Q1 2024 Qifu Technology Inc Earnings Call

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Speaker Change: Thank you ladies and gentlemen, thank you for standing by and welcome to the key food technology first quarter 'twenty 'twenty four earnings conference call.

Speaker Change: This time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on one on your telephone you will then have an automated message advising Johan just raised to withdraw your question. Please press star one and one again.

Speaker Change: Please also note today's event is being recorded.

Operator: To withdraw your question, please press star 1 and 1 again. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Miss Karen Ye, Senior Director of Capital Markets. Please go ahead, Karen.

Speaker Change: At this time I'd like to turn the conference call over to MS. Karen G Senior director of capital markets. Please go ahead Kevin.

Xiaoxiong Ye: Thank you, operator. Hello, everyone, and welcome to Qifu Technology's third quarter 2024 earnings conference call. Our earnings release was distributed earlier today and is available on our IR website. Joining me today are Mr. Wu Haisheng, our CEO; Mr. Alex Xu, our CFO; and Mr. Zheng Yan, our CRO.

Speaker Change: Thank you operator, Hello, everyone and welcome to the T fluid technologies third quarter 2024 earnings Conference call.

This release was distributed earlier today and is available on our IR website.

Speaker Change: Joining me today I need to wash it all CEO, Mr. Alex <unk>, our CFO and Mr. Jin Yan Oh, Yeah Oh.

Xiaoxiong Ye: Before we start, I would like to refer you to our safe harbor statement in the earliest press release, which applies to this call as we will make certain forward-looking statements. Also, this call includes discussions of certain non-cash financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to the GAAP financial measures. Also, please note that, unless otherwise stated, all figures mentioned in this call are in R&D terms. Today's prepared remarks from our CEO will be delivered in English using an AI-generated voice. Now, I will turn the call over to Mr. Wu Haisheng. Please go ahead.

Speaker Change: 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 Change: Also this call includes discussions of certain non-GAAP financial measures.

Speaker Change: Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to GAAP financial measures.

Also please note that unless otherwise stated all figures mentioned in this call are in RMB term.

Speaker Change: Today's prepared remarks from our CEO will be delivered in English using AI generated for now I will turn the call over to Mr. Watson. Please go ahead.

Speaker Change: Okay.

Haisheng Wu: Hello, everyone. Thank you for joining us. Starting in the second half of 2023, we have adjusted our business strategy in a timely manner, focusing on quality growth and improving profitability as the company's primary goal over the past few quarters. We have strictly managed risks and enhanced profitability by adhering to a prudent business strategy. All these efforts have enabled us to demonstrate stronger resilience in today's challenging macro environment and deliver solid performance to the market.

Speaker Change: Hello, everyone. Thank you for joining us.

Speaker Change: Starting in the second half of 2023.

Speaker Change: We have adjusted our business strategy in a timely manner.

Speaker Change: Focusing on quality growth and improving profitability.

Speaker Change: The company's primary goals.

Speaker Change: Over the past few quarters.

Speaker Change: Strictly manage risks and enhance profitability by.

Speaker Change: By adhering to a prudent business strategy. All these efforts have enabled us to demonstrate stronger resilience in today's challenging macro environment and.

Speaker Change: And deliver a solid performance to the market.

Haisheng Wu: Over the past quarter, we continued to expand the coverage on both ends of our platform, empowering 159 financial institutions to provide credit services to over 52 million credit line users on a cumulative basis. We further tightened our credit standards and streamlined our business structure to enhance the overall health and sustainability of our operation. We also optimized our profitability models through refinements made to our product offerings, risk management, fund structure, user acquisition, and asset distribution capability.

Speaker Change: Over the past quarter, we continued to expand the coverage on both ends of our platform.

Speaker Change: Powering 159 financial institutions to provide credit services to over $52 million credit line users on cumulative basis.

Speaker Change: In response to macroeconomic headwinds.

Speaker Change: We further tightened our credit standards and streamlined our business structure to enhance the overall health and sustainability of our operations.

Speaker Change: Also optimized our profitability models, who refinements <unk> made to our product offerings risk management fund structure user acquisition and asset distribution capabilities.

Haisheng Wu: Revenue during the quarter increased by 15.4% year-over-year to RMB4.2 billion, while our net take rate increased by 54 basis points to roughly 3.5%. Non-GAAP net income increased by 23.4% year-over-year to RMB 1.2 billion, and non-GAAP net income per diluted ADS increased by 28% year-over-year to RMB 7.58.

Speaker Change: Revenue during the quarter increased by 15, 4% year over year to RMB, four 2 billion, while our net take rate increased by 54 basis points to roughly three 5%.

non-GAAP net income increased by 23, 4% year over year to RMB, one 2 billion and non-GAAP net income per diluted ads increased by 28% year over year to RMB 758.

Haisheng Wu: ROE reached approximately 22% in the quarter, significantly outperforming the industry under more stringent credit standards. Total Loan Facilitation and Origination Volume across our platform came in at RMB 99.2 billion in Q1, with further improvements to risk indicators for new loans. Now let's move on to our key initiatives and the progress we have made in this course. Our top priority in Q1 was improving our asset quality, as we tightened our overall credit standards.

Speaker Change: He reached approximately.

Speaker Change: Proximately, 22% in the quarter significantly outperforming the industry peers.

Speaker Change: Under more stringent credit standards.

Speaker Change: Total loan facilitation and origination volume across our platform.

Speaker Change: Same in at RMB $99 2 billion in Q1.

Speaker Change: With further improvements to risk indicators for new loans.

Speaker Change: Now, let's move on to our key initiatives and the progress we have made in this quarter.

Speaker Change: Our top priority in Q1 was improving our asset quality.

Speaker Change: As we tightened our overall credit standards.

Haisheng Wu: We further iterated risk strategies across the loan facilitation, Credit Operation, and post-credit process to improve risk. We also revamped our strategy framework to integrate risk segmentation and introduced external data sources from leading internet platforms for joint modeling and scoring, improving our ability to identify and intercept high-risk customer segments. With regard to loan collection, we actively expanded and optimized line resources to increase connection, and enhanced incentive schemes; we gradually boosted our overall collection efficiency.

Speaker Change: We further deteriorated risk strategies across the loan facilitation credit operation and.

And post credit processes to improve risk metrics.

Also revamped our strategy framework to integrate risk segmentation.

Speaker Change: <unk> introduced external data sources from leading internet platforms for joint modeling and scoring.

Improving our ability to identify and intercept high risk customer segments.

Speaker Change: With regard to loan collection, we actively expanded and optimized line resources to increase connection rates.

Speaker Change: By refining collection strategies and enhancing incentive schemes, we gradually boosted our overall collection efficiency.

Haisheng Wu: As a result of these measures, our expected vintage loss for new loans in Q1 decreased by roughly 15% sequentially. Additionally, the D1 delinquency rate and 30-day collection rate of the overall loan portfolio improved by 14 basis points and 19 basis points, respectively. We expect to make further gradual improvements to our risk metrics in Q2. With ample liquidity in the financial system during the quarter, demand from financial institutions for consumer credit assets remained robust.

Speaker Change: As a result of these measures are expected vintage loss for new loans in Q1 decreased by roughly 15% sequentially.

Speaker Change: Additionally day, one delinquency rate and 30 day collection rate of the overall loan portfolio improved by 14 basis points and 19 basis points respectively.

Speaker Change: We expect to make further gradual improvements to our risk metrics in Q2.

With ample liquidity and the financial system during the quarter.

Speaker Change: Demand from financial institutions for consumer credit assets remains robust.

Haisheng Wu: Our industry-leading risk management capabilities placed us in a competitive position in collaboration with financial institutions. Leveraging our stable asset performance, we stepped up ABS issuance efforts and actively worked with financial partners to reduce funding. During the quarter, we issued roughly RMB5.3 billion worth of ABS, representing an increase of 130% year over year, with issuance costs falling by roughly 150 basis points year on year. In particular, we issued the first domestic exchange-traded ABS with a AAA international rating, valued at RMB1 billion.

Speaker Change: Our industry, leading risk management capabilities placed us in a competitive position in collaboration with financial institutions, leveraging our stable asset performance.

Speaker Change: We stepped up ABS issuance efforts and actively worked with financial partners to reduce funding costs.

Speaker Change: During the quarter, we issued roughly RMB five 3 billion worth of ABS.

Speaker Change: Representing an increase of 130% year over year.

Speaker Change: With issuance cost falling by roughly 150 basis points year on year.

Speaker Change: Notably.

Speaker Change: We issued the first domestic exchange traded ABS with a AAA international rating valued at RMB 1 billion.

Haisheng Wu: The ABS program attracted subscriptions from global professional investors, which significantly expanded our funding channels globally, driven by both a higher percentage of low-cost capital like ABS in our funding mix and a further reduction in funding costs for loan facilitation. Our overall funding costs decreased by over 70 basis points sequentially during the quarter. We expect to maintain our advantage in funding costs throughout the remainder of the year. We also adopted a more prudent marketing strategy, further optimized customer acquisition, and bolstered acquisition efficiency of major. In the quarter, our acquisition cost per credit line user decreased by roughly 12% sequentially. The percentage of new users with approved credit lines from our embedded finance business increased to 36.4% from 34.9% last quarter.

Speaker Change: The ABS program attracted subscriptions from global professional investors, which significantly expanded our funding channels globally.

Speaker Change: Driven by both a higher percentage of low cost capital like ABS and our funding mix and.

Speaker Change: And a further reduction in funding cost for loan facilitation.

Speaker Change: Our overall funding costs decreased by over 70 basis points sequentially during the quarter.

Speaker Change: We expect to maintain our advantage in funding costs throughout the remainder of the year.

Speaker Change: We also adopted a more prudent marketing strategy further optimized customer acquisition channels and bolster acquisition efficiency of major channels.

Speaker Change: In the quarter, our acquisition cost per credit line user decreased by roughly 12% sequentially.

Speaker Change: The percentage of new users with approved credit lines from our embedded finance business increased to 36, 4% from 34, 9% last quarter, we continue to maintain our edge across leading embedded finance channels in terms of user conversion rate and loan volume.

Haisheng Wu: We continue to maintain our edge across leading embedded finance channels in terms of user conversion rate and loan volume, by leveraging our user identification and risk control capability; through differentiated operations, we have continued to optimize risk and unit economic models in Q1. Credit Performance and Operational Efficiency of the Embedded Finance Channel were further optimized, and the ROA of new loans from this channel increased by 115 basis points from Q4 as we improved the accuracy of user identification and profiling. We have been able to onboard a more diverse pool of financial institution partners, strengthening our ability to serve various loan asset segments by aligning assets with the risk appetites of different institutions.

Speaker Change: Leveraging our user identification and risk control capabilities.

Speaker Change: Through differentiated operations, we have continued to optimize risk and unit economic models.

Speaker Change: In Q1.

Speaker Change: The credit performance and operational efficiency of the embedded finance channel will further optimize.

Speaker Change: <unk> of new loans from this channel increased by 115 basis points from Q4.

Speaker Change: As we improve the accuracy of user identification and profiling.

Speaker Change: We have been able to onboard a more diverse pool of financial institution partners strengthening our ability to serve various loan asset segments.

Speaker Change: By aligning assets with the risk appetites of different institutions.

Haisheng Wu: We improved asset allocation efficiency and increased overall returns on our loan portfolio. Through a more precise match between loan assets and funding partners, we achieve better risk performance and overall profitability. During the quarter, the percentage of our on-balance sheet loan volume increased to 28%.

Speaker Change: Improved asset allocation efficiency and increased overall returns on our loan portfolio through a more precise match between loan assets and funding partners, we achieved better risk performance and overall profitability.

Speaker Change: During the quarter the percentage of our on balance sheet loan volume increased to 28%.

