Q2 2026 Chailease Holding Co Ltd Earnings Call

August 25, 2026

Operator: Welcome to the Chailease Q2 2026 earnings release conference call. At this time, all participants are on the listen only mode. Following management's prepared remarks, there will be a question and answer session. Please follow the instructions given at the time if you would like to ask a question. As a reminder, this conference is being recorded. For your information, a webcast replay will be available within an hour after the conference is finished. Now I would like to turn the call over to Kimberly Lian, Project Manager of the Chailease Holding. Ms. Lian, please go ahead.

Speaker #1: Welcome to the Chailease second quarter 2026 earnings release conference call. At this time, all participants are in listen-only mode. Following management's prepared remarks, there will be a question-and-answer session.

Speaker #1: Please follow the instructions given at this time. If you would like to ask a question, and as a reminder, this conference is being recorded.

Speaker #1: For your information, our web class replay will be available within an hour after the conference is finished. Now, I would like to turn the call over to Kimberly Lin, Project Manager of Chailease Holding.

Speaker #1: Ms. Lin, please go ahead.

Speaker #2: Thank you, Jason. Hello, everyone. Thank you for joining us today for our second quarter 2026 results conference call. With me this afternoon is Mrs. Jerem Fenn, head of IR, and she will open to your questions after the presentation.

Kimberly Lian: Thank you, Jason. Hello, everyone. Thank you for joining us today for our Q2 2026 results conference call. With me this afternoon is Mrs. Sharon Fan, head of IR, and she will open to your question after the presentation. The presentation I'm giving today will be available for download on our official website at www.chaileaseholding.com.tw. As a reminder, please refer to the disclaimer in slide 2 regarding forward-looking statements. Our actual results may differ from such statements. Today's agenda includes management highlights for the Q2 2026, followed by the consolidated performance review and segment review for our major operations in Taiwan, China, and ASEAN. Now let's begin the presentation by turning to slide 4, some highlight points for the second quarter. The summary table here highlights credit portfolio growth for the second quarter. On a year-over-year basis, Taiwan remains flat compared with the same period last year.

Speaker #2: The presentation I'm giving today will be available for download on our official website at www.chaileaseholding.com.tw. And as a reminder, please refer to the disclaimer on slide 2 regarding forward-looking statements.

Speaker #2: Our actual results may differ from such statements. Today's agenda includes management highlights for the second quarter of 2026, followed by the consolidated performance review and segment review for our major operations in Taiwan, China, and ASEAN.

Speaker #2: Now, let's begin the presentation by turning to slide 4, which highlights some key points for the second quarter. The summary table here shows quarterly portfolio growth for the second quarter.

Speaker #2: On a year-over-year basis, Taiwan remains flat compared with the same period last year. China declined by 3%, while ASEAN grew by 12%, altogether resulting in a consolidated growth of 5% year over year.

Kimberly Lian: China declined by 3%, while ASEAN grew by 12%, all together resulting in a consolidated growth of 5% year-over-year. We set a moderate portfolio growth target this year. Compared to the prior quarter, either on a year-over-year basis or accumulated basis, the consolidated credit portfolio has already shifted from negative to positive growth, making solid progress toward our target. Overall, we observed accelerating business momentum during the second quarter, which gave us greater confidence in achieving our annual target, which is single-digit credit portfolio growth in Taiwan and China, and if exclude Thailand, double-digit growth across Vietnam, Malaysia, Cambodia, Indonesia, and Philippines. The second highlight is our asset quality, which shows a more stabilized trend and continue to improve slightly. Overall, we see the amount of new delinquent formation has declined compared with the previous quarter.

Speaker #2: We set a moderate portfolio growth target this year, and compared to prior quarters—either on a year-over-year basis or cumulative basis—the consolidated quarterly portfolio has already shifted from negative to positive growth, making solid progress toward our target.

Speaker #2: Overall, we observed accelerating business momentum during the second quarter, which gives us greater confidence in achieving our annual target, which is single-digit quarterly portfolio growth in Taiwan and China.

