LexinFintech Holdings Ltd.

Good day and thank you for standing by. Welcome to Lessing FinTech's third quarter 2023 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. It is now my pleasure to hand you over to the IR Director, Ms. Mandy Dong. Please go ahead, ma'am.

Thank you, Amber. Hello, everyone. Welcome to the third quarter 2023 earnings conference call. Our results were issued earlier today and can be found on our IR website. Joining me today are our CEO, Jay Hsiao, President, Jared Wu, and CFO, James Chung. Before we get started, I'd like to remind you of our Safe Harbor Statement in our earliest press release, which also applies to this call. During the call, we may refer to business outlook and forward-looking statements, which are based on our current plans, estimates, and projections. The actual results may differ materially, and we undertake no obligation to update any forward-looking statement. Last, unless otherwise stated, all figures mentioned are in RMB. Jay will first provide an update on our overall performance James will cover the financial results in more detail. And lastly, Jared will then discuss risk management. I will now turn the call over to Jay. His remarks will be in Chinese, and the English translation will follow.

Hello, everyone. It's a pleasure to share with you our performance.

for the third quarter of 2023. In the face of the current industry-wide and macroeconomic challenges, we adopted a prudent and steady strategy in the third quarter. Despite a slight volatility in asset quality, we reasonably tightened our risk strategy to balance growth and quality. In the third quarter, we adhered to the dual wheel drive of risk and data, pushed forward the refinement of operations and continued to strengthen our fundamental capabilities, recording another solid ROSE performance. Transaction volume was RMB 63.3 billion, up 13% year-over-year. Loan balance under management was RMB 120.7 billion, up 28% year-over-year. Revenue was RMB 3.5 billion, up 30.4% year-over-year. Net profit was RMB 371 million, up 34.4% year-over-year. In the third quarter, the effectiveness of both new customer acquisition and existing customer operation was further improved. The synergies between e-commerce and the consumer credit business were further enhanced, and the tech empowerment business continued to grow, with its commercialization capability being validated, and we are accelerating its expansion.

The performance of 3G has three highlights. First, the continuous operation brings an increase in the efficiency of new customers and old customers. In terms of new customers, the company has made greater improvements to the new customer model and strategy in the past three seasons, and has achieved more significant results. The information flow has improved by 38.5% compared to the previous quarter. The new customer pass rate, the number of transactions, and the total loan amount have increased by more than 20% compared to the previous quarter. The early entry indicators have dropped by 20%. We expect that the size and quality of the new customers in the fourth quarter will continue to benefit.

There were three main highlights of the third quarter results. Firstly, refined operations have led to improved efficiency in both acquiring new customers and managing existing ones. In terms of new customers, we made major upgrades on our new customer acquisition model and strategy in the third quarter, resulting in notable achievements. The efficiency of attracting customers through feed channel increased by 38.5% compared to the first quarter. The approval rate, number of drawdown borrowers, and the facilitated loan volume for new customers all showed improvements of over 20% compared to the control group. Additionally, early stage delinquency indicator decreased by nearly 20%. We expect both the skill and quality of new customers to continue to benefit in the fourth quarter.

In the third quarter, we further expanded the construction of offline customer capabilities, including upgrading the organizational structure of the general meeting team, perfecting the sales management system, strengthening the cultivation of standardized talents, strengthening the offline precision recognition capabilities, In the third quarter, we further enhanced our offline customer acquisition capabilities. This included upgrading the organizational structure

of the Offline Inclusive Finance team, improving the sales management system, strengthening the cultivation of standardized talents, and enhancing the ability to accurately identify offline customers. These efforts solidified the advantages of our offline direct customer acquisition model, resulting in a decrease in overall customer acquisition cost. Sales expenses in the third quarter declined by 9.5%, compared to the second quarter. We see more potential and opportunities for offline growth in the future, and will continue to deepen our presence in this unique business model.

In terms of old customers, we insist on stable management. The underlying performance of the Hangzhi model application has been further improved. In the quarter, In terms of existing users, we maintained a steady operation and strengthened the underlying capability building for model application.

further enhanced our service capabilities. During the quarter, we introduced more data sources and built an identification system centered around the credit system of PBOC. We improved the model framework for the entire customer acquisition, risk management, and operational lifecycle. The sequencing and the stability of the model were improved by 10% to 20% over the previous version.

