LexinFintech Holdings Ltd.

Good day and thank you for standing by. Welcome to the Lexin third quarter 2025 earnings conference call. At this time all participants are in a 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 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Will Tan. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to our third quarter 2025 earnings conference call. Our results were released earlier today and are currently available on our IR website. Today, you will hear from our Chairman and CEO, Mr. J. Wenjie Xiao, who will provide an update on our overall performance and strategies of our business. Our CFO, Mr. Arvind Zangwen Chow, will then provide more details on our risk management initiatives and updates. Lastly, our CFO, Mr. James Zeng, will discuss our financial performance. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements. Last, please note that all figures are presented in Renminbi terms, and all comparisons are made on a quarter-over-quarter basis, unless otherwise stated. Please kindly note Jay and Alvin will give their whole remarks in Chinese first, then the English version will be delivered by Jay's and Arvind's AI-based voices. With that, I'm now pleased to turn over the call to Mr. Jay Wenjiexiao, Chairman and CEO of LeXin.

Please. Hello, everyone. I'm very happy to share with you the performance of our Q3 in 2025. In the third quarter, we completed the adjustment and deployment of the business in accordance with the new rules. This time, the adjustment was done smoothly. The key is that the company's continuous risk capability in the past few years and the unique flexibility of the ecological business fully reflect our long-term development concept and the ability to handle the cycle effectively reduced the impact of the new rules on the company. In the context of the fluctuating cycle of the industry, the company has still achieved stable performance in the third quarter. The actual transaction amount is 508.9 billion yuan and the revenue is 34.2 billion yuan. The net profit is 5.2 billion yuan, the net profit is 2%, the net profit is 68%, the net profit is 2.01%, the net profit is 9BP, the net profit is 92BP. We believe that as the new rule falls, the industry will enter the threshold and will further improve. The market is moving in a healthier and more sustainable direction. Our unique ecological business advantages and co-operative capabilities We believe that the long-term investment in the underlying energy and ecological business in the past will gradually turn into a差異化的競爭優勢。公司一直高度重視股東回報。我們此前宣布下半年分紅比例將由25%提升至30%並積極推進股份回購與增持計劃。 As of now, the related repurchase and real-time progress has exceeded half. Next, I would like to introduce some of the key work in the second half of the year. First, we have strengthened the identification of user categories and early response to industry risks. In the third quarter, we have strengthened the identification and active management of user categories according to industry risk trends, effectively balancing business scale and capital risks. In the first quarter, through the historical cycle model, we have targeted and identified a group of users who are affected by the cycle and are unstable, and made corresponding risk strategy adjustments to make the customer group more detailed division, real-time depreciation of interest rates and prices. In the third quarter, we added assets to achieve the balance of risk and profit. Secondly, we improved the product experience with the user as the center. In the third quarter, we promoted the upgrade of product and management capabilities, users care about the system and achieve the results of the construction. Financially, we satisfy the financial service needs of different split users. In the quarter, we combine with financial institutions to optimize the funding supply, expand the coverage of flexible back-and-forth and other flexible solutions, and use customized Re-Offer to increase user satisfaction and annuality, effectively improve the flow of users, and increase the ratio and contribution of good users. . . . . . In the third quarter, the company's unique business ecosystem and each branch co-constructed a more resilient ecosystem. Personal consumption is now facing high-quality users and optimizing service experiences, which significantly strengthens user year-on-year. Separate retail, deep-rooted young customers and core consumer scenarios continue to optimize supply systems. In terms of living consumption, the exchange rate in the quarter increased by 58.5% and increased by 133.8%. In the past two years, the market share of Double 11 has increased by 38% and the daily consumption of consumer goods has also increased by 237%. The stock exchange business has grown in the low-end market, focusing on small and medium-sized enterprises. The quality of assets has been stable and has verified the value of the low-end market. We will continue to expand the investment in the offline market and continue to improve the offline operating system. The number of overseas businesses has also achieved a steady growth. The company has always adhered to the service concept of the user as the center, and considers the protection of consumer rights as the core competitive advantage. In the third quarter, we will strengthen the consumer rights protection system in the system, products, and services. At the system level, we will develop a sustainable strategy to protect consumers. Through a variety of mechanisms, we will promote the protection of consumers and facilitate the transmission of all business segments to actively respond to the needs of users in the field of products and services. By using online customer service, AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service The joint industry has jointly attacked governance and obtained certain results. In the fourth quarter, the new rules are officially implemented. The industry will enter a more healthy and sustainable stage of development. Based on the completed business adjustment, we will seize the opportunity to increase the investment in ecological businesses and promote company stable development. In the future, we have confidence in the steady growth of performance.