Haisheng Wu: While the percentage of our loans facilitated under the ICE model increased to 21%. Meanwhile, the take rate of the ICE model increased by 76 basis points compared to the same period last year. Our extensive user base has always been the bedrock of our operation; to cater to users' diverse needs, we have offered differentiated value-added services through a loyalty program to boost user retention and engagement. Going forward, we aim to further enrich the value propositions of our product offerings, and we'll implement differentiated user operations to enhance user satisfaction and drive long-term growth in LTV. We continue to invest in cutting-edge technology, with a strong focus on expanding the application of AI and large language models in the fintech sector to elevate user experience and improve operational efficiency.

While the percentage of our loan facilitated under the ICD model increased to 21%.

Speaker Change: Meanwhile, the take rate of ICD model increased by 76 basis points compared to the same period last year.

Speaker Change: Our extensive user base has always been the bedrock of our operations.

To cater to users' diverse needs. We have offered differentiated value added services through our loyalty program to boost user retention and engagement going forward. We aim to further enrich the value propositions of our product offerings, and we will implement differentiated user operations to enhance.

Speaker Change: <unk> user satisfaction and drive long term growth and LTV.

Speaker Change: We continue to invest in cutting edge technologies with a strong focus on expanding the application of AI and large language models in the fintech sector to elevate user experience and improve operational efficiency.

Haisheng Wu: We integrated large language models into our core capabilities and developed a standardized Qifu AI co-pilot system that has been deployed across key segments of our business, including risk management, telemarketing, loan collection, and customer service. The system enables intelligent human-computer interaction through Automatic Speech Recognition Technology, or ASR. It has currently achieved a recognition accuracy rate of 97% in our own collection scenarios, leading the financial industry standard. Additionally, through the use of voice print recognition capability.

Speaker Change: We integrated large language models into our core capabilities and developed a standardized chief you AI co pilot system that has been deployed across key segments of our business.

Speaker Change: Including risk management telemarketing loan collection and customer service the system enables intelligent human computer interaction through automatic speech recognition technology or ASO.

Speaker Change: It is currently achieved a recognition accuracy rate of 97% in our collections.

Speaker Change: Collection scenarios.

Speaker Change: Leading the financial industry standards.

Speaker Change: Additionally.

Speaker Change: Through the use of voice print recognition capabilities.

Haisheng Wu: We have achieved a remarkable 95% accuracy rate in identifying blacklisted customers, helping us effectively prevent asset losses and malicious complaints. Finally, we also rolled out an AI development tool, UGAI, and applied it across various stages of our development cycle, including requirement communication, solution design, coding, and testing. With an adoption rate of 20% for AI generated codes, we achieved a 30% improvement in development efficiency in the applied field. Our technology solutions business continues to make steady progress.

Speaker Change: We have achieved a remarkable 95% accuracy rate in identifying black listed customers, helping us effectively prevent asset losses and malicious complaints.

Speaker Change: Finally, we also rolled out an AI development tool.

Speaker Change: Usually AI and applied it across various stages of our development cycle, including requirement communication solution design coding and testing.

With an adoption rate of 20% for AI generated codes, we achieved a 30% improvement in development efficiency and the applied fields.

Speaker Change: Our technology solutions business continued to make steady progress.

Haisheng Wu: During the quarter, we entered into partnerships with two additional financial institutions, bringing the total number of financial partners for our end-to-end technology solutions to seven. These partnerships cover different categories, including internet, private, and municipal banks, as well as consumer finance companies, via our end-to-end tech solutions. The daily average loan volume reached RMB 11 million in April 2024.

Speaker Change: During the quarter, we entered into partnerships with two additional financial institutions, bringing the total number of financial partners for our end to end technology solutions to seven.

Speaker Change: These partnerships cover different categories, including Internet private municipal banks as well as consumer finance companies.

Speaker Change: Through our end to end Tech solutions Daily average loan volume reached RMB $11 million in April 2024.

Haisheng Wu: As financial institutions take on an increasingly prominent role in the consumer credit market, we remain committed to assisting financial institutions in advancing their digital transformation and sharing the benefits of their long-term growth. Moving on, Despite the marginal improvements in our risk indicators and initial positive signs of a macroeconomic recovery during the quarter, we will remain patient and continue to prioritize risk performance and operational efficiency until we see clear signs of a recovery in credit demand.

Speaker Change: As financial institutions take on an increasingly prominent role in the consumer credit market, we remain committed to assisting financial institutions and advancing digital transformation and sharing the benefits of their long term growth.

Speaker Change: Moving onto the outlook.

Speaker Change: Despite the marginal improvements in our risk indicators and initial positive signs of a macroeconomic recovery during the quarter, we will remain patient and continue to prioritize risk performance and operational efficiency until we see clear signs of a recovery in credit demand.

Haisheng Wu: In the meantime, we also recognize the vast market potential there is, with a substantial base of unmet user needs and inefficient connections between financial institutions and end users. With more than 52 million cumulative users with credit lines, we have developed deep user insights and industry-leading capabilities in online customer acquisition and profiling. Moving forward, we will actively explore a more open platform model.

Speaker Change: In the meantime, we also recognize the vast market potential there is with a substantial base of unmet user needs and inefficient connections between financial institutions and end users.

With more than 52 million cumulative users with credit lines, we have developed deep user insights and industry, leading capabilities in online customer acquisition and profiling moving forward, we will actively explore a more open platform model.

Alex Xu: Starting with user needs, we aim to facilitate more efficient connections between users and financial institutions and work with financial partners to offer a broader spectrum of products that address user credit needs throughout the life cycle. Furthermore, since 2024, we have significantly optimized capital allocation by stepping up share buyback efforts while ensuring stable returns through a dividend policy. The US $150 million share repurchase program announced in June 2023 was successfully completed at the end of March this year, three months ahead of schedule.

Speaker Change: Starting with user needs, we aim to facilitate more efficient connections between users and financial institutions and work with financial partners to offer a broader spectrum of products that address user credit needs throughout the lifecycle.

Speaker Change: Since 2024, we have significantly optimized capital allocation by stepping up share buyback efforts, while ensuring stable returns through a dividend policy.

Speaker Change: The U S $150 million share repurchase program announced in June 2023 were successfully completed at the end of March this year three months ahead of schedule.

Alex Xu: Starting on April 1st, 2024, we have been actively executing our new share buyback plan of up to US $350 million. We have full confidence in the long-term development of our company. Through ongoing buybacks and dividends, we aim to further boost capital allocation efficiency, optimize shareholder structure, and enhance long-term shareholder returns. With that, I will now turn the call over to Alex Xu. Thank you, Haisheng. Good evening and good morning, everyone.

Speaker Change: Starting on April one 2024, we have been actively executing our new share buyback plan of up to use $350 million.

Speaker Change: We have full confidence in the long term development of our company.

Speaker Change: Through ongoing buybacks and dividends, we aim to further boost capital allocation efficiency optimize shareholder structure and enhance long term shareholder returns.

Speaker Change: With that I will now turn the call over to Alex Hu.

Alex Xu: Thank you hi, good evening and good morning, everyone welcome to our first quarter earnings call.

Alex Xu: Welcome to our first quarter earnings call. Despite the still uncertain microenvironment in the first quarter, we made good progress to optimize our operations and further trim exposures to underperforming assets and deliver solid financial results. Total net revenue for Q1 was $4.15 billion, versus 4.5 billion in Q4 and 3.6 billion a year ago.

Alex Xu: Despite the still uncertain macro environment in the first quarter, we made good progress to optimize our operations and further trend exposure to underperforming assets and delivered solid financial results.

Alex Xu: Total net revenue for Q1 was $4 one 5 billion.

Alex Xu: Versus $4 5 billion in Q4, and $3 six spending a year ago.

Alex Xu: Revenue from credit-driven service Capital Heavy was $3.0 billion in Q1 compared to $3.2 billion in Q4 and $2.6 billion a year ago. The year-on-year growth was mainly due to growth in on balance sheet loans and contribution from other value-added services, partially offset by declining in offset in all balance sheet loans. On balance sheet loans account for around 28% of the total loan volume. Overall funding costs further declined over 70 basis points sequentially and over 100 basis points year-over-year, with the help of our strong relationship with financial institutions, partners, and record-high ABS issuance. Revenue from platform service Capital Light was $1.1 billion in Q1, compared to $1.2 billion in Q4 and $969 million a year ago.

Alex Xu: Revenue from partly driven service capital heavy was three point opening in Q1 compared to $3 2 billion in Q4, and $2 6 billion a year ago.

Alex Xu: Year on year growth was mainly due to growth in on balance sheet loans and contribution from other value added services, partially offset by declining in <unk>.

Alex Xu: <unk>.

She'd loans.

Alex Xu: On balance sheet loans account for around 28% of the total loan volume.

Speaker Change: Overall funding cost further declined over 70 basis point.

Speaker Change: Question, Lee and over 100 basis point year over year was the help our strong relationship with financial institutions partners and record high ABS issuance.

Revenue from platform service capital Light was $1 1 billion in Q1 compared to $1 2 billion in Q4, and 969 million a year ago.

Alex Xu: The year-on-year growth was mainly due to strong contribution from ICE and other value-added services, substantially offsetting the decline in capital light loan facilitation. As we try to strike an optimal mix between risk-bearing and non-risk-bearing assets in an uncertain micro-environment, we are also gradually cutting back loans that generate marginal returns. In Q1, we saw continuous sequential improvement in revenue take rates for both cap heavy and cap light operations. During the quarter, average IRR of the loans we originated and facilitated was 21.5% compared to 21.3% in the prior quarter.

Year on year growth was mainly due to strong contribution from ICD and other value added services.

Speaker Change: Substantially offsetting the decline in capital light loan facilitation.

Speaker Change: As we try to strike, an optimal mix between risk bearing and non risk bearing assets in an uncertain macro environment.

Speaker Change: Also gradually cutting back loans that generate marginal returns.

Speaker Change: In Q1, we saw continued sequential improvement in revenue take rates for both cap heavy and kept light operations.

Speaker Change: During the quarter average IRR of the loans, we originated and the facility was 21, 5% compared to 21, 3% in prior quarter.

Alex Xu: Looking forward, we expect pricing to fluctuate in a narrow band around this level for the coming quarters as we further optimize our loan portfolio in response to the macro uncertainty. Sales and marketing expenses decreased 25% year-on-year and 2% year-on-year, as we intentionally control the pace of user acquisitions in an uncertain environment. We added approximately 1.45 million new credit line users in Q1 versus 1.7 million in Q4. Unit cost to acquire a new credit line user decreased significantly to 285 from 326, mainly due to our more disciplined approach and the Chinese New Year seasonality.

Speaker Change: Looking forward, we expect pricing to be fluctuated in a narrow band around this level for the coming quarters as we further optimize our loan portfolio in response to the macro uncertainties.

Speaker Change: Sales and marketing expenses decreased 25% Q on Q and 12% year on year as we intentionally control the pace of user acquisitions in the uncertain environment we are.

Speaker Change: <unk> added approximately 1.45 million new credit on users in Q1 versus one 7 million in Q4.

Speaker Change: Unit cost to acquire new credit line users decreased significantly Q on Q2, 285 from 326, mainly due to a more disciplined approach and the Chinese new year seasonality.

Alex Xu: We will make timely adjustments to the pace of new user acquisition based on micro conditions from time to time and further diversify our user acquisition channel. Meanwhile, we will continue to focus on re-energizing existing user base, as repeat borrowers historically contribute the vast majority of our business. 98 The delinquency rate was 3.35% in Q1. This ratio was calculated by dividing the outstanding balance of on and off balance sheet loans that were three months past due with the total outstanding balance of on and off balance sheet loans across our platform on March 31.

Speaker Change: We will make timely adjustments to the pace of the new user acquisition based on macro conditions from time to time and further diversify our user acquisition channels.

Speaker Change: Well, we will continue to focus on re energizing existing user base.

Speaker Change: Repeat borrowers historically contribute vast majority of our business.

Speaker Change: 90 day delinquency rate was 3.35% in Q1.

Speaker Change: This ratio was calculated by dividing outstanding balance of on and off balance sheet lungs that was three months past due.

