Q2 2022 360 DigiTech Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to day 360 did your Pet's second quarter 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.

<unk> issued earlier today.

Oh Wow.

Right.

Joining me today Mr. Shang.

And Raptor.

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

Mr Jong in Yang our CFO .

Before we begin our prepared remarks I'd like to remind you of our safe Harbor statement.

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 for reconciliation between non-GAAP and the GAAP one.

Yeah.

Otherwise stated all figures mentioned are in RMB.

I'll now turn the call over to our CEO Mr. Sheng.

Oh, Jamie.

Regarding the monopoly element as you do that yet.

And due to women.

I know you'll have all the time.

One reason that our industry.

Each of them.

Goodbye.

Argued to accumulate.

It sounds like the food from.

<unk> profile.

Do you guys fit in pushing tons that you could do.

Yeah.

Women.

Good hand with units.

If you remember when you do that soon.

In the June quarter.

<unk>.

With that thank you.

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

In Q2.

No I was in Asia, and a placebo patient volume.

$98 3 billion.

11% Y O y.

Ending loan balance reached RMB 155 billion.

28% Y O y.

Despite.

Usually by the time macro environment with the Shanghai locked down and we still get.

Kobe in multiple cities we.

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

Jim I mean for 10 months and hits you won't get that until the fourth.

Jim on.

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

But it's in that.

So I wanted to do is doing wonderfully.

I mean, you guys didn't do that.

Okay. So it did one.

So Judy.

Got.

We don't buy that John .

Could you have done.

Jim could you just do the job.

There's a ton of hydrogen web.

They will be kind of three months.

John you can kind of tuition.

Goodbye.

Fortunately siobhan energies into Q4.

We can hedge into Cleveland, Jim So as you find that when Tom Jim Hygiene content and got <unk> 10 down by Genworth.

Yeah, Doug <unk>.

<unk> 37, and Theyre doing the window a bushel since you don't.

You are talking to some guy window Shadows go to Joe <unk>.

We believe that <unk> got so is equivalent to <unk>.

Hello, Jim.

Talking about conducting your conduct Julia codes within Sanofi that's oil.

On the regulatory front there are further debottleneck in rectification works platform economy.

Our retail megawatt hour meeting or 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 give up.

Normalized for BJ.

As the regulatory environment gradually stabilize.

We see clear our guidance.

On July 28.

N Ho 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.

As a follow up meeting by the POC other spirit, the central Bank with <unk>.

<unk> can't progress major platform rectification.

And neither will urge based companies to complete the whole rectification project.

Then on the revenue per region that a more transparent and predictable as.

As a result.

Promote the roll off the platform economy in job creation and boosting consumption.

And with your women Tiguan the bushel Carryout Youll, you mentioned I believe you need to.

Hudson vaccines.

Indiana Jones, Jim on woman change in June we will do the time now how this would you.

Got it.

<unk> Jones fine sand demand for liquid ball since your box ship with Jim on that issue to me that goes on.

And Jim why I didn't put it behind that.

Thank you.

We have completed most of the rectification work according to the regulatory requirement.

Now in the stage of Rattler data reporting.

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

Mantech close dialogue with that.

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

Sure.

Yeah.

Sean Johan.

I'll, let Glenn Johnson I'm, sorry, yes.

Are you putting on at that kind of year one is.

As of June four T cells.

So it's all of it.

Yeah.

Jeff either.

Our slogan.

And then Joe Hogan Syngenta bullshit.

But thanks again.

Good to see.

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

Some months ago.

Sure.

<unk> funds in the usual.

I need them.

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

Hugo can fellowship.

In July .

RSV published a notice on strengthening the management of Internet business of commercial bank and improving the quality and efficiency of financial services, mainly circular number 14.

Documents 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, Jim starting 2023.

In addition, the government once again acknowledge our collaborative business model between commercial van and the related party Internet lending business.

We have already implemented.

<unk> requirements outlined in the circular in our daily operations.

Sure sure.

It could do for each hotel.

Right.

You guys want to box will allow that sounded to me.

<unk> zero chunk women.

Where do things go down.

<unk> done it go there, but what we do.

Uh huh.

So Jim Thompson.

Uh huh.

Yes.

That's what the team does.

Could you since you've done the same.

You opened on 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.

Successfully executing our operational strategy and made great progress.

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

For England.

Steve.

Hello, Daniel.

Does it go.

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

Thank you gentlemen.

Yes.

The Parisian securities.

ABS debt.

Yes.

Good afternoon gentlemen.

Sure.

So you can be.

Arguably rifleman communicating that sometimes the Abi.

And somebody gives.

Back in June .

On the funding front, we further optimized our founding sector. During the quarter. We added 10 buoy joined Dawson and a major urban and rural commercial bank with over RMB, one trillion, AUM, which make our phone is applying more about it.

Thanks to improved funding supply and the resumption of insurance of ABS.

Our funding costs for a 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 been done.

For the year.

Thank you Jacob.

John .

Sitting duck.

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

On the product front we.

We continue to optimize product portfolio and the lower our average price based.

This marks our full compliance.

At 24% regulatory requirement.

And we'll go from there.

Sure.

Could you since you've done it.

From what you said.

Susan Telecom was actually the guidance.

Jimmy with a quote on a user could be more.

Could you answer than Youre seeing whether its own.

Well, it's England program in motion I just forgot.

So I'm curious either.

Sure.

Got it.

So luminaire Poland on icon.

Sure the user cohort is this woman they would do that.

So putting that critically important.

So so it didn't cope with Julia 70, QE and Gallup I E.

Tom Sawyer.

Just on that kind of.