Speaker #2: And if we exclude Thailand, there's double-digit growth across Vietnam, Malaysia, Cambodia, Indonesia, and the Philippines. The second highlight is our asset quality, which shows a more stabilized trend and continues to improve slightly.

Speaker #2: Overall, we see that the amount of new delinquent formation has declined compared with the previous quarter. In particular, China demonstrates a solid improvement trend for several consecutive quarters, with the second quarter recording the lowest level of new delinquent formation in the past five quarters.

Kimberly Lian: In particular, China demonstrate a solid improvement trend for several consecutive quarters, with the second quarter record the lowest level of new delinquent formation in the past five quarters. Third highlight is that our ASEAN delivered continuous growth in portfolio and profit in the second quarter. Our ASEAN operation continued to present a higher growth momentum within the group, including Malaysia, Vietnam, and Cambodia record double-digit portfolio growth this year. Moving on to slide 6. The consolidated credit portfolio reached TWD 825 billion at the end of the second quarter of 2026, representing 5% year-over-year growth and 1% quarter-over-quarter growth. The second quarter also demonstrates a stronger momentum compared with the first quarter, especially our ASEAN regions, reinforcing our confidence in the overall growth track. The next slide 7, shows us the trend of consolidated average loan yield and cost of funds for the past three years.

Speaker #2: The third highlight is that our ASEAN division delivered continuous growth in both portfolio and profits in the second quarter. Our ASEAN operations continue to demonstrate a higher growth momentum within the group, with Malaysia, Vietnam, and Cambodia recording double-digit portfolio growth this year.

Speaker #2: Moving on to slide 6, the consolidated quarterly portfolio reached $825 billion at the end of the second quarter of 2026, representing 5% year-over-year growth and 1% quarter-over-quarter growth.

Speaker #2: The second quarter also demonstrates stronger momentum compared with the first quarter, especially in our ASEAN regions, reinforcing our confidence in the overall growth trend.

Speaker #2: The next slide, slide 7, shows us the trend of consolidated average loan yield and cost of funds for the past three years. In recent quarters, we see lower loan yield trends for both the Taiwan and China markets.

Kimberly Lian: In recent quarter, we see lower loan yield trend for both Taiwan and China market. We will discuss the change of each operation regions in the next section. Next, on slide 8. On the left-hand side, consolidated revenue for the first 6 months of 2026 reached 48.3 billion NT dollars, representing a 2% decrease compared with the same period last year. While our portfolio growth has turned positive in Q2, revenue growth remained under a bit pressure because interest income is recognized gradually over time. On the right-hand side, Q2 2026 consolidated revenue increased by 1% from the previous quarter, reflecting a positive business momentum in Taiwan and ASEAN in Q2. Moving on to slide 9. On the left-hand side, consolidated net profit for the first 6 months of 2026 totaled 10.8 billion NT dollars, with earning per share of NT$5.84.

Speaker #2: We will discuss the change in each operating region in the next section. Next, on slide 8, on the left-hand side, consolidated revenue for the first six months of 2026 reached NT$48.3 billion, representing a 2% decrease compared with the same period last year.

Speaker #2: While our portfolio growth has turned positive in the second quarter, revenue growth remains under significant pressure because interest income is recognized gradually over time.

Speaker #2: On the right-hand side, second quarter 2026 consolidated revenue increased by 1% from the previous quarter, reflecting positive business momentum in Taiwan and ASEAN in the second quarter.

Speaker #2: Moving on to slide 9, on the left-hand side, consolidated net profit for the first six months of 2026 totaled NT$10.8 billion. With earnings per share of NT$5.84, net profit increased by 3%.

Kimberly Lian: Net profit increased by 3%, primarily driven by reduced expected credit loss and a lower cost to income ratio. On the right-hand side, Q2 consolidated net profit declined by 6% quarter-over-quarter, reflecting the one-off RMB 205 million China tax rebate recorded in Q1. Turning to slide 10. This slide shows our credit portfolio mix and net profit contribution by operating regions. On the left-hand side, Taiwan's credit portfolio continued to account for majority, representing 56% of the group's total. China's share account 29%, reflecting a little of the depreciation effect on the Taiwan dollar against the RMB. ASEAN increased by 1 percentage point to 15% at the end of Q2. On the right-hand side, we see profit breakdown from owners of the company. Taiwan attributed 55% on the consolidated net profit, while China's portion remains steady at 36%.

