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spk03: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Jiayin Group first quarter 2023 earnings conference call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. I'll now turn the call over to Mr. Shawn Zhang from Inventor Relations of Jiayin Group. Please proceed.
spk06: Thank you, operator. Good day, everyone, and welcome to Giant Group's 2023 First Quarter Earnings Conference Call. We released our earning results earlier today via Newswire Services. You may check the press release and sign up for the company's email alerts by visiting our IR webpage. On the call with me today are Mr. Yanding Gui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Ms. Xu Yifeng, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the seat proper provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. For their information regarding these and other risks and uncertainties is included in the public findings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Finally, we will post a slide presentation on our investor relations web page soon, providing details of our resource for the quarter. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese . Let me now turn the call over to CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan.
spk07: Hello, everyone. Thank you for joining our first quarter 2023 earnings conference call. The company's trading volume in this quarter has reached a new high of 1.98 billion RMB, which is better than the previous forecast. In addition, the company's revenue in the first quarter also reached 1.12 billion RMB, which is about 119.5% of the total government. The profit and loss ability has maintained stability and continued to grow strongly.
spk06: I am delighted to share with you today the exceptional performance of Jiayin in the first quarter of 2023. Our robust results this quarter are a testament to the steady recovery of the domestic economy and the solid foundation we have built through the consistent improvement of our operational efficiency. In the quarter, we achieved a record loan origination volume of RMB 19.8 billion, surpassing our previous projections. Additionally, our net revenue for the quarter reached RMB 1.12 billion, marking a year-over-year increase of approximately 119.5%. Our profit margins also remain strong maintain our robust growth trajectory.
spk07: From a market perspective, China's national statistics show that in the first quarter of this year, China's economic operation was good, and domestic production total growth was 4.5%, which is 1.6% higher than in the first quarter of last year. This established a good foundation for achieving the goal of annual development and expectation. Among them, consumption contributed 66.6% to economic growth, Online consumption maintains a good development trend, and the urban and rural markets recover at the same time. Consumption potential accelerates and releases, presenting a fast recovery trend. At the same time, the first quarter of the financial statistics published by the People's Bank of China shows that the social financing scale has accumulated a total of 4.53 trillion yuan, which is more than 2.17 trillion yuan in the same period last year. One expert analyzed that as the early stage of stable growth, Looking at the first quarter from a broader perspective, the National Bureau of Statistics of China has reported a promising start to the year with a 4.5% year-over-year growth in China's GDP. This represents
spk06: an increase of 1.6 percentage points from the fourth quarter of last year, marking an encouraging beginning to China's macro recovery in 2023. Particularly, consumption contributed to 66.6% of economic growth, with online consumption maintaining a strong momentum, the simultaneous recovery of urban and rural markets has led to a rapid release of consumer potential, indicating a swift recovery trend. Additionally, the People's Bank of China's financial statistics for the first quarter reveal a cumulative increase in the scale of social financing of RMB 14.53 trillion. an increase of RMB 2.47 trillion from the same period last year. Industry experts attribute this to the efforts of policies aimed at the stabilizing growth and promoting development, which have significantly boosted market confidence, accelerate the recovery of effective financing demand and solidify the trend of macroeconomic recovery.
spk07: Under such a large environment, capital supply is more abundant and mobility is more flexible. As of March 31, 2023, we have established cooperation relationships with 64 financial institutions and have negotiated with 68 other financial institutions. The diversification of capital sources and the sufficient productivity provided by cooperation institutions This is an important basis for the rapid growth of our transaction money. Among them, the ratio of non-local limited funds in this quarter to the loan amount is still in the majority. What is worth mentioning is that the cooperation relationship with key financial institutions and cooperatives is further intensifying, and the structure of the source of loan funds is continuing to improve. In the first quarter of this year, The balance of the bank's partner's loan balance continues to increase in this quarter, and our efforts in this regard have also led to an increase in the average capital cost of our joint venture in this quarter. We are confident that the scale and quality of the joint venture network will provide a strong guarantee for the long-term development of our domestic business.
