Q2 2024 Qifu Technology Inc Earnings Call
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Yohan: At this time I would like to turn the conference over to MS guarantee senior director of capital markets. Please go ahead Karen.
Karen: Thank you Emily Hello, everyone and welcome to Chi fluid technologies second quarter of 'twenty 'twenty four earnings conference call. Our earnings release was distributed earlier today and is available on our IR website.
Mr. <unk>: Joining me today are Mr. <unk>, our CEO, Mr. Alex <unk>, our CFO and Mr. Jin Yan our CFO.
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.
Speaker Change: Also please note that unless otherwise stated all figures mentioned in this call are in RMB terms.
Speaker Change: Before we start.
Speaker Change: I'd like you to know that today's prepared remarks from our CEO will be delivered in English using an AI generated voice.
Speaker Change: Now I will turn the call over to Mr. <unk>. Please go ahead.
Mr. <unk>: Hello, everyone. Thank you for joining us today.
Speaker Change: Despite the ongoing macroeconomic challenges.
Speaker Change: 2024.
This solid performance by adhering to our prudent execution and quality development strategy.
Speaker Change: End of Q2, our platform empowered.
Speaker Change: 1060 financial institutions and serve more than 53 million users with approved credit lines on a cumulative basis.
Speaker Change: During the quarter, we further solidified our business foundation, and improved asset quality and operational efficiency with a keen focus on the quality of loans.
Speaker Change: These efforts enabled us to significantly improve our risk performance and recorded the highest quarterly profit over the past 11 quarters Hi.
Speaker Change: Highlighting the strong resilience of our business.
Speaker Change: We'd like to thank our entire team for their persistent drive for excellence and ongoing self development.
Speaker Change: Which has enabled us to navigate an ever evolving market environment.
Speaker Change: At the same time, we are building a more open ecosystem and adopting a platform approach to create value for both users and financial institutions aiming to further expanding the boundary of our business.
Speaker Change: In Q2, our revenue increased by six 3% year over year to RMB 416 billion.
Speaker Change: With our net take rate increasing by over one percentage points year over year to roughly 4.4%.
Speaker Change: non-GAAP net income increased by 23% year over year to RMB 141 billion.
Speaker Change: While non-GAAP net income per diluted ads increased by 32% year over year to RMB nine point 16.
Speaker Change: Thanks to our outstanding operational results and efficient capital allocation are all rowing in Q2 continued to outperform industry peers coming in at 25, 4% during the quarter.
Speaker Change: Despite facing macroeconomic headwinds our asset quality has steadily improved in Q2.
Speaker Change: Based on our keen insights into risk, we proactively tightened our overall credit standards over the past three quarters iterating risk strategies across loan facilitation credit operations and post credit processes to improve risk metrics.
Speaker Change: Risk indicators for new loans have started improving since November last year.
Speaker Change: Stabilized in the first half of this year.
Speaker Change: For loan collection, we further optimize collection resources to boost efficiency as line control issues have been largely resolved.
Speaker Change: Asset quality of the overall loan portfolio steadily improved in Q2.
Day, one delinquency rate decreasing by 10 basis points, while 30 day collection rate increased by around 1.2 percentage points sequentially.
Speaker Change: This positive trend in risk performance continued into Q3.
Speaker Change: With the optimization of risk strategies already in place we are confident in our ability to deliver on our operational and financial objectives for the second half of the year.
Speaker Change: During Q2 liquidity in the financial system was relatively ample market interest rates remained in a downward trend.
Speaker Change: With robust asset quality, we maintained on negotiating leverage on the funding side to further drive down costs. We also maintained the pace of ABS issuance with RMB four 6 billion issued in Q2.
Speaker Change: ABS issuance during the first half of the year increased 30% compared to the same period last year.
Speaker Change: Overall funding costs in Q2 decreased by another 56 basis points sequentially, resulting in a total decrease of 132 basis points for the first half of the year this notably improve the take rate for our capital heavy business.
Speaker Change: For the second half of the year, we expect funding cost to maintain largely stable with potential to slightly decrease further.
Speaker Change: In terms of user acquisition, we focused on acquiring and retaining high value users, while further diversifying acquisition channels and boosting efficiency.
Speaker Change: In Q2, we adopted a relatively prudent customer acquisition approach with a reduction in marketing spending.
Speaker Change: Among new credit line users unit acquisition costs remained flat sequentially, while the percentage of high value users increased by six eight percentage points.
Speaker Change: Our acquisition channels further diversified with loan volume from our embedded finance business more than doubling year over year.
Speaker Change: The percentage of new credit line users from this channel increased from 36, 4% in Q1 to 37, 7% in Q2.
Speaker Change: We also partnered with a wider range of traffic platforms under the embedded finance model, including E Commerce O to O and short form videos.
Speaker Change: Leveraging our strong user profiling and risk management capabilities, we have empowered these platforms to better serve a diverse user base.
Speaker Change: Furthermore, we are proactively exploring collaborations with financial institutions under the embedded finance model.
Speaker Change: By jointly serving the existing users who are currently underserved by the financial institutions, we will create new avenues for user acquisition.
Speaker Change: So far we have entered preliminary partnerships with a number of financial institutions.
Speaker Change: This collaborative model is expected to significantly enhance service efficiency for financial institutions improve the user experience and promote financial inclusion over the long term.
