Q2 2023 Qifu Technology Inc Earnings Call
Speaker 1: while seeking high quality growth. This will allow us to increase the margin of safety and strengthen the resilience of our business model against the complex macro environment.
Speaker 1: In terms of business growth, we have continued to expand and diversify our customer acquisition channels. By partnering with multiple leading traffic platforms under the embedded finance model, we have effectively expanded our coverage to the targeted users. We have also developed products tailored to different consumer and industry partners.
Speaker 1: In terms of profitability, we have taken further steps to boost operational efficiency, reduce funding costs, and improve risk assessment capabilities to optimize asset allocation and improve the overall profitability of our loan portfolio.
Speaker 3: Now, let me share some of our highlights in the second quarter.
Speaker 3: Do you amment when C she should told that go on hard to wholecur should, without transin the Co, the function some coca iality.
Speaker 3: Here woman, we should sangyela, we he? How would you the attship pinaship?
Speaker 4: To ask a question during the session, you need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Ms. Karen Chee, Senior Director of Capital Markets. Greetings, I am Karen Chee hobby and I am here in tam Best drill here.
Speaker 3: Che far. And then you have a isia door and it for tangium found planda that you do where with a TI on the two you found down eachially youn year more and two ways you transching team Jo. They don't coach in. There should be a soler. I mean the peortition.
Speaker 1: Please go ahead, Karen. Thank you, operator. Hello, everyone, and welcome to Qifu Technologists' second quarter 2023 earnings conference call. Our earnings release was distributed earlier today and is available on our IR website.
Speaker 3: 10 a woman. They us C the. You can forget with that Ho green water. Easy to keep ships in the simmarjiana on rg do the sinker twohundred, So be easy to se backackages's in the worker heing you ebitin good cion.
Speaker 1: Joining me today are Mr Wu Haisheng, our CEO , Mr Alex Xu, our CFO , and Mr Zheng Yan, our CIO. Before we start, I would like to refer you to our Safe Harbor Statement in the earnings press release, which applies to this call as we will make certain forward-looking statements.
Speaker 1: Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to GAAP measures.
Speaker 1: Also, please note that, unless otherwise stated, all figures mentioned in this call are in RMB terms. You may leave that in theQ&A at THIS.
Speaker 1: Now I will turn the call over to our CEO , Mr. Wuhai Shen. Please go ahead.
Speaker 5: Good cover.
Speaker 3: Thank you.
Speaker 3: Hello everyone, thanks for joining our second quarter earnings conference call.
Speaker 3: Thank you for your attention.
Speaker 3: I hope to see you in the next video.
Sure sure.
Can you tell me how much will that repeat.
And.
But it didn't seem that.
Yoga Christian.
I don't know if I can come into <unk>.
So those under their control.
So yes as Bill mentioned you.
Christian <unk> here.
I can't hear women halfway tissues for council.
You could.
Take a quick look crazy good.
Sure.
Work attempting to consume two months would you don't get them doing I'm quite sure.
First we continued to expand and diversify our customer acquisition channels, while leveraging innovative approaches to improve marketing efficiency in July we entered into partnerships with top tier traffic platforms, including shop on digital tablets, and the payment providers to tap into that market active user base.
Sue joins modeling process innovation and tailored user identification strategies, we boosted user coalition and enhanced our ability to reach targeted to users.
With marketing spending largely flat from Q1, the number of new users, making drawdowns increased 16% sequentially. Furthermore, we offer to some experimental compelling rates should boost engagement in a more innovative and effective way with high quality users with stable.
Need stronger intention to borrow and an appetite for larger credit lines, which also serves as an effective supplement to our existing user base.
Moving forward, we will continue to explore effective ways to acquire and manage your users from various segments and address the diverse needs through product innovation.
Yes, I'm from Myanmar.
Got you.
So you'll have to eat.
So you're saying that you know what you're doing.
Sure Sean.
Well then he told me this feature with a panel.
