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spk04: Good day and thank you for standing by. Welcome to the Listing Syntax at Quarter 2022 Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. And now I'd like to hand the conference over to Ms. Echo Yan, IR Director of Le Xin Fintech. Thank you. Please go ahead.
spk03: Thank you, Operator. Hello, everyone. Welcome to Le Xin's Third Quarter 2022 Earnings Conference Call. With us on the line today are CEO Jay Hsiao, President Jared Wu, and CFO Sandy Sun. Before we get started, I'd like to remind you that the call and presentation contain business outlook and forward-looking statements, which are based on assumptions as of today. The actual results may differ materially, and we undertake no obligation to update forward-looking statements. Jane will first provide an update on our performance. Sunny will cover the financial results in more detail. And lastly, Jared and Sam will discuss risk management. I will now send the call over to Jay. His remarks will be in Chinese and the English translation will be followed. Jay, please.
spk09: Hello, everyone. It's my pleasure to speak with you again.
spk03: In the third quarter, a variety called resurgence and a somewhat pressured macroeconomy will achieve a result that not only continues the recovery trend but also the path of a second and third quarter result. demonstrating that our previous obstacles have had an unsustainable track of clear change for the better.
spk09: The transaction volume of the third quarter has reached 5.62 billion yuan, exceeding the previous 5.3 billion yuan, with a return growth of 14%. The revenue of 27 billion yuan, with a return growth of 12%. The net profit of 2.8 billion yuan, with a return growth of 65%. The debt of 9.46 billion yuan, with a return growth of 9%. The total number of users has reached 1.84 billion yuan, with a return growth of 19%. Our loan volume exceeded the previous guidance at 53 billion RMB, reaching
spk03: 56.2 billion for the last quarter, representing an increase of 14% quarter over quarter. Revenue at 2.7 billion, representing an increase of 12% quarter over quarter. Net profit at 280 million, representing an increase of 65% quarter over quarter. Overall outstanding loan balance at 94.6 billion, representing an increase of 9% quarter over quarter. Total registered uses at 180 million, representing an increase of 19% year-over-year. Since the beginning of this year, our asset quality, funding cost, and loan volume improved quarterly, providing improvement in our profitability. Net margin improved steadily from 4.8% in the first quarter to 10.2% in the third quarter.
spk09: The improvement continued in the fourth quarter. Based on our confidence in strategy and growth potential, the company's repurchase program remains in execution.
spk03: As of September 30, 2022, the company had repurchased approximately 20 million ADSs for approximately $44 million under this repurchase program. In addition, a new share repurchase program has been authorized under which the company could purchase up to an aggregate rate of $20 million over the next 12 months from November 17, 2022.
spk09: Let's say that the performance of the third quarter is fast and good The main reason is that we insist on the management strategy of asset quality priority Through detailed operation Continuous improvement of asset quality Increase profit and profit Especially in terms of asset quality We have strengthened the construction of wind and air control teams Introduced multiple wind and air control experts At the same time, we have strengthened the efficiency and model of the industry Continuous increase in risk recognition accuracy Next, let me introduce in detail Since the third quarter, we have conducted specific strategic initiatives
spk03: Our ongoing recovery trend is accomplished thanks to an asset quality prioritized strategy that's been applying insistently, which is lowering our risk level, refining operations, and backing asset quality to the improvement of profitability. In particular, the asset quality will continue to strengthen our risk management team by introducing several talents in the industry to join us this quarter. We have also strengthened our investment in data and the models to continuously improve the accuracy of risk identification. And I would like to elaborate more on these subjects now.
spk09: In terms of new technologies, we have introduced more data to further improve the quality of our products. In the third quarter, we have enhanced the performance of our online delivery and exposed more external data. We have expanded the joint modeling of RTA, which is a collaborative organization. We have built more than 30 product models.
spk03: On the acquisition front, in the third quarter, we reinforced our online customer acquisition capabilities by extending the leverage of the use of external data resources and deepening the cooperation bond with our advertisement partners to generate over 30 customer acquisition models. For the last quarter, our acquisitions went down 14% year-over-year, and new customer per capita increased by 31% in September compared with that number in June.