spk06: Amid this macroeconomic environment, We have seen an abundant supply of funding and substantial market liquidity. As of March 31, 2023, we have partnered with 64 financial institutions and are currently in discussions with another 68. The diversification of our funding sources and the ample credit lines provided by our partners form the bedrock of our rapid loan volume growth. Furthermore, a majority of our funding are not restricted by geographic regions. Moreover, we have deepened our relationships with key financial institution partners, leading to an improved structure of our loan facilitation funding sources. The contribution of loans we facilitated for banks has continued to increase in this quarter. These ongoing efforts have allowed us to continue reducing the average funding costs for the loans we facilitated in the quarter. We are confident that the size and quality of our partnership network will provide a powerful guarantee. for the medium and long-term development of our domestic business.
spk07: As the company's financial technology level continues to increase, we are also continuing to cooperate with our partners in a higher level of cooperation. Using our technical capabilities, we can cooperate with financial institutions to help them achieve the technological transformation of their business. As of the end of the first quarter, we have already helped five financial institutions and cooperation partners to complete the digital upgrade of their business.
spk06: As we continue to enhance our FinTech capabilities, we are also fostering more advanced partnerships. We are leveraging our technological progress to empower our partners aiding them in their digital transformation. By the end of the first quarter, we have assisted five financial institutions in digitizing their in-house operations and are currently interfacing with another three. We are also in active discussion with five more institutions to explore potential collaborations.
spk07: In addition to the strong support of the current customs system, we continue to maintain an active customer base for the current customer base for the current customer base for the current customer base for the current customer base for the current customer base for the current customer base for the current customer base This result shows that we continue to expand our new customer base, and continue to expand the scope of effort and determination of the general financial collection. At the same time, we also increase the cooperation with multi-level mainstream information channels to diversify the scene of the major users, and the effectiveness of identifying target customers is more accurate. Due to the advantage of the借款人 in the performance of借款需求和还款能力上的表现更加优秀, Leveraging the robust support of our current risk control system
spk06: and capitalizing on the emerging foreign needs spurred by the recovery in consumption. We continue to implement an active borrower acquisition strategy. This strategy is pivotal in maintaining our current trajectory of rapid growth. We added nearly half a million new borrowers in the first quarter. representing an year-over-year increase of approximately 96.4%. At the same time, we have maintained a stable proportion of repeat borrowers at 67.8%, with the average borrowing amount reaching RMB 9,913, marking a 13.5% increase year-over-year. These figures underscore our commitment to expanding our borrower base and extending the reach of inclusive finance. To further this goal, we have strengthened our collaborations with several mainstream information platforms, diversifying our user engagement scenarios and enhancing the precision of our target customer identification. Our focus on high-quality borrowers who demonstrate superior loan demand and repayment capabilities contributes to a healthy and sustainable borrower structure as we continue to scale our business. We remain committed to investing in high-quality borrower acquisition channels, ensuring continuous optimization of our borrower structure amid rapid business
spk07: In addition, in terms of asset operation, the overall technology capability is one of our core competitiveness, and it is already in the management risk wave. Promote business, promote health development, and get good confirmation. As of March 31, 2023, our 61 to 90-day expected rate is 0.51% compared to the end of 2022, and remains stable at 0.63%. In managing our borrower base, our tech enables risk control capabilities
spk06: continue to be a cornerstone of our operations. These capabilities have proven effective in managing risk fluctuations and fostering robust healthy business growth. As of March 31st, 2023, our 61 to 90 day delinquency rate has remained stable at 0.63%. compared to 0.51% at the end of 2022. Recognizing the fluctuations in our risk metrics, we will persist in refining our borrower's stratification process, striking a balance between asset growth and quality improvement. This approach is designed to foster a a virtuous cycle of enhanced asset quality, reduced funding costs, and improved borrower quality.
spk07: In terms of international trade, we have been actively paying attention to and responding to various changes in Nigeria and Indonesia. The Nigerian trade market has experienced certain risk fluctuations in the first quarter. However, in terms of the results, our strong wind control team as well as fast-tracking advanced models have been well verified, and we continue to stabilize the development of documents in different regions. By the end of the first quarter, the business in the Liliya region has already had a certain scale, and we will further expand the foundation of the target market in the future in the African market. At the same time, we plan to further diversify the worker channel, reduce the dependence on the single worker channel, and continue to optimize the worker efficiency.