So it's stuff that kind of.

When a user could you missed it out.

<unk> done enough.

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

Yes.

Quicker than more humid especially on the motion.

Being able to put that Youll. Just makes you live again wanted to get critical about women didn't forget about <unk>.

Sure.

Yes, that's a little bit.

Baidu pension cash out.

Yes.

That's a good Kinder Morgan.

But.

Yes.

<unk>.

Okay.

That's in Atlanta.

Ladies and.

And then you've got the bandwidth.

So let me simply leave it as it goes.

Hopefully that should be good.

The user catch them up now towards our down there. These are the gods of Egypt.

Yes.

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

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

The coverage ratio, our precise targeting arcane input 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 earthquake 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 Pipestone.

Yeah.

Our model.

In other areas, we optimize the cost efficiency.

Position by upgrading our <unk> talent and marketing platform.

But also connected two new user acquisition with doing that.

Such as Baidu App.

And the Tokyo RPI rate story.

Yeah. Thank you if I may.

How did you do in the each home solar credits with a total shutdown.

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

California and Thats for Daniel.

Central idea you would.

You bet.

Internet.

She was in Puntland Thats only game dossier should benefit help us what a shovel.

<unk> seen them so at Cedar.

Tom sure either.

I mean, we don't shut down they'll kill rather suddenly.

<unk>.

Sure.

SPD <unk>.

Bob Evans.

<unk>.

We shut it down.

Some of them the <unk> E <unk>.

<unk>.

Yes, that's true.

The team with the issue.

So you wanted to tell you.

Great.

Yes.

Chen with Honda.

I mean, we saw some stocking up on the passenger bhatia 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.

That 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.

<unk> five point to one 1% in March.

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

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

So <unk> yeah.

Hum.

The chart then on their behalf.

Susan this.

This one.

And the issuance of 800 schoolchildren.

Stefan when she go again.

<unk> is a well known which and that's something until it.

With the <unk>.

Thank you for him to build a team but gotcha.

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.

What should we consider spoke up on that.

Could you point to the town center.

The timing of that kind of the non QM pools I'm finally women.

Good evening, Thank you for your ship.

Go ahead Jim.

Excuse me it was 101.

And from there.

When you go from them.

And then one woman argued.

Simple yet.

<unk> you want to hurt DSI.

So can you comment on what you're doing what you do.

Maggie.

For which year punctually Boucher.

Yeah.

Women.

And Tim Glenn in your particular should either because.

In terms of upgrading strategy we.

We may enhance that.

Five 7% of the loans originated and flip the page 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 <unk>.

Kevin of inflammation in the communications have knowledge, namely.

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

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

You too.

Wanted to talk about.

Kevin do Villa <unk> from sources here.

Vincent go ahead.

Three other EU hotel with Jabil.

So I'm on tangible.

<unk> had a one on one.

Yes. Please.

Turning to women's <unk> gone to a dollar.

Cuban agenda on your scenarios for your fund.

Yes impact.

When we're done with tissue, Jason when J D I misheard it.

Could you <unk>.

<unk>, new curtains decker with at the end of January .

In Q2.

<unk> gave it to the extreme pandemic situation.

If you wait locked down and other multiple macro fluctuation with strong operational and financial results looking.

Looking ahead into Q3.

We'll stay vigilant on the macro economy environment, and the pandemic tobacco mint.

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 rib deprecation.

CLS and permanent CFO , Alex did elect in northern Germany.

Okay.

Thank you everyone. Thank you John good morning.

Yes.

Welcome to our second quarter earnings call.

As has been discussed we delivered another solid quarter.

Rather challenging period of time from macro economic perspective.

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

Since the 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 soft macro environment, we continue to push for a steady improvement in overall asset quality throughout the quarter and the year.

This 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 .

<unk>, Inc. 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 will recover.

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 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.

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 actually improved modestly versus Q1 also due to longer long 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 light loan facilitation.

<unk> and other technology solutions combined account for roughly 56% of the total loan volume given.

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 were roughly in line with the increase in the average size of the new credit lines as such the average cost per dollar amount.

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 in 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 <unk> times in Q2 compared to $4 eight.

A year ago.

We expect to see rather stable leverage ratio for the time being until capital light 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 $7 billion in Q2 versus $6 2 billion in kilowatts.

As always a significant portion of our cash will normally be allocated to support the security deposits 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 out of our business.

West 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.

Our 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 risks.

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 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 to.

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

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 Kelly if you have more questions. So once again.

Zero one for questions.

First question is yes.

The ICC.

Please go ahead.

Oh go ahead go ahead to go with it.

When you go through the year, though the whole genome.

So you kind of tell them quite plentiful.

To ensure women, it's usually a kind of a downturn graduating into 'twenty alcohol, each you'll know kind of which for the consumer.

Sure.

We have to kind of prevent some dealing with you both sundar you'd only be Mcgalley hotel, we had come out.

Hong Kong yields will come down given kind of the total amount you really called young cannot.

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

Visual function.

Are you competing with them.

Thank you Willa Hollywood Digital 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 cordless will flex a little bit.

What are we dealing with it with <unk>.

To cope with that.

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 providers all of that.

Naturally institutions generally it has are.

Quanta understood and pressure such as the increase the customer thoroughly prepayments the customer acquisition challenges after the pricing adjustment. So I was wondering in the context of these uncertainties.

Any changes.

The names of our bank partners operated 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 they were worse than third and challenges with our plans and how are we going to overcome it.

Thanks management.

Yeah.

Looking out the window.

Okay.

Sure.

And do you know when you go from here.

In that.

Familiar with Ww.

Yeah.