spk09: Combined with the accumulated internal data for many years, we have increased the diversity of the data by 30% and strengthened the realization and application of real-time data of 10-point pressure. We have extended the risk recognition range of nearly 400,000. In terms of model construction, we have built a new bottom-level trading risk model. The recognition accuracy has been increased by 10%. In terms of business strategy, we have carried out a value division on the customer search, providing the best price and price for the most advantageous users, and combining more precise operation strategies.
spk03: In terms of our existing customers, we continue to enhance our capabilities into a more refined operation in customer management by incorporating external data resources with our own database, which contained many years of data and increased our data abundance by 30%. extended the degree of the direct connection of the use of the credit reports from PBOC, and derived nearly 400,000 risk identification dimensions. On top of that, we established and perfected a new risk model based on different trading patterns, increasing its accuracy by 10%. On the operational strategy front, we followed one of our priorities, in exploring the potential of our qualified customers, to whom we provided higher credit lines and lower interest rates, and boosted their contribution in values throughout their life cycles. Meanwhile, we are continuing the course of a steady reduction of high-risk customers to further stabilize our risk level.
spk09: Through these measures, the asset structure has been further optimized. low-risk trading customers' GMV increased by 17% and the total contribution increased by 44%, and the share price increased by 33% for the red-yellow users, and the conversion of users' GMV increased by more than 2 billion yuan. As for asset value, it continues to fall. Remember that the 30-plus expected rate is 94.61%, and the downfall is 20.61%. The 90-plus expected rate is 2.66%, and the loss rate remains the trend of continuous downfall.
spk03: Through these approaches, our asset structure was improved to the next level for the third quarter. Low-risk customer loan origination volume increased by 70% quarter over quarter, and average contribution increased by 44%. In the meantime, the output of our active customers increased by 33% year over year. and the incremental scale of long-origination conversion of the existing users exceeded 2 billion RMB. In the third quarter, the 30-plus-day delinquency rate was 4.61%, which decreased 0.24 percentage points quarter over quarter, while the 90-plus-day delinquency rate was at 2.66%. The day one delinquency rate continued to be decreased quarter over quarter, while the 30-day collection rate was maintained at about 90%, with a steady increase.
spk09: The achievement of Q3's success is inseparable from our data and technology-based infrastructure. This is an important driving force that supports the development of Lexin. Lexin has invested 1.4 billion yuan in Lexin's R&D. The total growth rate is 7%. Lexin continues to maintain a leading industry. smart business engines continue to be upgraded. In terms of system capabilities, we have established a model system that uses the whole life cycle, and we have built a indicator movement, navigation, and human-to-being system. We have also increased the coverage of urgent experiments in core business scenarios to 100%. We have greatly improved the decision-making and operation efficiency of the company. In terms of AI applications, we have strengthened in-depth learning of exploration applications, and we have increased the risk of detecting users from more dimensions, and we have increased the risk of detecting new customers by 20%.
spk03: All these cannot be done without the assistance of the optimization of our data and technology capabilities, which has always been the core driving engine of the development of the company. In the third quarter, research and development expenses were at $140 million, a 7% increase year over year, continuing to take the lead of the industry. The smart business engine continued to be iteratively upgraded. In terms of the system capabilities, we established mechanisms or systems such as our user LTV model, indicator variation alert, and intelligent attribution scheme. We increased the coverage of Agile business scenarios to 100%. which greatly improved the company's decision-making and operational efficiency. In terms of AI applications, we strengthened the exploration application of deep learning to identify user risks from more dimensions. And the risk identification ability of new customers has been improved by 20%. The series of marketing models based on federal learning and the joint modeling has improved the marketing conversion of new and existing customers by more than 35%.
spk09: Now, I would like to talk about the past Double 11, and talk about our technology sales, as well as the unique value of the technology sales and the eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly eco-friendly I'd like to talk a little bit on the business ecosystem surrounded by our three main businesses. The 2011 e-commerce festival has just passed.