Youll find that women will change I mean to achieve that.
Hmm, Louisiana for you your children proven that neither woman.
Thank you.
Turning to our religion should you there Jim.
<unk>.
From a human team that works on that sooner.
You bet.
Redwood Hogan gallium or does it come.
Sure.
In Marine Corps <unk> going to go down further.
Your password execution when they see what allowed you to go through the year.
Gentlemen, you can do or they don't.
That's what I can answer for eventual time argued.
Argued to Syncrude.
I mean.
Paragon total injury.
You do see something like that.
And I'll kind of switch.
Which is impacting Japan.
And so as you can see for China.
Hi.
Hey, guys.
Would you want to.
Well, we would keep them conduct over there.
<unk>.
She is a woman can help you with that.
Second we improved our user engagement capabilities and achieved a significant boost in user activity.
Starting from user needs, we optimized our product risks and operational strategist throughout the user lifecycle. We also enhanced our ability to identify users by leveraging <unk> credit data as well as data related to the broadly defined SME segment.
This enabled us to offer more competitive rates and our credit lines and a more flexible repayment message catering to users.
While ensuring the stability of our risk performance.
As a result, we saw a notable improvement in jordahl intention among new and existing users.
In addition through our diverse user reach and engagement approaches the first months Jordan.
Jordahl ratio of new borrowers increased by approximately 13% from Q1 and that there'll be borrowing rates of existing borrowers.
The average percentage of existing borrowers with an outstanding loan balance that Jordan again, the following month increased by approximately 8% from Q1.
On top of this we also introduced user loyalty programs and offer a broader range of products and the benefits shippers boost user engagement.
Yeah.
It sounds from your answer to women.
As you raise are again, they're doing Joshua.
The full year.
No.
Hum.
So Jim done there youll see that Youll have them in there you only moisture.
Thank you and then you know once you go and you need without Joshua Quechua people not finished Q2.
With a shotgun.
I'd say John for you guys for sure.
<unk> this is happening.
Thanks Rich.
And that's going to continue.
The company said you know you want to.
Well, John Quealy, who Corbin J Honda and ABS is there towards it.
You do the ABS are flashing green Montano Santa F C.
Pardon me it turns out not passenger you back kind of shop.
And so you're gonna toss team with him about a woman and she does.
Okay.
Let's say the woman.
So there's no need to put on that decision.
It didn't go your way that you know as you go.
I'd like to see some women correlation.
What's happening to them that they don't.
Well done.
Hum.
I'm from Valkyrie towards you or someone were to come here.
Third we kept our pricing and the risk performance at stable levels leveraging funding stress to further optimize our economic model during the quarter, our deepening cooperation with financial institutions contributed to a further reduction in our funding costs that far outpaced it.
Market rates cut.
In addition through innovative product design, we secured ABS investment from multiple state owned banks and a major joint stock banks, we issued roughly RMB five 3 billion of ABS in the quarter.
132% quarter over quarter, and leading to a further reduction in our overall funding costs.
Our credit assessment capabilities steadily improved we are collaborating with a broader spectrum of financial institutions, which will enhance our ability to optimize asset allocation and boost profitability.
Yes.
Well then there.
So I encourage you sound at Nashville, and where do you go about.
P J.
Sure.
Sure.
I understand that women are attempting to do pretty well.
Sure sure.
Two tours on the woman.
Our troops debate, we monitor on your part.
And then going all the way women there.
We've been telling you that they're going through now.
And so when you show your hand too.
She was the hardware engineering actual macondo you addressed it in sportswear clothing product because show it to them and Chick Fil a and controllers.
She's going to China.
If you did find its future.
China.
Unless you're catching some don't.
Don't forget Joseph Gunnar.
Fourth our technology solutions business, a devout steadily and has begun to take shape. We further optimized our credit matrix and our solutions to address the diverse needs of our banking partners in terms of organizational developments, we assembled a sizable chain capable of providing.
