Q3 2024 Lufax Holding Ltd Earnings Call
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Lufax Hldg third quarter 2024 earnings call. At this time, all participants are in a listen-only mode.
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Lufax Hldg third quarter 2024 earnings call. At this time, all participants are in a listen-only mode.
Ladies and gentlemen, thank you for standing by and welcome to the Luther Corning third quarter 'twenty 'twenty four earnings call.
At this time all participants are in a listen only mode.
Operator: After the management's prepared remarks, we will have a Q&A session. Please note, this event is being recorded.
Operator: After the management's prepared remarks, we will have a Q&A session. Please note this event is being recorded.
After the managements prepared remarks, we will have a Q&A session.
Please note this event is being recorded.
Xinyan Liu: Now, I'd like to hand the conference over to your speaker host today, Ms. Liu Xinyan, the company's Head of Board Office and Capital Markets.
Xinyan Liu: Now I'd like to hand the conference over to your speaker host today, Ms. Liu Xinyan, the company's head of board office and capital markets.
Speaker Change: Now I'd like to hand, the conference over to your speaker host today, Mr. Lu shipyard, the company's head of Board office and capital market. Please go ahead ma'am.
Xinyan Liu: Please go ahead. Thank you very much.
Xinyan Liu: Please go ahead, ma'am. Thank you very much.
Lu shipyard: Thank you very much Hello, everyone and welcome to our third quarter. Two O Q4 earnings conference call, our financial and operating results were released of our Newswire services earlier today and are currently available online today, you will hear from our chairman and CEO Mr. Why.
Y. S. Cho: Hello, everyone, and welcome to our third quarter of 2024 earnings conference call. Our financial and operating results were released by our newswire services earlier today and are currently available online. Today, you will hear from our Chairman and CEO, Mr. Y. S. Cho, who will provide an update of the recent development and strategies of our business. Our CSO, Mr. Peiqing, too, will then provide more details on our financial performance and the business operations.
Xinyan Liu: Hello everyone and welcome to our third quarter 2024 earnings conference call. Our financial and operating results were released by our Newswire services earlier today and are currently available online. Today you will hear from our chairman and CEO, Mr. Y. S. Cho, who will provide an update of the recent developments and strategies of our business. Our CFO, Mr. Peiqing Zhu, will then provide more details on our financial performance and business operations.
Lu shipyard: As true who will provide an update of the recent developments and the strategies of our business hours. She is oh, Mr. Paging through well then provide more details on our financial performance in the business operation before we continue I would like to refer you to our safe Harbor statement in our earnings press.
Xinyan Liu: Before we continue, I would like to refer you to our safe harbor statement in our earliest press release, which also applies to this call, as we will be making forward-looking statements.
Y. S. Cho: Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements.
Speaker Change: Release, which also applies to this call as we will be making forward looking statements with that I'm now pleased to turn over the call to Mr. Why I've chosen <unk>, Chairman and C O a flu facts. Please.
Y.S. Cho: With that, I am now pleased to turn over the call to Mr. Y.S.
Y. S. Cho: With that, I'm now pleased to turn over the call to Mr. Y. S.
Y. S. Cho: Cho's chairman and CEO of Liu Xinyan, please. Thank you for joining us today for the third quarter 20-24 earnings call. During the third quarter, while full loan demands remain weak, as small business owners continue to face a complex macro-environment, we saw ongoing growth in our consumer finance business. We are hopeful that policy stimulus measures introduced by the Chinese government in late September will help improve the macro-environment and have a positive impact on our business performance in the long run. Meanwhile, we plan to stay vigilant and prudent in the execution of our business strategies.
Y.S. Cho: Chou, Chairman and CEO of Lufax. Thank you for joining us today for our third quarter 2024 Online Call. During the third quarter, while 2-year loan demands remained weak as small business owners continue to face a complex macro-environment. We saw ongoing growth in our consumer finance business. We are hopeful that policy stimulus measures introduced by the Chinese government in late September will help improve the macro environment and have a positive impact on our business performance in the long run. Meanwhile, we plan to stay vigilant and prudent in the execution of our business strategies in light of the increased risk exposure on the 100 Guaranteed Finances, 100 Guaranteed Finances model.
Speaker Change: Thank you for joining us today for third quarter, 'twenty 'twenty four and core.
Speaker Change: During the third quarter why pull on demand remained weak as small abuse of Illinois continue to face a complex macro environment we.
Speaker Change: We saw ongoing gross you know principal finance business, we have.
So for that policy stimulus measures.
Speaker Change: Produced by the Chinese couple months in late September with helps improve the macro environment and have a positive impact will not be as performance in the long run.
Speaker Change: Why we plan to stay vigilant and prudent in the execution of our strategies.
Y. S. Cho: In light of the increased risk exposure on the 100 guaranteed business model, before we discuss the business details, let me share some updates on the macro-environment. In the third quarter, the macro-environment remains challenging for small business owners. The SME development index declined by 0.3 points, squatter over quarter to 8.7 in September. The business conditions index published by the Chong Kong Graduate School of Business also declined from 49.3 in June to 46 in September, suggesting persistent challenges faced by the small business sector. On the other hand, we are encouraged by signs of mild recovery in the consumption sector during the third quarter.
Speaker Change: Strategies.
Speaker Change: Right.
Speaker Change: The increased risk exposure under 100 guaranteed fees wonder I guarantee being smaller.
Y.S. Cho: Before we discuss the beans details, let me share some updates on the macro environment. In the third quarter, the macro environment remained challenging for small business owners. The SME Development Index declined by 0.3 points, quarter over quarter, to 88.7 in September. The Business Conditions Index published by the Cheong Kong Graduate School of Business also declined from 49.3 in June to 46 in September, suggesting persistent challenges faced by the small business sector.