spk03: and our FenQiLe platform delivered an encouraging performance. From October 24th to November 12th, total GMV increased by 97% year-over-year, and the number of transactions and uses increased by 94% and 70%, respectively. Benefiting from the consumption scenarios of the FenQiLe platform, our installment consumption scenarios led by LeHuaCard reached a 15% increase year-over-year in transaction volume, and our pool of transaction uses increased by 30% year-over-year. Leveraging the advantages of consumption scenarios and focusing on high-quality customer operations, our new consumption-driven local-based service business has continued to grow this year.
spk09: and the ability of the technology to combine with the business to form a circular path of strengthening. High-end, high-year-old e-commerce business has built up a unique consumer scene for us, and continues to provide excellent customer service for consumer finance main business. And the technology and comprehensive capabilities accumulated by consumer finance main business can also be exported to bank, business, and other joint business partners, and support the development of new business such as financial literacy. This, in turn, allows us to attract more funding and scene exposure to start a new round of learning. and the core capabilities of data analysis and technology keep its progress of integrating with the business
spk03: which forms a circular enhancement task. Our high-frequency consumption-driven local-based business puts Le Le Xin at the advantage of having opportunities to generate more high-quality customers for credit-driven business. Accumulated technology and risk management experience and capabilities of credit-driven business allow us to further provide services to our financial institutions and merchants, as well as promote Synergetic development of our technology-driven platform business. The synergetic development makes Leucine connected with more funding pools and scenarios, a virtuous circle thus formed. Leucine's unique business ecosystem with three diversified revenue drivers allow us to more robustly respond to the complex and the changing external environment.
spk09: Finally, I would like to talk about some of the mistakes in the corporate responsibility. In the face of corporate customers, last quarter, we launched a small shop fire program. Through a series of measures to alleviate the financial difficulties of small and micro enterprises. In the third quarter, we continued to assist small and micro loans of 5.4 billion. In the face of personal customers, we took many measures that were seriously affected by the epidemic to help them achieve their goals. In addition, in the fourth quarter, Let me spend a few minutes to update you about Lexin's corporate social responsibility, our CSR initiatives.
spk03: In the second quarter, we launched a specific program called Jiao Dian Yan Huo to help SMEs to deal with their cash liquidity challenges. And the program continues. The total amount of small and micro loans was $5.4 billion in the third quarter. For SMEs more affected by the pandemic resurgence, we took several measures to help them tide over the difficulties. In addition, we also upgraded our customer protection initiative in the fourth quarter by launching the 5S Guardian system, which makes full use of the AI technology to strengthen data security, anti-fraud protection safeguard, conduct standards, intelligence customer service, and strike for combating financial blackmail. All of the 5Ss together allows us to build a comprehensive security firewall for customers.
spk09: In the near future, we will continue to be optimistic and steady, and use technology to serve the real economy, and to help the small and medium-sized business community to walk a high-quality development path. We will continue to strengthen the infrastructure, and to carry out detailed operations, and to do a good job of reducing the cost-effectiveness, and to enhance the company's profitability to face the uncertain challenges of the future.
spk03: Looking into the future, we will stay positive with an optimistic attitude to pursue continuous sustainable quality development. We will do our best to aid offline stores or even real business development with our advanced fintech technologies while providing support to young people and SMEs. We will continue to strengthen the company's underlying capabilities, optimize our customer segmentation operation strategy, and improve profitability by reducing the cost while increasing efficiency, thus making us better prepared for any future challenges and uncertainties. The current momentum can be maintained in the first quarter, and our long origination is expected to be in line with the volume of this quarter. Let me now hand over the call to our CFO for financial updates. Thank you.