Speaker Change: We are also building a comprehensive credit Tech service platform based on users' risk profiles and values.
Speaker Change: Empowering financial institutions with a diverse range of products services and collaborative models, we aimed to promote financial inclusion across the board.
Speaker Change: For financial institutions, we have improved underwriting efficiency by providing more precise user profiling and better fund asset matching tailored to different risk appetites and return preferences.
Speaker Change: For end users, we have expanded the breadth and depth of our services by introducing a more diverse range of financial institutions and a broader price spectrum. We have also enriched our user loyalty program with additional benefits and improved our long term retention through differentiated user operations.
Speaker Change: By upgrading from a loan facilitation model to a platform model, we are expanding our total addressable market and extending the use of lifecycle, enabling us to boost operational efficiency and long term profitability, while balancing risks in.
Speaker Change: In Q2, we further optimized the structure of our business with a higher contribution from the capital light model.
The percentage of loan volume under the <unk> model increased slightly to 24, 6%.
Speaker Change: With the revenue take rate as a percentage of loan volume increasing by 54 basis points from the same period last year.
Speaker Change: Our technology solutions business continued to make steady progress.
Speaker Change: During the first half we established partnerships with seven additional financial institutions, bringing the total number of financial partners to 12.
Speaker Change: Our Chefoo Digitech brand has one broad recognition across the banking industry and is now among the first tier players in the market.
Speaker Change: As of the end of June our end to end technology solutions facilitated nearly RMB 2 billion in bank loans cumulatively without standing balances exceeding RMB 1 billion.
Speaker Change: Loan volume compound monthly growth rate reached 14% during the first half of the year.
Speaker Change: Of the new financial partners, we on boarded this year, our solutions will be deployed and launched with five of them between August and September driver.
Speaker Change: Driving further growth for this business.
Speaker Change: Our technology solutions have achieved an 80% standardization rate offering financial institution's digital enhancements and operations risk management and products based on hybrid deployment.
Speaker Change: We are also seeing growing synergies between our tech solutions and credit businesses.
Speaker Change: Through our integrated solutions covering technology empowerment joint operations loan facilitation and user referrals, we will further deepen our support for financial institutions and expand our customer reach.
Speaker Change: We continued 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 enhance user experience and improve operational efficiency.
Speaker Change: We upgraded over 10 modules in our efficiency focused AI co pilot system enhancing supervision summarization and analysis of collection teams work to better support supervisors in managing both collection teams in cases.
Speaker Change: Currently in the testing phase the upgraded system processes, a 1000 word cool and just five three seconds on average.
Speaker Change: Once rolled out in full scale, we expect the system to handle around 100000 calls per day.
Speaker Change: We're also leveraging the large language model to enhance our chat bots capabilities and communication efficiency and enrich the variety of scripts, increasing the average number of exchanges per call by over 10% and boosting script iteration efficiency by 40%.
Speaker Change: Additionally, we are also strengthening the copilot system's fundamental capabilities through ongoing upgrades to our automatic speech recognition ASR technology.
Speaker Change: By integrating our proprietary Chi fusion framework model, we have achieved a speech recognition accuracy rate of more than 93% and an intent recognition accuracy rate of more than 95% and a complex context.
T fusion has also set a new industry benchmark for the lowest character error rate, making us one of the top performers in China.
Speaker Change: Notably this achievement was recognized by into speech 2020 for a leading global conference on the science and technology of spoken language processing.
Speaker Change: Looking back at the first half of the year, we successfully navigated a challenging macro environment.
Speaker Change: And made significant improvements in both asset quality and profitability.
Speaker Change: We also upgraded our business model and enhance user engagement through differentiated strategies.
Speaker Change: Additionally, we strengthened synergies between our tech solutions and credit businesses.
Speaker Change: Reinforcing our platform position.
Speaker Change: As we look into the second half of the year, we will maintain prudent operations to effectively manage risks, while continuing to iterate products and services expand strategic partnerships and build a sustainable growth engine.
Speaker Change: We believe many of our current initiatives will continue to generate positive results in the near future.
Speaker Change: Supported by the steady growth of our earnings we have proactively optimized capital allocation and maintained a fast pace of share buyback. So far this year, our combined payout ratio leads the industry as well as the majority of Chinese ADR ours.
Speaker Change: Moving forward, we will continue to create value for shareholders through substantial buybacks and dividends.
Speaker Change: With that I will now turn the call over to Alex.
Alex: Okay. Thank you Hi, Sean.
Alex: Good morning, and good evening everyone.
Alex: Welcome to our second quarter earnings call.
Alex: Well micron environment was still challenging won't continue to make good progress to optimize operations improve efficiencies reduce risk exposure.
Alex: And deliver strong financial results in the second quarter.
Alex: Total net revenue for Q2 was $4 6 billion versus $4. One 5 billion in Q1, and $3 9 billion a year ago.
Revenue from credit driven service capital heavy was $2 91 billion in Q2 compared to three point or two better than Q1, and 279 billion a year ago.
Speaker Change: On your growth was mainly driven by growth in on balance sheet loan and the contribution from other value added services.
That's really offset by a decline in off balance sheet loans.
Speaker Change: Our balance sheet account for over 28% of the total loan volume in Q2.
