.

We generated $1 1 billion cash from operations in Q2 compared to $1 4 billion in Q1, the sequential decline in operating cash flow was in part due to some COVID-19 related timing issue as Shanghai being gradually reopen in late Q2 some of.

The business and administrative procedures within the financial system, we are still not running as efficient as what normally should be therefore, causing some delays in collecting receivables from some of our financial institution partners.

Total cash and cash equivalent was 11 4 billion in Q2 compared to $9 8 million in Q1 non restricted cash was approximately <unk>.

$7 billion in Q2 versus $6 2 billion in Q1 as always a significant portion of our cash will normally be allocated to support the security deposit with our institution partners in normal business course.

As we continue to generate healthy cash flow from operations. We believe our current cash position is sufficient to support the growth our business to invest in key technologies and to satisfy potential regulatory requirement and to return to our shareholders.

According to the dividend policy approved by our board last year, we declared another quarterly dividend of <unk> dollars 18.

Her avs for Q2.

The cash dividends represent approximately 20% of our Q2 earnings.

Finally regarding our outlook for 2022.

As we discussed previously we believe 2022 will be a fairly challenging year for the industry as the participants are settling in a new regulatory environment. Meanwhile, the on and off outbreak of Covid as well as associated measures to control the outbreak added additional uncertainties.

To an already soft macro economy. Therefore.

Therefore, we want to maintain a prudent approach to plan, our business and mitigate potential risk.

At this point in time, we would like to keep our full year loan volume.

Guidance of between <unk>.

RMB 410 billion and RMB 450 billion unchanged representing year on year growth of 15% to 26%.

We view this transitional year as an opportunity for us to further optimize our operations strengthen our technology.

<unk> and upgrading our customer base to build an even stronger foundation for future growth.

As always the forecast reflects the company's current and preliminary view, 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 management will now begin the question and answer sanctions. If you have any questions. Please press zero one on your telephone keypad.

If you need to cancel pre spent zero two.

For those who can speak Chinese please ask your questions in Chinese first followed by English translations in.

In addition in order to have enough time to address everyone on the call. Please keep it to one question and one follow up and return to queue. If you have more questions. So once again zero one for questions.

First question is yes.

Ali CIBC. Please go ahead.

Our clinical.

Cumulative clinical to.

The whole thing cannot go into content.

Delta to ensure women's usually a kind of a downturn when 2020, our eastern Oklahoma, which shouldn't assume generally competing with <unk>.

And we have to kind of prevent some dealing with your goals.

So we are kind of key channel.

Hong Kong, Colombia to come down given that the total.

We like to go over our book are you how would you move through though to go quicker.

Visual function generally competing with them.

<unk>.

As long as being strong but <unk>.

This is quite interesting.

Future digital form in a simple fashion Lithia motors where possible.

What are we dealing with short term I'm sure.

To cope with it.

Okay, then I'll do the translation part so under the current macroeconomic and predominate uncertainties. So with most of the retail credit service providers.

Naturally institutions generally has.

We encountered a sudden pressure such as the increase of customers early prepayments the customer acquisition challenges after the pricing adjustment. So I was wondering in the context of these uncertainties.

Any changes.

Neither of our bank partners to cooperate with US and are there any changes in the funding cost the customer acquisition costs and also the actual borrowing demand of our potential customers and if there were some certain challenges.

Our plans and how are we going to overcome it.

Management.

Yeah.

Looking out the window.

Sure.

Zero.

For being familiar.

Familiar with <unk>.

Yes.

So when we kind of like two months.

In terms of U K government.

Peter <unk>.

Ali.

Could you Dunion Dutch operation Desert trying a little delayed.

So malone in Tianjin <unk>.

The mutual fund.

Sure.

Instrument.

Two weeks ago.

Sure.

Hey, Jim.

Youll regions continue to a degree.

Two months out you do.

Issuing the two biggest chunks.

<unk> opened in English Canada.

And so it goes until mid September .

Michigan.

And since you are in the interim agenda.

Yeah.

Thomas.

To ensure higher into 2017.

<unk> you cannot integrate using that kind of thing.

The <unk> issue in terms of sentiment can do.

Sure.

From a single moment.

Two cohorts.

<unk> <unk>.

And would you be able to be in Cana.

<unk>.

In China.

Check with.

<unk>, you mean, Punjabi from the Taliban occur from <unk> militancy social cohesion.

For the second year.

So we cannot go Sanjay.

No.

And so the balance <unk>.

China, India development, and therefore, continuing to train and fatigue mental Asia II.

Thank you.

Settlement and conducted.

<unk> imaging.

I don't want to do.

Timna Natalia.

<unk> conducted them.

A minute ago.

Procurement and integrated to the user.

However, the media.

Yes.

I will answer your question.

Observation is correct.