spk05: Thank you, Jane. Good morning and good evening, everyone. It's my pleasure speaking to you again. I'm excited to report that despite external uncertainties, our CFO performance continued with an upward trend. guided by our principle of pursuing sustainable and quality growth. We continue to build up a diversified revenue structure, advanced risk identification capabilities, and operational efficiencies. Our never-ending efforts on technology innovation and digital transformation also contributed to the achievement of Q3 performance. Now let me go through some key financial and operational matrix with you. Total low origination in the third quarter was 56.2 billion RMB, representing a 14.4 growth quarter over quarter. The outstanding loan balance stood at 94.6 billion RMB, delivering a 9.2% increase compared with last quarter. If we look at the results at the end of fiscal year 2021, our outstanding loan balance as of Q3 already increased by 10.1%, demonstrating the ongoing resilience of our business. We're delighted to see that the positive momentum of both our loan origination and outstanding loan balance has continued for two consecutive quarters. And based on current information, it is on course for the rest of the year. While driving a solid growth continuity, we keep a close eye on potential fluctuations externally, such as COVID's resurgence-related economic impact, and are confident to make the corresponding adjustments if needed. At the current point of time, the management believes quality over quantity is the right approach to sustain a healthy status of our business. Total operating revenue was 2.7 billion RMB, achieving an 11.5% increase quarter over quarter. Revenue from new consumption-driven location-based services was 525 million RMB, an increase of 31.3% from the same period of last year, a modest decrease of 2.5% quarter over quarter. It is worth noting that the June 18 Liuyaoba online shopping festival made meaningful contribution to the Q3 revenue. Revenue from technology driven platform services was 500 million RMB representing a 14.6% increase quarter over quarter. Revenue from credit driven platform services was 1.7 billion RMB delivering a 15.8% increase quarter over quarter. I'd like to take the opportunity to emphasize again that we have reorganized our revenue segmentation since Q1 this year, which we believe better reflects the diversity and resilience of our revenue and the nature of our business. Once again, the contribution from nine credit-driven services was about 40% of the total revenue this quarter and has reached 1 billion RMB, achieving a 5.1% increase quarter over quarter. This is in line with our strategic goal of realizing high quality and complimentary revenue structure, which enables us to better overcome future external challenges in the long run. In line with government guidance, loan pricing in Q3 continued to fall and moved closer to 24%. The mix within 24% APR was above 80%, like the last quarter. Let me move on to the expense side of the third quarter. Sales and marketing expenses decreased by 11.1% quarter over quarter, and by 13.5% year over year, to 425 million RMB. This is as intended by the management to maintain a prudent overall spending in view of the uncertain trading conditions. However, we're reaching our customers more precisely through various online and offline channels thanks to our digitalized and data-driven marketing programs. Research and development expenses increased by 7.3% year-over-year to 141 million RMB, reflecting our continuous investment in upgrading our technology capabilities. G&A expenses went down by 7.7% quarter-over-quarter to 104 million RMB. While the long origination and top-line revenue kept their upward trend this year, Our G&A expenses remained stable and decreased on Q-on-Q basis for two quarters. I'm particularly happy to note that the net profit of Q3 was 276 million RMB, achieving a 64.4% significant increase quarter over quarter. It is encouraging to see that our profitability has continued its strong recovery trend on a Q-on-Q basis. while our major risk indicators remained stable. We expect net profit to be further improved in Q4 based on the current external conditions. On March 16, 2022, the company's board of directors authorized a $15 million US dollar share repurchase program. As of Q3, the company had repurchased approximately 20 million ADS for approximately US$44 million under this program. The Board has also authorized a new US$20 million repurchase program. However, prioritizing and concentrating resources on strategic and meaningful performance-related initiatives will be our guiding principle. We will continue to pursue a sustainable and resilient business approach and we'll also keep ourselves in the know of any material signs of external changes that may impact our business. We are very confident that we are well positioned to react quickly and responsibly. With that, I will turn the call over to our president, Jared Wu, who is overseeing the risk department. Jared, please.
spk06: Thank you, Sunny. Good morning and good evening, everyone. I'm Jared Wu, CEO of Lexin.
spk03: Thank you, Sunny. Good morning and good evening, everyone. It is a great pleasure to speak to you all, speak to all of you today.
spk06: By the end of September, our interest rate has remained in a trend of continuous decline. The 30-plus negative rate is 4.61%, which is 0.24% lower than last quarter. The 90-plus negative rate this quarter has stabilized at 2.66%. The 90-plus rise brought by the Q2 epidemic has basically reached its peak, which meets our expectations. Under the premise that the external environment is stable and there are no other emergency situations, we have remained optimistic about the improvement of the negative rate. Now let me elaborate on the risk management performance of our business. Last quarter resulted to be a quarter of improvement amid macro environment.
