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spk02: Good day, ladies and gentlemen. Thank you for standing by and welcome to JIA IN Group second quarter 2023 earnings conference call. Currently, all participants are in listen-only mode. Later, we'll 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. Sean Zhang from Jiayin Group Investment Relations. Please proceed.
spk07: Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the second quarter of 2023. We released our earnings results earlier today. The press release is available on the company's website as well as from Newsware Services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer, Mr. Fan Chunlin, Chief Financial Officer, and Xu Yifeng, Chief Risk Officer. Before we continue, let me quickly go through the safe harbors. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities 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. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese Renminbi. I will now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with the corresponding English translations. Please go ahead, Mr. Yan.
spk00: Because our team has once again surpassed ourselves, demonstrated outstanding execution, and once again delivered brilliant performance, all of this is due to our firm belief in technological innovation or our unwavering pursuit of operational efficiency. The growth of performance has made the best of our efforts and results. This quarter, our loan and exchange volume has achieved the same growth of 77.8%. At the same time, our revenue has also Good day to all. I appreciate everyone for taking the time to join us for our second quarter 2023 earnings conference call. As I look back on the past quarter, I'm filled with pride
spk07: At the exceptional performance, our team has once again delivered with excellent results, which is a testament to our focus on technological innovation and our continuous drive to enhance operational efficiency. I would like to highlight that our loan origination volume saw a remarkable increase of 77.8%. and our net revenue experienced a strong growth of 57.4% compared to the same period last year. More importantly, our commitment to cost optimization ensured that we continue to improve our bottom line as well.
spk00: The GDP of this quarter also achieved a growth of 6.3%. In this context, the Chinese government has launched a series of policies to stimulate and encourage residential consumption. This means that the consumer market is expected to become one of the main driving forces of China's economic recovery or further growth at this stage. In addition, data from the People's Bank of China shows that the RMB loan issued in the first half of this year also reached 15.73 trillion yuan. Reflecting upon the second quarter, the recovery of China's economy is still under progress. Zooming out to view the broader economic landscape, China's GDP expands by 6.3% year-over-year for the quarter.
spk07: this backdrop, the Chinese government wrote out multiple initiatives aimed at stimulating and encouraging consumer spending. This positions the consumer sector as one of the key potential drivers in China's economic revival and its onward growth trajectory. Additionally, Statistics from the People's Bank of China revealed that new RMB loans for the first half of the year reached RMB 15.73 trillion, marking a substantial year-over-year RMB 2 trillion increase. This relatively relaxed credit scale offers a favorable safeguard for boosting consumption.
spk00: Under the current good trend of China's economic recovery, we stick to our original intention of constantly strengthening the financial channels to ensure a stable supply of funds. Based on this, we will continue to expand our deep cooperation with key financial institutions and partners, and further deepen our cooperation with current partners. This strategy has not only brought significant growth to the housing business of this quarter, but also provided a solid foundation As of June 30, 2023, we have established a cooperative partnership with 69 financial institutions and are in close consultation with another 70 institutions. At the same time, our cooperative structure has also been further optimized. In addition to the coverage of commercial and agricultural businesses and consumer financial companies, we have further deepened the coverage of Internet banks, private banks, and shareholder banks. It is worth mentioning that Amidst the economic recovery trend, we've been steadfast in our mission to strengthen our funding channels to ensure our funding supply remains stable.
spk07: Our strategy has centered around calculating deeper ties with key financial institutions and enhancing our existing collaborations. This approach has not only fueled our long volume growth for the quarter, but has also fortified our reserves, positioning us to capitalize on upcoming opportunities. As of June 30th, 2023, Our FinTech partnerships have grown to encompass 69 financial institutions, and we are actively engaging with another 70. Meanwhile, we are also refining our partnership metrics. Beyond our engagement with city commercial banks, rural commercial banks, and the consumer finance firms, we have expanded our coverage to internet banks private banks, and even joint stock banks. It's worth noting that by the end of the second quarter, the credit line to be facilitated without regional constraint still constituted to the majority of our total credit line for origination provided by our funding partners, demonstrating our prospects for sustained robust growth in our long-origination business across China going forward.