Well look I know that you wanted to.

Youll see Goldman.

Peter Leys incident.

Ali.

And what you're doing in Dutch operation Desert, sometimes a little delayed.

From a government entity that you go to.

Sure.

The relationship.

Incident.

Sure.

Hey, Jim.

Youll regions continue to be two.

Humans allergy too.

<unk> John .

<unk> opened in English and looking at.

And if you go down to that determination.

Chip.

<unk> done them.

Just had a shutdown.

Yeah.

Thomas.

In Q into components.

Steve I cannot indicate using that kind of reducing the teradata team body issue in terms of the settlement Condor.

Does it for me good single appointment.

Copel <unk>.

It would have been with me now.

Issue.

In China.

Change it would be.

Do you mean by Debbie from that element that car for medallion.

What you can see the future.

I won't put a typical year for each musician XOMA.

Yes.

No.

The Q1 until about <unk> bitumen.

Two months.

Ganesh.

Development in the Eagle Ford Credit's into premium fatigue mental easier to get through.

And that you can give with Dr. Joe Sullivan and conduct.

And that you can meet them.

And so I don't want to do Timna.

So we know what we then conducted them.

I'm going to go.

It.

But some of it is integrated.

Generally found within Egypt.

Yes.

I will answer your question yes.

Your observation is correct.

Due to the impact of macro economy financial infusion.

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

Our consumer loan business remember too.

Financial institutions pressure from other asset classes actually <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 that.

Trending down our funding costs further.

Well second question as Florida kept in our acquisition activity.

Due to the lockdown of pandemic.

Offline activity.

Our customer drawdown activity is to some extent negatively impacted.

Thanks to our.

A series of countermeasures that Lee applying more precise path customized targeting that's the.

The drawdown activity.

At <unk>.

We have done a lot work in Q2.

To see the work bearing fruit in Q3.

Okay.

Now that women newco.

Another one here.

Although you don't see them contributing from what would have been made with you how to enter your oxygen.

Okay.

Okay questions Thomas Chong from Jefferies.

While it is all about.

Glen.

We don't guarantee.

One woman.

Yes.

I wanted to talk a couple of quick ones.

Sure Dmitry.

Linda it's empty.

Oh Boy you got to understand that.

Yes.

Nick.

So I apologize.

Yes.

It's always say it sounds like the southeast up on London.

Sure.

I still believe.

<unk>.

So hopefully that.

Finally in there.

Typically.

Yes.

Hi, Brad.

I sure will play.

Okay.

Thanks management for taking my questions.

My first question is about our SMA 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 board is.

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 SME.

Women.

Thank you Dan.

It's a good question.

And the children.

And in the each individual funds, what the showa Tinian to whom we can count.

The phenomenon.

You don't until the other.

<unk>.

Lisa.

So when we kind of on the Wilmington.

Sure.

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

Arguably Nancy Jim Fowler.

In yogurt.

Sure.

Kind of given that you're going to do it I got you.

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

Then for me.

Charles what do you think upon these women.

Yes.

100 <unk>.

Different bundles it already.

Good.

W time beholden theme.

Yeah.

How do you do now.

<unk> hundred antibody thankfully tankage in Guinea, EBIT, you can tell them.

The woman Peyton good very good.

Okay.

You can see it's an entitlement.

<unk>.

Yes, Rick.

According to new business naturally.

I think Lynn 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 Britain in SME business in Q2 peak.

<unk>.

This is number one for the second point is for that type of market decent channel or channels that we have less control.

Go back to volume and <unk>.

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

Navigation.

When we.

Which obviously has a negative effect.

Women just to kind of pool.

Integration average insured value.

During this year's worth of a shutdown.

From a guidance counselor.

Okay.

And will the Macondo.

When they tell them that kind of almost always Institute Hugo.

<unk> Glazer bigger social.

Tissue.

<unk>.

Could you.

As you know that <unk> had for years.

The shutdown of charge offs.

That can do this analysis that.

<unk> believes its mission.

One of the things that you guys have seen anti seizure, but two quick impact financials. It doesn't go through transition that women can use into your account.

New fashion.

Sure.

You could demonstration.

Yes Thomas.

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

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

Lee.

We tightened our credit standards.

The approval rate is lower than mature, we focus more on the high quality customers, which bring more value to the business to measure scab 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 at us.

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.

Compared to last quarter that longwall in what's a little bit over 10 billion. So thats the numbers there.

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.

Post 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 not slow growth in terms of the.

Ticket size and 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.

John when you take the take rate.

Got it.

Q2 being down.

That's all it all have a sense of Jim.

Possibly the Piedmont.

Yes, and also up a bit.

In the South Jamba.

Thank you.

Yes.

Tyson.

Okay.

Great.

Women sake.

So you feel good.

So San Diego.

So my question is mainly on the take rate outlook.

And you mentioned that your average <unk> during the quarter was $22.

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

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

Performance is also stabilizing so I'm wondering.

If we could expect some months ago.

Okay.

<unk> are 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 pricing go.

Based on the regulatory.

Guidelines, so we don't see really too much pricing downward trend.

Going forward for the remainder of the year.

With that.

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.

Uh huh.

More impact than usual, if we have a rather stable macro environment than all the assumptions.

I assume it will be a stable to may.

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 you.

Our next question is Richard from Morgan Stanley .

Okay.

Moving on.

That's helpful. Jim.

Great.

And that will be.

Sure.

Thank you Emma.

Now you can do with you had exiting <unk>.

So that would be the simple economics.

Two questions one the time because in general by the way.

Then David.

Hi, John .

These are my comments.

Okay.

These year over that.