Speaker Change: Overall funding cost further declined over 50, bips sequentially and over 150 Opex year on year with the help of a strong relationship with financial institution partners and new ABS issuance.
Speaker Change: Revenue from platform service capital Light was 125 billion in Q2 compared to 114 billion in Q1, and one point it was $3 billion a year ago.
Speaker Change: A year on year growth was mainly due to strong contribution from SCE and other value added service substantially offsetting the decline in capitalized loan facilitation.
Speaker Change: Overall, the contribution from outbound service further increase as we try to strike at an optimal balance between risk bearing and non risk bearing assets.
Speaker Change: Certain microenvironment.
Speaker Change: Q2, we saw continued sequential improvement in revenue take rates for both cap Harry and kept line of business.
Speaker Change: During the quarter average IRR of the loans, we originated <unk> facilitated was 21, 6% compared to 21 five in the prior quarter looking.
Speaker Change: Looking forward, we expect pricing to be fluctuate around this level.
Speaker Change: Sales and marketing expense increased 12% in Q on Q and 16% year on year as we intentionally control the pace of the user acquisition in an uncertain environment.
Speaker Change: We added approximately one 3 million new credit line users in Q2 versus 1.45 million in Q1 unit.
Speaker Change: Unit cost to acquire a new credit line users was essentially flat Q on Q.
Speaker Change: We will continue to make timely adjustments to the pace of new user acquisition based on macro environment from time to time.
Speaker Change: And to further diversify our user acquisition channels. Meanwhile, we will also continue to focus on reenergizing existing user base.
Speaker Change: Borrowers historically contribute the vast majority of our business.
Speaker Change: 90 day delinquency rate was three 4% in Q2, the ratio was pocketed by providing outstanding balance.
Speaker Change: And off balance sheet loans.
Speaker Change: Nine months past, sorry, three three months past due with a total outstanding balance of on and off balance sheet loss across our platform at the end of a quarter.
Speaker Change: As we continued to purposely cut our exposure to certain risk bearing assets total outstanding balance of on and off balance sheet loans reduced by approximately 15% sequentially in Q2.
Speaker Change: Therefore, the 90 day delinquency rate was mathematically insulated by roughly 18%.
Speaker Change: Which is somewhat misleading.
Speaker Change: Furthermore, as we discussed in previous calls this metrics is backward looking nature and provide little value to help investors understand our asset quality trends.
Speaker Change: We strongly recommend investors focus on key leading risk indicators, such as they want delinquency and 30 day collection rates.
Speaker Change: Delinquency rate was four 8% in Q2 versus four nine in Q1 30 day collection rate was 86, 3% in Q2 versus 85, 1% in Q1.
Speaker Change: The 30 day collection rate has since recovered to a similar level of Q3 2023 in recent months.
We expect to see continued gradual.
Speaker Change: Graduate improvement in these risk metrics in the coming quarters.
Speaker Change: As macro uncertainty persists we.
Speaker Change: We continue to take a prudent approach to book provision against potential credit losses.
Speaker Change: Total net provision for risk bearing laws in Q2 were approximately $1 three 1 billion versus $1 three 8 billion in Q1.
Speaker Change: The modest sequential decline in new provision was mainly due to Q on Q decline in off balance sheet capital have a longwall in.
Speaker Change: Well, the new provision booking ratio rising sequentially.
Speaker Change: Write backs, our previous provisions or approximately $480 million in Q2.
Speaker Change: As overall portfolio risk metrics improved we expect additional write backs in the coming quarters provision.
Speaker Change: Provision coverage ratio, which is defined as Dakota outstanding provision divided by total Outstandings delinquent asset heavy long.
Speaker Change: Loan balance between 90, and 180 days or 421% in Q2 compared to 414% in Q1.
Speaker Change: non-GAAP net profit was 1.41% in Q2 compared to $1 2 billion in Q1.
Speaker Change: The significant improvement in profitability was mainly due to better asset quality and operational efficiency as well as a favorable mix changes.
Speaker Change: Effective tax rate for Q2 was 33, 1% compared to our typical ETR of approximately 15%.
Speaker Change: That's higher than normal ETR was mainly due to approximately 380 million withholding tax provision related to the large stomach cash distribution from onshore to offshore for dividend payments and share repurchase program during the quarter.
Speaker Change: With solid operating results and higher contribution from capital light models, our leverage ratio, which is defined as risk bearing along balance provided by shareholders equity was two 4% in Q2.
Speaker Change: Oracle LOE, we expect to see this leverage ratio fluctuated around this level in the near future.
Speaker Change: We generated approximately $1 96 billion cash from operations in Q2 flat Q on Q.
Speaker Change: Total cash and cash equivalent was $8 5 billion in Q2 compared to $8 3 billion in Q1.
Speaker Change: Non restricted cash was approximately $6 3 billion in Q2 compared to $5 3 billion in Q1.
Speaker Change: That's why we continue to generate strong cash flow from operations.
Speaker Change: Believe our current cash position is sufficient to support our business development and to return to our shareholders.
Speaker Change: In accordance to our current dividend policy.
Speaker Change: Our board has approved a dividend of U S. Dollar 30 cents per class a ordinary share.
Speaker Change: U S dollar 60 cents per <unk> for.
Speaker Change: For the first half of 'twenty 'twenty four to holders of record of class a ordinary share in <unk> as of the close of business day on September 27, 2020 for Hong Kong time in New York Times, respectively. This.