Due to the impact of macro economy financial infusion.

And there are some pressures however, thanks to our number one accumulated quite a buzz in the market.

Our consumer loan business and Mikael.

Financial inclusion as pressure from other asset class.

<unk>, our high quality consumer loan asset is high.

High demand.

From a financial institution that is.

By that drop in funding cost that we already discussed.

In July and August we are seeing that.

Trending down our funding cost by that.

Second question as Florida Cat in our acquisition activity.

Due to the lockdown of pandemic.

Flight activity.

Our customer drawdown activity is to some extent negatively impacted.

Thanks to our I D.

The risk of counter measure it that way.

Applying more customized.

<unk> targeting that.

The drawdown activity.

Apple.

We have done a lot work in Q2.

I think you will see direct bearing for in Q3.

Okay.

Hey, Dara.

Now that kind of thing.

Another one here.

Although they don't seem to contributing some of which have been met with 301, New York City.

Okay.

Okay questions Thomas Chong from Jefferies.

One is our.

All of that.

We don't have Golden Eagle.

One woman.

<unk>.

Amanda I wanted to talk a little bit.

One what's your diligence.

David.

Boy, you got to understand that.

Yes.

So so.

Oh boy.

It's always had some items out there is a bottleneck.

Sure.

ICL for at all.

Sounds great.

And then quickly.

Typically.

Thanks.

Thank you.

Is that.

Great.

Sure.

<unk>.

B J.

Okay.

Thanks management for taking my questions.

My first question is about our SMA strategies.

The current macro backdrop.

We scaled back the pace of our SME business as well as the offline sales team and my second question is about the average ticket size.

The uncertainties of the macro environment are we seeing.

The ball is.

Getting a lower ticket size and they are getting a bit more than in globally. Thank you.

Santa Monica.

India.

Do you guys acquire music.

Women.

And he seen chicken tissue theoretical question tells you that can continue.

Since then the children.

In the east and the new forms of authoritarian truly can count.

<unk>.

Balance sheet.

Due to the short term.

Keith Felicia.

The interim <unk>.

In the Eaton litigation related Julia.

Arguably Nancy Chancellor.

In yogurt.

Sure.

Kind of given <unk> activity to integrate yogurt.

Sure.

And then 2020.

Charter what are the real time data and women.

<unk> hundred <unk>.

101, Debbie vigor.

<unk> hundred home in Sweden.

<unk> thousand 800 antibody Haynesville Eagle Tankage in Guinea.

So you buy enrolment at <unk>.

<unk>.

You can see.

Internet headwinds.

<unk>.

Yes regarding SME business.

Is this a more metered power there are kind of in my own business.

We take a more prudent approach only benign we have tightened.

Sanjay.

This business as you can see the total loan originations for the third patient in the SME business in Q2 peak.

This is number one for the second point is for that type of market different channel or external channels that we have less control with the gap after volume and.

Our focus on our direct sales team of Mike.

Navigation.

So when we haven't.

Haven't seen a negative side.

Women just to kind of assume who.

Congratulation to Val <unk> shutdown.

And that number from a downward revision.

Absolutely.

Thank you.

We will then conduct.

Like kind of a metrology Institute eager too.

<unk>.

Sure.

<unk>.

Could you.

As you know in the <unk> half year two.

<unk>.

And then can do listen only mode.

Duncan and Yieldco pretty eager believe adhesion Utica unifying the ticket sizes and anti seizure, but two quick impact financially to transitional women engines into your account and create a new fashion.

So that you could demonstration.

Yes Thomas.

The nation that customer consumption, the LLS jobs due to the impact of pandemic is correct.

We believe bathyal counter measure it number one.

<unk>.

Lee.

We've tightened our credit standards.

Amit.

The approval rate is.

In material, we focus more on the high quality customers, which bring more value to the business two matters together that makes our ticket side rather.

Relatively stable.

Okay Thomas.

Just add a couple more points there.

On the SME.

As John mentioned.

If you look it up.

Earnings release this quarter.

Credit line, the new credit line granted to SME is.

$4 9 billion.

And the actual long.

Facilitate our originate to SME is about seven 8 billion roughly.

To last quarter that loan volume was a little bit over 10 billion. So thats the numbers there, but just wanted to make sure.

When we talk about SME and we're talking about it rather.

Narrowly defined SME, so, meaning like if thats real SME as opposed to some of the.

Players talking about more broadly defined SME, so thats that makes a difference.

Secondly regarding the ticket size.

If you look at the for example average drawdown, we look at for Q2.

<unk> increased by roughly 5%.

Sequentially.

No. That's just added points to your <unk> comments.

When we pass through the Lockdown period, we actually see pretty.

Still see a pretty slow growth in terms of.

Ticket size in consumption.

Thank you.

Thank you.

Okay.