Speaker Change: What is the total outstanding balance of on and off balance sheet loans across our platform.

Speaker Change: On March 31.

Alex Xu: During the quarter, we purposely cut our exposure to certain risk-bearing assets and reduced the total outstanding balance of on- and off-balance sheet loans by approximately 16.5 percent sequentially. As such, the 90-day delinquency rate was mathematically inflated by roughly 16.5 percent, which is somewhat misleading.

Speaker Change: During the quarter, we purposely cut our exposure to certain risk bearing assets and reduce the total outstanding balance of on and off balance sheet loans by approximately 16, 5% sequentially as such the 90 day delinquency rate was mathematically inflate.

Speaker Change: By roughly 16, 5%.

Speaker Change: Which is somewhat misleading.

Alex Xu: Furthermore, as we always know, this matrix is backward-looking in nature and provides little value to help investors understand our asset quality trend. We strongly recommend investors focus on key leading risk indicators such as day one delinquency and 30-day collection rate. In fact, we start to see modest improvement in asset quality in Q1. Day 1 delinquency was 4.9% in Q1 versus 5.0% in Q4.

Speaker Change: Furthermore, as we always known this matrix is backward looking in nature and provide little value to help investors understand our asset quality trend.

Speaker Change: We strongly recommend investors focus on key leading indicators such as day, one delinquency and 30 day collection rates in.

Speaker Change: In fact, we start to see modest improvement in asset quality in Q1 day, one delinquency was four 9% in Q1 versus five point, though in Q4 30.

Alex Xu: The 30-day collection rate was 85.1% in Q1 versus 84.9% in Q4. The improvement was more noticeable among new loans issued in Q1, as pending risk management measures start to show benefits in the quarter. As Haisheng mentioned, expected vintage loss for new loans issued in Q1 declined by roughly 15% sequentially, and the 30-day collection rate further recovered to nearly 86% in April. We have further optimized our risk management model and applied more restrictive standards to new applications on new applications to mitigate potential risks throughout the quarter.

Speaker Change: 30 day collection rate was 85, 1% in Q1 versus 84, 9% in Q4.

Speaker Change: The improvement was more notable among new loans issued in Q1 as tightening risk management measures start to show benefit in the quarter.

Speaker Change: As Joe mentioned expect to vintage loss for new loans issued in Q1 declined by roughly 15% sequentially and 30 day collection rate further recovered to near the 86% in April.

Speaker Change: We have further optimized our risk management model and applied more restrictive standards to new applications.

Speaker Change: All new applications to mitigate potential risks throughout the quarter. We also proactively adjust our business mix to further reduce our exposure to higher risk assets, although economic conditions remain uncertain. We believe overall risk performance of the loan portfolio should gradually.

Alex Xu: We also proactively adjust our business mix to further reduce our exposure to higher-risk assets. Although economic conditions remain uncertain, we believe overall risk performance of the loan portfolio should gradually improve throughout 2024. As microincidentity persists and credit quality fluctuates, we will continue to take a prudent approach to book provisions against potential credit losses.

Improved throughout 2024.

Speaker Change: As macro uncertainty persists and the credit quality. It fluctuates, we will continue to take prudent approach to book provisions against the potential credit loss.

Alex Xu: Total new provision for risk-bearing loans in Q1 was approximately $1.4 billion vs. $2 billion in Q4, and the writebacks of the previous provisions were marginal in Q1. The significant sequential decrease in new provisions was mainly due to the substantial queue-on-queue decline in off-balance sheet capital-heavy loan volume, while the new provision booking ratio remained relatively stable. The decline in writeback was due to the expected risk of existing loans remaining stable, and micro uncertainties persist.

Speaker Change: Total provision for risk bearing loss in Q1 were approximately $1 4 billion versus 2 billion in Q4, and the write backs of the previous provisions were marginal in Q1.

Speaker Change: The significant sequential decrease in new provisions was mainly due to the substantial Q on Q decline in off balance sheet capital heavy loan volume.

Speaker Change: The new provision booking ratio remained relatively stable.

Speaker Change: The decline in write back was due to expect the risk of existing loans remain stable and micro uncertainties persist.

Alex Xu: Provision coverage ratio, which is defined as total outstanding provision divided by total outstanding delinquent asset heavy loan balance between 90 and 180 days, or 414% in Q1, compared to 481% in Q4. However, the provision coverage ratio was still well within our historical range. Non-Gap Net Profit was $1.2 billion in Q1 compared to $1.15 billion in Q4, and the effective tax rate for Q1 was 23.3% compared to our typical ETR of approximately 15%. Net profit and ETR were negatively impacted by 130 million withholding tax provision related to a significant tax distribution from onshore to offshore for dividend payment and share repurchase program during the quarter, with solid operating results and higher contribution from capitalized models.

Speaker Change: Provision coverage ratio, which is defined as total outstanding provision divided by total outstanding delinquent asset heavy loss.

Speaker Change: Balanced between 90, and 180 days or 414% in Q1 compared to 481% in Q4.

Speaker Change: Provision coverage ratio was still well within our historical range.

Speaker Change: non-GAAP net profit was $1 2 billion in Q1 compared to 1.15 billion in Q4.

Speaker Change: Effective tax rate for Q1 was 23, 3% compared to our typical ETR of approximately 15%.

Speaker Change: Net profit and ETR was negatively impacted by a 130 million withholding tax provision related to significant cash distributions from onshore to offshore for dividend payment and share repurchase program during the quarter.

Speaker Change: With solid operating results and higher contribution from capital light models.

Alex Xu: Our leverage ratio, which is defined as risk-bearing loan balance divided by shareholders' equity, was 2.8 times in Q1, at a historical low. We expect to see leverage ratios fluctuate around this level in the near future. We generated approximately $1.96 billion in cash from operations in Q1, compared to $2.35 billion in Q4. Total cash and cash equivalents were $8.3 billion in Q1, compared to $7.8 billion in Q4. Non-restricted cash was approximately $5.3 billion in Q1, compared to $4.2 billion in Q4.

Speaker Change: Our leverage ratio, which is defined as risk bearing loan balance divided by shareholders equity was two five sorry, two eight times in Q1.

Speaker Change: At historical low.

Speaker Change: We expect to see leverage ratio fluctuated around this level in the near future.

Speaker Change: We generated approximately $1 96 billion cash from operations in Q1 compared to 235 billion in Q4 total cash and cash equivalents was $8 3 billion in Q1 compared to seven eight.

Speaker Change: $8 billion in Q4, non restricted cash was approximately $5 3 billion in Q1 compared to $4 2 billion in Q4.

Alex Xu: As we continue to generate a healthy cash flow from operations, we believe our current cash position is sufficient to support our business development and to return to our shareholders. On June 20, 2023, we announced a share buyback program to repurchase up to $150 million over a 12 month period. In Q1, we bought approximately 16 million worth of ADS in the open market under the 2023 repurchase plan. As of March 28, 2024, we have completed substantially all of the 150 million 2023 share repurchase plan.

Speaker Change: 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.

Speaker Change: On June 22023, we announced a share buyback program to repurchase up to $115 million.

Speaker Change: Over a 12 months period.

Speaker Change: In Q1, we bought a process late 16 minting worse about ABS in the open market under the 2023 repurchase plan.

Speaker Change: As of March 28, 2024, we have completed substantially all of the $115 million 2023 share repurchase plan.

Alex Xu: On March 12, 2024, we announced a new share repurchase plan to purchase up to 350 million worth of ADS over a 12-month period starting April 1, 2024. As of May 17, 2024, we had in aggregate purchased approximately $3.4 million of ADS in the open market for a total amount of approximately $65 million, inclusive of commission, at an average price of $19.3 USD per ADS under the 2024 share repurchase plan.

Speaker Change: On March 12, 2024, we announced a new share repurchase plan to purchase up to 315 million worth of <unk> over 12 months period, starting April one 2024.

Speaker Change: As of May 17, 2024, we had in aggregate purchased approximately $3 4 million ABS in the open market for a total amount approximately 65 million inclusive of commissions at an average price of $19 three U S dollar.

Speaker Change: Per avs under the 2024 share repurchase plan the pace of the repurchase is faster than time schedule.

Operator: The pace of the repurchase is faster than scheduled; proactive execution of a share repurchase plan further demonstrates management competence and commitment to the future of the company, and the management intends to consistently use the share repurchase plan to achieve additional EPS accretion in the long run. With the full execution of the new share repurchase program and the dividend plan, we are generating the highest combined yield on a recurring basis among Chinese ADRs for our shareholders.

Speaker Change: The proactive execution of our share repurchase plan further demonstrated management's confidence and commitment to the future of the company and the management intends to consistently your share repurchase plan to achieve additional EPS accretion in the long run.

Speaker Change: With the full execution of the new share repurchase for a repurchase program and the dividend plan, we are generating highest combined yield on the recurrent basis, among Chinese ADR is to our shareholders.

Operator: Finally, regarding our business outlook, we will continue to focus on enhancing profitability and efficiency of our operation under current micro conditions. For the second quarter of 2024, the company expects to generate non-gap net income between RMB 1.22 billion and RMB 1.28 billion, representing a young-year growth between 6 to 12 percent. This outlook 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. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced.

Speaker Change: Finally regarding our business outlook, we will continue to focus on enhancing profitability and efficiency of our operation.

Speaker Change: On the current macro conditions.

Speaker Change: For the second quarter of 2024, the company expects to generate non-GAAP net income between RMB 122 billion and RMB 128 billion, representing a year on year growth between 6% to 12%.

Speaker Change: This outlook reflects the company's current and preliminary view, which is subject to material changes.

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

Speaker Change: Thank you to ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one on one again.

Speaker Change: Those who can speak Chinese please start your question in Chinese followed by English translation.

Speaker Change: To allow enough time to address everyone on the call. Please keep it to one question and one follow up and return to the queue. If you have more questions. Thank you.

Chia Huang: To withdraw your question, please press star 1 and 1 again. For those who can speak Chinese, please start your question in Chinese, followed by an English translation. To allow enough time to address everyone on the call, please keep it to one question and one follow-up and return to the queue if you have more questions. Thank you. We will now take our first question. This is from the line of Chia Huang from Morgan Stanley. Please go ahead. Okay, thank you, Manager. I have two questions to ask you.

Speaker Change: We will now take our first question.

Speaker Change: This is from the line of <unk> Wang from Morgan Stanley. Please go ahead.

Speaker Change: Alright.

Anytime.

Speaker Change: <unk> did you guys require you Glenn.

Chia Huang: First, what do you think about the growth in the number of loans this year? Especially considering the current situation of demand and risk, do you think there will be any changes compared to the beginning of the year? The second question is about how confident we are about increasing the take-away rate this year. And we can see that technology 1 is also continuing to progress. So, basically, two questions.

Speaker Change: Yes.

Speaker Change: Generally it goes somewhat come back.

Speaker Change: If you recall at Dawn, which ends on analogy switching off will generally want something you've kind of outlined chunky soil.

Speaker Change: Yes.

Speaker Change: I will go into your questions.

Speaker Change: China, India takeaways Houston's I'm in particular, you thought out about all of them kind of what you said.

Speaker Change: Yes sure.

Speaker Change: The <unk>.

Speaker Change: You can see the Missoula.

Speaker Change: <unk>.

Speaker Change: And take rates you saw that kind of got it all right now so you can tell on your P&L.

Speaker Change: So basically two questions. One is regarding the loan volume outlook, especially given the demand risk situation. We see right now house managements view changing from beginning of the year and second question is on the outlook on take rate improvement I'm. Just wondering how confident is management about improving takeaway.

Chia Huang: One is regarding the loan volume outlook, especially given the demand and the risk situation we see right now. How is management's view changing from the beginning of the year? The second question is on the outlook for TECRAE improvement. Just wondering how confident management is about improving TECRAE for the full year 2024 and whether the view has changed compared to the beginning. Okay, thank you. Let me answer the question. , [inaudible] Let's talk about the demand side first. Since today, demand for consumer loans has not recovered.