Speaker #2: This was primarily driven by reduced expected quarterly loss and a lower cost-to-income ratio. On the right-hand side, second quarter consolidated net profit declined by 6% quarter-over-quarter.

Speaker #2: Reflecting the one-off RMB 205 million China tax rebate recorded in the first quarter. Turning to slide 10, this slide shows our quarterly portfolio mix and net profit contribution by operating regions.

Speaker #2: On the left-hand side, Taiwan's quarterly portfolio continued to account for the majority, representing 56% of the group's total. China's share accounted for 29%, reflecting a little of the depreciation effect on the Taiwan dollar against the RMB.

Speaker #2: ASEAN increased by 1 percentage point to 15% at the end of the second quarter. On the right-hand side, we see the profit breakdown from owners of the company. Taiwan attributed 55% of the consolidated net profit, while China's portion remains steady at 36%.

Kimberly Lian: ASEAN contribution rose from 8% last year to 9% this year, driven by a faster portfolio profit growth pace compared with the other 2 regions. Moving on to slide 11. The chart on the left-hand side shows that the cost to income ratio decreased from 30% to 28% in the first 6 months of 2026, reflecting improved operational efficiency and disciplined cost management. The chart on the right-hand side shows that the asset to equity ratio stood at 5 times. Turning to slide 12. On the left-hand side, the consolidated ROA on the annualized basis was 2.3% for Q2, representing a modest improvement compared with last year. On the right-hand side, the annualized consolidated ROE was 12% for H1 this year, also show a slightly improvement if compared to last year. The ROE calculation presented here exclude preferred shares. Turning to slide 13.

Speaker #2: ASEAN contribution rose from 8% last year to 9% this year, driven by a faster portfolio profit growth pace compared with the other two regions.

Speaker #2: Moving on to slide 11, the chart on the left-hand side shows that the cost-to-income ratio decreased from 30% to 28% in the first six months of 2026.

Speaker #2: Reflecting improved operational efficiency and disciplined cost management. The chart on the right-hand side shows that the asset-to-equity ratio stood at 5 times. Turning to slide 12, on the left-hand side, the consolidated ROA on an annualized basis was 2.3% for the second quarter, representing a modest improvement compared with last year.

Speaker #2: On the right-hand side, the annualized consolidated ROE was 12% for the first half of this year, which also shows a slight improvement compared to last year.

Speaker #2: The ROE calculation presented here excludes preferred shares. Turning to slide 13, on the left-hand side, the consolidated delinquency ratio at the end of the second quarter remained unchanged from the prior quarter at 5.1%.

Kimberly Lian: On the left-hand side, the consolidated delinquency ratio at end of Q2 remained unchanged from the prior quarter at 5.1%. We continue to observe a firm improvement trend in China as the new delinquent formation amount has stabilized over several quarters. Later in the presentation, I will provide more detail by each region. On the right-hand side, the allowance to loan portfolio ratio remained steady at 3.1%. Moving on to the segment review. Let's look at our operating performance region by region. Turn to slide 15. Taiwan's credit portfolio reached 461 billion NT dollars at the end of Q2, reflecting a flattish year-over-year growth and a 1% increase quarter-over-quarter. The impact of intentionally slowdown in used car installment financing has continued this year. For better clarity, if we exclude the impact of used car installment financing, the portfolio record approximately 4% year-over-year growth.

Speaker #2: We continue to observe a firm improvement trend in China, as the new delinquent formation amount has stabilized over several quarters. Later in the presentation, I will provide more detail by each region.

Speaker #2: On the right-hand side, the allowance to loan portfolio ratio remained steady at 3.1%. Moving on to the segment review, let's look at our operating performance region by region.