Speaker Change: Before we discuss the Beastie case, let me share some updates on the macro environment.
Speaker Change: In the third quarter, the macro environment remains challenging for small business owners.
Speaker Change: The SME SME development index.
Speaker Change: Declined by a point to point <unk> eight points quarter over quarter to 887 in September.
Speaker Change: These conditions index published by the Hong Kong Greater School business also declined from 49 three in June to <unk> 46 in September.
Speaker Change: So justine persistent challenges faced by small opinions checked off.
Y.S. Cho: On the other hand... were encouraged by signs of mild recovery in the consumption sector during the third quarter. as the CPI showed improvement from 0.2% in June to 0.4% in September. In late September, we are glad to see that the Chinese government announced a number of new stimulus policies. including measures to help the recovery of the real estate sector and increase liquidity. such as the cut-to-reserve requirements ratio and the lowering of existing mortgage rates. Local governments also launched a series of stimulus initiatives relating to real estate and consumption to boost consumer confidence and strengthen the economy.
Speaker Change: On the other hand.
Speaker Change: We're encouraged by signs of mine recovery in the consumption sector during the third quarter.
Y. S. Cho: The SPI showed improvement from 0.2% in June to 0.4% in September. In late September, we are glad to see that the Chinese government announced a number of new stimulus policies, including measures to have the recovery of the real estate sector and increased liquidity. Xu Choy, such is a cut to resolve requirements ratio, and the rolling of if it is to move your rates. Local governments also launched a series of stimulus initiatives relating to real estate and consumption to boost consumer confidence and strengthen the economy. We believe all of these efforts will have a positive impact on Estinios in China.
Speaker Change: As the CPI showed improvement from <unk>, 2% in June two 4% in September.
Speaker Change: In late September we are glad to see that Chinese government announced a number of new stimulus policies <unk>.
Speaker Change: Including measures to have the recovery of the real estate sector and increase liquidity.
Speaker Change: Such as a cut to resolve most of Asia and the rolling off you could do some mortgage rates.
Speaker Change: Look a couple of months also launched a series of stimulus initiatives.
Relating to real estate and consumption to boost consumer confidence and strengthen the economy.
Y.S. Cho: We believe all of these efforts have a positive impact on activities in China. Meanwhile, we recognize that it will take time for SBOs to benefit from these measures and improve performance.
Speaker Change: We believe all of these air force.
We have a positive impact on <unk> in China.
Y. S. Cho: Meanwhile, we recognize it is a tech time for Estinios to benefit from these measures and improve performance. So we remain prudent as we extrude our business strategies in the short term. Furthermore, we also put more emphasis on our non-Estinios customers and continue to grow our consumer finance business. This will help us take full advantage of greater effects of consumption recovery and will be a solid position for future growth.
Speaker Change: Meanwhile, what Dirk.
Speaker Change: When is it.
Speaker Change: It'll take time for <unk> to benefit from these measures and improve performance.
Y.S. Cho: So we remain prudent as we execute our business strategies in the short term. Furthermore, we will also put more emphasis on our non-SEO customers and continue to grow our consumer finance business. This will help us take full advantage of the gradual effects of consumption recovery and will build a solid position for our future growth.
So we remain prudent as we execute our business strategies in the short term.
Speaker Change: Furthermore, we have also put more emphasis on our non S. Your customers and continue to grow our small finance business.
Speaker Change: This should help us to take full advantage of greater effects of consumption recovery and we'd be sorted position for future growth.
Y.S. Cho: Now let's turn to our operating results. First, let's take a look at our loan volume. Total neuron sales in the third quarter were $50.5 billion fletch-ish year-over-year and improving by 11.7 percent from last quarter. The quarter-on-quarter growth, despite the macro challenges, was mainly attributable to the continued growth of our consumer finance business, which offset the ongoing weakness in pre-loan demand from high-quality SBOs. New consumer finance loans increased by 27.8% year-over-year and accounted for 52% of our total new loans sales in the third quarter. as a result of our continued efforts to roll out smaller teacups and revolving product structures.
Y. S. Cho: Now let's turn to our operating results. First, let's take a look at our loan volume. Total new loan sales in the third quarter were 50.5 billion, a flatish year or year over year, and improving by 11.7% from last quarter. The quarter-on-quarter growth, despite the macro challenges, was mainly a true attributable to the continued growth of our consumer finance business, which offset the ongoing weakness in pre-loan demand from high-quality SBOs. New consumer finance loans increased by 27.8% year over year and accounted for 52% of our total new loan sales in the third quarter. As a result of our continued efforts to roll out smaller tickets and delivering product structures.
No restaurants, all quaking resource.
Speaker Change: First let's take a look at.
Speaker Change: Our loan volume.
Speaker Change: Torture neuro, let's say in the third of course, all well 50.5.
Speaker Change: Yeah.
Speaker Change: Flattish year on year over year, and improving by 11, 7% from last quarter.
Speaker Change: The quarter on quarter growth. Despite the macro challenges was mainly achieved at etsy.
Speaker Change: Good to see.
Speaker Change: Huge growth all of our principal finance business.
Speaker Change: Which offset the ongoing weakness in pool on demand from high quality has to be yours.
Speaker Change: Quite small finance loans increased by 27.8% year over year and accounted for 52% of our our tour to a new owner sales in the third quarter.
Speaker Change: As a result of our continued efforts to roll out smaller tests and LIBOR being product structures.