Speaker Change: This represents the second consecutive time, we've raised our semiannual dividends.
Speaker Change: On March 12, 2024, we announced a new share repurchase plan.
Speaker Change: Repurchase up to 350 million worth of <unk> over a 12 months period, starting April one 2024.
Speaker Change: As of August 13, 2020 for waste had in aggregate purchased approximately 10.7 million assets in the open market for a total amount of approximately USD $211 million inclusive about commissions.
Speaker Change: At an average price of $19 seven U.
Speaker Change: U S dollar per avs under the 2020 for a purchase price.
Speaker Change: Based off the repurchase is significantly faster than time schedule.
Speaker Change: The proactive execution of share repurchase further demonstrates management's confidence and commitment to the future of the company and the management intend to consistently use share repurchase to achieve additional.
Speaker Change: Accretion in the long run.
Speaker Change: With the full execution of our current share repurchase program and the dividend policy, we are generating the highest combined yield on a recurrent basis amongst Chinese ADR is to our shareholders.
Speaker Change: Before we move on to discuss financial outlooks I'd like to spend a few minutes to talk about the technology solution business.
Speaker Change: We start to offer other technology solution in large scale in early 2022, which provides financial institutions onsite deployed risk management SaaS module that help our partners improve credit assessment results.
Speaker Change: In Q2, these solutions facilitated approximately $25 6 billion loan volume.
Speaker Change: However, this service only generate marginal returns even after more than two years ramping and do not meet our internal target.
Speaker Change: As a result, we have decided to gradually discontinue the service by the end of 2024.
Speaker Change: Session will have a negligible impact to our overall financial metrics.
Speaker Change: And well since a little of a 2023 we start will offer end to end technology solution to financial institutions, which covers various aspects of our Fi partners operations, such offerings should generate higher returns that satisfy our internal criterias one fully scale up.
Speaker Change: That said the ramping of our end to end technology solution is still in its early stage and facilitated approximately $685 million of loan volume in Q2.
Speaker Change: Given the above mentioned changes starting Q3 'twenty 'twenty four we will provide pro forma information regarding loan volume and loan balance for the ongoing business and the intended discontinued businesses to better reflect year on year and sequential trends.
We were strongly suggest investors and analysts.
Speaker Change: Necessary adjustment to our respective financial models as well.
Finally regarding our business outlook.
Speaker Change: Well, we started to see some tentative signs of marginal improvement in demand. We will continue to take a prudent approach and focus on enhancing profitability and efficiency of our operation for second half of 2024.
Speaker Change: Meanwhile, changes in business mix overall over the last few quarters will also result in changing the pace of our revenue bookings.
Speaker Change: As such we expect to see continued improvement in overall take rate for the remainder of the year.
Speaker Change: For the third quarter of 2020 for complex spec to generate non-GAAP net income between RMB 155 billion and RMB 165 billion.
Speaker Change: Representing a year on year growth between 31% and 40%. 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.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be now.
Speaker Change: Your question. Please press star one again.
Speaker Change: Those who can speak Chinese please type 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 we tend to the QEP has more questions. Thank you.
Speaker Change: We will now take our first question from the line.
Speaker Change: Richard.
Speaker Change: Again Stanley. Please ask your question.
Richard Your line is now open.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you Hank.
Speaker Change: Thank you Catherine.
Speaker Change: Yes, hi.
Speaker Change: Sure.
Speaker Change: Even the guidance.
Speaker Change: Okay.
Speaker Change: It should be up about Shanghai.
Speaker Change: Yeah.
Speaker Change: Yeah.
Greg: Q <unk> Hey, Greg.
Greg: Yes.
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Joel: Thanks Joel.
Joel: Okay.
Joel: Yeah.
Joel: I will take up a whole lot you don't go to LNG.
Joel: Okay.
Two questions for me one is.
Speaker Change: Loan volume for second half.
Speaker Change: 24, <unk> 20.
Speaker Change: 2025.
Speaker Change: Any expected changes in take rate.
Speaker Change: Obviously, the profit guidance for two quarters quite strong any drivers behind that.
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Speaker Change: Thank you Don Kim have holiday Trulia Moshe.
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Speaker Change: Well my friends when you're in the kind of unusual whenever we want somebody to integrate a figure something out.
Speaker Change: So how did you get anything that's been done and I think if she wanted them.
Ghansham: Ghansham I mean she is.
Ghansham: The way women continue to think of them that they're going to make up for them.
Ghansham: Okay I'll do the translation effect regarding the loan volume.
Speaker Change: We expect loan volume to grow in the second half of the year compared to the first half mainly because we.
Speaker Change: Read it.
Speaker Change: The first one on demand side, we observed that credit amount is relatively stable recently and they use their activity level has slightly increased in June and July with the logging initiation rate are absolutely rising by about 7% compared to may.
Speaker Change: Second our risk side the improvement.
Speaker Change: Matrix is on track and that the momentum continues in Q3, which gives us more comfort that we can okay.
Speaker Change: Our calculation and the credit line to enhance activity of our exiting.
Speaker Change: In terms of our new Cascade Lake we have diversified.
Speaker Change: Our channels and improve our efficiency in custom application in the first half of <unk> and the quality of new customers has been significantly okay. Mike.