Next, I will hand over the speech time to Erwin. Thank you.

Hi, everyone. Thanks for joining us today for our third quarter 2025 earnings call. In the third quarter, we efficiently completed our business adjustments to comply with the new regulation. The smooth transition was mainly attributed to the company's strong risk management capabilities that we've been enhancing over recent years and the resilience of our business ecosystem. This demonstrates our long-term oriented development philosophy and our strong resilience in navigating business cycles, effectively mitigating the impact of industry fluctuations on the company. Against the backdrop of industry fluctuations, we delivered solid performance in the third quarter. Loan volume reached 50.89 billion RMB. Revenue reached 3.42 billion RMB. Net profit was 521 million RMB, up 2% quarter-over-quarter and 68% year-over-year. Net profit take rate stood at 2.01%, increasing by 9 basis points quarter-over-quarter and 92 basis points year-over-year. We believe that the implementation of the new regulations will further raise industry entry barriers and drive the industry toward a healthier and more orderly development. Our unique advantages in business ecosystem synergy and customer-centric operation system will position us more favorably in the future. We are confident that our long-term investment in the fundamental capabilities and the ecosystem businesses will gradually turn into our distinctive and powerful advantages. We have always placed great emphasis on shareholder returns. As we announced previously, the dividend payout ratio was increased from 25% to 30% of the net profit starting from the second half of this year, In addition to the cash dividend, the company's share repurchase plan and my personal share purchase plan are progressing well with each initiative now more than halfway completed. Next, I will walk you through the key initiatives we have made in the third quarter. First, we strengthened user categorization and risk identification and took early actions to address the industry risk In light of the industry risk trends in the third quarter, we enhanced user categorization and risk identification and took proactive measures to manage risk, effectively balancing business volume and asset risk. During the quarter, leveraging our historical cycle models, we systematically phased out users highly sensitive to cyclical impacts and exhibiting instability and adjusted our risk management strategy accordingly. We further refined our customer segmentation and implemented tailored pricing strategies accordingly. As a result, new assets in the third quarter maintained a balanced risk return profile Second, we enhanced user experience by adopting a customer-centric approach. In the third quarter, we upgraded our products and management capabilities, and the development of our customer care system has yielded positive results. This allowed us to fulfill the financial and service needs of different customer segments. During the quarter, we collaborated with financial institutions to optimize funding supply and expanded the coverage of flexible repayment solutions such as flexible borrowing and repayment and bullet loans. In addition, we provided customized re-offers to improve customer satisfaction and loyalty, effectively enhancing user retention. As a result, the proportion and contribution of high-quality customer continued to grow. Third, we accelerated our AI technology deployment, leveraged integrated AI agents to drive digital transformation. In the third quarter, we further advanced our AI initiatives. Our self-developed large model, Lexin GPT, has incorporated multidimensional data, providing AI agents with stronger decision-making capabilities under different scenarios. This has improved the accuracy of user request identification by over 20% and significantly enhanced request solution efficiency. During the quarter, AI Agent has been applied in multiple areas, such as risk management, credit granting, and repayment, and will continue to expand to other areas. Belong to the industry leading integrated AI agent has facilitated data connectivity and task coordination in different scenarios, thereby creating stronger business synergies. We have laid a solid foundation for AI driven digital transformation, providing robust technological support for improving efficiency, revenue growth, and user experience optimization. In the third quarter, different business units within our ecosystem worked together to create synergy and collectively reinforce the resilience of our ecosystem. Online consumer finance business targets at high-quality customers and focused on optimizing service experience, significantly enhancing user engagement and retention. Installment e-commerce business targets at young customers in key consumption scenarios. We continue to refine the supply chain system of our e-commerce platform. GMV for Essential Daily Consumer Goods