No service to financial institutions, small and medium sized banks are particularly keen to push forward. The digital transformation with the support of our end to end Tech solutions.
And then the of projects our current today in the implementation phase.
Okay.
Okay cool.
But we don't believe so.
Sudan.
Well no.
Until the charter.
Women, nips, and gentlemen, pitch them, but again, they're bigger deals.
Yeah.
So from here.
100, <unk> retirement portfolios, you're good to go.
Sure.
<unk> you know women.
<unk> with its you talk one woman that should all for attending.
Sure.
With the Johnson cartoons you go there.
Youll find women Jessica.
So it's just so crazy.
Great.
So Jimmy Antigua lessors as young women to Sarnia Moshe don't they don't cause you to do that.
Quickly on women, that's yet to Europeans.
Jim So look pseudotsuga hung up here in the homeland.
Let me continue with Susan <unk>.
I think a hernia partially the agenda.
What are you guys. So you can just kind of.
Looking back at the first half of 2023. Despite this afternoon macroeconomic environments, we balance the growth and risk through our prudent operational practices and have delivered solid results in the second half we will further expand our channel presence and product offerings to enhance user stickiness for us.
Closer partnerships with financial institutions, and optimize our asset allocation to improve our top line and the bottom line performance.
Our ongoing efforts to refine and upgrade our business model will enhance the resilience of our company in today's macro landscape.
We are confident that our industry position and a unique resource and capabilities will enable us to sustain our leadership position in the credit tech market and deliver even more robust growth in the long term.
Okay.
Women shingle.
Yeah.
Realize Saturday night, you don't eat meat and we assign agenda in front of me.
Franco do you want.
And so in Colorado, Indiana.
Jim fish on particular tissue you're going to.
If we go to your point.
I'm going to go into the timeshare, you'll meet Kristian Nino.
And surface hungry zimbra into a movie Julien Jovana sheets issue that they equate with local don't wake.
Wake with condo converter Charger on June 28, we announced a share repurchase program under which we may repurchase up to U S. Dollar 115 million worth of shares over the next 12 months.
The announcement, we have been actively executing the program we have strong confidence in the Companys long term profitability and cash flow.
Formats, and they remain committed to rewarding and creating value for our shareholders through dose shareholder return inertia in hips.
Oh yeah.
Sure Alex.
You guys haven't come in the future with that I will now turn the call over to our CFO , Alex Chi who will walk you through our financial results for the project.
Yeah.
Okay.
Yeah.
Morning, and good evening, everyone welcome to our second quarter earnings call.
Despite the slower than expected micro recovery, we continue to see modest improvement in many aspects of our operations.
The first half of the year.
Users' activity levels measured by a drawdown ratios continue to improve in recent months, which led to the accelerated loan volume both in Q2.
Although the pace of macro recovery is still uncertain, we are proactively taking some actions to optimize our product and service offerings.
Johnson relationship with key partners and ultimately to drive long term sustainable quality growth.
In Q2, the quality of our user base remains solid.
Leading risk indicators were rather stable near the best level of recent quarters.
Day, one delinquency was four 2% in Q2 versus a record setting four 1% in Q1.
The slight uptick in delinquency somewhat reflect powders sentiment.
The ongoing macro uncertainties.
Certainly the collection rate was 87, 2% in Q2 versus 86, 2% in Q1.
This sharp rebound mainly reflects seasonal factors as well as some improved collection efficiency.
As economic recovery remain uncertain, we may continue to see some fluctuation of these metrics in the near future. Although overall risk level should be relatively stable in our continued effort to proactively mitigate risks.
Total net revenue for Q2 was $3 9 billion versus three six in Q1 and four two a year ago.
Revenue from credit unions service capital heavy was $12 8 billion in Q2 compared to $2 6 billion in Q1, and $2 9 billion a year ago.
The year on year decline was mainly due to overall decline in expected average tenor.
New loans as well as a lower average interest rates.