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.

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 whole account women.

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It has more than 20 economic.

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So he didn't have to give students who would have that.

Although yugo.

You guys just with adequate.

And then Tim.

So getting them.

This is DJ Jud unusual woman.

It.

Cushing inventories have them with me.

And Tenda has softened.

Turning to other income.

Youtube revenues.

The global industry leader.

No no.

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Women with.

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Thanks, John .

Hmm.

And then could you.

Yosef into them.

And just sort of disaggregate your enrollment.

Sure.

The quick aluminum lithium.

Medicare for.

And put on the consumables.

You might even look at it with that.

<unk> enable to do it.

Gentlemen, I can do to see any change.

For the year. When we didn't include onetime equivalent affiliate that they can kind of connect those dots.

And then the bigger picture.

Alright, im going back into the clinic.

101, an email again.

With Olympic liquidity within the Chinese and English.

We tend to be good.

We ended the game.

Yes.

Yes, Richard.

Right.

<unk> average product price the overlap of target biotech with other guys like Joe mentioned at all Dan.

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 market is that our brands market with multi layered downhill banks, they have 10% price for that.

And 15% our price range as we discussed previously it retain 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 all of the platform and the Montana that cover the full spectrum of.

Customer growth.

Going back to kind of the new Britannia.

Okay. Thank you.

And our next question is Hassan.

NSA.

That's the only thing I would say, let's say to Hans.

Sounds congestion going its attention on the way.

She's Gonna go ahead, Jim Shaw, one, which encana shiny I'll close with saying it's empty frankly.

Got it got it.

Number one and then <unk> got this ongoing cooee.

Launching <unk>.

Amanda bumpy the highest we'll see you guys Hey, Joe just mentioned.

Hey, guys.

So it sounds like you.

You may begin.

So how should you always hear you should know by now on wireless switches that should eventually assume minimal space.

Do you guys have anything you would see you say you guys have any good.

Judy you Wayne Shaw woman that Joseph Tien delinquency.

Okay. So most of AT&T.

So you guys are with <unk>. 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.

Especially regarding the Colgate.

Firstly ops 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 assume anything thats out of Europe and Asia.

Hi, Doug.

Turning to <unk>.

Next slide this early in launch.

Let's see the culture.

So yes Elliot.

No.

The woman.

Yes.

In its initial guidance.

For a more synergy together so the element so yes.

The Cook with chewy.

She said she is one of them.

Yes women.

Sandburg Huntington talked about Asia did you want to leave elements within a single suite.

Samsung kitchen similar assemblage.

Some of the homeless.

$101 million since relate and following the sale of the P&L.

So if you go down mostly lithium.

Sure Tim.

We can offer those yields.

You want to cover the CBS CBS .

<unk>.

Total debt via Melissa you sold off to Dave Mosley.

So no women thankfully again conducting.

Conducting so much you did that this year with an approval.

Is on climate.

Yes women than men.

Itchy chips recently used to cope with it each year.

Two follow ups.

With that the end user.

Sure.

Does this year.

So hopefully you will see on the Internet.

Thank you again and congrats again.

Well my current dose with Shaw business.

Essentially when Dr. <unk> <unk>.

Sure.

GBS entire some thoughts and sat down and you got shifted.

All right.

And Luckily Lewis with <unk>.

Ravi the ECG monitoring all women.

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Tom.

We'll maintain that this kind of <unk>.

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Lindsay.

Suddenly disappear.

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Different choices.

Michelle.

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This is Don this is Damon that Jim I'm going to close in June and then the fifth.

Since initiating the leather goods into watching the whole thing.

EMEA <unk>.

Fortunately since that will add to it.

Yes, I'm on that she does.

But our team when they check out.

That's where we are now underway.

Yes.

Jimmy Chin did increase into the future.

<unk>.

And then secondly, hopefully.

So thats in development.

This is clearly a bunch of ability.

Thank you.

Newspaper PD initiative.

Al.

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

She is an FTE sensitivity, it's actually that on at least the GDP.

<unk> EBIT.

No.

No.

Great.

Ill now turn to the Google search social element.

Since it is simply too.

So the CBA today women women. She didn't do you agree with that.

Thank you.

We will know quite that good.

But there's no doubt.

<unk> lending with authentic agenda you guys.

John comes up on my side.

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

Duration of the Cree a model the number of our robust quality customers 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 derived 18000.

Nevertheless, the quieter this morning, covering the optimization of several models.

Including competitive offer exploration high quality customers advanced application lab customers add amplification career model income annualized LG <unk> has shrunk.

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 operation side, including pricing clarity line and promotion.

With these actions.

<unk> performance with new transactions has been improved we have seen that the SPD 30 days Q2 dropped by about 20% compared to the first quarter.

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

Where the epidemic outbreak, we have lowered 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.

Okay got you.

Okay.

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

Yeah.

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

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.

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 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 then Mr. Don Yang our CFO .

Before we begin our prepared remarks I'd like to remind you of our safe Harbor statement.

Our earnings press release, which also applies to this call may refer to forward looking statements based on our current plan activate and projection.

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.

Yeah.

Otherwise stated all figures mentioned are in RMB.

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

Okay.

Oh, Jamie.

Regarding the monopoly helman as you do that yet.

In general women to her.

I know you'll have all the time.

Within that our industry.

Sure.

Goodbye.

Argued to say give me that.

It sounds like the food home.

Toward <unk> ballpark.

So you're pushing company EBIT.

Yeah.

Good morning.

And then she got a good hand with units.

In December we did see the movement in the predefined June quarterly information in the coming.

<unk> that's another issue.