Speaker Change: We may try to invest more to attract new yoga studio.
Speaker Change: Diverse channels in the second half.
Speaker Change: First one our platform strategy is basically to divest.
Speaker Change: Direct cooperation model way more financial institutions to serve a more diversified user base, which will enhance our customer coverage and a collection of ink.
Speaker Change: So in summary, we have a lot of work in the first half of this year, giving us more room.
Speaker Change: Try and OPEC epic given the improving demand any risks. So we believe that the loan volume in the second half of the year will increase to some extent.
Speaker Change: At the same time.
Speaker Change: It's also laying a foundation for our longer term growth.
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Speaker Change: Let's see so much you can find there.
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Speaker Change: Uh Huh John that women.
Speaker Change: Can you have a lot of children.
Speaker Change: A woman who forgot.
Speaker Change: She is a woman can create a degree of new issue.
Speaker Change: Just on your women's and kids.
Speaker Change: Some children and I think a year, where there can be.
Speaker Change: And how do you all how youre thinking about the easy integration.
Speaker Change: And you mentioned that kind of emotional tie to our soldiers.
Speaker Change: Secondly, a quick question.
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Speaker Change: Curious on that.
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Speaker Change: Our intellectual property and you go it could be another good holiday.
Speaker Change: Meanwhile, AR.
Speaker Change: And integrating as well.
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Speaker Change: And what made you the whole kind of on that.
Speaker Change: Understood.
Speaker Change: So they own.
Speaker Change: <unk> kind of acquisitive Assembly is really the trigger.
Speaker Change: So you're going to generate here.
Speaker Change: Regarding the take rate I would like to address that the main driver of our profit growth in Q3 is mainly attributed the Q3, leading.
Speaker Change: First the reason is that.
Speaker Change: The credit cost and well continue to decline in Q3. Secondly, then is that through our platform strategy will not only enhance our user coverage. That's also a cheap money.
Speaker Change: Monetization.
Speaker Change: And certainly then is that in Q3, the proportion of asset light model will be fed rate increase and the revenue recognition pain of asset light model is relatively okay, which is also a reason for the right in our take rate in Q3. So based on these reasons, we believe that the takeaway in Q3, mainly.
Speaker Change: In a normal level and we won't expect our take rate to rise continuously in the future.
Speaker Change: Given what we have been keeping and improving on that.
Speaker Change: The take rate.
Speaker Change: Last quarter.
Speaker Change: Well, we believe four to four 5% is a relatively low level for our sustainable take rate.
Speaker Change: Thank you.
Speaker Change: Thank you for that.
Speaker Change: Thank you.
Our next question comes from the line of <unk> from Bank of America. Please ask your question Anna.
Speaker Change: Thank.
Speaker Change: Thank you guys with Adam.
Speaker Change: Yeah.
Speaker Change: I'll now.
Speaker Change: Right.
Speaker Change: No.
Speaker Change: Yeah, and I don't see that.
John: Sure John.
John: Sure.
Speaker Change: Yes, it's really usually on the call.
Speaker Change: Thank God.
Speaker Change: So Don you want to know what they are.
Don Kim: I'll answer that.
Speaker Change: Yeah. So congratulations on the very strong result.
Speaker Change: Macro challenges and we know that.
Speaker Change: He has to reside at the channel and the rest of the company.
Speaker Change: Mankind.
Speaker Change: Behind that business yet.
And impact on the Companys operation.
Speaker Change: Okay.
Omar.
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Speaker Change: With regard to political et cetera.
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Speaker Change #103: Finish the painful.
Speaker Change #103:
Speaker Change #103: And kind of.
Speaker Change #103: I'm sure you've been sending them put them at a time you consider just hand it to.
Speaker Change #104: Got it.
Speaker Change #104: Internet.
Speaker Change #105: So then do you consider this hernia.
Speaker Change #105: Millions yes.
Speaker Change #106: Chosen mcquade tissue.
Speaker Change #106: Uh huh.
Andrea: It's Andrea.
Andrea: Because if I'm gonna give women a tissue.
Andrea: Tissue that you get just circle again.
Andrea:
Andrea: Or.
Speaker Change #109: Clearly you have eight.
800.
Speaker Change #110: Chosen one.
Speaker Change #110: Thanks sedans, CDN Wade calling for.
Speaker Change #110: Sure.
Speaker Change #110: Sure.
Speaker Change #110: <unk>.
Speaker Change #110: Okay, I'd like to the transportation. Thanks Ana.
Speaker Change #111: MS. Jo has Mr. Joe has resigned from his position as chairman and a director of the board of the company, mainly due to personal reasons.
Speaker Change #112: He also believes that the company has become a material enterprise and Fintech space and hope that the company can develop more independently maintaining its own brand and the development strategy.
Speaker Change #113: Our largest shareholder Mr. Joe is very confident in the company's long term development and has been increasing his holdings in the company stock in the secondary market over the past two years.
Speaker Change #114: According to our annual report.
Speaker Change #175: Joe and his affiliates increased his holdings by one point 58 million a day between February 2023, and February 2024, and then she also increased his holdings.
Speaker Change #114: During the window periods this year.
Mr. Joe has not been involved in the company's day to day operations in the past. So his resignation will have no impact on the company's operations in the future. Mr. Joe will continue to provide valuable insight to the company, particularly in areas of strategy and AI.