Sequential increase.
Reflect growth in loan volume under captive hobby and relatively stable effective cameras earlier.
Early repayment levels were relatively stable in Q2 versus Q1.
On balance sheet loans continued to grow nicely in the console nearly 19% of the total loan volume.
We issued a record $5 3 billion ABS upper high of 43% 101 hundred 32% year on year and sequentially respectively.
Which helped us further lowered our overall funding costs and drive better utilization of our micro lending licenses.
Revenue from platform service capital lives was $1, one 3 billion in Q2 compared to 969 $969 million in Q1, and 124 billion a year ago.
Year on year decline was mainly due to overall decline in expected average tenor of the loans and also the modest decline in average pricing.
For Q2 capital light loan facilitation, ICD and other technology solutions combined account for roughly 58% of a total loan volume.
Compared to roughly 50, 56% in the prior quarter.
We expect this ratio to be gradually trending down for the remainder of the year to a normalized level.
Also we are evaluating different components of our operations and seeking a better mix between risk bearing and non risk bearing solutions based on vehicle environment and operational conditions.
During the quarter average IRR auto loans, we originated and facilitated remained stable Q on Q well within the regulatory rate cap requirements.
Looking forward, we expect pricing to be continued relatively stable for the coming quarters.
Sales and marketing expense increased slightly Q on Q as we remained prudent and the continued to diversify our user acquisition channels. We added approximately $1 5 million new users in Q2, roughly flat versus first quarter.
Unit cost to acquire a new credit user also increased marginally Q on Q at approximately 296.
Well, we will continue to drive for efficiency in our operations, we may adjust the pace of our new user acquisition based on medical condition throughout 2023.
Meanwhile, we will continue to focus on reenergizing existing user base as repeat borrowers historically contribute vast majority of our growth.
Although we will continue to take a prudent approach in booking provisions against potential credit losses, we should expect further write back of provision from previous periods.
As overall risk profile of our loan portfolios has been stabilizing to improving.
Total immune provision for risk bearing loans in Q2, or approximately one 9 billion and the write backs of previous provisions for approximately $525 million proving.
Provision coverage ratio, which is defined as total outstanding provision divided by total outstanding delinquent loan balance between 90, and 180 days or 511% in Q2 compared to 432% in kilowatts.
We started operating results and a stable contribution from capitalized model, our leverage ratio, which is defined as just bearing loan balance divided by a shareholder's equity was again at a historical low of three three times in Q2 compared to four times in a.
A year ago, we expect to see leverage ratio fluctuated around this.
This level in the near future.
We generated approximately $1 8 billion cash from operations in Q2, roughly flat Q on Q.
Total cash and cash equivalents was <unk> eight 5 billion in Q2 compared to two 9 billion in Q1.
Unrestricted cash was approximately $5 3 billion in Q2 compared to $5 1 billion in Q1.
The sequential decline in cash position was mainly due to increased cash usage in our balance sheet lending as we discussed earlier, we will continue to look for opportunities to deploy resources to launch new initiatives developed new technology and expand service offerings.
non-GAAP net profit was 114 7 billion during Q2 compared to 976 million in Q1.
As we continue to generate healthy cash flow from operations. We believe our current cash position is sufficient to support our business development and to return to our shareholders in Q1 earnings call, we announced to increase our dividend payout ratio to 20% to 30% switched to a semiannual dividend distributions.
Schedule today.
Today, we're glad to declare a semiannual dividend of 25 cents per ordinary share or 50 cents per avs.
In U S dollar boats, which represent approximately 30% of the payout ratio.
Also in June 20th 2023, we announced a share buyback plan to repurchase up to $115 million over 12 months periods.
As of August 18, 2023, we have already bought approximately 28 million U S worst of our ABS and <unk> open market at an average price of 18 <unk> III.
We will continue to execute the buyback program in according with that relative rules and the regulations with a fully execution of the repurchase program and the dividend plan. We may return more than half our net profit to our shareholders going forward, we will continue to optimize our capital allocation plan.