Speaker Change: All.

Speaker Change: For the full year 2024 and has the view changed.

Speaker Change: <unk> two <unk>.

Speaker Change: Beginning of the year. Thank you.

Speaker Change: Great.

Speaker Change: Well that.

Speaker Change: Uh huh.

Speaker Change: Okay and you guys do you think are switching over from here.

Speaker Change: Particularly in pharma and I'm going to be.

Speaker Change: If you're going to agree with John.

Speaker Change: So the 300 or excuse me with Humana.

Unknown Executive: , [inaudible] If we don't consider the impact of the Spring Festival, our users' login launch rate for the first four months of this year is still relatively stable., But since March and April, it will be slightly lower. So if it is the same as the same period last year, it should be said that the demand for users and the launch rate should be said to be lower than the same period last year.

Speaker Change:

Speaker Change:

Speaker Change: So hopefully about 100 excuse me when you're going through.

Speaker Change: Do you like or maybe.

Speaker Change: Okay.

Speaker Change: And what Youre seeing from the integrated Josh you rely on.

Hum.

Speaker Change: Youll see a real issue.

Speaker Change: And women neighborhood, how you're good to go.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: How do you think kind of on that woman.

Speaker Change: There's a good chance to be there.

Speaker Change: Yeah.

Speaker Change: The mood the fastener do not.

Speaker Change: Has it become human data.

Speaker Change: Finally, you can see from the learner to reality.

Speaker Change: Briefly on for Puneet.

Speaker Change: We hit upon that unusual.

Speaker Change: Degree of you know who their seasonal.

Speaker Change: So it should be seen in <unk>.

Speaker Change: Oh no.

Speaker Change: How long do you garner.

Speaker Change:

Speaker Change: Sure. So as you can see we're down to one because really hasnt, partially agenda you did it.

Unknown Executive: [inaudible] Unknown Executive, Xiaoxiong Ye, Yada Li, Unknown Executive, Xiaoxiong Ye, Unknown Executive, [inaudible] And this is the first time in the past two years that there has been negative growth in the currency. This also shows that there is still some negative growth in the current demand overall. [inaudible], We have also reduced the long-term assets of the 24-series.

Speaker Change: When we can easily do that.

Speaker Change: <unk> continues.

Speaker Change: Thank you.

Speaker Change: And you can see the shutdown.

Speaker Change: Oh.

Speaker Change: Hello, Matt.

Speaker Change: Uh huh.

Speaker Change: <unk> sat down theory, you tend to see the countdown.

Speaker Change: Okay.

Speaker Change: Giuliani them.

Matt: So it's good to hear you.

And it is within that.

Speaker Change: Not yet.

Speaker Change: It's coming together.

Speaker Change: And how should the year it should be good.

Speaker Change: And sugar.

Speaker Change: There's a huge one for me.

Speaker Change: Sure.

Speaker Change: So as you know and you go home and <unk>.

Speaker Change: The language you put them into the broader.

Speaker Change: Johan.

Speaker Change: Both of them and integrate them.

Speaker Change: You, who want to go where do you put them in real time.

Speaker Change: Okay.

Speaker Change: It is a good time to achieve.

Matt: Thank you Matt.

Speaker Change: You mean, the social <unk>.

Unknown Executive: So, on this basis, we should say that our risk performance has continued to improve. [inaudible] I expect it to be 15% better than last year's 4G. At the same time, we can see that Dapang's rush and 30-day recovery have also been edited this quarter. And this trend is still continuing in April and May of the second quarter. So I should say that our risk optimization work is still quite in line with expectations. So we should continue to maintain the current standard for wind and air and maintain a very stable overall state. Unknown Speaker 1.

Speaker Change: Three nine.

Uh huh.

Speaker Change: Man and woman.

Speaker Change: So you have got here for sure.

Speaker Change: It's just you've got Thunder.

Speaker Change: To continue the vintage loss.

Speaker Change: You could be.

Speaker Change: And it's easy to go back and do the civil Toyota Johan.

Speaker Change: And putting them in.

Speaker Change: You cannot do it.

Speaker Change: Uh huh.

Speaker Change: To advance agenda, so that they can.

Speaker Change: Two nine year olds.

Speaker Change: Got him.

Speaker Change: Thank you Susan.

Speaker Change: Argued with the three of them.

Speaker Change: Other tissue.

Speaker Change: So you can go home in the Fujian Johansson window now has a.

Speaker Change: Two of them in that way.

Speaker Change: Thank you Wei Qing.

Speaker Change: From cooling degree.

Speaker Change: Thank you about your husband Jenny.

Speaker Change: I'm going to go.

Unknown Executive: , I want to talk about a point that we have been trying to express in the past few quarters. Since last year, we have started to adjust the company's development strategy to [inaudible] Unknown Executive, Xiaoxiong Ye, Ran Xu, Frank Zheng, Zuoli Xu, Yada Li, Unknown Executive, Xiaoxiong Ye, Ran Xu, Frank Zhe For example, we are still at the peak of our growth in the direction of in-depth finance today.

Speaker Change: Hum.

Speaker Change: We can John John you go to women with you. So you can see due diligence.

Speaker Change: So I'm wondering just a woman.

Speaker Change: And you can consider.

Speaker Change: Julian on telling them ready to go.

Speaker Change: Richard.

Speaker Change: Sometimes where you go you need to know.

Speaker Change: Please I think.

Speaker Change: So does it sound that woman.

Speaker Change: Moving on to <unk>.

Speaker Change: Consider two two.

Speaker Change: So we had to move out.

Speaker Change: I'm not sure Paul.

Speaker Change: Three of them and then we'll go.

Speaker Change: So you can see here.

Speaker Change: We show them.

Speaker Change: And then on <unk> syndrome.

Speaker Change: Come on that.

Women do.

Speaker Change: Wichita.

Speaker Change: Underneath it.

Speaker Change: Yeah.

Speaker Change: You didn't comment it only means that they don't really on that.

Speaker Change: They're now with tissue totaled.

Speaker Change: Regional you're good to go integrate user.

Speaker Change: You don't want to name.

Speaker Change: And Ken what are you seeing them get them.

Speaker Change: Our hands on women.

Speaker Change: Yeah sure I mean, do you get them done in Colombia.

Unknown Executive: The amount of money we received from the top two in the first quarter increased by 8% and 12% compared to the previous year, which is much higher than the amount of our large-scale investment because large-scale investment has made some optimizations to the amount of land. At the same time, in terms of quality, we have optimized and increased the ROE of Qianrushi Finance by 1% in this quarter. [inaudible] Through this kind of structural growth, our trading volume may fluctuate, but our profits will get very good stable support.

Speaker Change:

Speaker Change: I mean churn that really they don't shut down at the pump.

Speaker Change: And Oh, I'm beads and gotten the patent box is about one just shop.

Speaker Change: Got you them in my opinion.

Speaker Change: In particular.

Speaker Change: And they should be Atlanta.

Speaker Change: And until you hit it.

Speaker Change: Okay.

Speaker Change: Unfortunately that is a good long time element.

Speaker Change: Are you now.

Speaker Change: Two nine year Johan <unk>.

Speaker Change: If you go back to.

Speaker Change: Uh huh.

Speaker Change: When.

Speaker Change: And you guys will have with tissue.

Speaker Change: I know the history that you may not how we do but it doesn't go.

Speaker Change: But as you get more of a frigid undergo can do it again.

Speaker Change: Sure.

Speaker Change: Gigawatt is it going to come down women and Jerry Yang.

Important pendulum, Connecticut unit. So there you go Peter how do you see him.

Unknown Executive: Therefore, we are very confident in fulfilling the guidance on our profits. In addition to our own work, I also want to say that we have seen that the government has recently introduced a lot of very dense policies on demand, especially the policy on real estate in Iran. I believe that real estate will play a fundamental role in the economy and bring confidence to users, especially in the gradual recovery of social employment.

Yeah.

Speaker Change: So pretty languishing human quite a woman.

Speaker Change: <unk> seen them.

Speaker Change: First one.

Speaker Change: It will depend on what you can't do that.

Speaker Change: And actually you have to meet with me.

Speaker Change: Okay.

Speaker Change: We can put together for them to bring immediate attention.

Speaker Change: We're going to.

Speaker Change: It gets into understanding it and continue to see if we can do them when you're dealing with atlantica.

Speaker Change: Can you do either didn't get them what they want.

Unknown Executive: We believe that these policies will gradually play a role. We will also closely observe changes in the macroeconomy and changes in user needs. We will adjust the overall pace in time. This is the first one, so let me translate it first. Okay, I will do the translation.

Speaker Change: And so you didn't talk it again.

Speaker Change: Well, she immediately to quanta and didn't wanted to be on packaging, which is already done.

Speaker Change: You said that you don't want to get yourself.

Speaker Change: Just as D G mentioned.

Speaker Change: Yes.

Unknown Executive: We understand everyone is concerned about our credit needs, risk, and loan growth. Since the beginning of 2024, the consumer credit amount is still yet to recover, especially since late March, where the amount has been weaker than we expected. This is reflected in the user initiation rate on our app. Excluding the impact of the spring festival, the user initiation rate in the first four months of last year was relatively stable.

Okay.

Speaker Change: Do the translation.

Speaker Change: And then everyone gets concerned about tableau cutting and loan growth.

Speaker Change: Since the beginning of 2020 for consumer credit demand is still yet to the kind of <unk>.

Speaker Change: Specially since late March whereby demand has been weaker than we think.

Speaker Change: T D.

Speaker Change: This is reflected in the new initiatives.

Speaker Change: Initiating.

Speaker Change: Yes.

Speaker Change: Excluding the impact of the Spring Festival you the initiation of a.

Speaker Change: First four months of last year. It was relatively stable. However, initiation later in March and April this year.

Unknown Executive: However, the initiation rate in March and April this year is slightly lower than the previous two months, so the user credit amount is weaker than the same period last year. The changes in our user demand are basically consistent with this year's macroeconomic trend. In the first quarter, CPI still maintained a relatively low growth rate, and the balance of household short-term consumer loans decreased by RMB 271 billion quarter on quarter. The social financing scale in April also decreased by RMB $199 billion sequentially, marking the first negative growth on a sequential basis in the past two years.

Speaker Change: Slightly lower than the previous two months.

Speaker Change: So the use of credit demand is weaker than the same period last year.

The changes in our user demand are basically consistent with <unk>.

Speaker Change: Excellent economic terms.

Speaker Change: In the first quarter EPS still maintain a relatively low loss rates and the pattern of how short term consumer.

Speaker Change: Decreased by RMB 271 billion.

Speaker Change: The social financing scale in April also decreased by RMB 199 billion sequentially, marking the first negative.

Speaker Change: A sequential basis in the past two years.

Unknown Executive: This data also confirms that the credit amount is yet to recover. In terms of credit rates, we have taken a lot of action in the past two quarters, including tightening the approval rate. Optimizing credit limits and contracting long-term assets of over 24 months. On this basis, the risk performance of our new loans has been continuously improving since November 2023. And the vintage loss in this quarter is expected to decline by about 15% compared to Q4.

Speaker Change: These data also confirms that high demand yet to come out.

Speaker Change: In terms of.

We have taken a lot of action in the path to <unk>.

Speaker Change: Including tightening approvals.

Speaker Change: Optimizing the credit limit and the contracting long term asset of over 24 months.

Speaker Change: On this basis.

Speaker Change: This performance of our new loan has been continuously improving since November 2023, and the vintage loss in this contract is expected to decline by about 15% compared to Q4.

Unknown Executive: At the same time, it can be seen that the day one delinquency rate and the 30-day collection rate of our overall loan portfolio have also improved marginally in this quarter, and the momentum will continue in April and May. At present, the risk optimization work is on track. Therefore, we will maintain current credit standards, which will be largely stable going forward.

Speaker Change: At the same time it can be seen that they wanted increasing rates and 30 day collection is also on the overall loan portfolio has also improved marginally its content.