Speaker Change #115: So on behalf of our management team I would like to express our heartfelt gratitude to Mr. Joe for his contribution to the company during his tenure as Carolyn.
Joe: Thank you.
Okay. Thank you.
Speaker Change #117: Our next question comes from the line of Alex Yao from you.
Speaker Change #118: Please ask.
Ask your question Alec.
Speaker Change #118:
Alex Yao: When he is why don't.
Speaker Change #118: Okay.
Speaker Change #120: What kind of Oh, my gosh little vignette.
If you do get is the whole.
People the central task order.
Speaker Change #120: But I guess the Danville.
Speaker Change #120: So you wanted that they hold a called out some of your U S allies of Citi.
Speaker Change #121: E Commerce is about so the more tenants at the optical that needle.
Speaker Change #120: So.
Speaker Change #122: We have noticed that the company has further accelerated the pace of share buybacks in Q.
Speaker Change #122: Q1 results in May and it's also faster dental original schedule of one year for the 50.
Speaker Change #123: 50 million buyback quota so I'm wondering what's the consideration behind this and then.
Speaker Change #124: Should we be expecting the company will be able to maintain that pace.
Speaker Change #125: Pace of buybacks for the rest of the year. Thank you.
Speaker Change #125: Okay.
Alex Yao: Alex I will take this one so yeah as of August 13th.
The purchased at a U S.
Alex Yao: $211 million worth of stock out of the 350 million authorization.
Speaker Change #126: It's about 60% into the program.
Alex Yao: Much faster than the.
Speaker Change #127: At the time.
Speaker Change #127: Schedule.
Speaker Change #127: And the reason we are accelerating our repurchase.
Speaker Change #127: That period is for one is because of the macro environment is still pretty challenging.
Speaker Change #127: And the market itself is still.
Speaker Change #127: Very much undervalued, the companys stock, we want to use that opportunity.
Speaker Change #127: To do more repurchase.
Speaker Change #127: And this will allowed us to.
Speaker Change #127: Create additional EPS accretion.
Speaker Change #127: And ultimately maximize the value of our existing shareholders.
Speaker Change #127: Since we already finished the 60%.
Speaker Change #128: One sort of a time.
Speaker Change #128: Pan.
Speaker Change #128: Going forward, we will continue to execute.
Speaker Change #128: Execute the repurchase program based on the market condition.
Speaker Change #128: And if the market.
Speaker Change #128: Consistently undervalue.
Speaker Change #128: Our equity.
Speaker Change #129: We will probably will maintain their continue at very.
Speaker Change #129: Active pace in the market and complete the current program ahead of the time.
Speaker Change #129: Scheduled.
Speaker Change #130: Thank you.
Speaker Change #130: Thank you.
Speaker Change #130: Our next question comes from the line of Ali from CIBC. Please go ahead, yes.
Speaker Change #130: Okay.
Speaker Change #131: You bet.
Speaker Change #131: So when T cells can tell us how you're going to you're not sure.
Speaker Change #133: Sounds good I'll conclude the interim button on gold.
Speaker Change #134: In our components when you ABS pricing.
Speaker Change #134: Once you've got those few though.
Speaker Change #135: I'll touch on the Union neither northern.
Speaker Change #134: In northern Colorado.
Speaker Change #136: Yeah like hub will items Youre walking dead.
Speaker Change #134: Okay.
Speaker Change #137: They always have done.
Speaker Change #137: Daniel Sauter 12, Tony Ramos.
Speaker Change #138: That's helpful.
Speaker Change #137: Now with element.
Speaker Change #139: John is going to happen.
Speaker Change #137: We will do that.
Speaker Change #137: There you go you have got that.
Speaker Change #137: You have no questions coming down.
Speaker Change #140: Then I'll do the translation Hello management. Thank you for taking my questions. The first one is about the funding cost, but what are the main reasons for the decline on the average funding costs.
Speaker Change #141: At UBS insurance or more discount on the required returns by the financial institutions and if we look at these two separately how much room is still there for the decrease of funding costs in the future.
Speaker Change #141: Secondly, the quality of the company has stabilized and improved what are the main reasons to see this trend and from the cost from the credit cards. The perspective, when we'd see the asset quality returns to the level of normal years, how much will it be optimized and what shall we see the optimization.
Speaker Change #142: In the future.
Speaker Change #142: Okay.
Speaker Change #143: Got it.
Speaker Change #144: When do you when you are going to hit your women's apparel.
Speaker Change #144: Glen.
Speaker Change #145: I think our funding cost.
I think cigarettes, you do the one are women.
Speaker Change #146: Those are two independent trigger.
Speaker Change #147: In 10 minutes.
Speaker Change #147: It hasn't been without that.
Speaker Change #148: So we also think it's you don't use it.
Speaker Change #149: Now UBS regimen.
Speaker Change #149: You can do that.
Speaker Change #149: <unk> seen it with the shutdowns.
Speaker Change #149:
Speaker Change #149: Do they go to the judge on that to get into MBS at Sam's.
Speaker Change #149: Maybe I'll jump in on.
Speaker Change #149: Hey, good system.
Speaker Change #149: In particular this year the good news with Ohio.
Speaker Change #149: And I don't know on an instrument.
John: John are you all.
Speaker Change #150: Lugar BP.