Make timely adjustments to generate higher returns to our shareholders.
Finally regarding our outlook.
Well, we see accelerated year on year growth in loan volume in Q2, which is in part driven by easy comps, we do notice continued uncertainty macro economy.
This junction, we still see a slow recovery in consumer credits.
With a growth rate somewhat depending on macro conditions for the rest of the year.
As such we would like to adjust our full year total loan volume targets for 2023 to be trained RM.
RMB 470 billion and RMB 485 billion, representing a year on year growth of 14% to 18%.
As always this 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're now.
Open to take some questions.
Thank you.
As a reminder to ask question you will need to press star one on your telephone for those who can speak Chinese. Please kindly ask your questions in Chinese first followed by English translation.
In addition in order to have enough time to address everyone's on the call. Please keep it to one question and one follow up and return to the queue. If you have more questions. Please stand by while we compile the Q&A roster.
Okay.
First question comes from the line of Alex here from UBS. Please go ahead.
Okay.
Great that's helpful.
Yes.
Hey, good.
Perfect.
Yes.
Hopefully you can see that its household anytime they can they go.
Maybe where you see it Matt thanks, so much.
So the answer which is that.
Joe.
Yes.
Good night.
Mind, you that volume down here.
It's actually John <unk>.
10%.
It also has a slow with my figures hybrid vehicles.
Got it.
Yes.
Great.
Could you just guide that way.
And good luck guys.
So the takeaway that you guys use it.
So my question is there appear to be some dislocation between the strong volume growth and less strong revenue growth and a path to a quarter.
Many do.
Due to the higher.
Payments.
Issue or there is some product mix change that led to such changes. So how should we expect the revenue take rate trend going forward. Thank you.
Okay.
Sure I think I would take this one and.
Youre, probably right basically the the reason that the loan balance growth as well as the revenue grows.
Slower than the loan volume growth is mainly because of the duration of the loans.
So far this year are shortening.
Which in part because of the issue we encountered in the first quarter of the early repayments. If you recall in the first quarter. There was no there was a pretty significant.
Impact on the revenue stream because of early repayments.
Even though the second quarter.
We saw that.
The early make a payment sort of peaked around the <unk>.
April timeframe, and then start to gradually although marginally trending.
To the right direction for us.
But still compared to sort of historical average, we're still seeing a shorter duration.
Duration of the loan book.
Now that's shorter duration will definitely result in a kind of a slower accumulation of the loan balance.
And also the slower or kind of a slower growth in the revenue relative to the loan volume.
We are.
I guess from product mix perspective, they didn't have too much significant kind of irrational impact say, we're taking in a bunch of new products that happen to the shorter duration no I don't think thats the.
A significant factor.
And it's more so.
Deal with the.
Issue I mentioned earlier than going forward.
<unk>.
Since the second quarter, we are taking some.
Kind of a.
Measures.
<unk> gradually.
<unk> kind of moved the duration or move the tenor of the loans.
To a longer period.
As I mentioned, but the.
Since may from May to July .
We see a gradual kind of improvement.
So far and for the second half.
We will continue to take some actions to manage the.
The duration and.
Hopefully the second half revenue take rates, you will see a little bit of improvement or increase compared to what you saw in the first half.
Okay. Thank you very much.
Thank you for the.
Two questions one moment for the next question.
Next question comes from the line offering Cheng from Credit Suisse. Please go ahead.
Okay.
I wanted to see if my Washington, reaching the Gene Hall.
Can you go in Houston and acquiring it won't.
Translate that Jim.
Diamond <unk> Michel from <unk> funds in the project.
You can have some more to answer your calls with our provision coverage ratio reaching of a team with a T shirt that you see will either problems that pulp is awesome.
Cheng Schinder each year.
The umpire Hydrosol I go to working towards.
Yes.
Yeah I'll go into chicken <unk> follow up curious like are you guys that you would see that account.