Speaker Change: The momentum will continue.

Speaker Change: April and May.

Speaker Change: At present this optimization work.

Speaker Change: So we will maintain current credit stonegate, which will be largely stable going forward.

Unknown Executive: Here, we would like to emphasize that since the second half of 2023, we have been very clear that our company's strategy is to pursue quality growth. Under this strategy, we will not take the overall growth rate of our loan volume as the primary goal but pursue quality growth as our goal. For ineffective loans, or loans with negative or marginal returns, we will optimize those kinds of loans.

Speaker Change: Here, we would like to emphasize that in second half of 2023, we have been very clear that our company strategy is to pursue quality growth.

Speaker Change: And then it got it and we will now take the overall growth rate of our loan volume as the primary call.

Speaker Change: Can you quantify at all four affecting loan along with leveraging our marginal.

Speaker Change: Sure.

Speaker Change: We will optimize those kind of known for.

Speaker Change: Business with healthy profit work.

Speaker Change: Q2 in that program.

Unknown Executive: For businesses with healthy profits, we will continue to invest in growth. For example, embedded finance will continue to be a focus of our growth this year. The loan volume of the top two channels for embedded finance in Q1 increased by 8% and 12%, respectively, sequentially, which is far higher than the overall loan volume growth.

Speaker Change: For example, in my embedded a finance and accounting.

Speaker Change: Okay. So partner this year.

The low volume of the top huge channel for embedded finance in Q1.

Speaker Change: <unk> by 8% and 10%.

Speaker Change: We expect to make discretionary which is far higher than the overall volume growth.

Unknown Executive: At the same time, the ROA of our embedded finance model also improved by about one percentage point sequentially in Q1. We will continue to deepen cooperation with quality channels and replicate the embedded finance model to more traffic. Through this structured growth, though low volume will fluctuate, our profitability will be steadily enhanced, and we are confident in fulfilling our profit guidance. Recently, we have seen the government introduce a series of policies to support the real estate industry.

Speaker Change: In terms of our embedded finance model also improved by about one percentage point in Q1 sequentially.

We'll continue to deepen cooperation with a quality channels and replicate embedded finance model.

Speaker Change: Thanks.

Speaker Change: Similarly structured.

So low volume wells.

Speaker Change: Our profitability will be Stephanie.

Stephanie: And then we are confident in fulfilling our profit guidance.

Stephanie: Recently, we have seen the government entity.

Stephanie: As a policy to support the real estate industry.

Unknown Executive: We believe it will play a positive role in stabilizing the real economy, and it's also helpful to the gradual recovery of users' confidence. So we will continue to observe the trends of macroeconomics and user demand and adjust the loan pace in a timely manner.

Stephanie: We believe it will take a positive stable.

Stephanie: Stabilizing the economy and it also helps to gradually economy with this company.

Speaker Change: We will continue to offset the chunk of macroeconomic and end user demand and adjust the locate.

Speaker Change: Timely manner.

Speaker Change: Uh huh.

Speaker Change: Thank you rich.

Speaker Change: Sure.

Speaker Change #100: I don't know, which I don't pretend to be down.

Unknown Executive: Since last year, we... [inaudible] took the rate from 3.2% in Q4 to 3.5% in Q1. If we cut the so-called tax income we expected from reducing the dividend, The operating profit ratio will be more obvious. Next, we expect that Q2's TechGrid will have further optimizations. Transcribed by https://otter.ai, [inaudible], The first thing is the risk, the risk burden.

Speaker Change #101: From switching Hillman.

Speaker Change #101: When we consider the good fight until you at all.

For you to then integrate your museum families or whatnot.

Speaker Change #102: As a woman.

Speaker Change #103: Oh, there you go.

Speaker Change #103: Hum.

Speaker Change #103: Sandy.

Speaker Change #103: Easy to dial back from funding.

Speaker Change #103: Until you go by.

Speaker Change #103: A woman to phone calls.

Speaker Change #103: When you go there for you.

The city and county courtyard behind that to continue.

Speaker Change #103: I'm not sure how crazy the comedian that's for sure.

Speaker Change #103: No.

Speaker Change #103:

Speaker Change #103: And again I know women.

Speaker Change #103: Your woman Chiara together to configure it in a heartbeat.

Speaker Change #104: You heard it from Jim.

Speaker Change #105: I think thats, what youre doing with you five minutes to get paid when youtuber.

Speaker Change #106: Do you do it.

Speaker Change #106: Tomorrow.

Unknown Executive: We should say that the profitability of the entire asset package has improved through the narrowing of our low-efficiency or loss-making business and our new release, Vintage Lost. [inaudible]??,??,?? The second is about the optimization of funding costs. This year, the funds are still very generous.

Speaker Change #106: And women.

Speaker Change #107: So soon.

Speaker Change #107: E G.

Speaker Change #108: So Chris Yeah, we're not.

Speaker Change #107: I think that's the 10 quarters ago.

Speaker Change #107: So you got to choose them.

Speaker Change #107: Easy to them in Xinjiang continental bigger vintage losses.

Speaker Change #107: It would be almost 62, you'll pop happen to Sherwin Williams.

Speaker Change #109: Darshan woman.

Speaker Change #109: The issues that women who aren't yet.

Speaker Change #109: Good I'm good on Johan Sverdrup and the woman.

Speaker Change #109: They already do that.

Speaker Change #109: But I don't know who you're good to me.

Speaker Change #109: Now the onshore on music freedom.

Speaker Change #110: Uh huh.

Speaker Change #111: Forgive me.

Speaker Change #111: And every time I'm, calling from my pencil woman.

Unknown Executive: At the same time, we have increased our ability to issue ABS. [inaudible] Unknown Executive, Yada Li, Frank Zheng, Zulu Xu, Yada Li, Unknown Executive, Yada Li, At the same time, we...?? We will continue to issue more ABS products in the second quarter. The overall cost of the second quarter should be said to have a further decrease in this gap. Thirdly, in terms of our overall asset distribution, we have introduced more financial institutions and matched different asset categories based on their different risk preferences and ability to pay. This is to improve the conversion rate of our overall assets. (Inaudible) I think we will be able to maintain our level in the second quarter.

John John: John I'll, let be degree ABS document.

John John: You don't know when.

Speaker Change #113: Thank you <unk>.

Speaker Change #114: What's your target.

Speaker Change #115: Uh huh.

Speaker Change #116: Good good.

Speaker Change #116: So that it becomes the incumbent.

Speaker Change #116: You're going to distribute it because shutdown into the lung.

Speaker Change #116: Uh huh.

Sharon: Now Oh Sharon.

Sharon: Woman.

Speaker Change #118: You too.

Speaker Change #118: Monday Sanjana sugar beet.

Speaker Change #119: Well then.

Speaker Change #119: When did you say the woman argued to tissue if I can do the EPS it.

Speaker Change #119: You have them and to get to that would be granted because of the environment.

Speaker Change #119: Argued to the engineers, because internally you guys, Ohio, eager and seeing if we can get it to go.

Particularly from Jim.

Speaker Change #120: Do you sounded as women's yoga.

Speaker Change #121: How do you get from you all.

Speaker Change #121: Well the Google you can do the do you know when you go in China can you just haven't put another panel in the midterm.

Speaker Change #121: Hey.

Speaker Change #121: Okay.

Phil: Yes, Phil.

Phil: Some of them, we didn't see it this time and get it in cotton Valley.

Phil: Unfortunately, you do create she Goldman.

Phil: Nishu.

Frank: And then could you kind of on a 62 women Jason This is Frank.

Speaker Change #124: The team.

And tuition a woman has a good position here with the take rate.

Speaker Change #125: Maybe chantal machine that Johan she's Luca.

Speaker Change #126: Hum argued with Huntington.

Speaker Change #127: Good wishes that negotiations are something that wasn't team, which im sure youll have.

Unknown Executive: We will make further improvements. On the other hand, we also use AI technology to enrich our business. For example, we use AI to help our engineers improve the coding efficiency of codes.

Speaker Change #128: Thank you.

Speaker Change #129: If I'm in women.

Speaker Change #129: We wanted them to go.

Yeah.

Speaker Change #129: Total.

Speaker Change #130: No you are.

Speaker Change #130: Beautiful woman and <unk>.

Speaker Change #130: Yeah.

Speaker Change #130: And bundle them in Congress.

<unk> hundred sheet you all the time.

Unknown Executive: Today, our entire company's code has a 20% use rate due to AI coding. In the future, we will continue to invest in this direction to improve the overall efficiency of our business. Based on the above work, we hope that this year's TechGrid will further optimize on the basis of 3.5. Okay, I will do the translation.

You didn't hear women Didnt see considered a good benchmark.

Speaker Change #130: You by now should be good.

Speaker Change #130: How do you really need to see a degree of IP HSM.

Speaker Change #131: Oh Man you guys were kind of out of like I showed you know you can I mean, essentially you got to do something now tell you, which I'm element.

Speaker Change #131: So what that game genre, you understand your human tissue damage and that you don't know me laughing them.

Speaker Change #132: The woman.

Speaker Change #132: Because when you show it to you.

Speaker Change #132: Okay.

Speaker Change #133: Sure sure.

Speaker Change #133: Yeah.

Are you going to Cook could be part of you guys do you guys see yourself, what it should do something.

Speaker Change #133: And really I wouldn't jump way tissue that defined cannot shoot tissue.

Speaker Change #134: Thank you Jason.

Speaker Change #134: <unk>.

Speaker Change #134: From an integration with you.

Speaker Change #135: G sounds as you've been doing on women.

Speaker Change #136: Shimon, Virginia, and that's a good to great.

Speaker Change #136:

Speaker Change #137: How reach team, which you shouldn't worry Johan.

Speaker Change #136: Karen.

Unknown Executive: Regarding the take rate, I want to share some color with you. Since the second half of the last year, we have made adjustments to our business strategies, emphasizing more the overall profitability of our business, and we have achieved good results. Our take rate has increased from 3.2% in Q4 to 3.5%. If we exclude the impact of the withholding on dividends and buybacks, the increase in the operating profit margin is even more.

Speaker Change #136: Okay.

Speaker Change #138: Out of the calculation.

Speaker Change #139: Adding to take rate <unk>.

Speaker Change #140: Since the second half of last year, and we have made adjustments to our business strategy emphasizing more on the overall profitability of our business and have achieved that.

Speaker Change #140: Our take rate has increased.

Three 2% in Q4 to three 5%.

Speaker Change #141: Excluding the impact of the withholding tax on dividend and buyback the increase in the operating profit margin even more.

Unknown Executive: Next, we expect the takeaway in Q2 to be better optimized, with the main driving factors being the first one being risk optimization. By cutting back business with lower or negative margins, we enhance the profitability of the overall loan portfolio. The vintage loss of new loans in Q1 is expected to be roughly 15% optimized compared to Q4. In addition, we will continue to improve the efficiency of the collection process, and we expect further optimization of the risk indicators in Q2. The second one is the funding cost. This year, market liquidity is still ample, and we have increased the issuance of the ABS. This quarter, we issued 5.3 billion ABS.

Speaker Change #141: We expect the takeaway in Q2 to be optimized.

Speaker Change #141: <unk> main driving factors.

Speaker Change #141: The first one.

Speaker Change #141: Optimization.

Speaker Change #141: By cutting back business.

Speaker Change #141: Negative margin, we enhance the profitability of the overall loan portfolio immediately lots of new loans in Q1 is.

Speaker Change #141: Actually <unk> been roughly 15% optimized compared to Q4. In addition, we will continue to improve efficiency of the collection process and we expect further optimization of the risk indicators in Q2.

Unknown Executive: At the same time, our funding cost for cap-heavy loan facilitation continues to decline. With these two factors combined, our funding cost in Q1 has decreased by about 70 billion. We expect to further reduce our funding costs by issuing more ABS and optimizing our funding structures going forward. The third one is about asset distribution. By introducing more financial institutions and matching different assets according to their risk appetites to enhance the overall conversion rate while also improving our own probability,

Speaker Change #141: Second one is the funding.