As a reminder, please press 014 questions.

Our next question is Alex <unk> from UBS.

Okay got you wanted to.

That is ongoing.

Great.

Hey, guys.

You too.

Joe.

Thailand Alexandra.

Alexandra Gen Ultra high power CW mode now.

And also other than summer.

John you got it.

I think just add to that yet.

Somehow advertiser number okay.

Okay.

You often see takeaway.

Zika.

So San Diego.

So my question is mainly on the take rate outlook.

And you mentioned that your average IRR during the quarter was 22.

The 23% and net debt to remain stable going forward.

You also mentioned you're putting cost is improving in Europe .

Performance is also stabilizing so I'm wondering.

If we could expect some months ago.

Okay.

<unk> are equivalent to y'all take rate going forward. Thank you.

Sure Alex.

Let me take your question here.

Europe generally youre right given that we have already reached the point in terms of the pricing go.

Based on the regulatory.

<unk> lines, so we don't see really too much pricing downward trend.

Going forward.

For the remainder of the year.

<unk>.

With that in.

The overall take rate.

I would say you probably will see a more stable take rate.

If anything there could be some improvement.

There by that.

Of course other factors you need to consider is the number one the macro environment.

And.

That will have a <unk>.

I would say more.

Uh huh.

More impact than usual, if we have a rather stable macro environment than all of the assumptions. We can assume it will be a stable to may.

Maybe modestly improved take rate.

But after some something unexpected.

I would expect to happen on the macro front then there will be another another question there.

From funding cost as I mentioned the sure.

Second quarter were six 8%.

And right now we're sitting at about six five so there's maybe still a little bit room to go in terms of the.

Lowering funding costs given the current money supply is pretty.

<unk>.

Pretty.

Available out there.

There may be some still some room to go but overall I would say from a modeling perspective, we are.

Conservatively yoga motto, a rather stable take rate.

If you want to add some to it modestly that's also fine.

Yeah.

Okay. Thank.

Thank you.

Thank you.

Our next question is Richard from Morgan Stanley .

Okay. Thank you.

Thank you Sanjay.

That's good you may what mentioned that.

Sure.

Oh, yes, yes, yes.

You can do what you had exiting <unk>.

So that would be the single economics again too.

Two questions one the $10 and I think that in general if I gave you that yet.

Then David.

Hi.

Okay.

Easier overlap.

Basically my question is on the competitive environment in China at the moment given.

360, <unk> is also aiming for a low risk.

Bars basically it's also some overlap with.

The.

Targeted customer by like and banks et cetera, So what's the competitive landscape at the moment.

Okay.

But I think.

Tony.

Solution that eliminating the degree this afternoon vigor.

And Vishal.

A whole lot count women.

<unk> had a bigger.

Humana will be implemented.

The global economic malaise.

<unk> can you can do the take overlap.

Horton.

No no.

Uh huh.

So he anti lingo students so good at that.

And are you kind of you guys.

As with adequate.

So and then getting them.

Does the DJ Jud unusual woman.

Cushing inventories in them.

And kind of hygiene.

Turning to other income.

Youtube <unk>.

Understood.

Uh huh.

Figure at <unk> Suisse.

Women now with.

With that.

And what you're actually going to go.

Thanks, John .

Hum.

Yes.

Yeah.

So just kind of get your enrollment.

Sure.

The book aluminum lithium.

Medicare for.

And put on a considerable room to do that.

And with that.

The antenna enabled too cute.

Q.

Gentlemen, I can look to see any change in the UK.

The when we didn't include 141 affiliate dividend timing can handle that 100 gig.

Hamlin and colonial claims usage, you did take Italian digital.

No.

<unk>.

With Olympic liquidity within the Chinese hanging in retention degree.

Thanks again.

Sure.

Yes rehan.

Right. After we did all our average product price the overlap of had in my head.

Like Bill mentioned at our bank.

And that includes a little bit however, we do not see that.

<unk> had to have competition with Ben there were a few arena number one the consumer loan market.

My guess is that a grand March with Martin layers going downhill banks, they have 10% price product and has 15% our price range as Willie discussed previously if we gained 22% to 23%.

Remember Q with different.

Different companies, Ken you're right and perhaps first.

Based on their unique competitive for example, and test that Jeff about their unique ecosystem.

We do not have any e-commerce pass through on E. Commerce ecosystem. Therefore, we can collaborate with all of the platform in the market.

Therefore, banco chunks of customer growth.

Yeah.

Does that continue.

Yeah.

Okay. Thank you.

Yeah.

And our next question is Hassan CLSA.

Hi, Dan.

Got you got anything you want to you winning Julien I would say I would say to answer.

Josh I'm not going to sit on the windshield.

Sure sure.

<unk> question, which I think it's empty.

Got it.