Should you should see natural shifts portion I mentioned quanta in central Appalachia.
I mean, she is for sure otherwise, which is downstream Josh at that moment, you know Jacob from wildfire sensors side young woman issue because she wanted it should pinch how it yet.
As you go up into Asia.
Thanks, Sean.
Your management for giving me the opportunity to ask questions. This is Frank from credit Suisse.
The first question is based on the latest micro environment and credit risk performance of the portfolio do we foresee any extra provision we need to take or is there any more room for extra write backs going forward.
Especially considering the provision coverage ratio recorded another step up to over 500% this quarter and the second question is a follow up of the previous question.
Can management give us more.
Specific measures taken to improve the duration of calls and I just want to just curious that in the current macro environment, we preferring longer duration or shorter duration.
Sure.
Okay, I think I will take the first part and then I'll, let our CFO Mr. John .
The second part.
In terms of our provisions as you know we have been very consistent policy.
To book, our provision is conservatively.
And make sure that all the provisions are more than enough to cover the.
Potential risks there.
And if you look at the historical kind of the financial report.
Basically.
Other than the very special.
Quarter, one or two quarters for the majority of the period.
<unk>.
Write backs.
From the previous provisions.
As I mentioned in my prepared remarks, I think the.
Right now we see a relatively soon.
Stable, although some fluctuation in the risk profile. So you should continue to see.
Write backs in the coming quarters, although the size of the write back when you may can.
Determined at this point.
It's up to a multiple.
The third party evaluation and also all the other factors, but internationally Youll continue to see write backs in the coming quarters.
And.
We will intend to continue booking additional provision we will take more prudent approach based on what our observation of the macro environment.
And if we feel necessary, we will book more provisions.
And to counter that potential risk.
Provision coverage ratio you mentioned, the 511% versus last quarter's 130 something.
That's not a.
Metrics, we have a target is more than <unk>.
Other than it's a calculated number so we booked a provision and then when we do the calculation that happened to be 511.
And so that's not a something indication that we are targeting a higher coverage ratio assumption no. It's more.
We took provision basic it based on the quarter's loan volume.
And that's sort of hard asset valuation.
I will stop here and the second part of question I'll hand over to Mr. John .
Okay.
Hi lymphoma.
Okay.
Thanks Blake.
The last one is that once you kind of both things.
Hope that she can you quantify just the otsuka CCN ETF Lula Alto principles handler.
This was actually down.
Jim Hoffmann Luna will much isabela, besides yonder to listen the initial language let Susan.
In terms of the issue.
Tell any bounds for us.
We believe loan duration is a combined result of contractual tenor and early repayment. So first I'll talk about the early repayments early repayment and was designated declining.
Mainly due to the macro environment changes and secondly meeting our operational efforts.
So Hawaiian <unk>.
Sundar will then cover the channel phone question.
Synaptics handoff since at San Juan.
Well, how about some serious <unk>.
The Chilean and the time that Jim Hawaii is you're still going to be a tool that does that.
Within the attendee.
In terms of EMEA.
<unk>, it's Andy.
So without alcohol cellular phones rollout.
Fabrication that ourselves so that you can answer.
Gently lethal either covered without notice how long it took the coupons that sanmina had a partial hook physicians assignment, but what she's saying, you're not sure who to Johan <unk> yeah.
Yeah.
My email them, then geology 40, Chihuahua for Asia.
It is unquestioned eufaula womens fashion egg Australia.
<unk> <unk> PD.
Not so good.
Neil portfolio Samiel of mid tier pharma Lee.
Where youll keep what you just said yes.
From a macro perspective, the early repayments sentiment was prudent.
From a macro perspective.
Sentiment was quoting us we have observed that the payout ratio for our historical loan portfolio has been decreasing for four consecutive months from April to July .
And then from operations perspective, we have refined our operation strategy to reduce early repayment in three ways.
First is we have hired a new telemarketing.