grew 58.5% quarter over quarter and 133.8% year over year. During the recent Tingles Day Shopping Festival, the total GMV of e-commerce platform increased by 38% year over year. With transaction volume for Essential Daily Consumer Goods surging by 237% year-over-year. Offline inclusive finance focuses on small and micro business owners in lower tier markets. The asset quality of inclusive finance business remained stable in the quarter, validating the value of the lower tier markets. We will continue to increase investment in offline markets and further improve its operations. Both tech empowerment business and overseas business achieved steady growth in volume during the quarter. The company has always adhered to a user-centric service philosophy, positioning consumer rights protection as a core competitive advantage. In the third quarter, we comprehensively strengthened our consumer rights protection system across multiple dimensions, including policies, products, and services. In terms of policies, we integrated consumer rights protection into our sustainable development strategy, implementing measures across all business processes through various mechanisms. In terms of products and services, we actively responded to user needs by leveraging technological means such as online customer service center and AI-empowered customer support to improve service efficiency and quality. We also proactively gathered user feedback for data analytics, aiming to enhance user satisfaction at the source. In response to frequent violations of consumer rights by illegal activities, we actively followed regulatory requirements and collaborated with the industry to combat such activities, which has achieved positive results. With the new regulations taking effect in the fourth quarter, the industry is now on a healthier and more sustainable path. Having completed our business adjustments, we are well positioned to capture opportunities arising from the industry adjustments by increasing investment in ecosystem businesses and drive steady growth. Looking ahead, we are confident in achieving stable performance growth. Next. I'll hand over the floor to our CRO, Arvind. Thanks.

Thank you. Next, I will report on the work situation and progress in the management of risk management in the third quarter. In the third quarter, the uncertainty in the modern industry is still relatively high. As the new rules of housing are coming to an end, the mobility of the industry has been greatly tightened in the quarter, which has had an impact and impact on the scale and risk of the industry. Due to this, the company's full-fledged asset inflow rate and recovery rate have increased significantly. Since the beginning of the second quarter, we have been gradually strengthening control and dealing with risk management. The overall risk increase is relatively controllable. In the third quarter, we have further strengthened the management of the growth group at the tail end. Through the means such as withdrawal and discount, we can ensure that new payments can be controlled, and the business is in line with new rules and guidelines. On the other hand, we continue to increase the management of high-quality customers and promote the increase in the size of high-quality assets. Next, I would like to introduce to you the key risk management measures we have taken in the three seasons. First, we have further strengthened the digging and processing of high-risk customers in the three seasons. In the model, we have increased the digging of key data such as multi-head debt, price bias, income quality, and so on, and strengthened the identification of sensitive customers with risk fluctuations in the industry. At the same time, the combination of the latest risk trends continues to be modeled on the behavior of the client. It is better to capture customers who have recently had abnormal behavior and further enhance the recognition of high-risk customers. In the strategic action, we continue to strengthen the risk management of the end-growth type customers. For high debt, high capital, and high-risk people, clear withdrawal is carried out. For weak long-term debt capability, external liquidity collection, to reduce the number of customers. Second, in the third quarter, we continue to improve the management ability of high-quality customers. For high-quality customers on the model, we upgraded the demand model, response model, and loss model, and other multi-dimensional models to focus on the method, degree, and price matching, to improve the quality of modern service for high-quality customers, strengthen the center of the customer, and focus on upgrading the customer experience of high-quality customers. continue to maintain competitiveness in terms of price according to the flexible configuration of different products. The focus is on low-income and low-income customers. Recruiting and refunding in a refund way for high-quality customers. Provide a