And then <unk> got this ongoing cooee.

Got it and are launching Sega.

Bumpy the highest with C U E.

Just you.

Hey, guys.

So it sounds like you.

Do you mean switching yet.

You should note you qualify that when one is would you guys sure. Thanks, Jason.

Sure Sean gentlemen, do you guys have I think what you'd see is that you guys have any.

Yes.

Judy Wayne Shaw woman that Joseph Tien delinquency.

So most of our T&D.

Thanks, Steve So let me translate so my question is more about ash quality.

Management, just mentioned that would be looking to the second half we can see improvement in overall risk indicator.

My question is more about how do we see the path of this improvement is it like a graduate bumpy one or like a notable options.

Regarding the Colgate.

On a fully ops recently in across many cities.

And also when do we expect the 90 day delinquent.

Delinquency ratio to peak, yes. That's my question. Thank you.

Constant rigor when in humans in the south of England idea.

Thank you.

Sure.

July this early in launch.

Let's see the counter.

So, yes, Elliot should outgrow this yet either.

The woman.

Yes.

I cant its initial guidance.

For a more syndicated pseudo women.

The Cook with chewy.

Troy.

She has in abundance.

Yes women Sam.

Got it.

Yes.

Womens retailer tendency.

Sean bathroom and kitchen related.

Miller Lite.

Some of the homeless.

Santa Isabel was $1 million since really the bottom line.

Danielle.

This has been a little down mostly lithium aqua.

Yes sure.

To cover the CBS .

CBA.

Coproduct via Melissa you sold off to Dave Mosley.

Thanks to an element that's pretty darn good.

Thanks, So much you did this year with an approval.

It is unclear.

Thank you.

And then Damian itchy.

Susan.

The clean Ccs upward and downward.

Cynthia.

This year too.

Hudson, Louisiana and.

The other tell you Chad Thank you again and congrats again.

Sure.

This is Doug <unk>.

As you achieve your entire some hypothesis shutdown then you got cheated.

Great.

Lewis.

Providing ECG women and men who cheat.

Just one last one.

We'll maintain that kind of coming out soon.

Buffalo Thunder.

Semi material disciplines.

Thanks, Joe.

I remember that one Sheila.

Yes.

And the students.

So to this day.

Jabil she's on the telco.

And so we'll.

Well Michelle can have Glenn.

Thanks Anatol cheap.

<unk> sorry.

It does include gentlemen, Jim I'm going to close in June and then <unk>.

<unk> will add equivalents batching Paul.

Turning to EMEA.

So that will put them on that ship.

But our team when they ship.

I will now.

Yeah Jamie.

Joseph churn did include into the streets.

<unk>.

And then secondly, hopefully.

So thats in development.

This is purely a bunch of donlin gold.

Alicia please so PD infinity to John Let's just Adele.

We also on <unk> is this is that if we sat down with.

Chen.

She is an FTE sensitive businesses that are leased.

EBIT.

Nonetheless.

Great.

Doug.

And Cheetah mobile short Thompson, Ohio woman.

Sensitive to see you too.

<unk>.

Thank you.

But the good thing.

<unk> lending with our clients' agenda.

Uh huh.

Well its own concept.

Okay. So our risk management team has been working with other teams co play to make several adjustments during the second quarter, firstly, improving the quantity of newly acquired customers with a comprehensive coverage of Rte and the integration of a model number.

Our robust quantity CAC and Murray has been doubled compared with the first quarter.

Secondly, improving the data mining from People's Bank of China call David.

We have set up a joint project team and design with 18000 effective November <unk>.

<unk> covering the optimization of several models.

Including competitive offer exploration high quality customers Evans vacation bad customers, Adam mutation carrier model income annualized LNG mode et cetera.

In the Meanwhile rate is that a customized way support quite a performance more cautious right.

Thirdly, we improve the resource allocation to high quality customers on the operation side.

Including pricing credit lines and promotion.

With these actions.

The performance of new transactions has been improved we have seen that the SPV 30 days Q2 dropped by about 20% comparing to first quarter.

Maintain a downward trend in July and August where.

Where the epidemic outbreak, which has been our ela risks, which truly demonstrates the resilience of our team and our assets.

Now the results of some action mentioned above there have not been fully reflected at some actions are in pilot testing, we need long term performance.

Therefore with fully adoptions of these actions we are very confident to maintain stable performance in the future.

As for 90 day delinquency rate it will be lower in the third quarter as well.

We focus more on 30 day delinquency rate. It has been the lowest in July and our future targets will be more than two 5% to 8%.

Hope this can clarify your question.

How does that shake.

Thank you Akshay.

And this is the end of our question and answer sections and now I hand back to management for conclusion.

Yes.

Okay. Thanks again for joining US conference call. If you have any additional question. Please feel free to contact us offline. Thank you.