Speaker Change #151: And kind of one Shanghai on women.
Speaker Change #150: And that's the intent.
Boucher: Boucher you're good.
Jim: Jim kind of really the shelf with a shotgun.
Mr Jenkins.
Speaker Change #154: Your boyfriend.
Speaker Change #155: Okay. Thanks for that.
Speaker Change #155: First in terms of the overall funding cost reduction a.
Speaker Change #155: Significant reduction in the following four hour over a four hour capital heavy loan facilitation. This culture is the most important.
Speaker Change #156: Adding sector.
Speaker Change #157: And the cost of ABS, which was already quite low has further decreased in this quarter. In addition, we have seen slight increase in the proportion of MBS fell a funding structure perspective.
Speaker Change #157: These three factories have collectively led to an overall decrease in the following.
Speaker Change #157: 56 basis points sequentially in Q3.
Speaker Change #157: Looking ahead, we believe that funding cost will remain largely stable with a possibility of a slight decrease.
Ashley: Well, thank you Ashley.
Ashley: It's quite limited.
Ashley: Okay.
Ashley: Geography.
Ashley: Thanks.
Ashley: Right.
Ashley: Hello.
Ashley: Thanks.
Ashley: This is Glenn.
Ashley: Is that Cytosorb.
Ashley: Yes.
Ashley: Hello <unk>.
Ashley: <unk>.
Ashley: So Lisa this is Jeff.
Ashley: Yeah.
To achieve that.
Ashley: Yes.
Ashley: Yeah.
Ashley: Does it does.
Ashley: Thank you guys.
Well.
Ashley: This is a fundamental but you didn't see that.
Ashley: He goes on a Sunday and Sunday <unk> Hotel.
Ashley: The hotel was tasked with your partners and most of them.
Ashley: Yeah.
Dr <unk>: Dr <unk>.
Dr <unk>: Yeah.
Dr <unk>: Yeah.
Dr <unk>: Ciena.
Dr <unk>: Yes.
Dr <unk>: Yeah.
Dr <unk>: That chart as a whole.
Dr <unk>: What's your policy.
Dr <unk>: Hum.
Lee: Okay. So this is lee.
Lee.
Paul: Thank you Paul.
Speaker Change #162: So that's definitely one time.
Speaker Change #162: <unk> alone.
Speaker Change #162: Yeah.
Speaker Change #163: These are questions that data.
Speaker Change #163: EMEA.
Speaker Change #163: <unk>.
Speaker Change #163: Okay.
Speaker Change #163: Uh huh.
I Hope you don't get home that holiday cope with Asia.
Speaker Change #163: Thanks to the bundle.
Speaker Change #163: But I also know you go to Guadalajara Cabos honey.
Speaker Change #164: Youll see a bunch of them at that facility as the dust EMEA.
Speaker Change #165: Here in Canada.
Nice job on kind of what do you I'm sure So, California somewhat timid.
Speaker Change #166: It was simple cheap.
Speaker Change #167: Uh huh.
Paul: Dsos at Paul.
Paul: Do you want to Cook will equal.
Speaker Change #168: The holders of Tcs.
Speaker Change #168: Houston liquidation.
Speaker Change #168: That's also an element.
Speaker Change #169: W E believe upward lever the balance sheet.
Speaker Change #170: <unk> got.
Speaker Change #170: Got it.
Speaker Change #170: And she says you can put the chi deal.
Donald J: Donald J code yet.
Speaker Change #173: Thank you.
Speaker Change #173: When she says no to cope with that.
Speaker Change #173: Okay.
Speaker Change #173: <unk> 2000 <unk>.
Good morning.
Speaker Change #173: Uh huh.
Sam: Hello, Sam on immediately.
Speaker Change #175: Okay, Let me do the translation.
Speaker Change #177: Our overall risk indicators mainland day, one delinquency rate and a 30 day collection rates showed stability and improvement in Q2, mainly for three reasons first in light of the macro uncertainty we took a more cautious approach in new loan origination in Q1.
Speaker Change #177: Q2 significantly improved.
Speaker Change #177: Improving the quality of new loan through a substantial optimization of risk models and strategies compared to Q3 and Q4 of last year.
Speaker Change #177: Second in Q2, we further optimized the structure of asset and funding matching.
Speaker Change #178: <unk>, introducing more financial institution that can complement our risk capability.
Speaker Change #178: Risk appetite, we have formed a differentiated and complementary cooperative model with these financial institutions in risk management, making our asset quality more robust and solid.
Speaker Change #178: In terms of managing the risk of that existing loan balance we continue to optimize postal law operation in Q2 for example by strengthening advanced your language.
Speaker Change #178: <unk> for customer payments.
Speaker Change #178: Effectively reduced our day, one delinquency rate at the same time, we optimized the management and performance review of the external collection team, which also helped us to improve the traction bank.
Speaker Change #179: Regarding the second half of the year based on the current risk performance as Haisheng. Just mentioned, we made more readily open up a bit in terms of our cost ratio and credit limits to enhance the engagement of our existing customers.
Speaker Change #179: At the same time, we have clear management measures to further optimize the user base structure, including further optimizing credit line credit limits and the pricing combination.
Uh-huh simply upgrading customer makes it right and optimizing the customer experience on our app product side.