spk00: In addition, our financial technology ability is also our ability to further assist private financial institutions in the digital transformation of their private businesses. As of June 30, this year, six financial institutions have successfully launched their private business platform in cooperation mode. At the same time, we have actively promoted cooperation with five partner companies. and other three financial institutions under the same framework to explore the potential of cooperation. What I need to point out is that whether it is to use the housing platform under Jiayin or the digitalized business of Fulun's partners, it will be beneficial to us and our partners to establish a longer-term, more stable and closer business relationship based on Jiayin's financial technology capabilities.
spk07: 在不断变化的市场中,我们将持续为合作伙伴在聚焦优质资产,应对风险波动等方面提供有力的协助。 Furthermore, our commitment to leveraging FinTech capabilities has been pivotal in assisting licensed financial institutions with the digital transformation of their in-house businesses. By the close of second quarter, we have successfully aided six financial institutions in transitioning their in-house operations to digital platform and are in the process of collaborating with another five to empower their online self-operated business platforms. Additionally, we are currently in progressive discussions with three more institutions under this framework to explore avenues for potential collaborations. Importantly, either we enable our partners to leverage our loan facilitation platform or we empower our partners' digital operations, we are strategically positioned to cultivate long-term and synergistic collaborations with our partners are based on our leading FinTech capabilities. As the market dynamics continue to evolve, we will remain committed to enabling our partners, especially in areas such as targeting high-quality borrowers and managing risk volatilities. 在这里我想着重指出的是,
spk00: The related applications of artificial intelligence have improved the foundation of our financial technology capabilities. As of now, the support of GDP has been invested in the development and use of three business scenarios. The first is to assist in the study and work, to improve the quality and quality, to include the GPD negative label, to draw small details, to speed up the prediction, to identify emotions, and to draw in-depth dynamic analysis, etc., to assist in the detailed operation. The second is to assist with the signing of modern business contracts, the collection of documents and elements, the implementation of risk analysis and prediction, and the optimization of business processes. The third is to build a home GPT lab within the group through the check GPT interface, to encourage employees to actively explore and actively use AI technology in business scenarios, to enhance efficiency, and to assist in the intelligentization and precision operation of business. This will also help us to develop many scenarios in the future, Here, I would like to highlight that applying AI technology has further strengthened our fintech capabilities. To date, GPT business assistants
spk07: has been deployed or is under development in three distinct use cases. Firstly, it aids in enhancing performance efficiency and the quality of our service representatives. By leveraging ChatGPT, we empowered various service aspects, such as tag extraction, conversation summarization, customer-compliant prediction, emotion detection, and deep conversation insights, all of which further refine our operations. Secondly, it facilitates real-time risk analysis and alerts by assisting in the extraction of signatures, text, and essential elements from credit contracts, thereby streamlining our business processes. Thirdly, within our firm, we have established the Jain GPT lab using the ChartGPT interface, encouraging our employees to actively explore the utilization of AI technology in business use cases to enhance efficiency and support intelligent, detailed operations. This will also pave the way for our future development of multi-scenario intelligent Q&A assistance, virtual avatar, marketing, audio-visual generation, the prompt platform, and other initiatives that drive end-to-end operational intelligence.
spk00: Since the upgrade in May 2023, AI technology such as language recognition, natural language understanding, and big data processing have increased the coverage rate of self-checking in the process to 100%. As for the advanced artificial intelligence system, it adopts a mode of artificial self-checking and artificial screening, which supports the storage and self-checking of text, recording, and mass data. In addition, comprehensive and accurate quantitative evaluation has been done for the study work. From the results of the system upgrade, Furthermore, since its upgrade in May 2023, the Lengjing Intelligent Quality Inspection System will develop through our subsidiary
spk07: has achieved a remarkable feat by ensuring 100% coverage in our quality inspection processes. This has been made possible through the integration of cutting-edge AI technologies that consists of voice recognition, natural language processing, and advanced big data analytics. the lunging system seamlessly integrates automated AI-driven quality check with human oversights, ensuring storage and quality of both textual and auditory data. This synergy enabled a comprehensive and precise evaluation of our service representatives' performance metrics and preliminary results since the system's launch has validated its efficacy. The system has been instrumental to improving quality inspection capabilities, elevating customer service standards, and optimizing operational cost and risk profile for us and our licensed financial institutions partners.
