LexinFintech Holdings Ltd.

Good day and thank you for standing by. Welcome to Le Sing FinTech first quarter 2024 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 need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I'd now like to hand the call over to Mandy Tong, IR Director of Le Sing. Please go ahead.

Thank you, Desmond. Good morning and good evening, everyone. Welcome to Le Sing's first quarter 2024 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, CRO, Arvin Chow, and CFO, James Jones. Before we get started, I'd like to remind you of our safe harbor statement in our earning 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 statements. Last, unless otherwise stated, all figures mentioned are in RMB. Jay will first provide an update on our overall performance. Arvind will discuss risk management updates. Lastly, James will cover the financial results in more details. I will now turn the call over to Jay His remarks will be in Chinese, and English translation will follow.

Hello, everyone. I am very happy to share with you the results of our business in 2025. In the current situation, we are taking a cautious business strategy. We have achieved a steady growth in performance, Hello everyone, it's my pleasure to give an update regarding our performance for the first quarter of 2024. Considering current macroeconomic environment and industry dynamics,

We adopted a cautious and a prudent business strategy in the first quarter. We maintained a deal-driven approach of risk and data, aiming to strike a fine balance between growth and quality, and achieved a set of healthy results. Here are the key highlights. In the first quarter, total loan origination for the first quarter reached 58 billion RMB. Loan balance stood at 121.5 billion RMB, a year-over-year increase of 13.5%. Total revenue amounted to 3.2 billion RMB, with a year-over-year growth of 8.7%. Net profit reached 202 million RMB. In terms of assets,

In terms of asset quality, in the face of the moderate recovery of macroeconomic environment,

the intensified competition among loan facilitation industry and the relatively high risk level of some part of our existing loan portfolios. We strengthened efforts to collect tail end assets and disposal of delinquent assets in the first quarter. For newly issued loans, we undertook the high credit standard, ensuring the good quality of new assets. to be more specific on these two rounds of asset quality measures.

To be more specific on these two rounds of asset quality measures. To be more specific on these two rounds of asset quality measures.

For existing assets, we strengthened efforts to collect tail-end assets in the first quarter. This included improving the intelligent cost routing strategy for multi-line management to minimize the negative impact of line control. We also continued to advance the construction of a localized integrated system for collection, mediation, and litigation services, ensuring an efficient user experience and effectiveness in post-loan collections. Simultaneously, we accelerated the disposal of tail-end assets by introducing strategy robots replacing manual decision-making with machine learning algorithms, significantly enhancing the efficiency and effectiveness of asset disposal.

In terms of added assets, one is to reduce the added assets of bad assets. The other is to completely land on new customer management, and to grow the new customer risk management system by increasing the rate of new customers by increasing the rate of new customers by increasing the rate of new customers Regarding new assets, firstly,

we undertook measures to reduce the increase of high-risk assets. In the first quarter, the low and low new customer risk management system was fully implemented across all business lines by initially granting a low credit limit to new users and gradually increasing the limit as we know the customer better as time passes by. We reduced the likelihood of credit loss for new credit approvals and maintained the increase of approval rate of new customers. We also enhanced our offer competitiveness for high quality customers through dynamic credit limit growth to facilitate conversion. The approval rate for new customer credit increased by over 30% and the proportion of super prime and prime segment customers rose from 24% in January to 40% in March. The Early Risk Performance Indicator for New Customer Assets, SPD-30, shows a continuous downward trend.

The first is to continue to expand the value of new and high-quality assets. The first stage is to launch a pricing experiment and establish a pattern of inferences and deductions, to improve the compatibility of pricing between customers, The second measure targeting at newly issued loans is that we continued to increase the proportion of high-quality new assets. Through pricing experiments and casual inference models,

we improved the matching of differentiated priced products among various customer segments, enhancing the competitiveness of offers for super prime and prime customers, leveraging the advantage of losing large user base of over 200 million accumulated registered users. We targeted potential customers who have turned or not yet converted and conducted re-offering programs which contributed to the increasing proportion of good quality assets.