Y.S. Cho: Balance-wise, our total loan balance stood at $213.1 billion as of the end of third quarter, of which consumer finance loans took up 22%. Turning to asset quality, our tightened risk control policies and enhanced risk assessment systems have helped maintain stable asset quality. The C2MC flow rate of Puhui launch remained at 0.9% during the 3rd quarter, despite a decrease of total balance as compared to the 2nd quarter. The asset quality of our consumer finance loans also stayed strong, with the NPL ratio further decreasing to 1.2% from 1.4% in the second quarter. As loans enabled under the 100% Guarantee Model kept increasing as a percentage of total loans, our balance-take rate rose by 1.9% points year-over-year to 9.7%.
Y. S. Cho: Balance-wise, our total loan balance stood at 213.1 billion as of the end of the third quarter, of which consumer finance loans took up 22%. Turning to asset quality, our tightened risk control policies and enhanced risk assessment systems have helped maintain stable asset quality. The C2MC flow rate of poor balance remained at 0.9% during the third quarter, despite a decrease of total balance as compared to the second quarter. The asset quality of our consumer finance loans also stayed strong, with the MPL ratio further decreasing to 1.2% from 1.4% in the second quarter. As loans enabled under the 100% guarantee model kept increasing as a percentage of total loans, our balance take rates rose by 1.9 percentage points year over year to 9.7%.
Speaker Change: Balance wise, our our tour to Bloomberg.
Speaker Change: Loan balance stood at $213 1 billion as of the end of third quarter.
Which question will finance took up 22%.
Turning to asset quality, our tightened to risk control policies and enhanced risk assessment systems have had maintained stable asset quality.
The seats are empty floor rates of hopefully Louis remains at <unk>, 9% during the third quarter. Despite a decrease of total balance as compared to the second quarter.
Speaker Change: The asset quality of our Crimson will finish noise also stayed strong.
Speaker Change: With the NPL ratio of further decreasing to one 2% from one 4% in the second quarter.
Speaker Change: As you launched enabled under the 100% guarantee more than kept increasing as a percentage of total loans. Our parents take rate rose by one 9% points year over year to nine 7%.
Y. S. Cho: During the third quarter of 2024, cost of funds continued to decrease, driven by both monetary policy stimulus and our diversified license strategy. As mentioned during our last online call, we acquired a nationwide small landing license in July. We started to provide neurons under this newly acquired nationwide small landing license in August. As of the end of third quarter, we have provided more than 1 billion in neurons under this new license. We believe our small landing license has the potential to further reduce our funding cost, diversify our product portfolio, and improve our capital management efficiency.
Y.S. Cho: during the third quarter of 2024. Cost of funds continue to decrease, driven by both monetary policy stimulus and our diversified license strategy. As mentioned during our last earning call, we acquired a nationwide small lending license in July. We started to provide neurons under this newly acquired nationwide small landing license in August. As of the end of third quarter, we have provided more than 1 billion in neurons under this new license.
During the third part of 'twenty 'twenty four.
Speaker Change: Cost of funds continued to decrease driven by both monetary policy stimulus and our diversified license strategy.
Speaker Change: As mentioned during our last earning call we'll pilot a nationwide small lending license in July.
Speaker Change: Talk to you to provide new noise under this newly all pod nationwide small lending license in August.
Speaker Change: As of the end of third quarter, we have provided more than 1 billion in euros under this new license.
Y.S. Cho: We believe our small lending license has the potential to further reduce our funding cost, diversify our product portfolio, and improve our capital management efficiency.
Speaker Change: We believe our sworn lending license has the potential to further reduce our funding cost diversify our product portfolio and improve our kimpton managed money efficiency.
Y. S. Cho: Finally, I want to provide an update on PINAN Group's mandatory general offer. On September 27, PINAN Group dispatched offer documents and commenced the offer period. If there are no additional requirements from regulators, the offer period will end on October 28. As stated in the offer documents, PINAN Group is making the offer solely to comply with applicable rules and has no intention to privatize Lufax. The intention is that Lufax will continue to remain an independent entity listed on the New York-style exchange and Hong Kong exchange. Looking ahead, we seek to continue to deepen our synergies with PINAN Group, leveraging its brand, reputation, technological resources, and extensive network to strengthen our market position.
Y.S. Cho: Finally, I want to provide an update on Ping An Group's mandatory general offer. On September 27th, Ping An Group dispatched offer documents and commenced the offer period. If there are no additional requirements from regulators, the offer period will end on October 28. As stated in the offer document, Ping An Group is making the offer solely to comply with applicable rules and has no intention to privatize Lufax. The intention is that Lufax will continue to remain an independent entity listed on the New York Stock Exchange and Hong Kong Exchange. Looking ahead, we seek to continue to deepen our synergies with Ping An Group, leveraging its brand, reputation, technological resources, and extensive network to strengthen our market position.
Speaker Change: Finally, I want to provide an update on peer groups mandatory general awful.
Speaker Change: On September 27th Xiang group dispatch it off without too much and commissioned at the offer period.
Speaker Change: If there are no additional requirements from regulators the offer period will end on October 28.
Speaker Change: <unk> stated in the offer documents.
Speaker Change: We'll be making the old fall solely to comply with applicable Rus and has no intention to privatize.
Speaker Change: Thanks.
Speaker Change: The intention is that <unk> will continue to remain an independent entity listed on the New York Stock Exchange in Hong Kong Exchange.
Speaker Change: Looking ahead, we seek to continue to deepen our synergies with Ping an group leveraging his friends reputation technological resources and extensive network to strengthen our market position.
Peiqing Zhu: I will now turn the call over to Beijing. We provide more details on our financial performance and business operations.
Peiqing Zhu: I will now turn the call over to Peiqing, who will provide more details on our financial performance and business operations. Thank you, guys.
Speaker Change: I will now turn the call over to pay Ching will provide more detail on our financial performance and business operations.