flexible plan for the first period and the second period. At the same time, strengthen the one-to-one service of high-quality customers. Provide customized re-offer to continuously improve the satisfaction and annuality of customers. Under the optimization of this series of strategies, the three-level sales business has maintained a large-scale growth in the high-quality crowd Third, in the field of e-commerce, we continue to improve the risk management system and further strengthen the risk recognition ability In the third quarter, in the face of the uncertainty of the external environment, we actively control the development rhythm, balance the scale and risks, and achieve stable and sustainable business development. In the risk management and control, the third quarter actively shrink and control the scale of growth for high-risk and environmentally sensitive customers. At the same time, we provide specialized prices for high-quality products such as 3C digital and other high-quality products to promote e-commerce and high-quality JMA growth. In the fourth quarter, we will carry out dynamic strategic adjustments according to the risk form of the industry to ensure that the business achieves stable and healthy sustainable development. Fourth, in the field of intelligent control tool construction, we have made significant progress in the construction of a new generation of intelligent control system. The decision-making wind control intelligent body completed the development of the top line wind control intelligent body achieved from the population selection to the population classification strategy to the evaluation of the effect of the entire process of automation and intelligentization Achieved from the transformation of quantum drive to AI drive to achieve the efficiency and effect of the decision-making and the effect of the decision-making are significantly improved In the fourth quarter, the impact and impact of new regulations on the mobility and risk of the industry is expected to continue. The scale and risk estimate of this quarter will continue to be suppressed in the first half of the quarter, and the second half of the quarter is expected to be gradually eased and restored. In the fourth quarter, we will continue to strengthen the risk identification and increase the risk management of customers, and ensure that the risk fluctuation is controllable, and business management is stable.

Thanks, Jay. Next, I will provide a review of our key initiatives and achievements in risk management for the third quarter. In the third quarter, industry uncertainty remained elevated. With the new regulations officially took effect in October, industry-wide liquidity tightened further on a month-over-month basis in the fourth quarter. Impacted by the broader industry trends, our day-one delinquency ratio and the collection rate of loan balance saw a minor increase. thanks to the proactive measures we've taken to enhance risk control and with starting from the second quarter the overall risk volatility remained manageable in response to the complex industry environment we have further tightened risk controls over high-risk customers by phasing out risky accounts and reducing credit lines these measures have helped keep new loan risks manageable and ensure full compliance with regulatory requirements Meanwhile, we doubled down on serving prime customers to promote the growth of high-quality assets. Let me introduce the key initiatives we've taken in the third quarter. First, during the third quarter, we further enhanced risk control measures for high-risk customers. From credit model perspective, we enhanced data mining on key variables, such as multiple borrowing, pricing preference, and income verification. to enhance identification of customers sensitive to industry fluctuations. In the meantime, by integrating the latest risk trends and optimizing our customer credit behavior timeseries model, we were able to identify anomalous signals accurately and swiftly, further enhancing the identification of high-risk customers. From risk strategies perspective, we continued to intensify management of high-risk assets. We systematically phased out customers with excessive shared debt exposure, multiple borrowings and high-risk profiles, and reduced credit line of borrowers with weak repayment capacity or those vulnerable to liquidity tightening. Second, in the third quarter, we continued to enhance our operational capabilities tailored to prime customers. In terms of model and enhancement, we upgraded multi-dimensional models including demand, response, and churn models and made targeted investments in our outreach approach, credit line granting, and pricing alignment to ensure service quality. Also, we have reinforced our customer-centric approach to enhance the customer experience for prime customers. In terms of credit line, we continue to maintain our offer competitiveness. In terms of pricing, we implemented