We incorporate the early repayment ratio into the <unk> of the sales presence. So the sales present tense your control. Thank you Rachel.
We offer some benefits to retain the users when they have the intention for the payments.
Three we reduced the seven day interest the coupon to avoid dose short term borrowers based on dose optimization, we have seen improvements in our early repayments titration.
Yes.
Look back when she came up on me.
In Valencia nano Guizhou.
So of your time here.
I was just within their input on the cool pool of mobile with Honda.
C and are thought.
Do you believe this beautiful woman sometimes.
Okay.
Thank you <unk>.
<unk> now, we'll know if we choose and how you're gonna tell time that she is here.
Andy Copenhagen long Miami doesn't lugo immune to either country Hoffman, the niche are low and the high grade equivalent when youll achieve equal with the formula.
Jordan Cove, with Jim Sheehan equals a function to us yes I.
I know two between the phone, yes, we would see Egfr <unk>.
<unk> heard on traditional fortune 1000 between lease now.
Well normally team, which he did a woman that GBS tea machine.
Additionally, what mosquito the keto central <unk> <unk> de <unk>.
<unk>.
Not centralized.
Hawaii is within <unk> Glen Italia, <unk> home I need the Delphi team, who said, yes sure.
<unk> also done that.
As for our contractors.
It won't say shorter.
As for contractual Cana, we won't stay shorted, a Bachelor or vice versa. We offered tenant based on the user's profile for example for those who have stable income on higher credit worthiness, we tend to offer a longer tenor should lower their repayment pressure.
For those who have less long term visibility, we tend to reduce the risk risk exposure in the short term the tenor to control the risk.
So different user profile and the ticket size will have different impact on the short term and the long term credit risk.
Further upgrade our self developed GP FTE model.
<unk> survival chain model to improve the Finland.
And balance the profitability and the risks.
In.
Motion and current macro conditions and our proactive management, we expect the early repayment ratio will further decline.
Our effective long duration will increase in Q3.
Okay.
Yes.
Hello brother in the minerals.
Hello.
Thank you very much.
Thanks.
Thank you for the questions.
Move on to the next question is from the line of MSG from Bank of America Securities. Please go ahead.
Can you go with you in a deep way.
<unk> always agile sure Glenn I think you do that that question you talk about that when you do the team now I'm kind of curious on those or.
Jamie England back to him.
Sat down loss, so that Hershey now Joan team will tell that has altice will still has to be done now and then Oh man will take handle Sandy do you add at that point. She tells me positively.
To go your way to the young I will tell them that they're going.
<unk> D L.
<unk> will tell you that.
Yes.
It sounds like you got it.
The woman that that when you do what else I mean, I don't know so I have two questions. The first one is about the loan demand in third quarter. We see short term consumption household consumption alone declined 42 billion in July and it seems that consumption recovery remains lackluster.
All right.
What's your long well, what what do you see that loan demand at your site and.
The second question is about our loan pricing, so well the lackluster demand impacted loan pricing and with the L. P are being cut for twice since.
These children do you also need to adjust out your loan pricing.
Thank you.
Thank you Omar.
Were there any numbers.
Well there is $3 <unk>.
You mean on that.
Sure Sanjay.
Until recently.
Well.
<unk>.
Has it changed.
Sanjay will run.
It seems like that May and June .
Appreciate it.
Okay.
Thanks, Amit.
Ask your question.
Also noticed that the citizens short term loan has decreased.
And in July , but from our perspective, our loan balance continued to increase in July and August and like the timing of certain events short term loan balance.
So we should have a different yards.
Hi, Jeremy.
So julien.
As you may hear the integration being partnership.
<unk> agenda.
Now do you get your assortment.
No.
So.
Thank you Jonathan.
Ill move on here.
So yogurt things changed.
TJ Hong Kong, let's.
<unk>, we're not sure shandy, you'll be able to do.
Okay together.
Yes.