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

In Q2 total loan originations and the associated patient volume.

RMB 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 kobe in multiple cities.

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

Yeah.

So is there any one Jim on the 10 month I mean, then hits you won't get that till the fourth.

Jim on.

So how are you doing with Tim has indeed, Don Hinson dive into it.

But the agenda.

So I wanted to integrate doing wonderfully.

Downing.

Got it.

Okay. So it did one.

To Judy on that again.

So we don't find that John .

Could you gentlemen.

We can conduct could succeed.

There's tons of hydrogen web.

They want to kind of streamline switch.

And when I'm done you can get a tuition.

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

So what's happened in adjacent or you mean Q4.

Travelling companions equivalent Gen. Com. So you can find that one Tom Jim has indeed going into and got paid compacting. This has turned out by Genworth.

Yeah, Doug Hi, Arnie Stuthman Niccolo de.

And that when they are going to seek in Portugal since you don't.

The banking team has yet.

Shadow grocery shop.

The teams with a total chimpanzee at London, specifically.

This is equivalent to <unk> <unk>.

And probably an option that you conduct your ear hurts within Shelby that's oil.

On the regulatory Frac Nora further debottleneck in rectification work caf forming columns.

Recent regulatory meetings at all okay.

Our seasonal net of risk for this region and the insight.

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

Normalized for BJ.

As the regulatory environment gradually stabilize we see clearer guidance.

On July 28, the central part of the pickup Bureau of Docomo related party in China.

Economic priority for the second half of the year.

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

Clearly the rectification work and the comeback Batchelor Super region.

Follow up median by the PV LLC.

The Central Bank with Martin <unk> progress major a catwalk rectification.

And neither will urge based companies to complete the whole rectification program placed them and our revenue per region that a more transparent and predictable as.

As a result.

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

Okay.

With your women Tiguan, the bushel or you also you mentioned.

I believe you that with Hudson that resort.

John and Jim on woman change in due time.

Now how much would you.

Thank goodness.

For me Young Jones fine sand demand for liquid bulk Cynthia Belak ship question why that's just seems to me that goes on.

You don't mind, I'll generalize them credit bonds that we're more tweaking.

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

Regarding credit agents do a four line Julien we have already submitted our execution plan to regulatory and Mantech.

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 Evan.

Sean Johan.

Shanghai that Glen Johnson, I'm, sorry, you're saying.

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

And you'll see this as a holiday.

Yeah.

Jeff either.

Our solid.

Joe Hogan Syngenta about Sheila.

Potentially yes.

As a courtesy.

So you guys can do that.

What do you want that one.

And you can once you go because whether youll Moshe.

Hum in the usual.

Hum.

So it doesn't make a year, we should hold from the intelligence that you've got one solution.

In July the CVI RSV published a notice on designees of management, our Internet business of commercial bank and improving the quality and efficiency of financial sorry, mainly circular number 14.

Documents is consistent with earlier guidance, including cellular 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 government once again acknowledging the collaborative business model between commercial bank and the related party Internet lending business.

We have already implemented the staffing requirements outlined in the circular in our daily operations.

Already to consumers.

And you could go into each one.

<unk>.

But knowing that you guys want to box will allow for that kind of thing.

<unk> will then go down.

<unk> done it.

Hey, Jim.

Yeah.

So I didn't want to attempt.

Hey, guys.

Yes.

What's what the tinder.

Could you since you've done this yet.

Are you open on holiday.

In Q2.

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

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.

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

Zimbra woman.

Woman.

Youll follow seem to look like.

If you go there.

Hugo.

Thank you Sue Cheung who visit.

Glenn has been what you send that tying that to move down.

Hey, guys.

And the other commute.

There is within the policing specialties, the human ABS debt.

I'm not good as the incumbent.

Thank you.

I'm being shut down.

So <unk>.

Or do you like women.

Yes.

Can you.

TJ back in June .

And finally, we further optimized our founding sector during the quarter. We added 10 buoy joint stock Bank and a major urban and rural commercial bank with over RMB, one trillion, AUR, which make our founding supply more around it.

Thanks to improved funding supply and the resumption of insurance of ABS.

Our finding costs for a credit driven loan decreased by 21 basis points.

Racial basis. Thanks.

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 been done.

<unk> for the year.

From a net hunton Jacob John .

Sandy I'm sitting down.

Jimmy ones from a Gen. One do you think that it'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.

Linda could you since you've done that.

Towards the settlement.

Similarly total moisture.

Got you.

Keeping with our core yields a cushion of Greenwood <unk> anything whether its own.

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Sure Jason.

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Tom on the searches on that can you just.

So it's stuff that kind of.

On the user clicks and nurture them.

<unk> diagnostics.

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

Yes.

Corporate led motion that especially on the motion.

Dean.

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Live again wanted to get critical that women can forget about it.

Yeah.

Yes, that's a little about baidu.

Baidu patient death.

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The Kinder Morgan.

One of them has already hit the <unk>.

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Ladies and.

These are the boudoir.

Hello, My Indonesia.

Hopefully that should be good.

Okay.

The user catch them up now towards.

<unk> hit the observation to it.

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 channel the number of 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 model.

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

Acquisition by upgrading our talent and marketing platform.

We also connected two new user acquisition resources, such as Baidu open swing at the Tokyo RPI rate story.

And so when they are thinking about that.

How did you do a woman in the each home solar credits with a total shutdown.

Although of course, EOG, the shinko combo with <unk> Gulf wind units.

Central idea you would see him taking.

<unk> net.

You bet.

On the Internet.

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<unk> syndrome, so at Cedar.

Tom sure either.