In the third quarter, we utilized the enterprise WeChat for user operations

which has accumulated 700,000 borrowers and improved service efficiency and satisfaction. Through refined operations, targeted high-quality customer groups via enterprise WeChat, compared to the traditional method, we achieved a nearly 65% increase in customer order rates and a 107% increase in transaction volume.

In the third quarter,

Our product, Le Jin Card, priced below 18.18% and targeted towards high-quality customer segments, delivered satisfying progress. After using Le Jin Card, users' willingness to place order and the transaction volume has been significantly improved. The order rate, average transaction volume per person, and the total transaction volume all experienced around an This effectively enhanced the engagement of high-quality active borrowers and facilitated the return of more high-quality settled users, expanding the scope and the opportunities for managing our premium user base.

The second highlight was the continued growth of Luoxin ecosystem and the further enhancement of synergies.

The tech empowerment business, after achieving quarterly profit in the fourth quarter of last year, the scale of this business line grew further with a 59 sequential increase in the third quarter. After nearly two years of exploration, we have completed upgrades in solutions, diversified our product portfolio, and validated the standardized capabilities in systems and deliverables, which was well-recognized by multiple urban and rural commercial banks.

59% of the real estate has further verified the ability of digital commercialization. Although digital is currently not much of a part of Lexin's overall business, in the context of continuously narrowing the management of the industry and the downfall of the current market, digital business can help banks to quickly carry out the digital transformation of the market. The 59 growth rate further validated the commercialization capability of our tech empowerment business.

although it currently accounts for a small proportion of Leucine's overall business. In the context of increasingly refined industry regulations and a downward trend in consumer credit market interest rate and tech empowerment business can help banks quickly undergo retail credit digitalization transformation with tremendous market potential. It can also bring better synergy to funding cooperation and drive deeper and broader collaborations between lexin and financial institutions. Currently, the Tech Empowerment Business Team is accelerating its expansion and will cover more city and rural commercial banks to further expand the scale.

Secondly, e-commerce business is growing rapidly The price has risen and the joint effect of consumer modern business has been further strengthened. In the third quarter, e-commerce mobile phone categories continue to consolidate. Apple, T1, and Huawei L1 have the highest level of authorization. Maintaining an advantage on the first batch of goods in the shortage of goods, it has further escalated the user consumption of the divided business class. With Huawei as an example, in the third quarter, new products, Meta60, Quanxi and X5 sales hit a new high of about 60% compared to last year's Meta50 new products.

Secondly, our e-commerce business brought out more value in terms of customer new acquisition and activating existing ones, further enhancing the synergies with our core consumer credit business. In the third quarter, our e-commerce division continued to solidify its highest level authorization for Apple T1 and Huawei L1. maintaining advantages in skills and initial supply. This further boosted consumer spending on our e-commerce platform, taking Huawei as an example. Sales of the new Mate 60 series and the X5 reached a record high for the year in the third quarter, with an approximately 60% increase in revenue compared to last year's Mate 50 products.

In addition to our strength in the consumer electronics 3C category, we introduced more high-quality new brands and merchants onto our platform in the third quarter.

covering categories that are favored by young generation, such as luxury goods, sports, and past goods. The number of new merchants reached 241, representing a sequential growth of 51% in brand coverage.

With the addition of more merchants and expansion of product categories, a large number of existing users have been activated, leading to a stimulation between e-commerce

and consumer credit business. During the Double 11 Shopping Festival, the period from November 1st to 11th, the growth in the e-commerce consumer base resulted in a notable increase in transaction volume from high-quality active customer R1 to R3, with a sequential increase of approximately 12.4%. At the same time, These active consumer credit users further drove e-commerce spending, creating a reinforcing cycle within our business ecosystem.

The third highlight is the effect of data drive system. Profitability is further improved. In the third quarter, we will take a series of data drive methods to improve the efficiency of operation. These measures include the application user life cycle overall model and other digitized tools to strengthen advanced operation. Third highlight is the data driven approach to improve quality and efficiency, further enhancing our profitability.

In the third quarter, we implemented a series of data-driven measures to improve our operational efficiency. These measures included applying data tools such as user lifecycle models to strengthen precision operations, enhancing the efficiency of funds and asset matching through decision simulation systems, and improving the customer retention rate for settled users.

The drop in funding cost has further improved profitability. In the third quarter, the company achieved significant optimization of our funding structure and entered into strategic partnership with multiple major banks.

including national-wide joint stock banks. Funding costs reach a new record low, a 21-bibs drop on a Q&Q basis.