Don't fit that vigor sofa cushion.
Todd Schull.
Sandy.
I'm not sure I'll leave it at Cushing nitrogen.
But give me some censorship.
Hum hanging on kind of criticism that they don't.
General higher total neutral here.
Yeah.
So tiny.
Excuse me.
Hello, gentlemen.
But John Jimmy in women and children.
So are you, saying that sort of coming down the pipeline can you talk are you.
But then this is I think a cushion to mitigate challenges.
Well look I know you initiated or has it been capacity position.
Some demand perspective since the beginning of this year, we have seen some structural changes in terms of user demand.
User quality perspective, the highest quality users tend to repay the loan earlier why are the low lower quality users have relatively stable demand.
And from the usage perspective, the product broadly defined SMT users are more active than the consumer credit users, especially for those in the construction transportation tourism.
<unk> and the catering industry.
Plus our operational efforts, we have gained efficiency improvement in managing the broadly defined SME segments.
Okay.
So for example, Tim you did it in Montana.
Women and of course, you don't read tissue expansion will lead to good things.
Oh, let me on pretax income from your non strategic government funds out recruiting.
Hello.
Sure.
Do you find out very quickly.
So we got him on the phone.
Given the softer consumer credit amount, we expect to increase our spending on the broadly defined SME users.
We will increase our further we will increase our penetration in the broadly defined customer segments.
New user acquisition.
And for the existing users will improve our service quality to improve the user stickiness.
Joining me for the third time.
Jonathan.
Women and nonrecourse either in January or has the way it is matilda.
So when you said you wanted to kind of women.
Christian so they're essentially quadrature, Jonathan Chang temporary gesture and we've been doing that for Hudson.
One particular quarters youre going to breakeven.
In terms of the pricing, we expect the pricing will be stable in the fourth.
In the future from our past experience.
Our rights are cuts had very little impact on our pricing our pricing is mainly determined by the supply and demand in this market.
Can you hear me okay.
Tcf is handled downfield.
Thank you for the questions.
One moment for the next questions.
Next question is from the line of Jan <unk> from CIBC. Please go ahead.
Well listen I'll help guys. They go to the Q&A to where it was when you move to that yet.
Now when it comes and goes out in Q1 that were going to you one second.
You may even if we go to your hardware ulcer Tweeners you will call me no listen I'm, Okay to open Philip we're going out.
Don't worry about that generally goes home with them.
I'll do my translation Hello management. Thanks for taking my question. This is the other with TICC and today I just have one quick question.
I was wondering could you. Please elaborate more about the reason behind the 150 meeting share repurchase purchase program. This time and should we consider right.
Regular way to return value to the shareholders. Thank you.
Okay.
Okay.
Alex Workshop.
Okay.
Yes, Thanks for your question.
Basically every quarter.
We are reviewing our.
Our cash position as well as our capital allocation.
Kind of a strategy.
And.
When we.
Determined that there are actual.
Have you considered that.
Free cash.
Sitting there idle.
Without making.
Too much of a return than we would like to deploy that cash either in the form of the.
Dividends or in the forum.
The buyback okay. So that's a.
I would say ongoing process.
In the future quarters as well and.
We consider.
The optimal balance between the buyback and.
Uh huh.
Dividends.
Is the best way.
<unk> returned to the shareholders.
So like I said, the first thing first we need to complete this 150 million U S buyback program.
And along the way, we will do our periodical review.
And it took them to determine what to do.
Afterwards, there Budd.
Longer term I would say some kind of a combination between the buyback.
Buybacks and dividends.
Thank you.
Thank you for the questions.
And then Josef times I will now conclude the Q&A session I would like to hand, the call back to management for closing remarks.
Okay.
Thanks for everyone.
Joining the conference.
Since we have our peers right behind us in their earnings call so to the courtesy.
We just concluded our call here if you have additional question. Please.
Contact us offline. Thank you.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
Yeah.
[music].
Okay.
[music].