And we don't shut down they'll kill other understanding any.

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SPD.

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We shut down some time you are in the passenger E <unk>.

Yes sure sure.

Yeah.

Jim would you issue.

They wanted to.

Great.

Yeah.

Chen with Honda.

So to.

Starting with the passenger bhatia with you or your question Doug.

And the advantage of <unk>.

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

<unk> acquiring higher quality customers and gradually cutting at high risk for users.

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

As a result.

Performance of our new loan origination was great.

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

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.

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

The Overwore am one collateral rate of current loan book trended up to 86, 9% in June compared to five 2% in March.

So <unk> yeah.

Hence you see that the total job.

On their behalf.

Susan I misheard that.

This one.

And the issuance of 300 to each other.

Stefan when see go again.

<unk> is a well known <unk> from hotel there.

With the seven units issued to them.

Thank you for him to build a team well ghansham.

Despite the impact of the pandemic.

Overall, our asset quality improved in Q2, if batteries for new loan origination.

This reflected is that permanent.

Last night, we made and our ability to counter the pandemic related challenges.

If macro circumstances, they know right.

Rest of 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 with them yet.

How do you do.

This year.

Tissue picking up I wonder.

Kita spoke up on that.

Could you point to that uncertainty.

Well then they non QM Bollywood Lynn.

Accordingly, the cheater Youll ship.

I Gotcha, England I wasn't there.

101, smoking Quant fund that way when you go from them.

And then one woman argued luciana is simple yet.

<unk> heard DSI.

So Q2 and onward.

Don My design.

Cobra here Tuesday Boucher.

The woman.

And Tim Glenn here.

Either you guys incur.

In terms of upgrading strategy.

We may incur that.

Five 7% of the loans 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 <unk>.

Kevin or information on the communications have knowledge, namely ICT.

ICT branded among the first batch of companies under the business security initiatives, namely.

Together industry giant, including China, mobile and girl Baidu and essential.

Charles the man hour capability and business security management and technology.

And then maybe in the two to.

Linda toward that.

In the human boiler issue from sources here.

Vincent Andrews question, three other EU hotel, which bill.

Some of them in San Diego Women's Omnichannel bundle.

Yes.

Women's engine until dollar.

Q1 tends upon your scenario, where you find the highest impact.

When we're done with tissue, Jason when JD unnecessarily.

Your line is on cookies.

No one could then therefore with at the end of January .

In Q2, we navigate through the extreme pandemic circulation update you white 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 increase 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.

BJ.

Okay. Thank.

Thank you everyone. Thank you John good morning.

Welcome to our second quarter earnings call.

As Jim discussed we delivered another solid quarter in there.

The 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 consumer confidence and altered consumption pattern for many.

Since the lockdown removed in June .

Zero to 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.

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.

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

Particularly they 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.

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

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

As of 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 risk metrics continue to support our current user acquisition strategy, which 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.

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 long tenure.

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 <unk> facilitated further dropped to between 22%, 23% well within that 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.

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

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 macro uncertainty and Covid were still apparent on old 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 capitalized model, our leverage ratio, which is defined as risk bearing loan balance divided by shareholders equity was at a historical low of four <unk> times in Q2 compared to $4 eight.

A year ago.

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

<unk> become a bigger portion of the business in the future.

We generate $1 1 billion in 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 reopen in late Q2 some of the.

Business and administrative procedures within the financial system was 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.

Non restricted cash was approximately $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 of our business to invest in key technologies and to satisfy potential regulatory requirement and to return to our shareholders.

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

Her avs for Q2 the.

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.

And therefore, we want to maintain a prudent approach to plan, our business and mitigate potential risks.

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.

Form 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 print 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.

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 014 questions.

First question is yes.

Lee CIC. Please go ahead.

Critical to go with your gut.

And as you will see a clinical study.

We'll go.

To go into town.

And with Delta to ensure women's usually kind of downturn as you look one thing between eastern Oklahoma, which shouldn't assume high yield generally competing.

When we actually kind of a program continuing to go.

I'll leave you Mcgalley wholesale connecting Hong Kong Claudio to come down given that the total amount you really cannot do that if you go back a year how would you move further to go quicker.

Visual function.

Charles Duncan.

Johan <unk> pharma greenhorn, but alcohol.

<unk> <unk> <unk>.

The future digital formats Triple approximately if you will.

First of all with you.

<unk> General Mr.

To cope with it.

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

Naturally institutions generally has.

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

Any changes.

The names of our bank partners to operate 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.

We are continuing to grow.

It will be in that vigor.

Failure with handling those evaluations.

Yeah.

So when we kind of like two months.

In terms of yield.

Goldman.

Peter regiments.

Ali in Jordan, which Utonian Dutch operation Desert I'm trying to do.

Hum.

So malone went into that.

The mutual fund.

Congratulations.

Hmm.

Two weeks ago.

Inventory.

Uhm.

Youll regions continued to degrade.

Two months out you do.

Issuing due to embedded John .

<unk> opened in English and looking at.

Canada.

That's it.

Michelle.

Yes.

Chip.

In the interim agenda.

Yes.

Eager and Shanghai.

Thomas.

To ensure higher into 2007.

<unk> you cannot advocate chooses.

Refusing to routinely issue in terms of the settlement Condor.

Sure.

Surgeons, who need a single moment.

Luca cohort.

<unk> <unk>.

It will be with me in Cana.

Sure.

In China.

<unk> change with the <unk>.

<unk> you.

You mean Punjabi from that element.

The medallion values kind of mirror, what you can see each of the future.

For the second year.

Sure.

We cannot.

Yes.

No.

Mr Kurian, Solodyn and <unk>.