Peiqing Zhu: Thank you, Ys. I will now provide a closer look into our third quarter results. Please note, all numbers are R&B terms, and all comparisons are yearly year basis unless otherwise dated. In the third quarter of 2024, our total income decreased by 31.1 percent to 5.5 billion from 8.1 billion. Mailing due to a decrease of outstanding loan balance by 41.8 percent. Partially offset by our increase take a rate. As long as enabled, and the 100 percent guarantee model constitutes a higher proportion of our total loan work. Meanwhile, our total expenses decreased by 19.2 percent to 6.3 billion from 7.7 billion, among which the total operating expenses declined by 35.9 percent to 3 billion from 4.7 billion.
Speaker Change: Stinker wise.
Peiqing Zhu: I will now provide a closer look into our third quarter results. Please note, all numbers are RMB terms, and all comparisons are on a year-on-year basis, unless otherwise stated. In the third quarter of 2024, our total income decreased by 31.1% to $5.5 billion from $8.1 billion. mainly due to a decrease of outstanding loan balance by 41.8%. Partially offset by our increased take rate, as loans enabled under 100% guarantee model constitute a higher proportion of our total loan volume. Meanwhile, our total expense is decreased by 19.2% to 6.3%. from 7.7 billion, among which the total operating expenses declined by 35.9% to 3 billion from 4.7 billion.
Speaker Change: I will now provide a closer look into our third quarter results.
Please note all numbers RMB terms and all comparisons on a year on year basis, unless otherwise stated.
Ching: In its third quarter of 2024.
Speaker Change: Our total income decreased by 31, 1% to $5 5 billion from $8 1 billion.
Speaker Change: Mainly due to a decrease of outstanding loan balance by 41, 8%.
Speaker Change: Partially offset by our increased pay correct as loan loans enabled in the 100% guarantee model constitute a higher proportion of our total loan book.
Speaker Change: Meanwhile.
Speaker Change: Total expenses decreased by 19, 2% to six three.
Speaker Change: Billion from $7 7 billion, among which the total operating expenses declined by 35, 9% to <unk> 3 billion from 747 billion.
Peiqing Zhu: And credit imperial losses increased by 9 percent to 3.3 billion from 3 billion. Our operating efficiency improved without operating expenses to income ratio decreasing from 53.8 percent to 57.8 percent in the third quarter of 2023. The increase of our credit imperial losses was mainly due to increase of provision related to our loan work and certain investment assets. As a result, we recorded an hour loss of 725 million fourths of quarter. Turning to the unique economies of our long business, our APR by balance decreased 19.5% from 20.1%. If, by the decrease in APR, I'll take the rate by balance increased to 9.7% from 7.8%.
Peiqing Zhu: and credit impairment losses increased by 9% to $3.3 billion from $3 billion.
Speaker Change: Any credit impairment losses increased by 9% to $3 3 billion from 3 billion.
Peiqing Zhu: Operating efficiency improved, with our operating expenses to income ratio decreasing from 53.8%, from 57.8% in the third quarter of 2020. The increase of credit impairment losses was mainly due to increased provision related to our loan book and certain investment assets.
Operating efficiency improved with our operating expenses to income ratio decreasing from 53, 8% from 57, 8% in the third quarter of 2023.
Speaker Change: The increase in credit the credit impairment losses was mainly due to increased provision related to our loan book and the sort of investment assets.
Peiqing Zhu: As a result, we recorded an air loss of $725 million for the circuit.
Speaker Change: As a result were recorded a net loss of $725 million fourth quarter.
Peiqing Zhu: Turning to the unique economies of our long business. our APR by balance decreased 95.5% from 20.1%. despite the decrease in APR. Our tech rate by balance increased to 9.7% from 7.8%. primarily due to the removal of negative impact from a high CGI premium after our transition to the 100% guarantee model, and also thanks to the decrease in our funding cost. We accept that the take rate will further increase as the percentage of loans enabled under the 100% guarantee model continues to increase. and that funding cut will continue to decrease as we continue to optimize our funding structure by leveraging our consumer finance and a small lending life.
Speaker Change: Turning to the unit economies about Lumpiness, all API balance decreased 19.
Speaker Change: 5% from 21%.
Speaker Change: By the decrease in APR I'll take full rates by balance increased to nine 7% from seven 8%.
Peiqing Zhu: Primarily due to the removal of negative impact from a high PGI premium up our transition to the 1% guarantee model. Now, so thanks to the decrease in our funding cut. We accept that the take rate will further increase as the percentage of the loans in labor to end the 1% guarantee model continues to increase. And that funding cut will continue to decrease as we continue to optimize our funding structure by leveraging our consumer finance and a small lending license. On the extensive side of a unique economy, while sales marketing expenses remain stable, credit costs and other operating expenses will attract our net margin.
Speaker Change: Primarily due to the removal of a negative impact from a high CGI premium our transition to the 100% guarantee model.
Speaker Change: So thanks to the decrease in our funding costs.
Speaker Change: We accept except that the take rate to a further increase as a percentage of the loans.
Speaker Change: And labor at the end of the 100% guarantee model.
Speaker Change: Continues to increase.
Speaker Change: And that funding cost will continue to decrease as we continue to optimize our founding structure by leveraging our consumer finance and a smart lending license.
Peiqing Zhu: on the expensive side of a unique economy. While sales and marketing expenses remained stable, credit costs and other operating expenses were a drag on our net margin. credit costs increased primarily due to the increased risk exposure and the provision for our loan book.
Speaker Change: An extensive side of a unit economy, while sales and marketing expenses to remain stable.
Cost and operating expenses will attract all net margin.