通过以上措施, 新客风险逐步改善, 新增资产风险得到控制。 虽然存量资产风险处置和化解仍需要时间, 但是未来随着新增资产在资产结构中的占比逐步提升, 预计到下半年整体风险情况将会逐步好转。 Through the above mentioned measures,

the risk performance of new customers has gradually improved and the risk of newly issued assets has been under management. Although the disposal of existing delinquent loans and the resolution of risks associated with existing assets still require time. As the proportion of new assets in the asset structure gradually increases, It's expected that the overall risk performance will gradually improve in the second half of the year. .

The users who use Lejin card have a higher level of popularity. The number of people who download and compare the number of people in the first quarter, the number of people who trade, and the number of people who trade, respectively, increase by 14%, 13%, and 19%. The early risk performance is lower than half of the big market. In the first quarter, we strengthened the management of small and medium-sized customers, and launched large and small products with low prices. Le Zhouzuan mainly supports low-risk small and medium-sized customers. From the current trend, the early risk of Le Zhouzuan customers is much lower than the general market. In the future, In terms of refined operations for different customer segments, we continue to prioritize customer orientation and leverage our product matrix to drive customer activities

and improve asset quality. In the first quarter, we increased efforts in promoting Le Jin Card in Chinese, Le Jin Ka, to serve our top-tier customers better. Le Jin Card is a consumer loan product with interest rates below 18%, targeting at high-quality, working-class consumers. After more than six months of testing, Users of Luojin Card demonstrated higher user activity levels in the first quarter. The number of transactions, average transaction amount, and average loan balance per user increased by 14%, 13%, and 19% respectively on a Q-on-Q basis, with early risk performance indicators less than half of our overall portfolios. We also focused on operating high-quality micro and small business customers by introducing a low-interest and large-ticket-sized product called Luozhouzhuang in Chinese. This product primarily serves high-quality micro and small business owners. Based on current tracking data, the early risk performance indicator for customers using Luozhouzhuang are significantly lower than the overall inclusive loan portfolios, and we plan to continue expanding its scale while maintaining good asset quality. Le Jintar and Le Zhujuan are two key products targeting our top-tier customers, aiming to boost the activity of high-quality borrowers on our platform and promote the return of more high-quality lost customers.

In the first quarter, overseas business that we previously explored achieved a breakthrough in the Mexico market. Total long origination volume grew by double digits on a quarter-over-quarter basis, and it remained profitable. In terms of funding costs,

we continued to bring in more financial institutions with strong comprehensive capabilities. In the first quarter, we established a partnership with several national-wide large-scale institutions, further increasing the proportion of funds from national-level financial institutions. Our funding cost reached a new historical low level with a 34 basis point decrease compared to the previous quarter. In May, we issued the company's first internationally rated ABS with AAA rating. Moreover, in the future, we will further progress the regular insurance of ABS. 提高工作效率和客户体验

Introducing large model real-time image recognition technology over the years, the company has accumulated customer service and sales scene data to learn and train and improve the accuracy of the large model identified by the customer's intention to identify the large model. In the customer service and telecommunications scene, the customer is soundly created individualized solution, which greatly improves the satisfaction of the customer. The user image recognition aspect through continuous training, large model automatic analysis and recognition, the ability of the user in the industry to repay wishes and other information to be improved,

In the first quarter, we invested 130 million RMB in research and development, further integrating large language models with our business to improve work efficiency and customer experience. We introduced real-time intent recognition technology based on large language models, leveraging years of accumulated data from customer service and sales scenarios. This technology improved the accuracy of customer intent recognition, enabling personalized solutions tailored to customer needs in customer service and telemarketing scenarios, greatly enhancing customer satisfaction. In terms of user profiling, through continuous training, The large language model's ability to automatically analyze and identify information, such as the profession and repayment willingness, has improved, with an accuracy rate exceeding 70%, effectively supporting refined operation for different customer segments. 体验社会责任方面,一期度我们推出消保软经济活动,

from institutional construction, product functions, user experience, and financial support and training, four aspects, to provide financial consumers with insurance services, to assist local police in breaking two illegal agents' rights cases, and to continue to attack financial blackouts. In April, Lexin became an official partner of the Chinese national infrastructure team, and used the Olympic Games as an opportunity to launch the相信锋芒助力拼搏計画, which includes connecting more than 2 billion yuan of funds to assist local specialties In terms of corporate social responsibility, in the first quarter, we launched the consumer protection and warmth season campaign, providing consumer protection service

through institutional building, product features, user experience, and financial knowledge cultivation. We assisted the police force in several cities in cracking two cases of illegal agency, continuously combating financial fraud. In April, Leqin became the official partner of Chinese national fencing team. We launched the Believe in the Edge Empowerment and Strive Program to support local industries for micro and small enterprise with over 20 billion funds, offering 1 billion interest-free dream funds to support young graduates in pursuing their dreams, and collaborating with merchants to develop multiple product categories with monthly sales exceeding tens of millions.