业务的高速发展离不开技术和研发的持续投入, 三季度公司研发投入1.27亿元, 继续保持行业领先。 季度内,我们通过乐信金融专属数据训练, 业务数据金条加速了AI大模型在公司落地应用。 In terms of business interaction, it has fully landed in the main business processes such as e-commerce, customer service, and collection. In terms of productivity improvement, it has widely applied in the field of development, code support, design and creative production, data analysis, and other scenarios, improving the overall operating efficiency of the company. In terms of core control, we continue to pay attention to and actively explore the landing applications of AI big models in the core field. These factors greatly improve the overall operating efficiency and customer experience of the company.

The rapid development of our business also relies on continuous investment in technology and the research and development. In the third quarter, our company invested RMB 127 million in research and development, maintaining our industry-leading position. During the quarter, we accelerated the development of the use case of AI large language models in our business through exclusive data pre-training and fine-tuning of business data. In terms of business application, we have already fully implemented the AI model in key business process such as telemarketing, customer service, and loan collection. In terms of working tools, the AI model is widely applied in scenarios such as coding assistant tools generating design ideas and data analysis, enhancing the overall operational efficiency of the company. In terms of risk management, we are closely watching the industry trends and actively exploring the use case of AI large language models. These initiatives have significantly improved the overall operational efficiency and the customer experience.

With solid technology advantages, in the third quarter, Lexin has been selected for the fourth time as one of the top 500 Chinese service companies, making us the only fintech company on the list for fourth time. In terms of corporate social responsibility in the third quarter,

We made major upgrades to our consumer rights protection measures. Upon the foundation of our 5S Guardian system, we have carried out four major initiatives. One, strengthening our data security management system. Two, enhancing anti-fraud protection capabilities. Three, expanding intelligent customer service applications. And four, intensifying efforts to combat illegal anti-collection groups. These measures collectively established a comprehensive safety firewall for consumers.

In the first eight months of this year, Le Xin intercepted 1.6 billion data security attacks. The data protection and governance system has maintained records of data leakage since it was launched. The anti-theft system accumulated more than 4.7 billion yuan in loss of land users. Customer satisfaction has increased to 99.6%. In the face of a complex and uncertain external environment, we will follow Shenzhen's business principles, risk management priority, continue to promote risk reduction, asset quality improvement, and maintain balance between trading size and asset quality. The company will maintain the exchange rate of 24.5 to 25.5 billion yuan per year, which is 20% to 25% of the same growth.

From January to August this year, Luoxin intercepted 160 million instances of data security attacks, maintaining a record of zero data leaks since the launch of the data protection and governance system. The anti-fraud system has prevented potential user losses for over 270 million RMB. and customer satisfaction has reached 99.6%. Looking ahead to the fourth quarter, in the face of a complex and uncertain external environment, we will adhere to the principle of prudent operation and prioritize risk management. We will continue to enhance risk management capabilities and improve asset quality while striking a fine balance between transaction volume and asset quality. We maintain the guidance on full-year loan origination we gave earlier this year, ranging from RMB 245 billion to 255 billion, representing a 20% to 25% year-over-year growth. Next, I will pass to our CFO. for financial updates.