China and India.

And then they go home continuing to train them to mental Asia II.

Hum.

Selman <unk>.

Gentlemen.

So we know them.

And then kind of algorithm.

A minute ago.

So EUR procurement mitigated to a user simply.

Typically found within Asia.

Yes.

I will answer your question.

Your observation is correct.

Due to the impact of macro economy financial institution.

And there are some pressures however, thanks to our number one accumulator Inc.

In the market.

Our consumer loan business in Brazil.

Financial institutions pressures from other asset classes actually in Chile, our high quality consumer loan is.

He is in high demand.

From a financial institution that is.

Exactly.

The drop in funding cost that we already stack.

In July and August we are seeing that change.

Trending down our funding cost.

Yes.

Second question is Florida.

In addition activity.

Due to the lockdown of pandemic.

Client activity.

Our customer drawdown activity is to some extent of the impact.

Thanks to our.

Series of counter measure it that way.

Applying more precise path customized targeting that.

The drawdown activity.

At <unk> we.

Have done a lot work in Q2.

Just asking to see direct bearing fruit in Q3.

Okay.

Okay.

Neither Omar.

With annual LNG.

Although they don't seem to be contributing from where would you be met with you how the antioxidant.

Okay.

Our next question Tom.

Thomas Chong from Jefferies.

Well it does all of that.

We don't have Golden Eagle as one woman.

Yes, Amanda I wanted to talk a little bit.

One what your damages.

Linda SMT.

Oh Boy you got to understand that.

Yes.

So so offline.

Yes.

It's always there.

There is a bottleneck.

Goldman issue.

I still believe.

Nick.

Celebrated.

Two if I may and then.

Typically.

<unk>.

Yes.

Hi, Brad.

Our realized oil play.

Okay.

Thanks management for taking my questions.

My first question is about our SMA strategies.

Given the current macro backdrop.

Scaled back the pace of our SMB 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 ball is.

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

Santa Monica.

Okay.

Sure.

Do you guys acquire Musica SME.

A woman.

You think you can take a question tangela.

And the children.

And in the east and the two funds, what the silver Tinian to whom we can count.

And women balance sheet until the other day.

Sure.

Lisa.

We cannot know enrollment entity.

Uh huh.

On the digital related Julia.

Nancy Jim Fowler.

In yogurt.

Sure.

Kind of given that <unk> activity with our yogurt.

<unk>.

So to them.

And then <unk>.

Surely the foundries in women.

<unk> hundred <unk>.

100 <unk>.

I can tell you.

100, <unk> three inhibitor.

<unk> thousand 990, <unk> legal banking and Guinea EBIT, you can tell them taper enrolment Peyton good rigor.

You can see.

The internet headwinds.

Steve.

Yes regarding SME business.

Actually this is more metering called down our cost in my own business.

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

Yes.

For this business as you can see the total loan origination for the segmentation in the SME business in Q2 peak.

This is number one for the second point is for that type of market decent channel or external channels that we have less control leads to go after volume.

More focus on our direct sales team of Mike.

Navigation.

Doug.

Which obviously has a negative effect.

Women just to kind of assume pool.

Reservation to Val <unk> shutdown has resulted I E.

<unk> okay.

And then Canada.

<unk> thousand 900, <unk> Metrology Institute vigor.

To kick a little Asia bigger social.

Sure <unk>.

Could you.

Looking now on the <unk> solar.

Saldana charger.

That can do this in a moment.

Duncan and the Utica could be eager to lead the decision Utica unifying the ticket sizes and transition Paducah, Kentucky Financers doesn't go through transition enrollment engines into your account.

<unk> has a need.

Now that you've got demonstration.

Yes Thomas.

Innovation that the customer consumption the LLS jobs due to the impact of pandemic is correct.

We believe the ICL counter measure it number one.

<unk>.

Lee.

We tightened our credit standards.

Okay.

The approval rate is lower.

Immaterial, we focus more on the high quality customers, which bring more value to the business to measure scan that makes our ticket size rather.

Relatively stable.

Okay Thomas.

Just add a couple more points there one is on the SME.

As John mentioned.

If you look at our.

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.

Third to last quarter that longwall and was it a little bit over $10 billion. So that 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.

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.

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.

Thank you John .

Great Okay.

Element.

Thanks, Joe.

That's all of the oil sands agenda, how do you weigh policy document.

And also on the demand side.

Got you.

Ill just add to that.

Yes.

Somehow the Titan can you.

You see often take a zika.

Sam.

San Diego.

So my question is mainly on the take rate outlook.

And you mentioned that your average <unk> during the quarter was 22.

2% to 23% and net debt to remain stable going forward.

You also mentioned your funding cost is improving in Europe .

Performance is also stabilizing so I'm wondering.

If we could expect some months ago.

Okay.

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

Sure Alex.

Let me take your question here.

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

Based on the regulatory.

Guidelines, so we don't see really too much pricing downward trend.

Going forward.

For the remainder of the year.

And.

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 macro environment.

And.

That will have a <unk>.

I'd say more.

More.

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

Maybe modestly improved take rate.

But after some something unexpected.

Unexpected happening on the macro front, then there'll be another another question there.

From funding cost as Hudson mentioned mature.

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.

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.

Thank you.

Our next question is Richard from Morgan Stanley .

Okay.

Thank you Jim.

Maybe can that maybe.

Yes sure.

Okay.

Okay.

Are you going to what you're kind of hitting highlighted attempting to <unk>.

That'd be good.

Okay.

It seems like Hell on the $10 and I think that in general binding because again.

A 10 day rates you'd have to take.

Hi, John .