Speaker Change #142: Market liquidity is ample.

Speaker Change #143: And we have increased issuance of the ATM.

Speaker Change #143: This quarter, we issued five 8 billion.

Speaker Change #143: At the same time.

Speaker Change #143: Multiple kept having room for dedication continues to decline.

These two factors combined our Holly Hunt <unk> has decreased.

Speaker Change #143: 70 basis points sequentially, we expect to reduce our funding.

Speaker Change #144: By issuing more <unk> and <unk>.

Speaker Change #144: Optimizing our funding structure going forward.

Speaker Change #145: Third one is about extra patients by introducing more financial institution and a matching different assets according to their appetite.

Speaker Change #145: They're opening a commercially while also improving our own capability.

Unknown Executive: This quarter, the loan volume of IPE has further increased, and the tick rate of IPE has also been optimized by 76 basis points compared to the same period last year. It is expected to maintain at this level. We also empower the business through artificial intelligence, such as our AI development tools, with a code adoption rate of 20%, which can improve our development efficiency by roughly 30%. We have also used large-language models to empower our staff in the collection and telemarketing operations to improve efficiency in user communication.

Speaker Change #145: This quarter is a low volume of IP.

Speaker Change #145: And the takeaways of ITE has also been optimized by 76 basis points compared to the same period last year.

Speaker Change #145: We expect it to maintain at this level in Q2 and going forward.

Speaker Change #145: We also empowered to.

Speaker Change #145: Artificial intelligence such as our AI.

Speaker Change #145: Development <unk>.

Speaker Change #145: With a code adoption rate of 20%, which you can't improve our management efficiency by roughly 30%. We have also lost language model to empower our staff in the collection and telemarketing operations to <unk>.

Speaker Change #145: Tuesday efficiency in use.

Speaker Change #145: The communication, we have seen some benefit in the testing area and.

Unknown Executive: We have seen some benefits in these testing areas, and we will continue to invest in these directions in the future to continuously improve our operational efficiency. Based on the work we have been doing so far, we expect the take rate to be further optimized on the basis of 3.5% in the future. Thank you. We will now take our next question. Standby.

Speaker Change #145: And it will continue treating back east direction in the future.

Speaker Change #146: To continuously improve our operational efficiency.

Speaker Change #146: Based on what we have been doing so far we expect that the takeaway to be optimized on the bagel three 5% in the future.

Speaker Change #146: Sure.

Speaker Change #147: Thank you.

Speaker Change #148: Thank you.

Speaker Change #149: Well now take our next question.

Please standby.

Emma Xu: The question is from the line of Emma Xu from Bank of America. Please go ahead. Thank you for the question. I have two questions. The first question is about the quality of assets. We see some leading indicators, such as the Day-1 Delinquency Rate and 30-Day Collection Rate, have been stable in the first quarter. Can we maintain this trend in the second quarter? Or will we see a more significant improvement? As Mr. Xu said, the Day-1 Delinquency Rate has risen a lot in this quarter because the corresponding balance has fallen by 16.5%.

Speaker Change #150: Next question is from the line of <unk> from Bank of America. Please go ahead.

Speaker Change #151: Yes, so again, if you want to deal with.

Speaker Change #152: What do you mean <unk>.

Speaker Change #151: Hello.

Speaker Change #151: Yeah.

Mr. Wang: Thank you Mr. Wang W Bank collection may think of that.

Speaker Change #151:

Speaker Change #151: No.

Speaker Change #151: No it's all about.

Speaker Change #151: That's useful.

Speaker Change #151: Michael.

Speaker Change #151: Oh My God she's only.

Speaker Change #154: Sure. So as you can see those also have dual.

Speaker Change #154: And the way.

Allison: Thanks Allison.

Emma Xu: But even after considering these factors, the Day-1 Delinquency Rate still has a significant rise. Although we know that this is a post-pandemic indicator, investors are still concerned about this indicator. So I would like to ask, when do you think the Day-1 Delinquency Rate will start? And when will we see it?

Speaker Change #156: Do you guys own.

Speaker Change #156: Hum.

Judy: Thank you Judy.

Speaker Change #158: That's fine.

Joe Mitchell: Joe Mitchell.

Speaker Change #160: Okay got you.

Speaker Change #161: Yes sure.

Speaker Change #162: Oh Wow.

Speaker Change #163: Well, Jay Balmy element you adopt <unk>.

Speaker Change #164: She michaelle Holland on golf.

Emma Xu: The second question is about return on investment. As Mr. Xu mentioned, the current return on investment plan is running faster than expected. Can we maintain this trend in the future?

Speaker Change #163: Yes.

Speaker Change #163: Not the other lens.

Speaker Change #165: Jackie golf like all of that.

Speaker Change #163: Alondra.

Lieutenant Michael: So I'm Lieutenant Michael do you want <unk>.

Speaker Change #163: Okay.

Speaker Change #167: So you got yourself.

Speaker Change #168: So I have two questions first one is about your asset quality. So some of your leading with indicators have already stabilized impact contracts.

Emma Xu: The first one is about your asset quality. So some of your leading risk indicators have already stabilized in the first quarter. So can we continue to see this trend or even more significant improvement in the second quarter? And about the 90-Day Delinquency Rate, you explained earlier that the significant increase is possibly driven by a lower loan balance. However, even excluding these factors, the 90-Day Delinquency Rate still increased quite significantly.

Speaker Change #167: Okay.

Speaker Change #167: Juicy such trend or even more significant improved improvement in the second quarter and about a 90 day delinquency rate.

Speaker Change #169: <unk> explained earlier that.

Speaker Change #170: The significant increase is partly driven by low loan balance.

Speaker Change #171: Other events.

Speaker Change #171: Excluding.

Speaker Change #171: These factors the 90 day delinquency rate steel increased quite significantly so.

Emma Xu: So when will we see the improvement in this metric? The second question is about your buyback. You mentioned earlier that you execute the share buyback plans at a pace faster than the time schedule. So do you expect to continue to maintain such a repurchase pace? Thanks. Thank you, Emma.

Speaker Change #172: We see that improvement in this metric and the second question is about your buyback.

Speaker Change #173: Or the year that you are.

Speaker Change #174: The share buyback and at a pace faster than the time that you. So do you expect to continue to maintain such repurchase pace. Thanks.

Speaker Change #175: Uh huh.

Alex Xu: Let's have our CIO Zhen Yan and CFO Alex answer these two questions separately. Haisheng Wu just mentioned that Q1's interest rate will be 15% better than last year's Q4. In terms of the risk of pure total assets, this year's Q1 30-day moving average is highly related to the 30-day return on investment. The interest rate is 100% better than last year's Q4.

Speaker Change #176: For me, it's human liver cells for example.

Speaker Change #177: With that language.

Speaker Change #177: Okay.

Speaker Change #177: Hi.

The second one is <unk> had some headwinds on our Mercury fund when did you last each is simply be G&A closely our battle with a number of <unk>.

<unk> is essentially.

Speaker Change #177: So this doesn't move favorably for Santander has also doubled.

Speaker Change #177: <unk> be chi in Tucson, like kind of <unk>.

Yan Zheng: It will continue to improve in the next two months. In May, we expect to see an improvement of more than 8% on the basis of Q1. There are several aspects to promote this early risk indicator optimization. The first is the optimization of our own trading strategy and contract strategy. The third is to improve the model performance of our risk by combining the three. Unknown Executive, Xiaoxiong Ye, Ran Xu, Frank Zheng, Zuoli Xu, Yada Li, 360 Digitech Unknown Executive, Xiaoxiong Ye, Ran Xu, Frank Zheng, Zuoli Xu, Yada Li, Okay, I will do the translation.

Speaker Change #177: Soon soon.

Speaker Change #178: <unk> Wilson was equal to the tissue side.

Speaker Change #178: It will go up in value centers Johan <unk>.

Speaker Change #179: <unk> is our chief Williams with <unk>.

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Speaker Change #178: So the formula.

Speaker Change #178: Hi.

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Speaker Change #181: Mosley Sina.

Speaker Change #181: It will be a lesser guffman medallion.

Speaker Change #182: Yes on US is that I believe one in Colombia.

Speaker Change #183: Thanks <unk>.

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Speaker Change #184: So you don't have a single home at <unk>.

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Speaker Change #184: Such temporary solution team.

Speaker Change #184: Please please be truly the last sort of five <unk> bank convenient.

Speaker Change #185: The Healy Cheetah.

Speaker Change #185: <unk> Eagle Bank and you can see them.

Speaker Change #185: These antennas.

Speaker Change #186: Well I'll start with the <unk>.

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Speaker Change #188: Until I see some on the <unk> maybe one.

Speaker Change #188: EMEA piece.

Speaker Change #188: <unk> South Africa.

Speaker Change #188: <unk>.

Stefan: Stefan <unk> from BNP.

Stefan: So the cohort C and a familiar pattern.

Alicia team.

Stefan: Okay.

Yan Zheng: As Haisheng just mentioned, the vintage loss has declined by roughly 15% in Q1 sequentially. As for the overall loan portfolio, the 30-day migration rate, or days past due 30 plus, for Q1 has been a 4% reduction compared to Q4. With our continuous efforts in April and May, it is expected to be further optimized by more than 8% in May on the basis of Q1. The main work driving the optimization of our early risk indicators includes the following three aspects.

Speaker Change #190: Okay, I'll add to their translation and hedging just mentioned that the vintage loss.

Speaker Change #190: By roughly 15% in Q1 sequentially.

Speaker Change #190: Overall, 40, 30 day migration rate or days past due 30 for Q1 has been a has been.

Speaker Change #190: A 4% reduction compared to Q1 with our continuous efforts in April and May it is expected to be better optimized supply.

Speaker Change #191: More than 8% in may on the basis of Q1, the main ones driving the optimization of our early indicators, including the following.

Speaker Change #192: See FX.

Yan Zheng: First one, the risk strategy and the credit line optimization. By using the models in conjunction with the third party, we have improved the performance of the risk models to identify high-risk transactions. Second, in the post-loan operation, we established new self-operating principles and procedures and a collection partner management method in March. We optimized the case collection algorithm and the commission mechanism for different collection teams.

Speaker Change #192: First one strategy.

Speaker Change #192: Strategy and credit line optimization by building the model in conjunction with third parties, we have incurred.

Speaker Change #192: Okay.

Speaker Change #192: To identify high risk connection.

Speaker Change #192: Second in the postal operation, we established a new operating principles at Pratt and.

And attraction panel management method in March we optimized that page collection operation and commission mechanic in four different collection team.

Yan Zheng: Promoting the internal and external collection team to invest in higher quality collection resources to improve the collection rates for both front-end and back-end. It is expected that the 30-day collection rates will improve by 80 to 100 basis points in April and May, compared to 85.1% in Q1. Third, we're focusing on upgrading the post-loan repayment infrastructure. We have made lots of optimizations in both the front and back ends, including externally expanding news deduction channels and a method to improve the coverage and the success rate of the repayment deduction.

Speaker Change #192: Noting the internet internal and tunnel patches.

Speaker Change #192: To invest in higher quality packaging recast to include the collection rates for both.

Speaker Change #192: Front end and backend.

Speaker Change #193: Exactly that's the 30 day production rate increased by 80 to 100 basis.

At this point in April and May.

Speaker Change #193: Compared to 85, 1% in Q1.

Speaker Change #193: We are focusing on.

Speaker Change #193: Upgrading the post Malone the PMA interconnection, we have made lots of optimization in both defense and buckhead, including externally extending use detection channels and methods to improve the coverage and the success rate of the payment.

Speaker Change #193: Payment protection.

Yan Zheng: And internally, we have also optimized the polling algorithm and the timeliness of the payment deduction. In this way, we have ensured better collection efficiency while maintaining our customer experience. In addition, we have also achieved good results in terms of resource expansion and applications in the way of legal fees, such as barter, bailout, and delivery. Overall, our back-end reserve assets have increased by about 1.7 billion yuan compared to four months two or three months ago this year, and we will further increase our investment in legal fees this year. Overall, I think that with a series of efforts to optimize and build capabilities and some resource investment, our Q2 asset quality will continue to improve.