Thank you, Jay. I will now provide more details on our financial results. Please note that all numbers are in RMB unless otherwise stated. In the face of a sluggish macroeconomic environment and a subdued consumer confidence, we have sustained our growth for the sixth straight quarter, signaling a robust V-shaped recovery since the first quarter of 2022. Our focus on improving risk management capability, customer upgrading, operational refinement, cost initiatives, and optimizing our funding, particularly by lowering the early repayment rate, has prepared us forward this quarter. Amidst the ongoing economic uncertainties, our strategy has been prudent. We have moderated new loan originations to prioritize asset quality, and conservatively made ample provisions in our financials, which, while impacting us in the near term, supports us our long-term financial health. To provide some context, first let's take a look at the year-over-year number comparisons. Total loan origination increased by 12.7% year-over-year to $63.3 billion. Revenue climbed to $3.5 billion, up 30.4% year-over-year, largely due to reduced early repayments and a larger outstanding loan balance, now at $121 billion. Notably, we significantly cut the early repayment ratio in Q3 to a level at about 90% of Q2's level and aim to keep it optimal in Q4. The average weighted APR remained under 24%, with loans below this threshold comprising 86% of total loans, up over 5% from last year. Our funding costs hit a record low of 6.4%, down from 7.0% last year, attributable in part to successful partnerships with the national banks, which we anticipate will further reduce costs. Loan tenders decreased as we fine-tuned our portfolio's structure in response to the market uncertainty, averaging 13.1 months compared to 13.8 in Q3 of 2022. Cost efficiencies continue with operating expenses, including processing and services, sales and marketing, R&D, and G&A, falling to 0.91% of the average loan balance, a 35 basis point saving from the previous year. Consequently, that income rose to $371 million, a 34.4% increase year-over-year, improving our debt margin to 10.6%. Despite the heightened provisions, the increase underscores our resilient profitability and the business momentum. Apart from the above year-over-year analysis, I would also like to share some perspectives from quarter-over-quarter comparisons. Total GME remained relatively stable as we balanced maintaining asset quality with business growth. A slight tickering improvement reflects effective early repayment control, and reduced funding costs, although offset by pricing reductions, shorter loan durations, and additional provisioning. Risk management remains a cornerstone strategy, yet factors like the slow economic recovery and challenges within the loan collection industry have slightly affected the asset quality, as reflected in metrics such as day one delinquency rate, M1 collection rate, and 90 days delinquency rate. For instance, our 90 days delinquency rate in Q3 was 2.67%, which is slightly higher in comparison with 2.59% in Q2. Nonetheless, we have adjusted our debt provisions, reaching a coverage ratio of approximately 350%, which is defined as the total provision amount divided by the principal amount of 90 days delinquent loans. The current fluctuation in asset quality across industry seems to continue to cloud Q4. We are vigilant and have taken all measures to safeguard our asset quality level. Operating expenses fell by 7.2% from the last quarter primarily from reduced sales marketing and general administrative spending. With increased provisions from Q2, we still achieved a 4.2% sequential growth in net income and maintained a 10.6% net margin. From both year-over-year and quarter-over-quarter perspectives, we have made significant improvements during Q3. Although macro headwinds persist, We have maintained the rebounding pace of our business and anticipate the business growth momentum to continue. Let's review some specific financial items. Total operating revenue hit $3.5 billion for Q3 with an increase of 14.8% quarter-over-quarter and a 30.4% year-over-year. Driven mainly by the credit facilitation business, which saw a significant increase both quarterly and annually. Tech empowerment services also grew, while installment e-commerce platform service revenue declined due to the high Q2 numbers driven by the 618 promotion and an accounting reclassification. Despite all of this, the e-commerce GMV grew by 12.8% year over year. Expense ratio demonstrates our continued progress in cost optimization, notably in marketing, where we have achieved greater efficiency and lower customer acquisition costs. The sales marketing expenses decreased by 9.4% quarter over quarter, and it decreased by 3.3% year over year. which was mainly due to the improved efficiency of upgraded RTA customer acquisition models. In Q3, new users with approved credit lines increased 15.1%, and new active users increased 8.2% on a quarter-over-quarter basis, indicating a lower customer acquisition cost in Q3. Net profit for the quarter was approximately 371 million marking steady increase with a 4.2% growth quarter-over-quarter and a 34.4% growth year-over-year. Our cash position is strong, ending the quarter with around $5 billion in hand and a solid equity position of $9.8 billion. In Q3, we have declared a recurring cash dividend plan and paid out the cash dividend for the first half of 2023, amounting around $19 million, equivalent to roughly 20% of the total net profit for the first half of 2023. Looking forward, we will continue to look for ways to return more value to shareholders. Looking ahead to the rest of 2023, Given the current macros and the pressure on asset quality throughout the industry, we remain conservative in loan origination pacing. We maintain the earlier guidance of annual GMV amount of 245 to 255 billion growth, which represents a 20 to 25% year-over-year. These estimates reflect our current expectations, which is subject to change. To sum up, Q3 marks our sixth consecutive growth quarter. Our key strategies, risk management, customer enhancement, operational refinement, and cost efficiency are all paying off. As we navigate ongoing macro and industry challenges, we will maintain our focus on asset control, measured business expansion, and operational optimization. poised to seize opportunities as they arise. Now, I will hand over to Jared Wu, our president, to discuss our approach on risk management in detail. Jared, please take it from here. Thank you, James.