Hello.

Okay.

<unk> overlap.

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

<unk> is also aiming for a low risk.

Those 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 navigator.

So move.

And then it will limit the degree this acumen vigor.

The decision to hold our councilman in.

<unk> had a bigger.

And when that will be implemented.

The two together like Continental Luca quick.

<unk> you can do the degree of overlap.

And Holden.

No no.

Hum.

So again, I think a sense of what of that.

And are you kind of you guys here.

With adequate.

So and then.

So getting them.

Because <unk> got an unusual woman.

Cushing to have them with me.

Encana has.

Okay.

And indeed other income.

<unk>.

Understood.

Uh huh.

Figure 12 milligram once the monumental in quick lube Andrea.

Good for you.

Women now with.

With that scenario should it occur.

Thanks, John .

It's really the unknown.

Hum.

Could you use.

The usual things from them.

And just sort of disaggregate the enrollment issues.

The book aluminum lithium and towards Medicare for.

And put on the considerable room to do that.

And with that Tim.

In April .

Sure.

Women are going to see with in Chengdu.

<unk> when we didn't include one we won a further dividend timing can handle that and do 100 gigabit network.

Alright.

Please do take a tiny little bit.

101, an email again.

With significant liquidity with Lufthansa is sending a retention degree.

Hugo.

Yes.

Yes.

Right. After we did all our average product price the overlap of had in my head as a guy like no mention at all bank.

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

That had to have competition with Dan and Ralph you Arena number one the consumer loan.

Is that a brand loyalty 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%.

And thank you with different.

Different companies, Ken you're right and the prospect.

Based on their unique and patent 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 and have therefore, banco chunks of customer growth.

Does that mean.

Okay. Thank you.

And our next question is Hassan.

CLSA.

Okay.

Yes.

Got you got anything you want to take a few minutes.

I would say I would say it.

I was hoping you ashok going its attention on the way.

Could you kind of go ahead, Jim Shaw, when I'm with Shanghai, and shiny, creating uncertainty for me to answer got it got it.

And then Scott is ongoing.

<unk> see.

<unk>.

Amanda bumpy the highest velocity you guys, Hey, Joe just mentioned.

Hey, guys.

So it sounds like you.

You may begin.

Hi, Phil.

You should note you can find it online as we do that.

Gentlemen, do you guys I know you would see is that you guys have any TGF.

Wait a minute Joe so Ken delinquency.

So most of our T&D.

Thank you Steve.

Let me translate so my question is more about asset quality.

Management, just mentioned that would be looking to the second half, we're going to 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.

Especially regarding the Covid.

Fully apps 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 assume in <unk> Asia.

Hi, Doug.

I'll now turn to <unk>.

Sure.

Thanks, Jeff.

Okay.

Seamus Elliot.

Yes.

The woman.

Yes.

I cant its initial guidance.

For a more synergy together so the element.

Also the Cook with chewy.

She said she is not bad news.

Yes women got Sam.

Hunter This is Bob on Acs elite women's retailer shingles.

Samsung kitchen related.

Miller.

Some of the homeless.

Standby and then $100 million since related.

Yes.

This has been a slightly little down mostly lithium aqua.

<unk> of it is yes sure.

To cover our CBS CBS .

<unk>.

Total debt via Moshe you sold off to Dave Mosley.

Vincent element, that's pretty darn good.

Thanks, So much you did this year with a cool.

And that is on climate.

Yeah those are women.

She too soon for us to cope with the P&C here.

<unk>.

Absolutely.

Since it does this year.

200 <unk>.

Thank you again and congrats again.

We're making sure that actually essentially again, so choice second that loss ratio.

To achieve yields entire some hypothesis sat down there you got shifted.

Right.

Well normally low issuance.

Nevada, the ECT women.

And then <unk>.

At this moment.

Women team, that's just kind of coming out soon.

Buffalo Thunder.

Some of them.

Thanks, Joe.

Thanks, Amit.

Yes.

Excluding Switzerland.

So to this day.

<unk> on the charter.

With interest as well.

Michelle.

Thanks Anatol cheat.

E <unk>.

This is Don this is Damon that Domino question, Joe will then <unk> the rollout of Goldman to watching the whole.

EMEA Kishore.

Shortly I will update us on that.

But as you guys.

I will now.

Yes, Jimmy Chin.

David.

No.

And then secondly.

So that's in development.

So this is Alan.

Hi, Suzanne Thank you Alicia safely so PD infinity to down, let's just say it's Adele.

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

Sure.

She is an FTE sensitive businesses that I'll, let Lisa <unk> EBIT.

Nonetheless.

Great.

Okay.

And Chi the Google search function, Ohio woman.

<unk> to see you too.

<unk> women women.

Yes.

We will now play but the good.

I think I'm going to go.

In London with authentic agenda.

Hi.

John comes with Amazon.

Okay. So our risk management team has been working on that.

Teams globally to make several adjustments in the second quarter.

Lastly, improving the quantity of newly acquired customers with a comprehensive coverage of Rte.

The integration of the pay model the number of our robust quantity cackleberry has been doubled compared to the first quarter.

And 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 infections.

Quite a bit.

Covering the optimization of the separate models.

Including comparative offer exploration high quality customers Evans vacation bad customers Edification conveyor model income annualized energy model.

And in the Meanwhile, Rea is that customized way support quite a performance more cautiously.

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

Including pricing credit lines and promotion.

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

Maintain a downward trend in July and August where.

Where the epidemic outbreak, which has been our ela risks, which truly demonstrated 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 compares by your question.

Okay got you.

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 question. Please feel free contact us offline. Thank you.