spk06: Turning to our international business, we have been vigilantly observing and adapting to the evolving dynamics in the Nigerian and Indonesian markets. The Nigerian market encountered some risk fluctuations in the first quarter. These fluctuations served as a significant task for our robust risk control team and our continually refined advanced risk control models. The outcomes in the regional markets have reaffirmed our risk control progress in international markets, and we can now utilize this successful case study to bolster our steady growth in other regions. By the end of the first quarter, our Nigerian operations had achieved a substantial goal, thereby solidifying the foundation of our future expansion objectives in the African market. Concurrently, We are strategizing to diversify our customer acquisition channels further, reduce our reliance on any single acquisition channel, and persistently enhance our customer acquisition efficiency. This strategic approach is designed to foster the sustained and healthy growth of our Nigerian operations.
spk07: In Indonesia, we kept our investment in the market over the past few quarters, seeing an accelerated growth rate in the regional business scope.
spk06: we will persistently monitor the Indonesian market environment and adjust our strategies accordingly.
spk07: Finally, in terms of policy and supervision, we are concerned that the Chinese Internet Financial Association is currently in the early stages of the Internet and Internet consumption trend of Internet and Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption trend of Internet consumption We believe that back-to-back service is an indispensable part of the whole service chain, and the relevant standards will provide a clear standard framework for the standardization and development of the relevant fields in this industry. Because of the consistent requirements for back-to-back service, the importance of consumer protection is also constantly increasing. In February this year, Jiayin Inc. published a white paper on consumer protection in 2022. Finally, on the policy and regulatory front, the China Internet Finance Association is presently
spk06: spearheading the creation of the Risk Control Guidance for Loan Collection of Personal Online Consumer Credit in Internet Finance, also known as the National Collection Standards. We view post-loan services as a crucial component of the comprehensive loan facilitation service cycle, and the establishment of these standards will offer define a definite regulatory framework for the industry standardization. We are also actively strengthening our dedication to ensuring the compliance of post-law services and safeguarding consumer rights. In February this year, we published the 2022 Consumer Rights Protection White Paper. which provides a detailed account of our consumer protection initiatives, accomplishments, and plans over the previous year. We are confident that a regulated industry environment will substantially contribute to the sustained development of both the industry and our business. 此外,未来响应监管机构关于转成年的要求,
spk07: Moreover,
spk06: In response to the regulatory mandate to terminate direct data connections, or called in Chinese, we have proactively engaged with credit institutions to establish collaborative plans and have successfully completed all necessary technical and system preparation. We are confident in our ability to meet the regulatory in requirements ahead of the deadline, ensuring a seamless transition in our business operations. As a front runner in the FinTech industry, Jiayin remains committed to safeguarding consumer information, upholding data security within the industry, and delivering high-quality financial services. Compliance has always been at the forefront of our operations. And we will persist in this commitment as we continue to foster the growth of inclusive finance.
spk07: In summary, the first quarter of 2023, Jiayin achieved significant business progress and strong financial performance. Our positive results also once again proved that the current strategy of the company can effectively help the company to expand its business scale, deal with risk fluctuations, optimize the asset structure, and open up the stock market. We believe that Jiayin's hard work will help us maintain the growth trend in the medium and long term, and gain satisfactory results in the coming few quarters. Therefore, we remain consistent with our expectations for the total amount of borrowings in 2023, and set a new goal for borrowing amount in the second quarter of 2023, which is between 2.3 billion and 2.4 billion yuan.
spk06: In conclusion, the first quarter of 2023 has been a period of significant progress and robust performance for Jiayin. Our remarkable performance this quarter is a testament to the efficacy of our strategic initiatives which have enabled us to expand our business operations, navigate risk fluctuations, optimize our border-based structure and extend our reach in international markets. We are confident that these concerted efforts will allow us to maintain our growth trajectory in the medium to long term and deliver outstanding results in the coming quarters. As such, we reiterate our full-year guidance for 2023 and are setting a new loan origination volume target ranging from RMB 23 billion to RMB 24 billion for the second quarter of 2023.
spk07: With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.