Peiqing Zhu: Credit costs increase primarily due to the increase risk exposure and provision for our loan book. As discussed before, while we anticipate loans under the 1% guarantee model, while we lifetime profitable, it's important to note that these loans may incur accounting losses in their first calendar year due to a high upfront provisions. This accounting treatment affects our short-term profitability, but is expected to lead to improved long-term financial performances as a long-pop value materials. The increase of our operating expenses was primarily due to the contraction of our loan balance and the reduced economy off-scale. Now, let me highlight a few of the key pioneer items. During this quarter, our technology platform-based income was 1.6 billion, representing a decrease of 49.9%.
Speaker Change: Costs increased primarily due to the increased risk exposure and the provision for our loan books.
Peiqing Zhu: As discussed before, while we anticipate loans under the 100% guarantee model will be lifetime profitable, It's important to note that these loans may incur accounting losses in their first calendar year due to a higher upfront provision. This accounting treatment affects our short-term profitability but is expected to lead to improved long-term financial performances as the loan portfolio matures.
Speaker Change: As discussed before while we anticipate loans ended at 100% guarantee model will be lifetime profitable.
Speaker Change: It's important to note that these loans may incur accounting losses in their first calendar year due to a higher upfront provisions.
Speaker Change: This accounting treatment affect our short term profitability.
Speaker Change: It is expected to lead to improved long term financial performance fees as the loan portfolio matures.
Peiqing Zhu: The increase of other operating expenses was primarily due to the contraction of our loan balance and the reduced economy upskill.
The increase of other operating expenses was primarily due to the contraction of our loan balance and the reduced economy of scale.
Peiqing Zhu: Now, let me highlight a few key P&L items. During this quarter, our technology platform-based income was $1.6 billion, representing a decrease of 49.9%, mainly due to a decrease in retail credit services fees, as a result of a 41.8% decrease in outstanding loan balance. In addition, it was also negatively affected by cessation of the Lu Jing Tong business in April 2024. Our net interest income was $2.7 billion, a decrease of 18.8% from the same period last year. The relative lower decrease in net interest income was the result of an increase in consumer finance revenue. Meanwhile, our guarantee income was $818 million, a decrease of 13.1% in terms of revenue make Technology platform-based income accounted for 29.5% of our total revenue, down from 40.5% in the same period of last year.
Now, let me highlight key P&L items.
Speaker Change: During this quarter all technology platform based income was $1 6 billion, representing a decrease of 49, 9% mainly.
Peiqing Zhu: Mailing due to a decrease in retail credit services fees as a result of 41.8% decrease in our standing loan balance. In addition, it was also negatively affected by the cessation of the losing term finish in April 2024. Our net interest income was 2.7 billion, a decrease of 18.8% from the same period last year. The relative lower the decrease in net interest income was the result of our increase in consumer finance revenue. Meanwhile, our guarantee income was 818 million, a decrease of 13.1%. In terms of revenue mix, technology platform-based income accounted for 29.5% above total revenue.
Speaker Change: Mainly due to a decrease in retail credit services piece.
Speaker Change: As a result of 41, 8% decrease in outstanding loan balance.
Speaker Change: Addition, it was also negatively affected by the cessation of the looting companies in April 2024.
Speaker Change: Our net interest income was $2 7 billion.
Speaker Change: Decrease of 18, 8% from the same period last year.
Speaker Change: They're relatively little lower decrease in net interest income was the result of our increase in consumer finance revenue.
Meanwhile, I'll guarantee income was 818 million a day.
Speaker Change: Kris of 13, 1% in.
Speaker Change: In terms of revenue mix Tac.
Speaker Change: Technology platform based income accounted for 29, 5% of all total revenue down from 45% in the same period last year.
Peiqing Zhu: Down from 40.5% in the same period below. Xiaoxiong Ye, Yada Li, Xinyan Liu, 9.9, 49.9% to 1.1 billion. Mailing due to reduced loan-related expenses resulting from the decrease in new loan sales and outstanding loan balance, as well as the elimination of expenses associated with our looting companies. Operation and the service expenses decreased by 25.8% to 1.1 billion. As a result of our continued effort to control expenses and the decrease in loan balance, partially offset by increased commission associated with improved collection problems, our finance costs increased by 48.9% to 59 million from 40 million. Mailing due to the decrease of interest income from vent deposits, partially offset by the decrease of interest expenses, as a repayment of our sea-run recovery processing net upon the maturity on September 30, 2023.
Peiqing Zhu: Net interest income and guaranteed income accounted for 48.5% and 14.7% of total revenue in the third quarter, respectively, as compared to 41.1% and 11.7% in the same period last year. In terms of expenses, our credit impairment losses increased by 9% to $3.3 billion. mainly due to increased provision related to loans as we applied a more prudent approach in our ECL model to reflect the complex macroeconomic environment in the third quarter. as well as increased provision related to the certain investment aspects. of total sales and marketing expenses, which include expenses for borrower acquisition costs, as well as the general sales and marketing expenses.
Speaker Change: Net interest income and guaranteed income accounted for 48, 5% and a 14, 7% of total revenue in the third quarter.
Speaker Change: Actively as comparing it to 41, 1% and 11, 7% in the same period last year.
Speaker Change: In terms of expenses.
Speaker Change: Credit impairment losses increased by 9% to $3 3 billion.
Speaker Change: Mainly due to increased provisioning related to loans as we applied a more prudent approach in our ECL model should reflect the complex macro economy environment in a suit.
Got it.
Speaker Change: As well as increased provision relates to the certain investment assets.
Our total sales and marketing expenses, which include expenses for borrower acquisition costs as well as a general sales and marketing expenses.
Peiqing Zhu: decreased by 49.9% to $1.1 billion, mainly due to reduced loan-related expenses resulting from the decrease in new loan sales and outstanding loan balance, as well as the elimination of expenses associated with our losing company. operation and servicing expenses decreased by 25.8% to $1.1 billion as a result of our continued efforts to control expenses and decrease loan balance. partially offset by increased commission associated with improved collection performance. Our finance costs increased by 48.9% to $59 million from $40 million. mainly due to the decrease of interest income from bank deposits. partially offset by the decrease of interest expenses after repayment of our C-Round corrective processing net upon the maturity on September 30, 2023.