Speaker #2: Turn to slide 15. Taiwan's quarterly portfolio reached NT$461 billion at the end of the second quarter, reflecting flattish year-over-year growth and a 1% increase quarter-over-quarter.

Speaker #2: The impact of the intentional slowdown in used car installment financing has continued this year. For better clarity, if we exclude the impact of used car installment financing, the portfolio recorded approximately 4% year-over-year growth.

Speaker #2: Turning to slide 16, the slide highlights the change in Taiwan's solar assets. Taiwan's solar assets in gross amount reached NT$74.7 billion at the end of the second quarter.

Kimberly Lian: Turning to slide 16, the slide highlights the change in Taiwan's solar asset. Taiwan solar asset in gross amount reached TWD 74.7 billion at the end of Q2, representing a 4% year-over-year increase and a 1% quarter-over-quarter increase. As of the end of Q2, we own approximately 4,700 solar power plants with a total generating capacity of about 1.6 gigawatts. Turning to slide 17, this page represents the trend of Taiwan loan yield and funding cost. Yield at Q2 is at 7.79%, and funding cost is at 2.36%. The continued decline in loan yield during Q2 was driven by the change in product mix as we discontinued high yield used car financing business through dealer channel starting last year. This part of the portfolio balance will continue to shrink for another 2 to 3 more quarters.

Speaker #2: This represents a 4% year-over-year increase and a 1% quarter-over-quarter increase. As of the end of the second quarter, we own approximately 4,700 solar power plants with a total generating capacity of about 1.6 gigawatts.

Speaker #2: Turning to slide 17, this page represents the trend of Taiwan loan yield and funding costs. Yield in the second quarter is at 7.79%, and funding cost is at 2.36%.

Speaker #2: The continued decline in loan yield during the second quarter was driven by the change in product mix, as we discontinued the high-yield used car financing business through dealer channels starting last year.

Speaker #2: This part of the portfolio balance will continue to shrink for another two to three more quarters; however, with smaller and smaller impact going forward.

Kimberly Lian: However, with a smaller and smaller impact going forward, funding costs increased slightly compared with the prior quarter. However, this is still within a normal variance range, and we expect the funding costs for Taiwan will remain stable. Moving on to slide 18, revenue for our Taiwan operations for the H1 reached TWD 25.9 billion, representing 3% year-over-year decrease. We see revenue continue to be affected by the slowdown of used car installment financing. As mentioned earlier, the impact probably will continue till next year and gradually diminish. The quarter-over-quarter comparison on the right-hand side, Q2 revenue was up 2% quarter-over-quarter due to a better solar income in Q2. This is a result from more sunshine in Q2. Turn to slide 19.

Speaker #2: Funding costs increased slightly compared with the prior quarter. However, this is still within a normal variance range. Taiwan will remain stable. Moving on to slide 18.

Speaker #2: Revenue for our Taiwan operations for the first six months reached NT$25.9 billion, representing a 3% year-over-year decrease. We continue to see revenue affected by the slowdown in used car installment financing.

Speaker #2: But as mentioned earlier, the impact will probably continue until next year and gradually diminish. For the quarter-over-quarter comparison, on the right-hand side, second-quarter revenue was up 2% quarter-over-quarter due to better solar income in the second quarter.

Speaker #2: And this is a result of more sunshine in the second quarter. Turn to slide 19. Taiwan's net profit for the first half of 2026 reached NT$6.9 billion, up 3% year-over-year.

Kimberly Lian: Taiwan net profit for the H1 2026 reached TWD 6.9 billion, up 3% year-over-year. This positive growth was primarily driven by reduced impairment losses and improved cost to income ratio compared to the H1 last year. On the right-hand side, Q2 net profit rose 7% quarter-over-quarter, supported by better top-line growth and a more favorable cost to income ratio relatively to Q1. Turning to slide 20, on the left-hand side, Taiwan's delinquency ratio at the end of Q2 increased slightly by 0.1 percentage point to 4.2%. However, we see the amount of new delinquent formation decline compared with the prior quarter, indicating an improving trend, which corresponding to the year-over-year decrease of credit cost trend for the H1. On the right-hand side, recovery from delinquent accounts also improved relatively to the previous few quarters.