spk05: Thank you, Mr. Yan, and hello everyone for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB, and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan mentioned, we delivered exceptional results in the first quarter. Our loan origination volume surged 142.9% to $19.8 billion, exceeding our forecast made last quarter. Our net revenue was $1.12 billion, up 119.5%, driven by a 94.1% increase in our revenue from loan facilitation services. Other revenue grew significantly to $255.7 million from $64.7 million in the same period last year, mainly driven by the revenue from individual investor referral services and the guarantee income from financial guarantee services. Moving on to costs, origination and servicing expenses were $274.2 million, up 193.6%. driven by the increased loan origination volume and the post loan services related expenses. Allowance for receivables and the counter assets grew by 67.5% to 6.7 million, primarily due to the increased loan volume from overseas markets. Sales and marketing expenses increased by 155.9% to $380.8 million, mainly reflecting an increase in borrower acquisition expenses and commission fees for partnership referrals. As a percentage of net revenue, S&M expenses increased to 33.9% from 29.1% in the same period last year, as we continued our investments to attract and retain high-quality borrowers. G&E expenses were 46.4 million, up 14%, primarily driven by higher staff costs in the quarter. As a percentage of net revenue, G&E expenses reduced to 4.1% from 8% in the same period last year. R&D expenses were 64.8 million, up 55% from 41.8 million, mainly due to increased employee compensation benefits expenses and professional service fees. As a percentage of net revenue, R&D expenses reduced to 5.8% from 8.2% in the same period last year. As we continue to prudently manage our costs, our profitability remains strong. Our net income for the first quarter increased by 93.4%, to $279.7 million from $144.6 million in the same period last year. Our basic and diluted net income per share were both RMB 1.31 compared to RMB 0.67 in the same period last year. Basic and diluted net income per ADS were both RMB 5.23 compared to RMB 2.68 in the same period last year. We ended this quarter with 340.6 million in cash and cash equivalents, up from 291 million as of December 31st, 2022. As of March 31st, 2023, we have bought back approximately 1.5 million of our ADSs for U.S. dollar 3.5 million on our US dollar 10 million share repurchase plan were announced in June 2022. In addition to that, the company's board of directors just approved to extend the share repurchase plan for a period of 12 months on June 7th, 2023. The extension will be commenced on June 13th, 2023 and ending on June 12th, 2024. Pursuant to the extended share repurchase plan, the company may repurchase its ordinary shares through June 12, 2024, with an aggregate value not exceeding the remaining balance on the share repurchase plan. With that, we can open the call for questions. Operator, please proceed.
spk03: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 11 and wait for a name to be announced. If you prefer to ask your question in Chinese, please repeat your questions in English immediately after for the convenience of everyone on the call. Once again, to ask questions, please press star 11. One moment for the first question. There were questions from the line of Martin Chen from Penn Asset. Please proceed.
spk04: Hello, Mr. Guan, can you hear me? Yes, we can. Hello, Mr. Guan. Congratulations on a very strong record. I'm Martin from E-State. I have two questions. The first question is about guidance. In the second quarter, we had a turnover of $2.5 billion, plus $2 billion in the first quarter, which is about 60% of the annual turnover of $7 billion. Does this mean that the turnover in the second half of the year will be slower than in the first half of the year? Let me do the translate first. Hi, measurement team. Congratulations on the third strong result. This is Martin from 10SF. I have two questions. The first one is regarding the guidance. The loan volume guidance in the second quarter is about $23 billion. Combined with $20 billion in the first quarter, account around 60% of $70 billion for the four-year guidance. Does this imply that the volume in the second half of the year will slow down compared to the first half?
spk01: Hello, Mr. Tian. Your question is for me to answer. I am Xu Yifang. The guidance we updated this year is to raise the second quarter. However, the total amount of funding for the whole year remains the same. This means that we are confident in the completion of this year's plan. Compared to what we said last year in 2022 and 2023, we are quite confident in completing this year's plan. This is my interpretation. As for the next half of this year, will the rate of growth of the entire trading volume slow down? Of course, it will not be completely defined by this year's target plan. The overall trading of the second half of this year, if it is significant, there will be a significant market or There are economic risks, but at present, the overall environment is stable. For the second half of the year, there are still two decisive factors related to our business. The first factor is the supply and demand of the overall capital market. We have been maintaining the stability of the funding partners in the cooperating institutions and the pipeline of the institutions that may strengthen and increase cooperation in the next steps. In this way, if there is no accident, the whole financial market will still be relatively stable, but there may be some other situations. This is definitely one of the factors that will have a decisive impact on our trading volume in the second half of the year. The second factor is still back to some of the key indicators that we just saw in the opening remarks. These key indicators are actually for assets to balance the need for trading volume growth and our overall asset Okay, this is Shawn from the IR team of Jiayin Group and I will do the corresponding translation for Ms. Xu.