Looking ahead to the second quarter, we will continue to adhere to a prudent operating principle, prioritize risk management, and continuously enhance profitability.

in the face of a complex and low-visibility accidental environment. As our profitability grows in the future, we will continue to distribute cash dividends and provide more returns to shareholders. Next, I will hand over to our CIO, Arvin, for risk management updates. Thank you.

Thank you. Next, I would like to share with you the risk situation of the first quarter. The uncertainty of the external environment of the first quarter has not been significantly improved. The macroeconomic situation shows a weak recovery attitude, and the supply and demand is weak. This is why we continue to advance in the first quarter to reduce the risk and promote the strategy. focus on the improvement of risk identification capability, asset structure optimization, risk customer management, increase and speed up, and optimization of pricing capability, and so on. Through the above measures, although the risk of new customers is gradually improved, the risk of increasing assets is controlled, but the management and resolution of asset risks still need time. In the first quarter, we observed uncertainty persisted in the external environment.

without a notable improvement from last quarter. This can be showed by a continued weak recovery pace of macroeconomic conditions, an extended lukewarm consumer credit demand, and a seasonal factor of the Chinese Spring Festival. Based on these observations, we firmly continued to implement our risk management upgrading and profit enhancement strategies in the first quarter. We focused on a series of initiatives, such as enhancing credit profile identification capabilities, optimizing asset structure, increasing the disposal of high-risk customers, and upgrading differentiated pricing capabilities, which achieved noticeable results. Through the above-mentioned measures, although the risk performance of new customers has gradually improved, with the risk level of new assets has been under management. The disposal of existing delinquent loans and resolution of risk associated with existing assets still require time. Looking ahead, as the proportion of new assets in the asset structure gradually climbs, it's expected that overall risk performance will gradually improve in the second half of this year. Next, let me elaborate on the specific risk management measures we implemented in Q1.

The KS indicator of the main risk-dividing model, which is rich in model characteristics and brings new old customers, has been increased by about 10%. Risk recognition capabilities have been further enhanced. At the same time, in terms of customer image model construction, professional model, academic model, income prediction model, First, in terms of continuous enhancement of risk identification capabilities, in the first quarter, we further increased the exploration of external scenario-based data and introduced cutting-edge

algorithm to significantly improve risk identification capabilities. Regarding the continuous optimization of risk scoring for new and existing customers, we established partnerships with several platforms that possess their proprietary ecosystem data. Through joint modeling and utilizing additional data dimensions for key feature extraction, we enriched the types of model features. This resulted in an approximate 10% improvement in the KS value for the main risk models, further enhancing the risk-identifying capability between good and bad customers. Additionally, in terms of customer credit profiling, occupation model, education model, and the income prediction model were all developed and implemented in Q1. This significantly enriched our understanding and insights into customer credit needs, greatly improving the matching effectiveness between loan products and the user needs.

其次,在优化资产结构方面,一季度在新客风险管理方面上线了基于Law and Growth方法论的新客风险管理体系,在货客摊 Next.

In terms of optimizing asset structure, in the first quarter, we launched the risk management strategy system for new customers based on the low and grow methodology. On the customer acquisition side, through strengthened front-end risk identification RTA model and optimized user application completion models, the efficiency of acquiring high-quality customers significantly increased the proportion of high-quality loan applications increased by over 20%. While achieving a more than 30% uplift in the credit approval rate for customers, the SPD-7 for new customer loans decreased by around 20% compared to Q4, resulting in a monthly improvement in new customer risk level.