Speaker Change #193: And internally we have also optimized our polling also with him and 10 minutes.

Speaker Change #193: Payment protection.

Speaker Change #193: This way, we have a shed better collection efficiency while maintained.

Speaker Change #194: Our customer experience.

Speaker Change #195: So I don't know Matthias <unk> signage.

Speaker Change #195: Yes.

Speaker Change #196: She says she tell shoebox. So soon so such as possible to implement the unions on yet Johnson is slower than we should.

Speaker Change #197: <unk> intends to gilead can be <unk>.

Speaker Change #197: It achieved so no we're not seeing any of the team will achieve Tata subsidiary I know you've got Hulu.

Speaker Change #197: Sure.

Speaker Change #197: <unk> on the deal up in the lithium cell Assembly in D C in Asia.

Sameer: Hello, Sameer <unk> with Macquarie.

Speaker Change #199: Please proceed with that center.

Yan Zheng: In addition, we have also achieved good results in backhand collection, especially in the application of legal collection methods, such as litigation, property preservation, and lawsuits, which resulted in an actual recovery amount of additional 170 million RMB in the first four months of this year compared to the same period last year. We have further increased investment in legal collection resources this year. Regarding the increase in the 90-plus overdue rates this quarter, the core reason is that in the process of de-risking, we will guide the tail-end customers out, which leads to a 16.5% decrease in the denominator of the statistics. The decrease in the denominator directly caused the ratio to jump up.

Speaker Change #199: Okay.

Speaker Change #200: In addition, we have also achieved a good result in that kind of collection, especially in the application of legal collection method, such as litigation update and transformation in the last year, which has resulted in an actual net amount of the additional 170 million RMB in the first four months.

Speaker Change #201: <unk> I think your last year, whereby the increased investment in legal collection recycling this year.

Speaker Change #201: Regarding the increase in the 90 plus overdue rate this quarter.

Speaker Change #201: The core reason is that in the process of Derisking, we looked at the tail end customers.

Speaker Change #201: Which leads to a 16% 16, 5% decreasing the denominator.

Speaker Change #201: Check.

Alex Xu: Since the indicator mismatches and is delayed in time, it doesn't reflect the real-time trend of our risk performance, and we recommend that we pay less attention to it. If we continue to do this action, it will lead to a further fluctuation in the denominator, and the 90 plus overdue rate will fluctuate as well. But the actual result is that we are doing the de-risking, and our risk performance is improving. So we suggest focusing more on indicators such as the day one delinquency rate, 30-day correction rate, and the 30-day migration rate that can truly reflect the current risk situation, which is all continuously improving.

Speaker Change #201: The decreasing the denominator, that's made constellation to jackpot, indicating mismatch and the delays in China. It doesn't reflect a new 10 10 off our risk performance and Luisa.

Now that we can.

Speaker Change #201: Pay less attention today, and we continue to do these actions it will lead to a further fluctuation in the denominator.

Speaker Change #201: The Nike plus overdue rates were flattish.

Speaker Change #202: Oh Wow.

Speaker Change #202: The actual results, we are doing that derisking and our performance.

Speaker Change #203: <unk> Suisse.

Speaker Change #203: Let's focus more indicators such as that day, one delinquency rate 30 day production rate and the 30 day migration rate that's K to name the lack of kind of situations, which are continuously improving.

Alex Xu: Okay. And regarding the share buyback, as we mentioned in the prepared remarks, we are ahead of schedule. If you do the math, $350 million buyback program, over 250 trading days for a year, which averages about $1.6 million US per trading day.

Speaker Change #204: Okay, and then regarding the <unk>.

Speaker Change #205: Share buyback as we mentioned in the prepared remarks. We are ahead of our schedule. If you do the math $315 million a buyback program over a 250 trading days for a year, which average about $1 6 million U S per day per trading day. So.

Speaker Change #205: So far we're running at about one point close to $1 9 million U S. Dollar per trading day. So about 20% ahead of our schedule right now and the reason why we do that to more proactively just because.

Alex Xu: So far, we are running at about $1.9 million US per trading day, so about 20% ahead of the schedule right now. And the reason we do that more proactively is because we still view this as a very attractive valuation. We still believe this is a good investment for our cash. And at least for the time being, we will continue to maintain a relatively faster pace than the schedule. Thanks.

Speaker Change #205: We still view this as a very attractive valuation we still believe this is a good.

Speaker Change #205: Our investment for our for all cash.

Speaker Change #205: And at least for the time being we will continue to maintain a relatively faster.

Speaker Change #205: Pace than the time schedule.

Speaker Change #206: Thanks next question please.

Speaker Change #207: Thank you.

Well now take our next question.

Operator: Next question, please. Thank you. We'll now take our next question. This is from the line of Alex Ye from UBS. Please go ahead. Okay, thank you.

Speaker Change #208: This is from the line of Alex <unk> from UBS. Please go ahead.

Alex Ye: I have two follow-up questions. The first one is about the funding cost. You just mentioned that there is room for further reduction in the second quarter. I would like to ask, especially in terms of the rental funding cost, because we see that there was no decrease in RPR in the first quarter. So such a significant reduction in funding costs is mainly due to the supply and demand of financial institutions. So I would like to ask, if we do not consider ABS issuance, just looking at the rental cost, how much room will there be in the second quarter? Is it actually a little bit smaller than the first quarter?

Speaker Change #209: Hey, good morning, John.

Julien: Hey, Julien.

Speaker Change #211: T D.

Speaker Change #212: <unk> Macquarie.

Speaker Change #212: So.

Speaker Change #213: You don't you.

Speaker Change #213: It's identical.

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Sean: Permission side.

Sean: At this time I would say client kind of in the mail.

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Sean: So the things I'm going to charge offs.

Speaker Change #215: Uh huh.

Speaker Change #216: Thanks, Sean.

Speaker Change #215: Okay.

Speaker Change #215: Uh huh.

Speaker Change #215: So it's a kind of provide some let's say.

Speaker Change #215: Just to kind of highway you toss out there you guys.

Speaker Change #215: So my sense of it.

Speaker Change #215: Later this year.

Speaker Change #215: You have one chance at <unk>.

Speaker Change #215: Telephone.

Speaker Change #218: How you think especially at the appeal blah Blah blah blah.

Speaker Change #217: Thanks <unk>.

Speaker Change #219: Well champions be Trina <unk> assignments.

Speaker Change #220: Thank you.

Alex Ye: The second question is about the pre-payment rate because there was a more obvious jump in the first quarter last year. At the moment, due to the relatively weak demand, I don't know if it will also affect this area. My first question is about the funding cost outlook. So, management has mentioned that there's plenty of room for improvement in the second quarter. So, I'm just wondering, in terms of the magnitude, how much should we expect the funding cost to improve in the second quarter?

Speaker Change #221: My first question is on the funding cost so my estimation.

Continued room for improvement in the second quarter. So I'm just wondering.

In terms of the magnitude how much should we expect.

Speaker Change #222: The pudding.

Speaker Change #222: Cutting cost to improve in the second quarter and then secondly in terms of the early prepayment ratio.

Alex Ye: And then secondly, in terms of the early prepayment ratio, it increased quite a bit in Q1 last year. And now, given credit demand appears to be relatively weak at the moment, does it have any impact on your prepayment ratio as well?

Speaker Change #223: It increased quite a bit.

Speaker Change #223: Q1 last year and now given the credit demand appear to be relatively weak at the moment.

Unknown Executive: How is the current prepayment running compared to last year and last year? I'd like to talk about the cost of capital. I mentioned it earlier, Unknown Speaker 00.00.00.00.

Speaker Change #224: Any impact on your prepayment.

Speaker Change #225: Prepayment ratio.

Speaker Change #226: How is the current covenant ratio.

Speaker Change #227: Compared to last year and last quarter. Thank you.

Speaker Change #227: Okay.

Speaker Change #227: Okay.

Speaker Change #228: Good morning.

Speaker Change #229: Chairman My graduation.

Tom: This is Tom.

Tom: Do you want me to do them servicing them at the time the negotiation.

Speaker Change #231: Is it a few times is a good figure to suggest we should you actually mentioned it.

Speaker Change #231: Hum.

Speaker Change #232: 301 undergrad cigarettes.

Speaker Change #232: And do you actually have it waiting to get them, but.

Unknown Executive: [inaudible] We will continue to strive to release more on AVS, so what if these two factors add up? [inaudible] Yan Zheng, Frank Zheng, Yada Li, Unknown Executive, Xiaoxiong Ye, Ran Xu, Frank Zheng, Zuoli Xu, Yada Li, Unknown Executive, Xiaoxiong Ye, Frank Zheng, 360 Transcript by Rev.com Page 1 of 10, [inaudible] According to the data, the 7-day and 30-day pre-yielding rate of the first quarter of this year is basically the same as last year's Q4, which should be said to be 15% lower than the same period last year.

Speaker Change #232: Turning to women's everything.

Speaker Change #232: Suffice it now which is huge and you can do in certain lines, where did you end up on that.

Speaker Change #232: You could go into Manhattan.

Speaker Change #232: Shoot.

Speaker Change #232: John.

Speaker Change #232: Interesting.

Speaker Change #232: Glenn would you agree that you don't want to you.

Speaker Change #233: Junior engineered wood.

Speaker Change #234: Good good.

Speaker Change #235: So do you mean the degree.

Speaker Change #236: I know you started the young how you know how can she cleaned up.

Speaker Change #235: Is it where you could pass what it'd be good to go to somebody with unions and Keith agree Yun.

Speaker Change #235: I put it on humans and dogs.

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Speaker Change #237: You wouldn't do.

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Speaker Change #237: Between 20 to 30 bps, you don't want to go Skus and do you want.

Speaker Change #237: It's all booted them, unfortunately couldn't treat them differently.

Speaker Change #237: Great.

Speaker Change #237: These women she didn't do a good deal for them, which we shifted them integrated.

Speaker Change #238: It's a great tool and getting them to do them.

Speaker Change #238: Until you won't be at credit Suisse, and wishing that she can use her own cool country.

Speaker Change #238: Gotcha.

Speaker Change #238: You can do it at a good humor, and which ones you don't use <unk>, who didn't integrate it was from Macquarie.

Speaker Change #238: Into them and kind of let it go through realized last one O.

Speaker Change #239: And you need really good chunk of it sounds like you're in a degree which you don't want you're not keeping how quick can you integrate your capital with them when pitching it I'm not even sure sure John.

Speaker Change #239: Patton just shows what you.

Speaker Change #239: Generic woman's human pathway of credit box, you can kind of deal with Genesis.

Speaker Change #240: That's correct.

Unknown Executive: Okay, I will do the translation. First, our funding cost. As I discussed earlier, the demand for assets from financial institutions remains very strong this year, and we remain competitive on the funding side. We expect that the cost of funds in Q2 will continue to decline.

Speaker Change #241: Okay I'll do that.

Speaker Change #241: Transmission.

Speaker Change #242: Our funding cost as I discussed earlier.

Speaker Change #242: Demand for assets from financial institutions, the main kind of Congress and we remain competitive as final site.

Unknown Executive: On the one hand, our funding cost for cap-heavy loan facilitation and ABS issuance will continue to decrease. And on the other hand, the proportion of ABS in the fund will be further increased. Second, it is about early repayment. This year, the central bank has placed greater emphasis on guiding the balanced allocation of credit, enhancing the stability and sustainability of the overall growth of credit. So the market environment has a better impact on the repayment of prepayment than Zintier last year.

Speaker Change #242: We expect that the cost of funds in Q2 continued to decline due to our funding forecast heavy loan facilitation.

Speaker Change #242: In addition, we have continued to decrease and on the other hand desktop a proportion of <unk> increased.

Speaker Change #242: Second is about early repayment.