spk03: uncertainties and the residual impact of sporadic COVID resurgence. We are witnessing a continued lowered day one delinquency rate as of the end of September. And our 30 plus day delinquency was at 4.61% this quarter, representing a decrease of 0.24 percentage points from the last quarter. As for our 90 plus day delinquency, It held relatively steady at 2.66% this quarter, which fell into our prediction at up three basis points. And we expect the impact from second quarter's COVID restrictions has been faded out, and our 90-plus-day delinquency has peaked in the third quarter. Should no interruptions caused by external false majeure happen, we are prudently optimistic to state that our delinquency metrics are to go on a stable downward trend to reach a more balanced level, and our overall risk level to continue to fall in a more favorable direction.
spk06: In Q3, further serving high-quality users and improving the trading ratio of high-quality users is one of our most important goals. To achieve this goal, we have introduced more high-quality data sources, and the focus has been strengthened on the use of data mining for human resources. In the last quarter, further serving high-quality users and boosting the contribution of our high-quality users was one of our priorities.
spk03: Surrounding such, we expanded the depth and breadth of the use of more high-quality data resources and focused on strengthening the exploration and application of credit reports from the PBOC, as well as further upgrading the refinement models for different user segments. These measures helped us identify high-quality users more accurately and match them with lower interest rates. So, our APR has continued to decline, promoting a significant increase in customer unit price of high-quality users.
spk06: In Q3, the continuous impact on risk management has been made. We can see that the asset risk of high-risk cities will obviously rise. Since last year, we have started to build risk monitoring and targeted strategy adjustment mechanisms in the epidemic area. This system has become more mature. In the last quarter, the multi-point resurgence of the pandemic has in fact impacted our risk management front, and we can see that the risk of assets in high-risk cities rose to some degree.
spk03: But ever since last year, we started to build a risk monitoring and targeted strategy adjustment mechanism for pandemic areas. And this system has matured to the point that we are now able to quickly adjust our pre-landing, mid-landing, and post-landing strategies according to the situation in each pandemic area, which is one of the important measures for us to continue to improve our risk performance in this quarter.
spk06: With our additional investment in risk management this year, our detailed risk management capability in Q3 has also been rapidly improved. In the past two seasons, we have actively introduced more risk management talents in the industry. On the one hand, we have accelerated the upgrade of risk management modules, and at the same time increased the investment of data sources and models, which has played a key role in the detailed identification of user risks. From customer acquisition to asset management, from revenue to pricing, we have made good progress in each link. The corresponding measures of each side As we continue to devote resources to our risk management section, our refined risk management capabilities advanced rapidly. For the past two quarters,
spk03: On one hand, we actively brought in several risk management talents in the industry. On the other hand, we have been accelerating the rate of upgrades of various models of risk management and have been increasing the investment in data resources and models, which have had a timely effect on refining the identification of our user risk. We have made good progress in all aspects, respectively, from customer acquisition to asset management, from credit line granting to pricing. And the corresponding initiatives in the aforementioned have demonstrated effectively in their early state results in this quarter. Going forward, we will keep on working on supplementing these initiatives to further enhance our risk management capabilities and continue to improve our asset mix and the risk performance. Thank you. This concludes our prepared remarks Operator, we are now ready to take questions. Thank you.
spk04: Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please press star 11 on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Hans Fan from CLFA. Please ask your question.
spk07: Okay, thank you for giving me this opportunity to ask questions. First of all, congratulations on our performance in the future. It's not easy. I have two questions to ask. The first one is related to supervision, because we do feel that in recent times, the supervision of technology has had some turning points. I don't know if we can share with us the current progress of this reform, especially in terms of the paragraph chain. This is the first question. The second question is about our APR. I got two questions. First of all, this is Hans from CSA. Congrats to the improvement in the results on a quarterly basis. I got two questions. One is on regulation. Another one is on APR. So can you give us some updates regarding the rectification process, especially the decoupling of the data feeds to the banks, especially that over the recent days and weeks, we have noticed some signs of pivots in China FinTech regulation. So just wondering what's our progress there. Number two is about the APR. The APR of our company has been coming down in the past few quarters based on regulatory requirements and also our adjustment of the customer base. So I'm just wondering what's the outlook for the APR and also what's the exact APR in the third quarter? That's my question. Thank you very much.