spk06: Thank you for your question. Generally, we believe that the loan volume we facilitate in the second half of 2023 will not be simply limited by the whole year guidance we just expressed before. As you have mentioned that we maintain our whole year guidance as the same without any change. But we are very confident to complete the guidance in this year. We know that there are probably going to be some risk fluctuations during the year, but we still see that generally the economic environment is stable. I think the volume would mainly depend on two things. So firstly, it will depend on the total funding supply from our partners. And secondly, it will depend on the requirement we have on the asset and our goal to strike a balance between risk metrics and our sustainable growth in the second half year.
spk04: You mentioned refining your borrower base and focusing on high-quality borrowers. How do you define high quality and what strategy are you using to attract and return these borrowers in the future?
spk01: Okay, Mr. Chen, I will answer this question. We have talked about high-end borrowers and continuing to improve the structure of our high-end borrowers The strategic direction is what Jiayin has been focusing on and pursuing since the strategic transition to providing service to institutions. The understanding of high-efficiency borrowers comes mainly from the financial institutions we work with. Most of them are the requirements of banks and other private financial institutions regarding the quality of assets. In terms of the characteristics of these types of high-end borrowers, they are younger and more concerned about their financial performance. They have a reasonable and rational demand for loans. Under these characteristics, we will see that this type of client, the relevant indicators of his multi-border loan will also be lower. Relatively speaking, some of the relative indexes they made from the aspect of asset debt are also relatively better. For this type of high-end borrowers, the growth of our family's long-term business is a potential potential potential potential potential potential potential potential potential potential potential potential potential potential potential potential potential potential potential potential mainly in two directions. One direction is to attract new high-performance borrowers. Our main consideration is to choose a suitable customer channel. Such a customer channel is a more active platform for borrowers. The second is to provide customers with more competitive products. The current product is in line with their needs and in line with their loan. When they need this loan, we can appear by their side. Of course, there will be more competitiveness in terms of pricing and the degree of acquisition. This is a consideration from the point of view of attracting borrowers. As for the consideration of keeping this client, we have been running it for more than 10 years. We already have more than a million borrowers. We will pay attention to the development of this kind of client. We will use the payment services, such as membership days, or in our financial planning program, to provide more support for such clients with good credit and clients who need to borrow money. Okay, so to reach the better quality borrowers are one of the strategic goals of Giant Group.
spk06: from when we finish our business transformation that our funding sources just changed from a former individual funding sources to the financial institutions. So high quality borrowers is also a requirement from our funding partners. So in brief, high quality we call represents the borrowers with better credit standing We may find many similarities among those borrowers, such as they are younger in their age, they may care more about their credit standing, and they have rational use of the loan, et cetera. Those characteristics meet them without over borrowing from too many sources and at a better personal balance sheet position. So to reach those more high quality borrowers we just mentioned, we are now selectively choosing borrower acquisition channels just like other platforms. And we are providing more competitive products to those high quality borrowers when they need. And focusing on the borrowers with good credit who may grow up with us in the long run. Giant is a platform who has the business for over 10 years. And so we are also trying to attract those borrowers through our service during the loans, such as providing them with better products and lower rates.
spk04: Thank you. Thank you for the questions.
spk03: One moment for the next question. Next question, we have the line from Lin Yao from Huafu Securities. Please proceed.
spk02: And I will do the translation for myself. I'm Lin Yao from Huafu Securities. My first question is about sales and marketing expense. Can you share some details on your sales and marketing expense increase in this quarter?
spk05: Thanks. Thank you, Lin Yao, for this question. My name is Fan Chunlin. Let me answer this question. Yes, our sales cost in the first quarter of 2023 reached 3.8 billion yuan, which is 150% more than the growth. The share price has also increased a little. The sales revenue includes the cost of goods and services, salary, and other related taxes. The reason for the increase in share price is due to a significant increase in the amount of transactions. In this quarter, the amount of transactions reached 1.98 billion yuan. In the first quarter of last year, the amount of transactions reached less than 8.2 billion yuan. So we have increased the strategic investment of goods and services accordingly.
spk06: So the sales and marketing expenses in the first quarter of 2023 reached 380 million RMB with a year-over-year increase of more than 150%. And it's also a slight increase from the previous quarter. The S&M expenses mainly include borrow acquisition expenses, employees' compensations, and other related expenses. So the main reason for the substantial year-over-year increase was the increase in the volume of loan we just facilitated.