Speaker Change #179: This will increase the portion of high quality users in the overall asset portfolio.
Speaker Change #179: Thus far we believe second half or second half overall risk performance should be better than the first half and a.
Ken: Relatively stable Ken.
Speaker Change #180: Thank you.
Ken: Thank you.
Ken: We will now take our last question from the line of Cindy Wang from China.
Speaker Change #182: Please go ahead.
Speaker Change #182: <unk>.
Speaker Change #183: Oh, Oh Oh.
Speaker Change #184: Uh huh.
Speaker Change #184: Oh, yes.
Speaker Change #185: No what I wanted to share.
Speaker Change #187: Just one question.
Brian: From Brian.
Brian: There's just a whole country itself.
Chad: Sure Chad.
Chad: Okay.
Chad: No.
Speaker Change #190: All right that sounds great for.
Chad: Some of them.
Michelle: Thank you Michelle.
Michelle: So our company has maintained a reality.
Michelle: Okay.
Michelle: For the first half of this year.
Speaker Change #192: Got it.
Speaker Change #193: Dean of the pace of ethanol.
Speaker Change #193: Second half of this year.
Speaker Change #193: Davidson.
Speaker Change #194: Thank you. Thank you.
Speaker Change #194:
Speaker Change #194: Uh huh.
Speaker Change #194: Yeah.
Speaker Change #194:
Speaker Change #194: Some of them end up.
Speaker Change #194: Well then.
Speaker Change #194: Yeah.
Speaker Change #194: What's your thoughts on that.
It could be.
Speaker Change #194: Some money away.
Speaker Change #194: It's not quite as yet.
Speaker Change #194: Yes, the only woman.
Speaker Change #195: Somebody has a taller toward I think of yogurt in Laguna.
Speaker Change #196: She is one of them in the English room.
Speaker Change #196: No woman, who you can do the change in Shreveport.
Speaker Change #196: Meantime, Young Woman example, down the program a woman a quick what's your dog.
Speaker Change #197: More minutes of your allow yeah Dorian pilot.
Speaker Change #197: And put this integration.
Speaker Change #198: Uh huh.
Speaker Change #198: Hum.
Speaker Change #198: Hum.
Speaker Change #198: Okay.
Speaker Change #198: What's the secret to 20 minutes.
Uh huh.
Speaker Change #198: Changes in the genome box.
Speaker Change #198: How do you get them done.
Sure sure.
Speaker Change #198: But on the Uruguay.
Speaker Change #198: When it comes to women.
Speaker Change #199: I would put on can do it at a good it's a good shadow.
Speaker Change #199: You can get something done shipping.
Speaker Change #200: Tenants, you're concerned that they don't come June.
Duncan: Well, thank you Duncan.
Speaker Change #202: But to go up she tends or in China. They don't generally like to do it.
Speaker Change #202: Hum.
Speaker Change #203: Got it.
Speaker Change #203: Yeah.
Speaker Change #204: Women and they say you did it on so many important towards hager.
Speaker Change #205: Starting with the furniture.
Speaker Change #205: Uh huh.
Speaker Change #205: In addition, our goal, creating young woman Detica cocoa grew more and.
Speaker Change #205: More.
Speaker Change #205: So on the last one hum.
Speaker Change #205: Women.
Speaker Change #205: Sure.
Speaker Change #207: Uh huh.
Speaker Change #207: <unk> 10, Nanosphere regional grimwood isn't done pressure.
Speaker Change #207: Thank you.
Speaker Change #207: Other than that.
Speaker Change #207: And that they don't want to go into this without China.
Speaker Change #207: Consider that they could handle if we can go.
Speaker Change #207: You heard that community to get them going with him.
Speaker Change #207: There you go.
Speaker Change #207: Hum.
Speaker Change #207: Okay.
Speaker Change #208: Okay, Let me do the translation.
Speaker Change #208: Thank.
Regarding your question.
Speaker Change #209: I'd say in the second half of the year, we may accelerate a bit our customer acquisition pace compared to the first half. This is because our the aspects we have putting profitability improvement in the first half expiring thick, giving us more confidence to acquire new customers.
Speaker Change #209: Furthermore, we are continuously expanding our customer acquisition channels, making our customer acquisition approach increasingly diversified.
Speaker Change #209: Our customer acquisition is not just limited to information flow advertising at a quite diversified over the past few quarters. Our embedded finance model has maintained rapid growth with our <unk> also been continuously optimized.
Speaker Change #209: At the same time, we are expect expanding to more API channels, such as E Commerce shot video and other scenarios.
We are also exploring embedded finance model with bank apps.
Speaker Change #209: Also were planning at some of our high quality dormant users to the banks all of these initiatives will help us expand our customer reach uplift our loan volume.
Speaker Change #209: Now what we are not simply pursuing loan volume because of that quality loan growth achieving eight overall improvement our business healthy.
Speaker Change #209: Even at a stimulus scale the quality of our business now is significantly better. Thank.
Speaker Change #209: Thank you.
Speaker Change #210: Thank you.
Speaker Change #211: Now reached the end of the question and answer session. Thank you very much for all your questions I'll now turn the conference back to the management team for closing comments.
Speaker Change #212: Okay. Thanks, again for everyone to join us for the call. If you have additional questions. Please feel free to contact us offline. Thank you have a good day.
Speaker Change #213: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.