spk00: In terms of user customer group operation, we have continued to carefully manage the structure of the borrowers in the second quarter and continue to improve the ratio and quantity of borrowers. In the customer channel, we have especially increased the investment in the information flow channel in this quarter, only to reach a more precise and superior new customer borrower group. At the same time, we also continue to provide quality service to users by providing limited number of customers to explore the value of the entire life cycle of the user. In this quarter, our debt rate has increased by 2.3%, reaching 70.1%. At the same time, the debt amount of the establishment army has reached RMB10,368, which has increased by 16%. As the customer base structure continues to optimize, the product rate level provided by our financial institutions and partners has been further reduced in this quarter, which has laid the foundation for our further improvement of the platform's asset value in the future.
spk07: Now, on to borrower-based operations. We continue to refine our borrower structure in the second quarter, consistently increasing the proportion and overall number of high-quality borrowers. In our acquisition strategies, we focused on online channels this quarter, targeting a more high-quality borrower base. Alongside new borrower acquisition, we have been strengthening our service offerings to existing borrowers to maximize the full potential of their lifecycle value. Impressively, our repeat borrowing rate improved by 2.3 percentage points year over year. achieving a remarkable 70.1%, and the average borrowing amount per borrowing reached RMB 10,368, marking a 16% increase from the previous year. At the same time as we optimized our borrower portfolio, we have also observed a reduction in the product rate levels offered by our partner, partner financial institutions. This not only solidifies our future trajectory in asset quality, but also underscores our ongoing efforts in boosting consumption and driving economic recovery.
spk00: In terms of risk level, Jiayin's stable risk management strategy continues to be verified. In the second quarter of this year, the risk fluctuation in the market continues, but as of June 30, 2023, The expected rate of 61 to 90 days is still 0.66% stable. We have also noticed that some new external risk factors have appeared in recent days, such as the black and white of finance, which has had a certain impact on the normal operation of financial institutions. At the same time, it also challenges the personal information security of borrowers and all kinds of legal rights. What I need to point out is that while Jain is assisting partners to effectively deal with risk fluctuations, In terms of risk management, our approach is
spk07: continues to prove its effectiveness. Despite the ongoing market volatility throughout the second quarter, we have successfully maintained our 61 to 90-day delinquency rate at a stable level of 0.66% as of June 30, 2023. We have also noted that In recent days, some emerging external risk factors such as illegal and disruptive financial activities have had a certain impact on the normal operation of financial institutions and have also posed challenges to the personal information security and various legitimate rights and interests of borrowers. We want to mention that at the same time as we are assisting funding partners to effectively deal with risk fluctuations, Jiayin also put the protection of consumer rights and interest at the top of the list. As our platform's borrower base continues to grow in both numbers and quality, our focus remains twofold, ensuring reliable risk management and and elevating our service standards to the users. Our mission is clear, to strike a balance between growth and sustainability, all while upholding the highest level of service and risk oversight.
spk00: Despite all kinds of risk tests in the local market, our profit performance is still on the rise. In addition, the number of our local employees in Nigeria is constantly increasing. This shows that Jiayin's future will be a decisive step in the long-term root of the local market. In addition, the continent of Africa, which is full of unlimited opportunities, has always been one of our key overseas strategies. While Nigeria's business is steadily improving, we are also paying close attention to potential opportunities in other regions of Africa. In Southeast Asia, we continued and increased investment in the past in the Indonesian market. We observed that the Indonesian market has been maintaining a fast-growing trend. It is expected that its mainstream financial technology and new business model will be able to respond quickly. With the background experience in the market in China, we are ready to launch. We look forward to working with Indonesian financial institutions and partners to create glory together.