In terms of the management of old customer risk, we have rebuilt the price-to-price trading monitoring strategy system, and greatly improved the price-to-price differentiation, which makes the price-to-price differentiation and price-to-risk continuity more reasonable. Providing a significant increase in the loan product power of high-quality customers, the proportion of high-quality customers is significantly improved, and at the same time reduces the price-to-risk and risk loss of high-risk customers.

In terms of risk management for existing customers, we have restricted the entire system of credit line limit pricing and transaction monitoring strategy, significantly enhancing differentiation in credit line limits and pricing. This has resulted in a more rational alignment of credit line limits and pricing within various risk levels. The competitiveness of loan products offered to high-quality customers has been significantly strengthened, leading to a monthly rise in the proportion of high-quality customers. At the same time, it effectively reduces the credit limits and potential credit loss for customers with medium to high risk levels.

Third, in terms of high-risk customer storage, in the first quarter, we strengthened the withdrawal, interruption, and discount storage strength of the highest-risk customers. Newly developed automated withdrawal tools have been applied and landed in old customers' withdrawal, transaction anti-theft, and transaction interruption scenarios. There has been a significant improvement in the storage efficiency and storage effect of risk customers. Third,

regarding the disposal of high-risk customers. In the first quarter, we strengthened efforts to close accounts, intercept transactions, and reduce credit limits for high-risk customers. We developed and deployed an intelligent disposal tool which has been applied and implemented in syndicates such as customer accounts closing, anti-fraud detection, and transaction interception. This tool has significantly improved efficiency and precision in high-risk asset disposal. It can generate strategy recommendations on a daily basis, enabling efficient high-risk transaction interception and account closing for high-risk customers. It has significantly improved the response speed of high-risk asset disposal and reduced the generation of delinquent loans. Additionally, In terms of our cooperation with traffic channels, recently we have conducted a comprehensive risk versus profitability analysis of the existing traffic channels. Channels with small scale and high risk were closed, thereby contributing to a tangible positive result in reducing the risk level of new assets.

Fourthly, in terms of risk-based differential pricing and loss, remember that we focus on strengthening the risk-based differential pricing strategy management system to improve the continuity and rationality of risk and price, and to improve the compatibility of risk and profit of all kinds of assets. In the case of maintaining the relative stability of the military price, it will increase the real-time price reduction of high-risk customers and promote transaction transformation.

Fourthly, in terms of risk-based differentiated pricing and customer chain prevention, in the first quarter, we also spent great efforts on strengthening the management system of risk-based differentiated pricing strategy. This led to a substantial improvement in the alignment and the rationality of risk level and pricing, enhancing the matching of risk and profitability for various class of assets and driving the growth of profitability. While maintaining average price of the whole portfolio almost stable, we increased the intensity of time-limited price promotion for high-quality, low-risk customers to boost transaction convention. and drive growth in high-quality loan volumes. We also lifted the price for tail-portion customer segments to ensure risk and price alignment.

Q1, we have outlined the trend for high-loss customers and the trend for high-loss customers compared to the same period last year. The trend for high-loss customers and the trend for high-loss customers

In Q1, we launched an offline and real-time customer chain prevention strategy system targeting customer groups with high chain probability. As a result, the number of chained customers in the first quarter declined compared to the same period last year. This achievement increased the size of our operatable customer base. Additionally, we provided re-offers for customers who historically obtained approved credit lines but never conducted a drawdown, through which we successfully recalled those silent customers. Compared to the control group, the number of recalled customers increased by over 30%.

In the second quarter, we will continue to increase risk identification, increase high-risk customer management, improve quality new customers, accelerate acquisition, and improve quality old customers. We will focus on risk differentiation, pricing, deepening, and other key work to promote risk control, increase profits, and build capacity. We believe that in the second quarter, with the new risk management system and methodological effects, In the second quarter, we will continue to focus on enhancing credit profile identification

intensifying the disposal of high-risk customers, accelerating the acquisition of high-quality new customers, scaling up the loan volume of high-quality existing customers, and continued to push forward the risk-based differentiated pricing strategy. These key initiatives aim to promote risk management enhancements, improve profitability, and strengthen our capabilities. We believe that in the second quarter, as our new risk management system and methodology gradually come into more effect, it will effectively drive a decline in the risk level of new loans while accelerating the disposal and the resolution of risk in existing loans. Based on current estimations, we expect the risk performance of overall assets will gradually improve in the second half of this year. This ends the risk performance update for this quarter. Now I will hand over to our CFO, James, to share the recent financial updates.