Speaker Change #243: The Central Bank has a greater emphasis on guiding the balanced allocation of credit enhancing the stability and sustainability of the overall growth.

Speaker Change #244: Okay credit so the market environment has a better impact on entertainment prepayments and I think you asked here.

Unknown Executive: We have also taken many measures to control the early repayment ratio. For example, we control the issuance of turnover funds for active users in terms of our operations. Second, we also predict users' early repayment tendency based on our algorithm and enhance our product offering in a timely manner to manage the early repayment ratio. Therefore, the seven-day and 30-day repayment rates in Q1 this year are basically the same as Q4 last year but have decreased by approximately 15% compared to the same period last year.

Speaker Change #244: We have also taken many measures to control it.

Speaker Change #245: Tim renovation finished the one we are in and.

Speaker Change #246: And we control the issuance of 10 or more active users.

Speaker Change #246: First of all our operations.

Secondly, we also are pretty.

Speaker Change #246: Did you say early repayment, Tennessee based on our overhead and enhance all kind of on a timely manner to manage that letting that stimulation. Therefore, the seven day.

Speaker Change #247: 30 days with payments to make.

Speaker Change #247: In Q1 this year are basically the same.

Speaker Change #247: To put on that.

Speaker Change #247: Let's have decreased by approximately 15% compared to the same period last year and we expect our earnings accumulation, we have maintained a stable going forward.

Unknown Executive: And we expect our early repayment ratio will remain stable going forward. Thank you. Okay, operator. Let's take the final question for the day. Thank you. One moment, please.

Speaker Change #249: Thank you Okay, operator, let's take the final question for the day.

Speaker Change #248: Thank you.

Speaker Change #250: Well amendment place.

Yada Li: Our final question is from the line of Yada Li from CICC. Please go ahead. Hello, management team. Thank you for giving me this opportunity to ask questions. Today, I would like to ask the management team about the choice of our future payment mode. At the end of this year and in the long term, the platform mode will make a difference in the price-to-asset ratio and I.C.E. And in the credit-driven payment mode, the price-to-asset ratio will show the difference between the price-to-asset ratio and the self-profit mode. Let's take a look at how the company balances the bottom line and the reasons behind it. Thank you for your attention. Then I'll do the translation.

Speaker Change #250: And our final question is from the line of Yodlee from CLSA. Please go ahead.

Speaker Change #250: Hello, Greg Hopkins Who's going to go to you on that too, but didn't hear some sound quality with delta.

Speaker Change #251: Well I think what most of the other constraints or something about the union.

Speaker Change #252: Hi, Moshe.

Speaker Change #253: With that I see going through the <unk>.

Speaker Change #254: Does that assume that you don't assume that most of them what would that be more selective at W. Twos it would be a problem.

Speaker Change #255: And amongst them kind of inclusive of all go to telecom grew more so at the time you pay a whole lot of Tony Vivien I'll tell you why do you call them.

Yada Li: My question today is regarding the loan structure. By the end of this year and going forward, can you give us more color on the breakdown of volume percentage for capital I and ICE in platform services, and furthermore, how to view the mixed change for guaranteed and self-funded models in credit-driven services, respectively? In addition, what are the causes for the potential change?

Speaker Change #256: I'll do the translation on my question is regarding the loan structure by the end of this year are kind of going forward. Okay will give us more color on the breakdown of volume percentage for a capital light and ICU and platform services and Furthermore, how to view the mix change for guaranteed and self funded model.

Speaker Change #257: Credit driven Thursdays respectively.

Speaker Change #258: What are the causes for the potential change and that's all thank you.

Speaker Change #259: Oh no no.

Yada Li: And that's all. Thank you. Yeah, I'll show you.

Speaker Change #259: Hmm.

Unknown Executive: [inaudible] I would like to share with you our fundamental thinking on the proportion of light and heavy assets. [inaudible] Therefore, in different stages, in different market environments, we will choose different combinations. We have maintained a relatively balanced structure. Overall, we think it will be relatively healthy.

Speaker Change #260: Which I'm sure you have them.

Speaker Change #260: Kindred at times, it could be either yougov.

Speaker Change #260: Carl.

Speaker Change #260: I'm just curious I Didnt hear Giga Genie owns the kind of degree of PV Greenwood Vishal woman.

Speaker Change #261: But that should we consider soybean you've got put into mobile.

Speaker Change #262: She Tricia you could be well, we don't have them or you don't.

Oh sure I should buy them, we'll be arguing anytime soon.

You wanted them to know how you had it on Zhengzhou.

Speaker Change #262: I came home woman.

Speaker Change #262: A woman the union issue.

Speaker Change #262: Unfortunately, with what's going on in that.

Speaker Change #262: Some woman to potentially take rates.

Speaker Change #262:

Speaker Change #263: Good job on that but who knows I guess, just finally, hana well when we put them through a hub.

Speaker Change #263: Hmm, which in English sheep actually you guys Chambly Kingdom, there you could see it go.

Speaker Change #263: I don't know why men and women.

Speaker Change #263: Didn't see something we don't we can tend to be at genco can be antibody.

Unknown Executive: Our risk will be better than 100% heavy-asset companies. Our profitability will be better than those companies that are basically all light assets. In this quarter, we have significantly increased the amount of money we give out. This is because we have distributed more ABS. In this quarter, our ABS revenue has increased by 130% compared to last year. And the capital cost of ABS is significantly lower than the cost of the motherboard part.

Speaker Change #263: So now well.

Speaker Change #263: Hum.

Paul Championing Jay.

Speaker Change #263: Keep it down to a degree the channel she chooses chemicals now women their degree of unique preclinical.

Speaker Change #263: No.

Speaker Change #263: I think it would do less one woman.

Speaker Change #263: Typically you do English and suddenly you can imagine that you go something like that.

Speaker Change #263: Now I don't think it was human woman talk on that can go to.

Speaker Change #264: Yes it.

Speaker Change #265: Cause you do them and maybe as it can be shinhan.

John: John the balance of your bet some.

Speaker Change #267: Uh huh.

Speaker Change #268: And to the degree woman <expletive>.

Speaker Change #268: I got to that point, you get more shouldn't forget them, but instead.

Unknown Executive: Therefore, this part of the ratio will greatly help to improve our overall take rate. In addition, this quarter, we also had significant growth in the IC model. Our main work is to attract more financial institutions to come in to optimize the efficiency of our overall asset distribution. [inaudible] Therefore, the increase in the share of our SE business also has a positive impact on our overall profitability. In the future, we will continue to implement this strategy to improve operating efficiency under different structures and adjust it dynamically to better balance the company's risks and profits. Okay, I will do the translation. Okay, I will do the translation.

Speaker Change #268: And so now when people are going to get PD that isn't.

Speaker Change #268: I don't know if we.

Speaker Change #268: She is a woman tendency to take rate.

Speaker Change #268:

Speaker Change #268: Eh seamless.

Speaker Change #268: So I think that's it with another woman.

Speaker Change #268: So you when you go to mention attention elementary other English.

Speaker Change #268: Tore you know when we can do that because you know once you got in mind.

Speaker Change #269: Hello Women's Yoga Vinci, that's the time from find out shortly.

Speaker Change #270: I see.

Speaker Change #270: Yeah with the solar order to grid and that's what you see.

Speaker Change #271: Good to meet you soon.

Uh huh.

Speaker Change #271: Ah innocent women infant in women.

Speaker Change #271: The degree of year with the company that you send them to them in Vinci.

Speaker Change #271: So every 10th Amendment.

Speaker Change #271: Ah you're relying upon woman natural highway shoot tissue fishing Chisholm put them there.

Speaker Change #271: Jacob.

Speaker Change #272: Michel you can you tell me what are you doing pad should tell them lagging hard opinion considering for example.

Speaker Change #271: Sure.

Speaker Change #271: Okay.

Speaker Change #271: Oh.

Unknown Executive: I want to share some of our considerations on the SM mix. Regarding the SM mix, we do not have a specific target, but instead, we want to balance our risk and profitability by optimizing the SM mix. At the same time, we want to enhance our takeaway by improving the efficiency of asset distribution. Therefore, at different stages and under different market conditions, we choose different asset portfolios. Currently, we maintain a relatively balanced asset structure, which makes our business healthier, with better risk performance compared to companies that are 100% asset heavy, and better profitability compared to companies that are completely asset light.

Speaker Change #273: Okay I'll do the translation I want to share some of our consideration on the SME.

Speaker Change #271: Regarding the asset mix.

Cathay Pacific: Cathay Pacific talking this is that we want to balance our mix.

Cathay Pacific: And it hasn't been achieved by optimizing the SME.

Cathay Pacific: At the same time, we want to enhance our take rates by improving efficiency of assay and.

Cathay Pacific: Distributions.

Cathay Pacific: The different stage and they're different market condition, we choose different asset portfolio.

Cathay Pacific: We maintain a relatively balanced as extraction, which makes our business healthier.

Cathay Pacific: With better performance compared to the company that are 100% at a heavy.

Cathay Pacific: And that's a capability compared to the company that's a complete today.

Cathay Pacific: Right.

Unknown Executive: This quarter, we increased the proportion of unbalanced loans mainly driven by more ABS issues. Our ABS book grew by 130% compared to the same period last year, and the cost of bonds for ABS is significantly lower than the capital-heavy loan facility.

Cathay Pacific: This quarter, we increased the proportion of on balance sheet loan, mainly driven by more atheists issuing our ABS deal by 130% compared to the same period last year and the cost of about four <unk>.

Cathay Pacific: Essentially lower than the capital heavy loan facilitation, therefore, increasing the question of on balance sheet.

Unknown Executive: Therefore, increasing the portion of unbalanced loans is beneficial for improving our overall take rate. Additionally, our ICE model has also increased this quarter, mainly because we introduced more financial institutions and optimized the efficiency of asset allocation. Our take-away from ICE has increased by more than 70% year-on-year, so the increase in ICE's proportion has had a positive impact on our profitability. Going forward, we will continue this strategy for asset allocation, improving operational efficiency under different models, and a better balance between risk and return by dynamically adjusting the asset structure.

Cathay Pacific: Inefficient for improving our overall take rate.

Cathay Pacific: Additionally, our LTE model has also increased this quarter, mainly because we introduced a more financial institutions and optimize the efficiency of asset allocation or takeaways on LTE has increased by more than 70% year on year. So the increase in Ice's proportion has positive impact.

Our private entity.

Cathay Pacific: Going forward, we will continue to be.

Speaker Change #275: Got it.

Speaker Change #275: The patient improving operational efficiency and expense model and a better balance and.

Speaker Change #275: Dynamically adjusting the abstraction.

Speaker Change #275: Yeah.

Unknown Executive: Thank you. Okay, thank you everyone for joining us for this conference call. And if you have additional questions, please, you know, contact us offline. Thank you very much. Have a good day. Thank you. That does conclude the conference for today. Thank you for participating, and you may now disconnect. www.youtube.com.cn www.youtube.com.cn Thank you for watching! www.youtube.com.cn www.youtube.com.cn www.youtube.com.cn www.youtube.com.cn www.youtube.com.cn www.youtube.com.cn www.youtube.com.cn www.youtube.com.

Speaker Change #276: Okay. Thank you everyone to join US for this conference call and if you have additional questions. Please.

Speaker Change #276: Contact us offline. Thank you very much have a good day.

Speaker Change #276: Yeah.

Speaker Change #277: Thank you that does conclude the conference for today. Thank you for participating and you may now disconnect.

Speaker Change #277: [music].

Speaker Change #277: Okay.

Speaker Change #277: [music].

Speaker Change #277: Okay.

Speaker Change #277: [music].

Speaker Change #277: Yeah.

Speaker Change #277: Okay.

Speaker Change #277: Hum.

Speaker Change #277: [music].

Speaker Change #277: Yeah.

Speaker Change #277: [music].

Speaker Change #277: Okay.

Speaker Change #277: Okay.

Speaker Change #277: [music].

Speaker Change #277: [music].

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