spk07: On the global stage, our Nigerian operations have demonstrated resilience, showcasing a consistent uptrend in profitability, even after navigating through certain risk challenges. A testament to our commitment to Nigerian market is our growing local workforce, which demonstrates our determination and confidence to develop in the local market for a long time in the future. Besides that, Africa as a continent brimming with bond lift potential remains a focal point in our overseas strategy. As we witness our steady progress in Nigeria, our guess is also set on identifying potential business opportunities in other parts of the continent. Shifting to Southeast Asia, We are increasingly committed to our investment in the Indonesian market. We have observed a rapid growth trend in Indonesian market and anticipate swift evolutions in its mainstream fintech lending business models. We are prim and enthusiastic about forging partnerships with financial institutions in Indonesia with our deep-rooted experience in China's loan origination sector and a collective vision for charting a new path of development.
spk00: 最后我想强调一下, 公司于近期发布了第二份年度ESG报告, 申询经济运营的战略方向, 我们在过去一年在科技赋能, 开放合作,员工发展, 地摊运营或社会公益等 Before I conclude, I would like to highlight the recent release
spk07: of our second annual ESG report. The report illustrated our commitment to efficient operations throughout 2022 with significant achievements in areas such as technology empowerment, collaborative partnerships, employee growth, carbon conscious operations, and community engagement. These accomplishments solidified the foundation for our sustainable growth. Going forward, our commitment to our ESG strategy remains at the forefront of our operations. Our corporate mission to realize dreams is not just a slogan but a guiding principle that we bring to reality through our actions. Our focus is on fostering sustainable growth for the company while upholding our social responsibilities in our pursuit to deliver safe, trustworthy, and high-quality products and services to all stakeholders.
spk00: These add-ons have once again confirmed our performance in expanding business scale, optimizing asset structure, controlling risk level, and expanding the strategy of the international business market. We believe that these efforts will allow us to continue to maintain a growth attitude in the medium and long term, and bring even more outstanding performance to the future investors of the company. Based on our current growth trend and firm confidence in the strategy direction, 我们已决定将今年三季度的出口贷款规模目标定为240亿元人民币, 并将年度目标指引上调至850亿元人民币。 In summary, we once again demonstrated significant business expansion and showcased a solid financial and risk profile in the second quarter of 2023. These achievements underscore the success of
spk07: our growth strategies in expanding our business goal, refining our borrower structure, strengthening our risk management, and penetrating international markets. We are confident that our concerted efforts will enable us to maintain a growth trajectory in the medium to long term and deliver satisfactory performance in the upcoming quarters. Given our current growth momentum and confidence in the strategic direction, we have decided to revise our annual business forecast upwards to RMB 85 billion, with RMB 24 billion coming from the third quarter of 2023. 下面有請公司的CFO樊春林先生介紹本季度的財務表現。 With that, I will now turn the call over to our CFO, Mr. Fan Chunling.