Speaker Change: Creased by 14.
Speaker Change: Hi, Mike.
Speaker Change: Nine 9% to $1 1 billion.
Speaker Change: Mainly due to reduced loan related expenses.
Speaker Change: <unk> from the decrease in new loan sales and the outstanding loan balance as well as the elimination of expenses associated with our leading pump business.
Speaker Change: Operation and the service servicing expenses decreased by 25, 8% to $1 1 billion as a result of our continued efforts to control expenses and a decrease in loan balance.
Speaker Change: Partially offset by increased commission associated with improved collection put boneless.
Speaker Change: Finance costs increased by.
Speaker Change: Or eight 9% to 59 million from 40 million.
Speaker Change: Mainly due to the decrease of interest income from bank deposits.
Speaker Change: Partially offset by the decrease of interest expenses.
Speaker Change: Payment of our.
Speaker Change: Colorado processes nuts.
Speaker Change: Upon the maturity on September 32023.
Peiqing Zhu: In terms of capital, as of the end of September 2024, our main operating entities remain well-capitalized. Our guarantees of starage leverage ratio stood at 2.6 acts, and our consumer finance subsidiaries capital-academy's ratio stood at 14.9%. As compared to the 10.5% regulatory requirement. As we deal with the complexity of the broader economic environment, we are now seeing encouraging signs in terms of asset quality and in the growth of our consumer finance business.
Peiqing Zhu: in terms of capital. As of the end of September 2024, our main operating entities remain well-capitalized. Our Guaranteed Subsidized Leverage Ratio stood at 2.6x and our Consumer Finance Subsidized Capital Activities Ratio stood at 14.9%. as compared to the 10.5% regulatory requirement.
Speaker Change: In term of.
Speaker Change: Capital.
Speaker Change: As of the end of September 2024, our main operating entities remain a well capitalized.
Speaker Change: Guarantees of star at the leverage ratio stood at $2 six Ax and our consumer finance subsidiaries capital equity ratio stood at 14, 9%.
Speaker Change: Compared to the 10, 5% regulatory requirement.
Peiqing Zhu: As we deal with the complexity of the broader economic environment, we are now seeing encouraging signs in terms of asset quality and in the growth of our consumer finance business.
As we deal with the complexity of the broader economy environment.
Speaker Change: Now seeing encouraging signs in terms of asset quality and in the growth of our consumer finance business.
Peiqing Zhu: We will remind committee to our approved strategy as we seek to build a solid foundation for long-term sustainable future operation and will uphold the commitment to bring value to our shareholders.
Peiqing Zhu: We will remain committed to our prudent strategy as we seek to build a solid foundation for long-term, sustainable future operation and will uphold our commitment to bring value to our shareholders.
Speaker Change: Whoever it might committed to our prudent strategy as we seek to build a solid foundation for long term sustainable future operation and it will come.
Commitment to bring value to our shareholders that.
Peiqing Zhu: That concludes our prepared remarks for today.
Peiqing Zhu: That concludes our prepared remarks for today. I appreciate it.
Speaker Change: That concludes our prepared remarks for today operator, we are now ready to take questions.
Operator: We are now ready to take questions. We will now begin the question and answer session. To ask your question, you may press stars and one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing me. If at any time your question has been addressed and you would like to withdraw your question, please press star to two. In addition, I'd like to remind you to please mute yourself after stating your question.
Operator: We are now ready to take questions. We will now begin the question and answer session.
Speaker Change: We will now begin the question and answer session.
Operator: To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. In addition, I'd like to remind you to please mute yourself after stating your question.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: In addition, I'd like to remind you to please yourself after stating your question.
Operator: At this time, we will pause momentarily to assemble our roster.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Okay.
Betty Lee: The first question today comes from Betty Lee with CLSA. Please go ahead. Thank you, management, for the opportunity to ask the first question. So I have two questions. The first one, could you kindly express what will be the impact of the new public system in our business? The second is could you share more about the business outlook for this year and beyond? Thank you.
Betty Li: The first question today comes from Betty Li with CLSA.
The first question today.
Speaker Change: It comes from that elite.
Speaker Change: L. S. A please go ahead.
Betty Li: Please go ahead.
Speaker Change: Okay.
Betty Li: Thank you, management, for the opportunity to ask the first question. So I have two questions. The first one, could you kindly express what will be the impact of the new policy stimulus on your business? The second is, could you share more about the business outlook for this year and beyond? Thank you.
Speaker Change: Thank you management for the opportunity to ask the first question. So.
So I have two questions. The first one could you kindly express what will be the impact of that new policy.
Speaker Change: Hum.
Speaker Change: The second is could you share more about our business outlook for this year and beyond thank you.
Y. S. Cho: Thanks, Betty. About stimulus policy, it is surely a positive impact, I think, on over the comment as in our SQL segments as well. But knowing small business owners in general are in difficulty now, it will take more time for them to benefit from these measures and improve performance.
Y.S. Cho: Thanks, Betty. About stimulus policy, it is surely a positive impact, I think, on the overall economy and our SBO segment as well. But knowing small business owners in general are in difficulty now, it will take more time for them to benefit from these measures and improve performance.
Speaker Change: Thanks Betty.
Speaker Change: Yeah about stimulus stimulus policy. It is surely a plus the impact I think on overall economy and as an hour SQL second one is wet.
Speaker Change: But knowing small business owners in general are in difficulty now either take more time for them to benefit from these measures and improved performance.