Speaker #2: This positive growth was primarily driven by reduced impairment losses and an improved cost-to-income ratio compared to the first half of last year. On the right-hand side, second quarter net profit rose 7% quarter-over-quarter.

Speaker #2: Supported by better top-line growth and a more favorable cost of income ratio relative to the first quarter. Turning to slide 20—on the left-hand side, Taiwan's delinquency ratio at the end of the second quarter increased slightly by 0.1 percentage point to 4.2%.

Speaker #2: However, we see the amount of new delinquent formation decline compared with the prior quarter, indicating an improving trend, which corresponds to the year-over-year decrease of quarterly cost trend for the first half.

Speaker #2: On the right-hand side, recovery from delinquent accounts also improved relative to the previous few quarters. Turning to slide 21, Taiwan's allowance-to-loan portfolio ratio was slightly down to 2% in the second quarter.

Kimberly Lian: Turning to slide 21, Taiwan's allowance to loan portfolio ratio slightly down to 2% in Q2, remains sufficient level. Turning to slide 22, China's credit portfolio reached RMB 50.2 billion at the end of Q2, representing a 3% year-over-year decline compared to 5% year-over-year decrease in Q1 and a 1% quarter-over-quarter increase. We see improved business momentum in Q2 and are confident to maintain our China portfolio growth target of single digit for this year. Turn to slide 23, this page presents the loan yield and funding cost trend for our China operations. The improvement funding cost has continued, and we have managed to maintain a stable spread across the quarters despite the current challenging macro environment in China. The variance in loan yield for this quarter remains within a normal range when viewed on a yearly time frame. Next slide 24.

Speaker #2: Remains at a sufficient level. Turning to slide 22. China’s quarterly portfolio reached RMB 50.2 billion at the end of the second quarter, representing a 3% year-over-year decline.

Speaker #2: Compared to a 5% year-over-year decrease in the first quarter and a 1% quarter-over-quarter increase, we see improved business momentum in the second quarter and are confident we can maintain our China portfolio growth target of single digits for this year.

Speaker #2: Turn to slide 23. This page presents the loan yield and funding cost trend for our China operations. The improvement in funding cost has continued, and we have managed to maintain a stable spread across the quarters despite the current challenging macro environment in China.

Speaker #2: The variance in loan yield for this quarter remained within a normal range when viewed on a yearly timeframe. Next slide, slide 24. China's revenue for the first six months of 2026 totaled NT$14 billion, a decrease of 8% due to slower portfolio growth.

Kimberly Lian: China's revenue for the first 6 months of 2026 totaled 14 billion NT dollars, decreased 8% due to slower portfolio growth. On the right-hand side, Q2 revenue was down 1% quarter-over-quarter. Moving on to slide 25. China's net profit for the first 6 months of 2026 reached 4.55 billion NT dollars, representing a 2% year-over-year increase. Profit growth outpaced portfolio and revenue growth, mainly driven by lower impairment losses in the first 2 quarters compared with the same period last year, as well as reduced cost to income ratio. On the right-hand side, China's Q2 2026 net profit declined 21% sequentially as a tax rebate of RMB 205 million was received in Q1, while no tax rebate was recognized in Q2 this year. Turning to next slide 26.

Speaker #2: On the right-hand side, second quarter revenue was down 1% quarter-over-quarter. Moving on to slide 25: China’s net profit for the first six months of 2026 reached NT$4.55 billion, representing a 2% year-over-year increase.

Speaker #2: Profit growth outpaced portfolio and revenue growth, mainly driven by lower impairment losses in the first two quarters compared with the same period last year.

Speaker #2: As well as a reduced cost-to-income ratio. On the right-hand side, China's second quarter 2026 net profit declined 21% sequentially, as a tax rebate of RMB 205 million was received in the first quarter.