Thank you, Arvind. I will now delve into our financial results, noting that all figures are presented in R&B, unless stated otherwise. As Jay and Arvind highlighted, Given the macroeconomic conditions and the continued cautious consumer behavior, as well as the New Year's analogy, we strategically adjusted our Q1 operations. We tightened our credit standards and moderated loan originations to ensure the resilience of our financial performance. This approach not only helped manage volume, but also enhanced the quality of our operations. which I will elaborate across the following five key aspects. Number one, resilient net profit margin. Despite a decline in new loan volume to $58 billion, down 5.3% from the previous quarter, and the total revenue falling to $3.2 billion, down 7.6% quarter over quarter, profit reached $202 million. The net profit margin remained relatively stable at about 6.2% in comparison with the pro forma Q4 net income without investment losses, reflecting the robustness of our business model and the profitability. Number two, record low funding costs. We achieved a significant reduction in funding costs by 34 basis points from the previous quarter bringing it to under 6%. This improvement stems from the overall market rate as well as enhancing our network of funding partners and increasing proportions of funds sourced from national banks to around 70%. Additionally, we resumed ABS issuance in May, raising $350 million. We plan to continue optimizing our funding costs through further ABS insurances as market conditions allow. Number three, revenue take rate uptake. There is a slight increase in the revenue take rate of new loans to 2.54% in Q1, up by seven basis points quarter over quarter, and up by five basis points year over year. This is due to the lower funding costs a continuously refined early repayment ratio, and slightly improved credit provisioning quarter-over-quarter. The total credit impairment cost lowered slightly quarter-over-quarter. The total credit impairment cost items, including the provision for financing receivables, provision for contract assets receivables, provision for contingent guaranteed liabilities, and a change in pay value of Financial guarantee derivatives and loans at a fair value decreased by 7.5% on a quarter-over-quarter basis due to the decreased new loan amount and the improvement in risk trends of new customer loans. Number four, improved risk profile of new customer loans. As explained by Jay and Arvind earlier, our focused risk management efforts have gradually improved the loan quality among new customers from super prime and prime segments. However, due to the size of the existing loan balance, the overall 90-day plus delinquency rate still increased by 10 basis points to 3.0%. Now, our overall provision coverage ratio remains at over 300%. which is defined as total provision amount divided by the principal amount of 90-day plus delinquent loans. This reflects our strong buffer against potential bad debts. An additional note, as followed by Arden, the enhancement of overall credit indicators will likely accelerate in the second half of the year, along with our risk mitigating initiatives, as well as the macro improvements. Number five, operational expense control. We continue to optimize costs, particularly in operational expenses, excluding the processing and servicing costs, which is driven by the credit cycle and the collection operations. Operating expenses, including sales and marketing, R&D and G&A, as a percentage of average loan balance further dropped to 2.09%, 11 basis points down from last quarter and 49 basis points down from one year ago. This reflects our strategic focus on maintaining effectiveness in essential operations like loan collections to manage credit costs while reducing expenditures in other operational areas. Apart from the above operations-related highlights, I also want to provide some additional perspectives related to income statement line items. Operating revenue increased by 8.7% year-over-year and decreased by 7.6% to $3.2 billion quarter-over-quarter, slightly more than the decline in loan origination volume of 5.3% quarter-over-quarter. mainly due to a proactive tightening of credit in the e-commerce business segment. Of balance sheet funding costs increased by 19.1% quarter over quarter due to high volume in all balance sheet loan facilitation. Year-over-year, the on-balance sheet funding cost amount decreased by 39.7% due to the decline of both the rate and the on-balance sheet loan amount. Processing and servicing costs rose by 14.3% quarter-over-quarter and 11.1% year-over-year. This is because we have intensified our efforts in loan selection and managed risk. Sales and marketing expenses decreased by 2.8% quarter-over-quarter and 5.1% year-over-year, aligning with our strategy to scale back customer acquisition amid seasonal and macroeconomic challenges. On the balance sheet side, our cash position remains strong. ending the quarter with approximately $4 billion on hand and a solid equity position of $9.9 billion. While looking for ways to continue increasing shareholder value when market conditions improve, currently we will maintain our dividend payout policy with the upcoming dividend payout payment scheduled for May 24. Looking ahead, While the macro environment remains uncertain and the consumer credit demand is weaker than expected, we will stay focused on enhancing risk management, refining efficiencies, and optimizing costs. For the second quarter, we anticipate a total GMV of low origination volume to be around 54. This estimate reflects the company's current expectation, which is subject to change. We are now ready to take your questions. Operator, please open the floor.