spk09: Okay, let me answer these two questions. First, the first question is about supervision. I want to say, first of all, we are not on the whole list of the first batch. We have not received any specific requirements in terms of supervision. But we also understand that the first batch has some clear requirements in terms of cut-off time. And we are also true to everyone and We also have a lot of communication and understanding with them about some of the solutions that are being implemented. Our current choice is that we will cooperate with both companies. We have prepared two sets of solutions. If these 13 companies get the approval of the supervision of the whole reform plan, then we can quickly complete the entire transition in this section at any time. Let me take the question. The first one about the regulations, as you know, we're not in the first bench of the name list. So currently, there's no specific requirements to our company yet.
spk03: However, we are closely working the situations and want to get the ideas of what is the specific requirements to the first bench of the name list. Meanwhile, we are maintaining very close communications with Prudente by these two vendors in the industry, and we are very aware of the solutions of these two companies. And currently, we are already about all the plans As long as the requirements from the authorities can be clear and the current conducted plans have been approved, we can take a very quick initiative to be connected as well.
spk09: Regarding the APR, our entire price in this quarter is very close to 24, which is 24.3, which is slightly over 0.0. So we only have a relatively small proportion in our entire platform. So I think we are also continuing to make some adjustments in terms of customer structure. I believe that the entire adjustment of this API to the company to 24 has not caused too much of a problem and will not cause much impact. What about the future? I think we will also continue to work towards a better customer direction. In the future, we will improve the quality of our customers. We will continue to push the price down. Because you have a good price, you can get better quality customers. In this quarter, our APR is very close to 24%, 24.3%, only a little bit above 24%. And the pricing, which is above 24%, is very, very limited.
spk03: And going forward, we'll continue to further decreasing our APR, and we believe, you know, together with the increased percentage of our high-quality customers and the increase of our asset qualities, our pricing will continue to be decreased. From our perspective, we believe the higher-quality customers The better quality of the asset management is actually in line with the further decreasing of our APR. Only with a better APR, we can attract a higher quality of the customers.
spk01: Thank you very much.
spk04: Great. Thank you. Our next question comes from the line of Frank from Credit Suisse. Please ask your question, Frank.
spk08: Okay. If the current quality is indeed good, in the following few seasons, can we see some significant decline in the provision? This is my first question. The second question is about the cost of funds. In the third season, the cost of funds also dropped by 20 points. I would like to ask what the main driving factor is in this. In addition, we have seen that in the entire financial market, there may be some slight tightening on the edge. Looking at the 4G degree, do we expect a further decline or a more stable state in terms of financial costs? Let me translate it myself. This is Frank from Credit Suisse. Thank you, management, for giving me the opportunity to ask questions. I've got two questions. The first one is on credit quality. We see that in this quarter, 90 days kept flattish quarter on quarter. 30 days started to fall already. and the company suggested it's likely to improve going forward. If the credit quality continues to improve, shall we see some sizable write-backs on the provision expenses in the next few quarters? And the second question is on funding costs. This quarter, funding costs improved by 20 basis points. What is the main driver behind this? And also recently, we have seen some marginal tightening in the monetary market. Do we expect further optimization on the funding costs in the fourth quarter? Thank you.
spk05: Let me first answer the question about whether provision will rebound. First of all, we are also very happy that our overall asset value is steady. The risk of 30 new assets is decreasing. But whether there will be a big rebound in provision in the future, we don't think we can be sure yet. We think the overall provision should be relatively stable. We can't fully predict the effects of the pandemic on the external environment, the public, and the pandemic. So we think it should be relatively stable, but there is a possibility of a rebound. This is the first question. The second question is about the funding cost. We are also working hard to reduce the funding cost by 0.2%. The main reason is that we see a good policy of the country in Hong Kong. The overall mobility is also relatively high. This is one aspect. On the other hand, our cooperation with financial institutions has been maintained for a long time and has established very good relationships. I will translate myself for the English speaking audience. For the first question, we are also very happy to see that our asset quality remained stable and is going upward trend. However, we were probably not in a position to say that there will be significant reduction in provision due to the uncertainties of the external environment, particularly the COVID resurgence-related economic impact. Of course, we do see the possibility of such a reduction of the provisions, but at the moment, we think that it will remain stable. We will keep a close eye on the external conditions and the markets. So at this moment, I think there are uncertainties. And the second question is regarding the drivers of the cost of funding. We are also happy to say that we have a 20% basis points reduction for the last quarter. And this is, of course, due to the favorable policies adapted by government on one hand, and also thanks to the years of relationship that we have built up with our partners. We are having close and close cooperation. So I guess this is the result of both drivers.