spk06: Please go ahead. 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 maintained our robust growth momentum in the second quarter. Our loan origination volume grew by 77.8% to 24 billion, meeting the top end of our previous guidance range. Our net revenue was about 1.28 billion, up 57.4%. The growth of our revenue from loan facilitation services moderated to 24.5% year-over-year as we adjusted our take rate to better serve our borrowers and refine our borrower-based structure. However, other revenue grew significantly to $352.9 million from $69 million in the same period last year, mainly driven by incremental revenues from individual investor referral and financial guarantee services. Moving on to costs, origination and servicing expenses were $355.8 million, compared with $128.3 million for the same period of 2022, driven by the increased loan origination volume and the post-loan service related expenses. Allowance for receivables and accounts assets grew by 97.1% to $13.8 million or 1.1% of net revenue compared to $7 million or 0.9% of net revenue in the same period last year. Sales and marketing expenses increased by 79% to $420.7 million, mainly reflecting higher borrower acquisition expenses. As a percentage of net revenue, S&M expenses increased to 32.9% from 29% in the same period last year, as we continued our investments to attract and retain high-quality borrowers. G&A expenses were $50.1 million, up 17.6%, primarily driven by higher stock costs as a result of increased share-based compensation expenses in the quarter. As a percentage of net revenue, GND expenses reduced to 3.9% from 5.2% in the same period last year. R&D expenses were 68.1 million, up by 25.9%, mainly due to the higher employee compensation as a result of an increase in research and development headcounts. As a percentage of net revenue, IMD expenses reduced to 5.3% from 6.7% in the same period last year. Consequently, our net income for the second quarter increased by 28.6% to $326.3 million from $253.8 million in the same period last year. Our basic and diluted net income per share were both RMB 1.52 compared to RMB 1.18 in the same period last year. Basic and diluted net income per ADS were both RMB 6.1 compared to RMB 4.72 in the same period last year. We ended this quarter with $288.9 million in cash and cash equivalents. compared to $340.6 million at the end of previous quarter. As of June 30, 2023, we have bought back approximately $1.8 million of our ADSs for a total of U.S. dollar $5.5 million and our U.S. dollar $10 million share repurchase plan we announced in June 2022 and extended in June 2023. With that, we can open the call for questions. Operator, please proceed.
spk02: Thank you. To ask a question, please press star 1 1 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. If you prefer to ask your questions in Chinese, please repeat your questions in English immediately after for the convenience of everyone on the call. Once again, that's star 11 for questions. Our first question comes from the line of Lin Yao from Huafu Securities. Please ask your question, Lin.
spk04: Hello, I'm Lin Yao from Huafu Securities. I have two questions for you. The first question is, compared to the previous few seasons, the increase in the amount of loans has been more than 100%. In this season, the increase in the amount of loans seems to have slowed down. What is the main reason for this? And if the I will do the translation for myself. I'm Lin Yao from Huafu Securities. My first question is about the low origination volume growth. Compared to the previous quarters where your volume growth was generally over 100%, What are the key elements behind this lower low origination volume growth in this quarter? How should we expand your low origination volume to trend going forward? Thanks.
spk03: Hello, Ms. Lin Yao. I'm Xu Yifang. Let me answer your question. First of all, we reported a growth of 77.8% in the first quarter of this quarter. As for the growth of 100%, compared to the growth of the first quarter in the first quarter of 2022 and in the first quarter of 2021, In terms of absolute value, in the first half of 2021 and in the first half of 2022, we were at a level of tens of billions per quarter. Now we are at a level of more than 2 billion. The absolute value growth is still very visible. Next, the growth of the industry, as mentioned by Mr. Yan, we have updated the guidance for the goal of the whole year. In principle, we hope that our family business platform can pursue a healthy and sustainable growth. After all, the business logic of modern business, the whole cost of risk is behind. 所以有控制有克制的能够追求持续性的建高发展呢, 才是我们平台整个追求的目标。 我希望这能回答到你的问题。 Okay, this is Sean Zhao from the Investor Relations, and I will do the translation for Mr. Xu. And as you mentioned that our volume growth rate for this quarter is 77.8%, which looks lower than...
spk07: over 100% rate in the last quarters. Well, one of the reasons is that if you look at the absolute value in the early 2022 and the whole year of 2021, our low origination volume, the absolute value of it is relatively small. And when we viewed the relatively slow down in the growth rate of the origination volume in this quarter, because the growth rate in the year of 2022 was very fast, which made it appear to slow down year on year for this quarter. But if you compare with what we had in the last quarter, the growth rate is still quite impressive. And just as Mr. Yen just mentioned, that we just revised our annual guidance upwards, which means that in the long run, we still want to pursue the growth of origination volume at a healthy level. And as you know, the business logic of the credit loans always includes the lack of risk costs. Therefore, we want to choose to achieve a growth which is under control and pursuing sustainable and healthy expansions. Hope that will answer your question, Mr. Lin.