Thank you. Thank you. As a reminder, to ask questions, you need to press star 11 on your telephone and wait for a name to be announced. If you wish to ask your questions to management in Chinese, please repeat it in English for the benefit of all participants. Please stand by while we compile the Q&A roster.

One moment for the first question. Our first question comes from Frank Cheng from UBS.

Please go ahead.

Thank you for the opportunity to ask me a question. Since the second quarter of April, I would like to ask the management what we have seen in terms of credit demand. How has the trend changed from the first quarter to the second quarter? And what is our expectation of the second quarter's entire payment volume? Then I will simply translate it. Thank you management for letting me to ask the question. Since April and the second quarter, how does the credit demand look like? What does the trend look like and what are the management expectations for total loan volume in the second quarter? Thank you very much.

Okay, let me answer this question. In the first quarter, we mainly consider the overall situation of the red line and the seasonal factors. The overall flow rate is within our expectations. In the first quarter, our return is only 5%, but it is also better than some average values in the industry. Since the second quarter, especially in April and May, we have seen that the entire macroeconomic situation is still not particularly good. From the inside, we continue to insist on a quality priority. So our risk is still at a relatively low standard. So far, what we have seen is that Okay, Frank, I will translate for Jay. In the first quarter, considering macroeconomic conditions and seasonal factors, the overall pace of low origination remained within our expectation. You can see

our total loan generation only dropped about 5% in Q1. We are talking about a Q and Q basis. This has actually outperformed the industry average loan generation pace in Q1. Since we entered the second quarter, you mean April and May, when we look at the operational metrics, considering both the external and internal factors, we see the external macroeconomic environment is still showing, we see relatively slow cultural trends. So therefore, internally, we will continue to adhere to the risk management upgrading strategy and then maintain a relatively high standard of credit approval for both new customers and newly issued loans. Therefore, taking both the internal and external factor into consideration, as for the effective credit demand, we actually see slowing down trend in April and May on a month-over-month basis that is actually below our expectation. Therefore, based on our current estimations, we said that the total loan origination volume for the second quarter will be around 54 to 55 billion RMB. At the same time, while we are adhering to the high standard of proof and prudent risk management strategy, we also closely monitor the macroeconomic recovery. If in the future the overall economic vitality improves significantly, we will also consider seizing the opportunity for business growth in a very timely manner. Okay, Frank, Hope, Jay addressed your question. Operator, I think we can take another question.

Certainly. One moment for the next question. Our next question comes from the line of Yada Li from CICC. Please go ahead.

Hello, Mr. Guo. Thank you for giving me the opportunity to ask this question. Mr. Xiao just mentioned that our overseas business has shown such a growth of two digits in the first quarter. Could you please introduce in detail the current development plans of our overseas business, the main limitations, and the future business prospects? Thank you very much. Then I'll do the translation. Mr. Shao mentioned that the overseas business achieved double-digit growth in the first quarter. Could you provide more detail about the business planning for overseas development, core business lines, and the future profit expectations? That's all. Thank you.