I remember that our wind and air upgrade and customer upgrade strategies are continuously improving, continuing to polish the wind and air model, optimizing the customer structure, and achieving this continuous effect. But in the context of the slow recovery of the macroeconomic economy, we were also affected by the continued impact of anti-exploitation and blackout factors. Our asset recovery has undergone some pressure. We expect that the impact of these factors may continue until the fourth quarter. As a result, we adopted a more cautious and stable risk strategy to deal with the changes in the environment. At the same time, in the expulsion period, Thank you, James. In the third quarter, we continued to step up our efforts in honing our holistic risk management system and optimizing our customer base on the grounds of our corporate strategy, risk management upgrading and customer base upgrading.

which yield consistent results. Although we continued to improve our risk management capabilities, our loan collection rate experienced some fluctuations due to the slow recovery of macro conditions and the rise of illegal anti-collection activities recently. We anticipate these impacts from these factors may last into Q4. Therefore, will yield into a more prudent risk management approach going forward. Meanwhile, we rolled out a series of countermeasures to mitigate these impacts on loan collection. For instance, in the collection process, we have set up our internal collection workforce and leveraged the advantages of internal collection manpower. and we also increased the proportion of manual case handling to uphold the collection rate.

During the third quarter,

through continuous optimization of our RTA model and the risk models for new customer credit line approvals. We achieved a 50% improvement in customer acquisition efficiency and a 20% reduction in new customer risk levels. In Q4, we will gradually amplify our experimental flow and continue to rapidly advance strategies iteration, striving to accumulate a sufficient number of high-quality customers this year, and lay the solid foundation for next year's growth.

In the third quarter, we have accelerated the introduction of top-level division control personnel to enhance our core competitiveness. We can predict that their professional ability and experience will help us to make new breakthroughs in the division control field.

In the third quarter, we accelerated the recruitment of top-notch industry talents in risk management space, further enhanced our core competitiveness. We anticipate their professional skills and extensive experience in risk management space will assist us to achieve more breakthroughs. adhering to the risk management driven principle, we will continue to build up our industry-leading risk management team.

Looking ahead, in the face of the current macroeconomic situation, in Q4,

We will continue to adhere to the principle of risk management first, adopt a prudent strategy, and at the same time continue to enhance our underlying risk management capabilities and persistently iterate the overall level of our risk management. Operator, let's close all our prepared management remarks. I think we are now good to open the floor for questions.

Thank you. We will now begin the question and answer session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Once again, that's star 11 for questions. Our first question comes from the line of Alex Yeh from UBS. Please ask your question, Alex.

Good morning. Thank you for the opportunity to ask me a question. I have two questions. The first one is about what Guan Yicheng mentioned in the talk. In the third quarter, the behavior of the user's advance payment has been effectively controlled. The advance payment rate has been significantly reduced and the tech rate has been increased. Can you tell us about some specific measures and a look at the advance payment rate level of Q4? After two questions, the first one is regarding the management remarks about the successful control in early repayment ratio in Q3, which helped to increase the revenue rate. Could you share with some more color in terms of the specific measures taken and provide us with some color into your expectation for the Q4? And second question is about your new customer acquisition. We have noticed good progress in Q3 in terms of both lower customer acquisition costs and number of new customers acquired. So could you also give more color on this? Thank you.

Okay, I can answer this question. In fact, in Q3, we have established a special group of direct leadership by the company in terms of the whole management and the whole profit-loss ratio. We have established some more precise specifications for customers. For example, which users may have a model of the entire refund in advance, including which users' total, based on the total amount of users, to provide a strategy for the best user experience. Through various measures, we can help to better find some users who may pay in advance. We also avoid some measures that cause users to pay in advance. In this case, we can cooperate with different departments In some processes, we have interfered with the users, including in the process of the user's early repayment. In the process of early repayment, for example, we have a user who wants to early repay, we can send a coupon to the user and tell him that if you don't early repay, we can give you a certain amount of interest. These measures help us effectively control the entire early repayment behavior. In our entire project, we will follow up with the state of the state, so we have achieved a good result. In Q3, our return rate is 90% of Q2, which has greatly improved the level of our entire template. We expect that these measures will continue to be maintained in Q4, and the level of the entire return rate in Q4 will also Thank you, Alex.