Speaker #2: While no tax rebate was recognized in the second quarter this year. Turning to the next slide, slide 26. On the left-hand side, China's delinquency ratio in the second quarter was down 0.1 percentage point to 6.9%, which shows improvement in asset quality.

Kimberly Lian: On the left-hand side, China delinquency ratio at Q2 was down 0.1 percentage point to 6.9%, which shows improvement of asset quality. The new delinquent formation continued to show decreased trend for the quarter. On the right-hand side, recovery from delinquency slightly increased for the quarter. Moving to slide 27, China's allowance to portfolio ratio for Q2 2026 remains stable at 4.6%. Now moving to ASEAN, slide 28. The credit portfolio at the end of Q2 reached 124 billion, up 12% year-over-year and 0.5% sequentially. Looking at portfolio growth by country, if we exclude Thailand, all other ASEAN market, including Malaysia, Cambodia, and the remaining country, reported a positive portfolio growth. Slide 29, on the left-hand side.

Speaker #2: The new delinquent formation continued to show a decreased trend for the quarter. On the right-hand side, recovery from delinquency slightly increased for the quarter. Moving to slide 27.

Speaker #2: China's allowance-to-portfolio ratio for the second quarter of 2026 remained stable at 4.6%. Now, moving to ASEAN. On slide 28, the quarterly portfolio at the end of the second quarter reached $124 billion, up 12% year-over-year and 0.5% sequentially.

Speaker #2: Looking at portfolio growth by country, if we exclude Thailand, all other ASEAN markets—including Malaysia, Cambodia, and the remaining countries—reported positive portfolio growth.

Speaker #2: Slide 29. On the left-hand side, ASEAN's revenue for the first two quarters of 2026 totaled NT$8.08 billion, representing a 12% increase compared with the same period last year.

Kimberly Lian: ASEAN's revenue for the first 2 quarters of 2026 totaled 8.08 billion NT dollars, representing a 12% increase compared with the same period last year, driven by double-digit growth in Vietnam, Malaysia, and Cambodia. On the right-hand side, ASEAN's Q2 revenue rose 2% sequentially. We see Q2 show better momentum than Q1.

Speaker #2: Driven by double-digit growth in Vietnam, Malaysia, and Cambodia. On the right-hand side, ASEAN's second quarter revenue rose 2% sequentially. We see the second quarter show better momentum than the first quarter.

Speaker #2: Moving to slide 30. ASEAN's net profit for the first six months was NT$1.57 billion, up 25% year-over-year. This was primarily due to lower impairment losses.

Sharon Fan: Moving to slide 30, ASEAN's net profit for the first 6 months of 2026 reached 1.57 billion NT dollars, increasing 25% year-over-year, primarily due to loan impairment losses, particularly at our Thailand subsidiary. On the right-hand side, ASEAN's Q2 2026 net profit was flat on a sequential basis. Turning to slide 31, on the left-hand side, ASEAN's delinquency ratio in Q2 remained unchanged at 4.5% from the previous quarter. We observed continued improvement in the delinquency ratio in Thailand and Vietnam during Q2. On the right-hand side, ASEAN's allowance to loan portfolio at Q2 also remained steady at 3.7%, same with the prior quarter. This also brings us to the end of my presentation. Thank you for your time in listening. Now, I would like to turn the call back to Jason to start Q&A. Jason?

Speaker #2: Particularly at our Thailand subsidiary. On the right-hand side, ASEAN's second quarter 2026 net profit was flat on a sequential basis. Turning to slide 31.

Speaker #2: On the left-hand side, ASEAN's delinquency ratio in the second quarter remained unchanged at 4.5% from the previous quarter. We observed continued improvement in the delinquency ratio in Thailand and Vietnam.

Speaker #2: During the second quarter, on the right-hand side, ASEAN's allowance to loan portfolio at the second quarter also remained steady at 3.7%, same as the prior quarter.

Speaker #2: And this also brings us to the end of my presentation. Thank you for your time and for listening. Now, I would like to turn the call back to Jason to start the Q&A.