spk04: Great. Thank you. Our next question comes from the line of Alex Yeh from UBS. Please ask your question, Alex.
spk00: Thank you for the opportunity to ask me this question. I have two questions here. The first one is, I saw that the amount of money spent by the government has a significant increase compared to the amount of money spent by the government. Maybe there is a 20% to 30% increase in this amount. I guess it should be because of the increase in the proportion of our young people. But I would like to ask, for example, our young people, How much is the current percentage of our defined wealth group? How much is the difference compared to the last three weeks? Will the future outlook continue to improve? The second question is related to tech rate. It is also related to the last question. As we continue to expand our wealth group, the tech rate of our new income What is the current impact? I would like to ask how much is the new exchange rate for this quarter? Compared to the entire large-scale rate, So I will translate for my question. The first one is on our customer mix migration. So I have noticed that our per customer loan volume, the ticket size has increased sizably Q1Q. So I would assume that was largely driven by our customer mix upgrade, but just want to get more color on. So for example, what was the percentage of the high quality customers per our definition and how does it change Q1Q and what's our outlook from here? And the second question is on the tech rate. So given our ongoing customer mix upgrades, how has been the impact to our tech rate? So specifically, I want to know more about the tech rate for this quarter on the new volume perspective, and how does it compare to the tech rate from our total portfolio? And could we say that we have probably seen our tech rate bottom from here? Thank you.
spk09: Okay, I'll answer this question. I think the definition that we can see in our internal self-discipline, in our internal self-discipline, in fact, we are still, in our internal self-discipline, we are 1 to 3 users. I think this proportion, in fact, we are continuing to improve. We, because recently, in precision operation, in the operation of old customers, and in the recovery of some lost users, our focus is on operating a whole 1 to 3 users. So we can see that this part of the entire user's use rate is rising. The other one is that we are pushing the future of the user group. There is also an important direction. That is, we continue to put some of our high-risk users, for example, users of our 6-8 level, users of 6-8 risk level, we are continuing to promote its whole limit. So with the adjustment of the entire asset structure, I believe that our entire asset structure will further optimize the whole Yes, I think this is the first question. The second one is the tick rate. I think the tick rate, with the continuous growth of our entire asset value, the asset structure is improving. So I believe that our entire tick rate can continue to increase. The goal we set for you in the beginning of the year is that our entire tick rate this year is expected to reach around 3. I think our current goal remains unchanged.
spk03: Talking about the premium or high-quality customers, we divided our customers into different dimensions from the risk level. And currently, internally, we mainly focus on level 1 to 3 as our major targeted high-quality customers. We are from three dimensions. First of all, we are... further understand the good performance customers who attracted back our original existing customers. And in the future, together with further provide better services and based on the better understandings of our current high-quality customers, we are also taking the assets to further limit The high-risk customers internally, we define them as the risk level from six to eight. So together with all these assets, we believe our overall risk management structures or asset structures will continue to be optimized. Talking about the take rate, together with the further optimization of our risk management and asset structures, we believe our take rate will be also on a uptrend in the future. At the beginning of this year, we have the overall view of our take rate level for the whole year, which is 3%. Currently, this whole year view is now changed.
spk04: All right. Thank you. As a reminder to ask a question, please press star 1 1 on your telephone.
spk01: All right, there are no further questions.
spk04: I'd like to turn the call back to the management team for closing remarks.
spk03: Thank you all again, everyone, for joining us today. If you have further questions, please contact us. We have our contact information available on our IR website. Thank you.
spk04: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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