So in the third quarter, we set up a special task that was directed by the company's management level and then spanning multiple departments such as operations, to determine based on the customer's outstanding balance or as well as the credit line to decide the best coupon strategies based on their own performances to better determine whether they are likely to do the repayment, early repayment process or not, to better avoid our strategic error to cost that. As well as we issued the suitable and the fit coupons in order to try to deter them from doing so, which effectively helped us to reduce the early repayment rate. And also our task team held weekly meetings to review and re-optimize and achieve a very good result in the third quarter. In the third quarter, our early repayment rate was only about 90% of which in the second quarter, which significantly improved the take rate level of the revenue. And then we expect to maintain such strategy as well as the optimized level in the early repayment rate to go on in the fourth quarter.

Okay, the second question is in terms of new customers. In fact, in Q3, our new customer capacity in the whole of Q3, we had a major upgrade of the entire A-card risk model. We have further enhanced the authenticity of the whole SYNK model. We have also continued to promote the entire RTA model of some of our major media outlets. As you can see, at least after this major change, our customer efficiency has increased by 50% and the risk of SYNK has decreased by 20%. From the report, our sales cost has decreased by 9.4%. But the number of new registered users, new customers, and new borrowers increased by 9%, 15.1% and 8.2% in the last quarter. This means that we use less money to get more effective customers. Q4, we are accelerating the application of this new model and continue to promote some of its updates. And we see the whole model of this new customer and some of the current customer results. For us next year, to acquire more quality customers, to improve their assets and quality, to lay a good foundation.

So in third quarter, we continue to iterate our ability to acquire new customers and achieve the same reduction in the new customer risk. In comparison with the previous quarter, we did a significant new customer risk model upgrade, including incorporating more of the PBOC model usage, as well as promoting the RDA model upgrade with our own with our main media channel. Specifically, our customer acquisition efficiency was increased by 50% and reduced new customers' risk by 20%. And from the pure earnings point of view, the amount of expenses decreased by 9.4%, quarter over quarter. But newly registered users increased 9.0%, quarter over quarter. And new users with approved credit lines increased by 15.1%. and new active users will increase by 8.2% on a quarter-over-quarter basis, indicating a much lower customer acquisition cost in the third quarter. Coming in the fourth quarter, we will increase the volume of our comparison as well as the experimental group mentioned before, and to continue to push forward the strategy of reiteration at a more faster pace to better reserve a significant number of high-quality customers, as well as including pushing the new model, which has been showing prominent results, to better lay a foundation for the next year's work. Hope that answers your questions, Alex.

Thank you, Alex. Our next question comes from the line of Yada Lee from CICC. Please ask your question, Yada.

I will do the translation. Thanks, management, for taking my questions. And I was wondering if you could elaborate more about how the current loan demand looks like in October and November and compare with the previous quarter. Currently, how is the recent trend of the asset quality?

And that's all. Thank you. Okay. I'll answer this question.

From what we've seen so far, in October and November, the demand was slightly lower than Q3. We didn't see a rebound. But the demand for Q3 in October is still a bit low. It's probably in the middle. And looking at the demand for the Japanese military in November, this is a unique advantage. Because we have e-commerce and malls, we benefit from the sales of the Double 11 e-commerce shopping festival. We see that the entire demand has been pulled back a bit. Compared to the whole level of q3 It looks like it's been two months now It's basically flat But considering some of the seasonal factors at the end of the year So we have a whole quantity of q4 It's still a cautious attitude, isn't it From the whole asset quality aspect I think it's just like I said before So q4 is a whole asset quality Some of the influences on the red line still exist, including some of the influences on the black line. We can also see some decrease in efficiency in the initial surge. At present, our entire asset quality is under a certain pressure. Some of the short-term risk indicators are fluctuating, but we have actively adopted various measures to deal with some of the external influences, to reduce this fluctuation of our entire influence. For example, we are now increasing the ratio Okay, thank you a lot.

At the operational level, the demand growth seemed so far in October and November down slightly compared to the third quarter, and no significant recovery of steam. So specifically, the demand level was slightly weaker in October compared to the third quarter, probably ranging in the single digits. And from the point of view that the average daily demand in November up to now, benefiting from the boost of the double 11 e-commerce festival, compared with the level third quarter, is basically Scottish. However, considering the year end seasonality factors, including the bank's year end supply tightening, and the recent trend of over capital flow shifting to government and real estate assets, we maintain a cautious and conservative stance on the fourth quarter volumes. And in terms of the asset quality, as Jarrett mentioned earlier, in the fourth quarter, the factors affecting our asset quality persisted, mainly because of the macroeconomy still in a period of steady recovery, as well as the growth. And the impact of the anti-collection industry has been affected, the rate of our collection rates to a certain extent. And it seems that we are currently under pressure on the quality of assets and the various risk indicators have been fluctuating. However, we have actively taken various countermeasures to deal with the fluctuations caused by external factors such as increasing the proportion of our own inbound calls and continuously iterating our risk management model. and the volatility of risk will put some pressure on the growth of the first quarter, that's for sure, but we are doing measures to combat that. I hope that answers your question, Yara.