Y.S. Cho: So, in near term, we remain prudent and put... asset quality over quantity for SBO lending.
Y. S. Cho: So in the near term, we remain prudent and put a security over quantity for SQL lending. But at the same time, we take full advantage of the gradual recovery by putting more emphasis, focus on non-SQL segments and expedite small and medium-sized ticket loan growth using our CF license, consumer finance license, and the newly acquired small lending license with their funding course advantage and consumer experience advantage over guaranteed model.
Speaker Change: So in the near term, we remain prudent and put.
Speaker Change: Asset quality over quantity for SBA lending.
Y.S. Cho: But at the same time, we take full advantage of the gradual recovery by putting more emphasis, focus on non-SBO segments and expedite small and medium-sized ticket loan growth using our CF license, consumer finance license, and the newly acquired small lending license with their funding cost advantage and customer experience advantage over guaranteed model.
Speaker Change: But at the same time, we take full advantage of the gradual recovery by putting more emphasis and focus on notice your segments and expedite our small and medium sized medium sized ticket loan growth using our.
Speaker Change: Our CF licensed consumer finance license and then new real.
Speaker Change: Smaller lending licenses with their funding cost advantage and cause so much beauty cosmetics peanuts advantage overall guaranteed motor.
Y.S. Cho: And then about our look, our question. So our volume guidance of renminbi 190 billion to 220 billion and loan balance of renminbi 200 billion to 230 billion that remains unchanged on a single account basis. We know that due to the upfront provision of the 100% guarantee model, so profitability is under pressure in the first, very first calendar year. But going forward, we know that, we believe the overall lifetime profitability will surely improve than before.
Y. S. Cho: And then about our question. So our volume guidance of 190 billion to 220 billion and loan balance of 1,200 billion to 230 billion, and that remains unchanged. On a single account basis, we know that due to the upfront problem of the 100% guaranteed model, profitability is under pressure.
Speaker Change: And then about.
Our question so our volume guidance of low maybe a $190 billion to 220 billions and loan balance of plumbing b.
Speaker Change: 200 billion to 20 30 billion that remains on change it.
Speaker Change: On a single account basis.
Speaker Change: We know that.
Speaker Change: The upfront problems and all that you wanted to percent guarantee motor so profitability is under pressure in the first very fast change that year, but going forward.
Y. S. Cho: The first, very first, came the year, but going forward, we know that we believe the overall lifetime practice which will surely improve them before.
Speaker Change: We know that we believe the overall lifetime profitability will surely improve them before.
Speaker Change: Okay.
Judy Jane: The next question comes from Judy Jane with City. Please go ahead. Thank you, management.
Speaker Change: Okay.
Judy Zhang: The next question comes from Judy Zhang with Citi. Please go ahead. Thank you, management. I have two questions. The first question regarding on asset quality. I understand that Lufax has been de-risking lone bulk for some time, which is the firing fruit in the recent quarters. Could management share a bit more color on our latest asset quality performance, and how has our low rate, delinquency rate, been trending since 3Q?
Speaker Change: The next question comes from Judy Zhang with Citi. Please go ahead.
Judy Zhang: Oh, Thank you management.
Judy Jane: I have two questions. The first question regarding ethicality, I understand the risk accessing the risk in loan bulk for some time, which is a very good in the recent cultures. Could management share a bit more color on overall issues for ethicality performance and how I saw were lowered to be linked with the rate in 2020 since 3Q.
Judy Zhang: Two questions.
Judy Zhang: First question regarding on agriculture.
Speaker Change: But derisking bulk for some time.
Speaker Change: In the recent quarters could management share a bit more color all over again.
Speaker Change: Performance on how I saw the low rates.
Speaker Change: Thank you.
Judy Zhang: And second question is, does management have any plan to announce another round of special dividend this year, or any other measures that you are considering to boost the shareholders' return? Thank you.
Judy Jane: And the second question is, does management have any plans to announce another wrong special dividend this year or any other measures that you are considering to do the shareholders return? Thank you.
Speaker Change: Second question.
Management plans to announce another special dividend this year.
Speaker Change: Other measures that you are considering.
Such a range of foods that shareholder return. Thank you.
Y.S. Cho: Okay, thanks, Judy. The asset quality indicator remained stable in the third quarter, with C2MCD flow rate of our pre-loans remaining at 0.9 percent, despite decline on balance.
Y. S. Cho: The asset quality indicator remained stable in the third quarter, with C2M6 flow rate of our pre-loans remaining at 0.9%, despite decline on balance.
Speaker Change: Okay. Thanks Judy.
Asset quality indicators remained stable in the third quarter.
Speaker Change:
Speaker Change: <unk> flow rates or about <unk> remaining at <unk>, 9%.
Speaker Change: Despite decline on business, so why our consumer finance NPL ratio continued to improve from one 4% to 2%.
Y.S. Cho: So, why our consumer finance NPL ratio continues to improve from 1.4 percent to 1.2 percent?
Y. S. Cho: So why our customer finance and peer ratio continue to improve from 1.4% to 1.2%, knowing that our loan balance reduction will come to an end in a few months or a few months later. And the portfolio account makes an income of account vintage, then mix will continue to optimize. So I believe we will be able to demonstrate more obvious asset quality improvement measured by net flow, not people wrong. So that we have confidence.
Y.S. Cho: knowing that our on balance reduction will come to an end in a few months, a few months later and their portfolio accounting mix in terms of account vintage, their mix will continue to optimize so I believe we'll be able to demonstrate more obvious ethical improvement measured by NFLO not before long so that we have confidence about shareholder dear return We do not. We do not have any specific plan yet after our special dividend this year. But the management team is committed to provide long-term shareholder returns as always, and we'll consider all positive ways to return value to shareholders going forward.