Speaker #2: Jason.

Operator: Yes. Thank you, Kimberly. Ladies and gentlemen, we will now begin the question and answer session. If you have a question for any of today's speakers, please press star one on your telephone keypad and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star two to cancel the question. Now please press star key and number one on your keypad if you would like to ask the question. Thank you. First we will have Alex Ye from UBS. Go ahead, please.

Speaker #1: Yes. If you can believe, and ladies and gentlemen, we will now begin the question and answer session. If you have a question for any of today's speakers, please press star one on your telephone keypad, and you will enter the queue.

Speaker #1: And after you are announced, please ask your question. If you find that your question has been answered before it's your turn to speak, then please press star two to cancel the question.

Speaker #1: Now, please press the Start key and number one on your keypad if you would like to ask a question. Thank you. And first, we'll have Alexia from UBS.

Speaker #1: Go ahead, please.

Alex Ye: Hi, Sharon. Thanks for taking my question. A couple of questions from me. Number one is on the loan yield of China. We have seen the loan yield has declined Q1 to Q2, like 30, 40 basis points. It seems a little bit sizable compared to a very stable trend even compared to the last few years. How should we understand this? Is this due to more like a seasonality, or is it because as you are shifting towards better quality customers so that you might also be slightly adjusting your pricing strategy to charge lower? Second question is about your, again, China asset quality. It is encouraging to hear management saying in the Chinese section that you are beginning to see your 2026 vintage, those early indicators running better than 2024 or even 2025 vintage, right?

Speaker #3: Hi, Sharon. Thanks for taking my question. I have a couple of questions. Number one is about the loan yield in China. We have seen the loan yield decline quarter-on-quarter by about 30 to 40 basis points.

Speaker #3: So, it seems a little bit sizable compared to a very stable trend, even compared to the last few years. So, how should we understand this?

Speaker #3: Is this due more to similarity, or is it because as you are shifting towards better quality customers, you might also be slightly adjusting your pricing strategy to charge lower?

Speaker #3: Second question is about your China asset quality again. It's encouraging to hear management say in the Chinese section that you can clearly see your 2026 vintage.

Speaker #3: Those early indicators are running better than the 2024 or even the 2025 vintage, right? So my question is, again, to what extent is your 2026 vintage improved against your 2025 vintage?

Alex Ye: My question is, again, to what extent is your 2026 vintage improved against your 2025 vintage? Can you quantify somehow that kind of improvement or for the new loans you issued for last year and this year? Third question is on your ASEAN portfolio. This quarter we seem to see your impairment charges for both China and Taiwan going down. But my calculation appeared to indicate your ASEAN impairment appeared to go up somewhat Q on Q. Given you were saying that the overall ASEAN portfolio as a quality, it is holding up. I am wondering what drove the Q on Q increase in the impairments and how should we think about outlook for ASEAN impairments on a full year basis? Thank you.

Speaker #3: So can you quantify somehow that kind of improvement for the new loans you issued for last year and this year? Third question is on your ASEAN portfolio.

Speaker #3: So, this quarter we seem to see your impairment charges for both China and Taiwan going down, but then my calculation appeared to indicate your ASEAN impairment appeared to go up somewhat quarter-on-quarter.

Speaker #3: But given you were saying that the overall ASEAN portfolio asset quality is holding up, I'm wondering what drove the quarter-on-quarter increase in the impairments.

Speaker #3: And how should we think about the outlook for ASEAN impairments on a full-year basis? Thank you.

Speaker #2: Okay, let's answer your questions one by one. The first question is about the China yield. For this quarter, actually, I think there are mainly two reasons. One is that our yield also reflects the improvement of the funding cost.

Sharon Fan: Okay. Let us answer your question one by one. The first question about the China yield. For this quarter, actually, first, I think mainly two reasons. One is that our yield also reflecting the improve of the funding cost. So we slightly to factor into the new pricing. That is one of the reasons. But the other is, just as you mentioned, there seems some seasonality if you compare to last year that the first quarter with the second quarter, there is always some dip. I think it is mainly because of the calculation. Because this slide, we are only using the simple calculation, like the total interest expense or interest revenue divided by the simple average of the portfolio balance. From our product, actually, the pricing remained very stable, and the spread also maintained around 10% for China.