I'd like to add one more thing. Just now, we talked about the progress of our new class. In fact, it will be of great help to our future. Our current new class has significantly improved in terms of scale, cost, and quality. So just to add one last point, in terms of the results that we're getting and the progress we're getting for new customer acquisitions,

In the future, we're hoping with the promising size and the volume that comes out of new customers, as well as the cost being lowered for new customer acquisitions, as well as the risk level looking very promising and good right now, it should be a very good factor for us in the future. It should be helping, whether it's on our asset quality side or the operational side in the future. So I hope that answers your question, Yara.

Thank you, Yara. Our next question comes from the line of Betty Lee from CLSA. Please go ahead, Betty.

Thank you for giving me the opportunity to ask a question. I have two small questions I would like to ask. First of all, I see that our long-term guidance has maintained a growth rate of 20% to 25%. I would like to see if we can look at I will translate by myself. The first one, given the current loan guidance, I think the company is in good track in maintaining the in the full year loan origination, but just wonder if you have any outlook for the 2024 loan demand. The second one is, I just wonder if the company has any further share buyback plans. Thank you.

Okay, I will take the question. Basically, first question is related to the outlook. Second question is about the buyback, right? Basically, for the macro perspective, we still believe there's a considerable amount of uncertainty in the fourth quarter. The overall recovery of the consumption still remains relatively slow. At the same time, because of the typical kind of seasonal factor of funding supply in the fourth quarter, it's a little bit tight, so we expected the overall lending volume in Q4 to be broadly in line with Q3. Okay, this is one. Two, obviously, we have other factors affecting the seasonal asset quality. These factors continue to exist, as mentioned earlier, right? One is the macro kind of still, the growth is a little bit slow. And also, within the loan industry, the impact of the combating illicit financial activities related to the debt collection. this is still kind of affecting the rate of entry into the collection and also the exit from the collection, okay? So based on this, the overall kind of asset quality is still under slight pressure at this point. The short-term risk indicators have still shown some fluctuations. So based on all of this, we are basically maintaining, continue to maintain a prudent approach for Q4, really adhering to the principles of prioritization risks and prudent management. And up to now, as a reminder, actually, you know, we have maintained a pretty good rate of growth. We have completed about 188 billion RMB so far for the first three quarters of this year. Really, this is about 26.7% year-over-year growth, okay? So we're going to continue, we're confident we'll continue to achieve the 245, 255 billion GAV growth, this will be 20 to 25 percent. And in terms of 2024, we're probably going to wait until after we close this year to give more guidance. By that time, hopefully, we have more certainty about the overall macros next year. Okay? That's the first question. The second question, in terms of any buyback plans, as a matter of fact, the Board has approved two buyback plans last year. We completed about 50 million buyback earlier part of this year, and then the board authorized 20 million buyback in November last year. For that, we haven't done anything yet. But in last quarter, we have declared a dividend plan. Basically, we declared we're going to pay out from 15% to 30% of our net income as a dividend payout rate. So the first half of this year, we paid out 20% of our net income, and we have completed paying out the dividend in the last month or so. So we'll continue to look for ways to return value to our shareholders. Basically, when we close the end of this year, we're gonna come back to look at our dividend planning again, see whether we should continue to pay out for the second half of the dividend for this year. Okay, so basically upholding the shareholder value is the number one priority for us. Thank you. Hopefully that answers your question.

Thank you, Betsy. We have reached the end of the question and answer session. I'll now turn the conference back to the company for any additional closing comments.

Well, I think that closed our conference call today. Thank you again, everyone, for joining us today. If you have further questions, please contact us via our contact information on the IR website. Thank you all. Have a good day and a good night.

Thank you. Okay, bye-bye.

Thank you.

That concludes today's conference call. Thank you for participating. You may now disconnect.