spk04: This time, the income from the loan matching business accounts for the current loan matching amount, which is the tick rate, and the operating cost have been further adjusted in this quarter. In the case of these changes, does the company have any predictions about the change in the trend of our profit and loss in the future? I would also like to ask the management level if there are any changes Also, I will do the translation for myself with the judgment in take rates and operational costs. Will margin transfer is bad going forward? Are there any potential headwinds or tailwinds that might impact the company's profitability? Thanks.
spk06: Thank you, Ms. Liang. I'm Charlie. Let me answer this question. In continuing to optimize the customer structure and improve the overall business performance of the company, at the same time, we also combine the monetary policy of the central bank about interest rates that will go down further. The company's product price, I think, from the medium term, we will present a trend of further stable downfall. This means that our take rate has a space for further decline.
spk07: This is Shawn Zhang again, and I will do the translation. So on the basis of continuously optimizing the borrower base structure and improving the company's overall operating efficiency, and combined with the monetary policy of the central banks for their downward interest rate, the product pricing offered by our partner financial institutions will maintain a further steady downward trend in the medium and long-term round. At the same time, I think our take rate has room for further decline as well.
spk06: Your observation is very accurate. The company's revenue, our capital, is derived from the flow and control of domestic stay-at-home business models. The size effect of the company and the overall efficiency of the company's overall operation continue to increase. The main majority of the company's revenue right now
spk07: comes from the loan facilitation services, including the acquisition of borrowers and risk control services. And with the scale effect and the improvement of our overall operating efficiency, the margin of this part of business will remain stable. And if you look at our other revenue sector, you can see overseas business revenues and also the revenue from guaranteed business. So for the guaranteed business, it has started to grow rapidly in the last two quarters. And the current margin of the guaranteed business is still lower than the loan facilitation services.
spk06: Okay, so
spk07: You may say that the facilitation services will still be the majority of a source of our revenue. And we will grasp the balance of different business segments in the proportion of the revenue. Our net profit margin in this quarter is 25.5%, which has a slight increase from the previous quarter.
spk06: And just as what Mr. Yan just mentioned,
spk07: that we will strengthen our AI applications and also refine our operation. Our management team is confident that our net profit margin will be maintained at a healthy level of around 25%. Thank you for your answer, Mr. Yang. Hope that will answer your question.
spk04: Thank you, Mr. Li. 我这边非常清楚了,也没有别的问题了,谢谢公司。 谢谢,Thank you so much.
spk02: Thank you, Lin. Our next question comes from the line of Martin Chen from Ten Asset. Please ask your question, Martin.
spk05: 可以听到,可以听到,Martin。 This is Martin from 10SF. Congratulations on a strong second quarter result and a raised whole year guidance. I have two questions. First one is that I noticed that the company's cash and the cash equivalent has decreased compared to last quarter. What are the main factors caused to this reduction? Also, I'd like to know the company's strategy to manage liquidity and the cash flow going forward.
spk06: Okay, thank you for the question, Martin. Yes, our cash balance of 630 is 289 billion yuan. It has dropped by 3.4 billion yuan at the end of the first quarter. There are more than 50 million of this number. There are two main reasons for this. First, it is the capital investment in our overseas business. Because this year we have added some strategic investment in the overseas market. So the overseas business itself has been on track for a period of climbing. So, you know, that's the same equation. Can you do something that we might share that again? Yeah, you know, so we're going to take a long time to find them by you. Did you get to do that? You didn't see them.
spk07: No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no 289 million RMB, which has a slight decrease from the end of the first quarter. And I think there are two main reasons for that. Firstly, we have a capital investment in our overseas businesses. And the reason for that is we have increased strategic investment in our overseas business this year. And for the overseas business, it still needs some time to be on the right track. And it will take some time for the overseas business to achieve a break-even or positive cash flow. Secondly, our guarantee business started to grow up in the most recent quarter as well. and the payment of security deposit increased accordingly, which occupy part of the cash as well.