Speaker Change: Knowing that our own balance sheet reduction will come to an end in a few months a few months later.
Speaker Change: And the portfolio account mix in terms of account vintage that mix will continue to optimize so I believe we'll be able to demonstrate more obvious <unk> measured by natural.
Speaker Change: That people are all so that we have confidence.
Y. S. Cho: About shareholder dear return, we do not, we do not have any specific plan yet after our special dividend ratio, but the management team is committed to provide long-term shareholder returns as always, and we consider all positive ways to return value to shareholder return.
About shareholder.
Speaker Change: Tom.
Speaker Change: We do not we do not have any specific plan yet as to our special dividend. This year, but the management team is committed to provide long term shareholder returns as always and we've placed the alternative ways to return value to shareholders going forward.
Speaker Change: Yeah.
Speaker Change: Yeah.
Yada Li: Next question comes from Yada Lee, with CICC. Please go ahead. Hello management, thanks for taking the questions. My first question is regarding the credit in parliament laws. Could you please share a bit more about why the credit in parliament laws is in crisis quarter, while the risk being the catalyst remains stable? And secondly, I would want to read what is the trend of the funding costs going forward. That's all. Thank you. Thank you, Yada.
Yada Li: The next question comes from Yada Li with CICC. Please go ahead. Hello, management. Thanks for taking my questions. My first question is regarding the credit impairment loss. Could you please share a little bit more about why the credit impairment losses increased this quarter while the risk indicators were less? And secondly, I was wondering what is the trend of the funding costs going forward.
Speaker Change: The next question comes from yes that will be with the ICC. Please go ahead.
Speaker Change: Hello management, Thanks for taking my questions. My first two questions with regarding no credit Karma knows.
Speaker Change: Could you please share it would be more about why the credit impairment losses increased this quarter, while the risk indicators.
Speaker Change: Stable and secondly, I was wondering what is the trend of the funding costs going forward.
Yada Li: That's all.
Y.S. Cho: Thank you. Thank you, Yada. I'll try to answer the first question. The increase is mainly due to the provision associated with our loans and certain investment assets. The increase of loan provision was driven mainly by the upfront provision of loans under 100% guarantee model, as we discussed, right? And the prudent approach, and also the prudent approach in our model to reflect our conservative forecast based on the micro environment in the third quarter.
Thank you.
Speaker Change: Thank you for your EDA.
Y. S. Cho: I tried to answer the first question. The increase is mainly due to the provision associated with our loans and a certain investment assets. The increase of loan provision was driven, mainly by the up-round provision of loans under 100% guarantee model, as we discussed, the prudent approach, and also the prudent approach in our model to our conservative forecasts based on the micro-environment in the silk quarter.
Speaker Change: I'll try to answer the first question.
Speaker Change: <unk> is mainly due to the provision associated with our loans and our investment assets.
Speaker Change: The increase of loan provision was driven mainly by the upfront provision of loans under 100% guarantee model.
Speaker Change: We discuss it right.
Speaker Change: <unk> approach and also the prudent approach in our model.
Speaker Change: Our conservative forecast based on the micro.
Y. S. Cho: We're still seeing some uncertainties in the micro economy, and the second question, I know you're interested about our funding cost trend, and our funding cost further decreased in the silk quarter, since to the verbal monetary policy, and our side was by the license strategy. Also, we tried to spend the time working with our partners and tried to cut down some of the funding costs in terms of the different products. We also expect funding cost to increase as we continue to optimize our funding structure by leveraging our consumer finance and small lending licenses.
Speaker Change: In the third quarter, we are still seeing some uncertainties in the macroeconomy.
Y.S. Cho: in the microeconomy.
Y.S. Cho: And the second question, I know you're interested about our funding cost trend, right? And our funding cost further decreased in the third quarter thanks to the variable monetary policy and our diversified license strategy. Now, so we try to spend more time to work with our partners and try to cut down some of the funding. cost in terms of the different products. And also we expect funding cost will further decrease as we continue to optimize our funding structure by leveraging our consumer finance and small lending licenses. Thank you.
Speaker Change: And then the second question.
Speaker Change: Are you interested about our funding cost trend right and our funding costs will further decrease in the third quarter. Thanks to the favorable monetary policy and our diversified the license strategy no.
Speaker Change: So we try to spend the time to.
Speaker Change: Working with our partners and try to cut down some of the.
Speaker Change: Funding.
Speaker Change: Cost.
Speaker Change: For the different products and also we expect funding costs.
Speaker Change: The decrease as we continue to optimize our funding structure by leveraging.
Speaker Change: We're financing a small lending licenses.
Y. S. Cho: Thank you.
Speaker Change: Thank you that concludes our question and answer session for today I will now turn the call back over to management for closing remarks.
Operator: That concludes our question and session for today.
Operator: That concludes our question and answer session for today.
Operator: I will now turn the call back over to management for closing remarks. Thank you.
Operator: I will now turn the call back over to management for closing remarks. Thank you.
Operator: This conference is now completed. You may well, and thank you for joining today's call. If you have any more questions, do not hesitate to contact our IR team. Thanks again. Thank you.
Speaker Change: Thank you. This conference is now concluded.
Operator: This conference is now completed and thank you for joining today's call. If you have any more questions, please do not hesitate to contact our IR team. Thanks again. Thank you.
Speaker Change: And well.
Speaker Change: And thank you for joining today's call if you have any more questions.
Speaker Change: Not hesitate to contact our IR team. Thanks again.
Speaker Change: Okay.
Operator: The conference is now concluded. You may now disconnect.
Operator: The conference is now concluded.
Speaker Change: Thank you.
Speaker Change: It is now concluded you may now disconnect.
Operator: You may now disconnect.
Operator: The End
Speaker Change: Okay.
[music].