spk05: After the company successfully completed its institutional funding business in 2020, our total transaction volume has been growing rapidly in the past few years. Our new customers have remained at about 30%. Director Yan just mentioned that we will continue to cooperate with our high-quality growth development strategy. In recent seasons, we have adopted a more positive customer strategy. Next, we will continue to increase our investment in high-quality customer channels. Okay, so after we just transformed our business model from
spk06: I mean the funding sources from the individuals to our funding partners from institutions. So in line with the company's strategy on the rapid growth, we have adopted a very active oral acquisition strategy and spending more on the acquisition process to ensure that we can achieve those high quality assets efficiently. So the proportion of new borrowers of our platform has remained higher and we plan to increase our spending on the high quality borrower acquisition channels to ensure the LTV of our borrower and to continuously optimize our borrower base where our business is developing rapidly.
spk05: From the point of view of operation and finance, we will also make some top-level planning and budget control for the minimum cost. Especially the marketing cost, because it occupies a relatively large proportion of the total revenue. Therefore, in the operation part, we will pay close attention to the cost investment and corresponding output of the marketing cost to ensure the accuracy and effectiveness of the marketing. From the perspective of our operation and finance,
spk06: We will also carry out a top-level planning on the ratio of SMM expenses to our revenue and also some budget control to ensure the accuracy and effectiveness of our sales and marketing. In the first quarter of 2023, you can see the SMM expenses accounted for about 33.9% of our revenue. It's basically at the same level as 33.1% in the whole fiscal year of 2022. And if you compare it with the 35.5% in the fourth quarter of 2022, you can also see a slight lay down.
spk05: This is due to the effective control of our investment output and the better implementation of the refined operation strategy. Okay, so just because we have a strong control and process on our sales and marketing
spk06: We are keeping our development at a very high quality, and we are confident that we will develop at a very sustainable way in the future as well.
spk05: Lin, I hope this answers your question.
spk02: Thank you, Mr. Fan. My second question is, have you noticed any changes in the company's Again, I will do the translation for myself. Thanks for your answer. My second question is about the accounts receivable. In our case, the accounts receivable account for a large proportion of the total assets of the company right now, and there is also an increase of about 200 million RMB. Okay, so you are right, Mr. Lin.
spk06: At the end of the first quarter of 2023, the company's balance of account receivable was 1.93 billion RMB, which accounted for about 45 of our total assets. And you can see it has been steadily increasing at the end of each quarter.
spk05: So it should be said that the vast majority of our revenue accounts are the service fees for our rental business. This is also the head of the company's operating income. The relevant accounting regulations require us to be on accounting processing. We will be at the time when the payment is completed. So at this point, the power and obligation of the company to match the service has been completed. So we will determine the corresponding revenue accounts and the corresponding income while paying the money. So the vast majority of accounts receivable we have are acquisition and risk control service fees for our loan facilitation services.
spk06: So under the currently accounting principles, at the same time as the loan is issued, the rights and obligations under our facilitation services have been fully met. So the corresponding accounts receivable and income are recognized immediately when the loan is issued to the borrower. And you can see that as our loan facilitation volume continues to increase and projects we recently signed will be usually collected within 12 months during the whole loan term. So you may observe that our balance of receivables also continue to increase.
spk05: So under our currently business model, as the volume we facilitate continues to increase,
spk06: the absolute value of our AR balance would surely increase accordingly.
spk05: What I especially want to point out here is that the recovery of our receivables is very good. After we completed the transformation of individual funds to institutional funds in 2020, there has been almost no breakdown in our in-house business. At present, we have not encountered any breakdown loss on the balance sheet, including on the business table. I want to mention that the collection of our account receivable is very good. After we just completed the transformation from personal funds to institutional funds in
spk06: In 2022, there have been almost no bad debts in the domestic loan facilitation business and no bad debt loss has been accrued so far either. And our management team and our auditors will pay very close attention to the recovery of account receivable.
spk05: Generally speaking, the company's profitability is satisfying and our balance sheet also continues to improve.
spk06: It has laid a very solid foundation for the healthy development of our business in the future.
spk05: Thank you for the questions.
spk03: We have no more questions at this time. I will return the call back to Sean for closing remarks. Please go ahead.
spk06: Thank you, operator, and thank you all for joining our call today. If you have further questions, please feel free to contact our investor relations team. We appreciate your interest and look forward to reporting to you again next quarter on our progress.
spk03: Let us conclude today's conference call. Thank you for your participation. You may now disconnect your line.
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