spk06: Overall, the liquidity ratio of the company is very good. In my liquidity strategy, my main focus is the revenue account. The revenue account recovery is very good. According to the company's strategy, we have invested appropriate funds in domestic and overseas related business expansion. So generally, we think the liquidity position right now for the company is pretty good. For the most of the asset, we also see a majority of them is from account receivable.
spk07: and the recovery of our account receivable is pretty good. We also have a cash balance needed for our overseas business.
spk06: Of course, this is a hard truth. So in the medium term, we will take the following measures in terms of liquidity management. First,
spk07: So in the medium and long run, in terms of our liquidity management, our plans will include as follows. Firstly, we will monitor the recovery of our account receivable, and we will strengthen the recovery of it.
spk06: Okay. So we will also further reduce the deposit payment ratio by negotiating with our partners and to decrease the effect from the cash occupied by the guaranteed business. Thirdly, the business expansion of our overseas business in the future will rely more on funding sources from other channels.
spk07: so as to achieve overseas business break-even or a cash inflow as soon as possible.
spk06: To conclude, we will further strengthen the refined operations and to increase workforce efficiency and continue to optimize the company's utilization efficiency of
spk07: Operating cash. Martin, I hope this answers your question. Martin, I hope that will answer your question.
spk05: Thank you, Mr. Fan, for your clear answer. My second question is, the overall economic situation in the third quarter is still not good. Can you feel the pressure from the decline in the economy? Can you share the growth of the initial loan collection in the third quarter or some relevant information about asset quality? My second question is the overall economy environment remains weak in the third quarter. Is China currently under pressure from the economy downturn? Can management share some preliminary information on the growth of loan facility or asset quality in the earliest three years? as well as companies estimate on the trend for this metric throughout the quarter.
spk03: Hello, Man. I will answer your question. First of all, we agree with the challenges of the macroeconomic situation. As you can see from the previous script, The entire GDP has significantly increased, but the Hong Kong economy is also calling to stimulate consumption. The rate of delivery of the whole credit is also increasing, but from the perspective of some employment data, there are some uncertainties, including the need for credit to be more abundant. It feels like the rate of return will be increased. Okay, I will do the translation for this part as well.
spk07: And yes, Martin, we did experience some challenges you just mentioned. And from what Mr. Yen just mentioned, that we also know the GDP of China still has a growth, and the consumer section will probably going to be going to be a very important part for the economy development in the future. But also from the outside, we also observed that the employment rate data becomes somewhat uncertain and probably not that optimistic. And at the same time, we find that the demand for the credit loan is still very strong, and the debt-to-income ratio of the borrowers is raising up as well. Also, from the internal perspectives, we can also see some trend changes from the inflow rate of some subdivided borrower groups, and also we can see some collection data.
spk03: Talking about the growth of Q3 and the quality of assets, the answer to my previous question is that we are pursuing a healthy and sustainable growth. We will evaluate the whole portfolio and the health of the new loan. So if we talk about the asset quality for the third quarter,
spk07: I want to mention that, just like what I have mentioned before, that we want to pursue our goal in a sustainable and healthy way. So we will monitor some early indicators, just like includes the asset quality of our borrowers and also the income ratio of them. and also some short-term to mid-term long application situations.
spk03: We also have the confidence and experience to take the initiative to manage the entire risk management work for the next generation. In the online modern business, we have a sense of awe of risk and a cautious attitude towards risk. This is what ultimately allows us to continue to develop in this industry. We have accumulated a lot of the experience in the past few cycles.
spk07: And I think we have the experience and confidence to actively manage the asset quality well. And for the online credit market business, we always using a prudent approach when facing new risk factors and abilities. And hope that we will deliver another satisfying business report in the future for all of our stakeholders.
spk05: That's going to be my answer.
spk02: Thank you. We have no more questions at this time. I will return the call back to Sean for closing remarks. Please go ahead.
spk07: Thank you, operator, and thank you all for participating on today's call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our programs.
spk02: This concludes today's conference call. Thank you for participating. You may now disconnect.
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