Speaker #2: So we slightly need to factor that into the new pricing. That's one of the reasons. But the other is, just as you mentioned, there seems to be some seasonality.

Speaker #2: If you compare to last year, the first quarter with the second quarter, there’s always some dip. I think it’s mainly because of the calculation, because this line is only using—we are only using—a simple calculation, like the total interest expense or interest revenue divided by the simple average of the portfolio balance.

Speaker #2: So, because for our product, actually the pricing remained very stable. And the spread also maintained around 10% for China. So, I think this is quite normal from the management point of view.

Sharon Fan: So, I think this is quite normal from the management point of view, the normal variation quarter over quarter for this quarter. The second question about the asset quality improvement. Yeah, I think probably in the Mandarin session, our CEO mentioned it is probably our time to look the whole year vintage for 2026 to further for more analysis about the improvement of the different vintage year, like this year compared to past 2 years. But usually we will need the case to go through all the complete tenure so we can see the true number. So right now we just have the high level information. We are quite confident that the new business for this year actually has a better quality compared to past 2 years. But how to quantify, probably we need more time, more data point after this year to conclude. Yeah.

Speaker #2: The normal variation quarter over quarter for this quarter. The second question is about asset quality improvement. Yeah, I think probably in the Mandarin session, our CEO mentioned it's probably our time to look at the whole-year vintage for 2026 to further do more analysis about the improvement of the different vintage years, like this year compared to the past two years.

Speaker #2: But usually, we will need the case to go through the complete tenure, so we can see the true number. So right now, we just have a high-level view of that information.

Speaker #2: We are quite confident that the new business for this year actually has better quality compared to the past two years. But how to quantify it—probably we need more time, more data points after this year to conclude.

Speaker #2: Yeah. And regarding the ASEAN portfolio, for the impairment expense, I think in terms of the absolute amount, you also need to take into consideration the new business volume.

Sharon Fan: Regarding the ASEAN portfolio, the impairment expense, I think in terms of the absolute amount, you also need to take into consideration of the new business volume. Because our provision expense including 2 major part. One is for those delinquent cases, we set aside impairment expense and allowance to reflect. The other is to comply with the IFRS, we also need to have some expected kind of impairment losses. That amount will increase together with the increase of the new business volume. So if you look at the absolute amount, that is normal to see an increase of it, because we are still at the growing mode for most of the ASEAN subsidiaries. Yeah.

Speaker #2: Because our provision expense including two major part. One is for those delinquent cases. We set aside impairment expense and allowance to reflect and the other is the to comply with the IFRS, we also need to have some expected kind of impairment losses that amount will increase together with the increase of the new volume, the new business volume.

Speaker #2: So if you look at the absolute amount, it's normal to see an increase because we are still in the growth mode for most of the ASEAN subsidiaries.

Speaker #2: Yeah.

Alex Ye: Okay. Thank you.

Speaker #3: Okay. Thank you.

Speaker #4: Thank you. To ask a question, you may press star one on your telephone keypad. Thank you. We are now in the question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. To ask the question, you may press *1 on your telephone keypad. Thank you. We are now in question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. Thank you. As a reminder, please press *1 on your keypad if you would like to ask a question. Thank you. Okay, Kimberly, we do not have further questions at the moment. Thank you.

Speaker #4: Thank you. As a reminder, please press star one on your keypad if you would like to ask a question. Thank you. Okay, Kimberly, we don't have further questions at the moment.

Speaker #4: Thank you.

Speaker #2: Okay. Okay. Conclude. Thank you.

Sharon Fan: Okay. We can conclude. Thank you.

Operator: Thank you. Ladies and gentlemen, we thank you for your participation in Chailease conference. You may now disconnect. Thank you again. Goodbye.

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Q2 2026 Chailease Holding Co Ltd Earnings Call

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