We are considering the development of the country's tourism industry, which has also entered a stage of high-quality growth. Living in the industry, The development has also entered a stable stage of development. We have made some mechanical attempts in overseas business. At present, it seems to have some good results. A few years ago, we also set up some investment companies. There are also residential businesses in Indonesia and other countries. At present, we are directly in Latin America. For example, Mexico has directly expanded some of its residential businesses. In the first quarter, we have spent more than RMB per month in Mexico. It has achieved a single quarter of the overall profit. The volume of overseas business has also increased by more than two microns. The real number is also far exceeding the domestic market. The overall scale of overseas business is still in a relatively small position compared to the market. In the future, we will continue to increase investment and expand the entire overseas market. In terms of products, we are also moving from a single cash product to a more comprehensive product. So, Yada, I will translate for Mr. Hsiao. Considering that China's macroeconomic development has shifted from the high speed growth to high quality growth, and you see the long facilitation industry has entered a stable growing phase,

we have made some attempts overseas and so far it achieved good results. And a couple of years ago, we made some strategic investment in Southeast Asia regions such as Indonesia. The invested affiliate company in Indonesia conducts loan facilitation business in the local market. Besides that, we also have built up our own operation team and expand our business into South America region, for example, Mexico market. Well, in the past quarter in Q1, the monthly loan ordination volume in Mexico market has exceeded 100 million RMB, achieving profitability for the quarter. The loan ordination volume for overseas business increased by a double-digit growth on a Q1 Q phases, which far exceeded our overall business line growth. However, you see the scale of the overseas business still relatively small compared to our domestic business. Therefore, in the future, we will continue to increase our investments overseas to expand and strengthen the business development. Regarding the products, we will push forward the transition from the current single model cash flow model to more diverse products models. Moreover, by optimizing targeted marketing, continuous inter-rating products, and enhancing risk management, we hope to increase the proportion of our overseas business and contribute more to our profitability. Yeah, I hope Jay gives you more color regarding our overseas business line. Well, operator, we can take next one.

Thank you. One moment for the next question. The next question comes from the line of Zoe Zhou from CLFA. Please go ahead.

Let me do the translation. As CRO, Mr. Chow mentioned that the risk performance of loan issue to new customer is showing a train of gradual improvement. Well, risk of existing loan book will still need time to be resolved. So looking ahead, could you discuss in detail the risk performance outlook of both existing and new asset and the steady future performance of the overall asset? Thank you.

Okay, the overall risk situation improvement of the company is a question that everyone is concerned about. Let me answer this. First, in terms of new customer risk management, we have strengthened the risk detection capability construction in Q1, and then also improved the optimization of the front-end customer model. At the same time, we have rebuilt the risk management system of our entire new customer. And then on this basis, let us let our customers' risk management, the ability to acquire, the advantageous customers' stand and risk level of a decline, all get an effective improvement and improvement. Our new customers' potential risk indicators have achieved a gradual decline, and then the pass rate has also been greatly improved. I believe that in the future, with further optimization and delay, in this area, our There is room for further improvement and improvement in this kind of pass rate and risk performance. The other piece is that in this new risk management, through the enhancement of this recognition ability and the acceleration and acceleration of this negative management ability, and the promotion of the adjustment structure of the new high-quality assets, the risk performance of our entire new assets will also be gradually improved and improved. Well, Zoe, let me translate

which already mentioned for you. So certainly, I think the overall risk performance of our total assets really draws market attention, and I will address that. In terms of the asset quality of loan issued to new customers, you see in Q1, we enhanced risk identification capability, improved the efficiency and accuracy of the front-end RTA model for acquiring new customers, and we also fully implemented the low-end growth lifecycle risk management approach. As a result, we see a noticeable increase in the proportion of new good-quality customers and a leading indicator for the asset quality for new customers. For example, first payment before rate 7 has decreased by more than 20% compared to the level in Q4, showing our month-over-month improving trends. Although you see the risk performance for loan issuer to new customer has gradually improved and the risk of new set has under management through the measures we talk about, it still requires time for the resolution of risk of existing assets. Therefore, we expect in the future that the proportion of new assets in the overall asset structure gradually increase and the existing loan book risk are gradually resolved we foresee that the overall risk performance will gradually improve in the second half of this year. Hope this answers your question regarding our risk performance of the overall assets, Zoe. Well, operator, can you look at the line? If there is no more queuing on the line, I think we are good to close the call for today.

Thank you. That's the end of the Q&A session. I'll now hand the call back to Yum for closing.

Well, thank you everyone again for joining us today. If you have further questions, please contact us via the contact information on our IR website and offline. Thank you all. Have a good day and a good night. Bye-bye.

This concludes today's conference call. Thank you for participating.