product-based pricing to reactivate dormant and churned customers. In terms of repayment methods, we introduced tailored solutions like flexible borrowing and repayment and bullet loans for prime customers. Furthermore, we enhanced one-on-one services for prime customers by providing customized re-offers, further boosting customer satisfaction and loyalty. Thanks to these initiatives, loan volumes from prime customer segments achieved month-on-month growth in the third quarter. Third, in the installment e-commerce business, our risk management system has been gradually refined with further strengthened risk identification capabilities. In the third quarter, in light of external uncertainties, we proactively adjusted the growth pace of our installment e-commerce business. to strike a balance between scale and risk, and to achieve sustainable business development. We've tightened the risk criteria of our installment e-commerce business, proactively scaling back exposure to high-risk and sensitive customers. At the same time, we've selectively provided support for categories such as high-quality consumer electronics by allocating dedicated credit lines, which help drive e-commerce GMV growth. Looking ahead to the fourth quarter, we will dynamically adjust our strategies based on the industry risk trends to ensure steady, healthy, and sustainable business growth. Last but not the least, in the development of intelligent risk control tools, we've achieved remarkable progress in building the next generation smart risk control system. The risk control intelligent agent for credit decision making, empowered by larger scale models, has been launched. it enables full process automation and intelligence from customer targeting, segmentation, and strategy formulation to results evaluation, marking a paradigm shift from quantitative-driven to AI-driven risk management. This has significantly enhanced the efficiency and effectiveness of credit decision-making In the fourth quarter, the impact of the new regulation is expected to persist, characterized by industry-wide liquidity tightening and risk fluctuations, as such business volume and risk performance are expected to remain under pressure in the first half of the fourth quarter and may gradually stabilize and improve in the second half. In response, we will continue to strengthen risk identification and enhance management of high-risk assets in order to ensure risk fluctuations under control, laying a solid foundation for steady and sustainable business operations.

Thanks, Arvind. I will now provide a detailed overview of our third quarter financial results. Please note that all figures are presented in living B terms. and all comparisons are made on a quarter-over-quarter basis unless otherwise stated. As Jane mentioned earlier, to proactively adapt to the evolving regulatory environment, we initiated a business adjustment in the third quarter. While this adaptation temporarily led to declines in loan volumes and overall pricing, we leveraged our business ecosystem to effectively mitigate these impacts. Despite ongoing adjustments and industry credit risk volatility related to the new policy, we delivered steady net profit growth in the third quarter. Our net income grew by 2% quarter-by-quarter and 68% year-over-year to reach $521 million, a record high in the last 15 quarters. Our net income margin increased to 15% from 14% last quarter. Our net income take rate increased nine basis points to reach 2.01%. We have realized the net income take rate goal of achieving over 2% by year end ahead of the original schedule, as we communicated earlier this year. This underscores the company's resolve and improved ability to execute on our business objectives. Now, let's take a holistic review of our third quarter financial results. First, net revenue of the credit business, which is derived by adding up credit facilitation service income and tech empowerment service income, net of credit costs, including provisions and fair value changes, and the funding costs, reached $1.9 billion, a 3% increase or $59 million decrease quarter over quarter. The decrease was primarily attributable to an increase in credit costs of approximately $40 million, reflecting continuously strengthened provisioning. Second, net revenue of the e-commerce business defined by e-commerce revenue, net cost of inventory sold increased by 14%, or $14 million to $14. $111 million. So the total net revenue summing the credit and e-commerce business added up to $2.1 billion, a 2% or $46 million decrease quarter-over-quarter. Operating expenses, including sales and marketing, R&D, G&A, processing and serving costs, decreased by 4% or $57 million to $1.4 billion. Tax and others increased by 1% for $1.8 million to $162 million. The total expenses added up to $1.5 billion, decreased by 3%, or $56 million. By deducting total expenses of $1.5 billion from the total net revenue of $2.1 billion, we get net income of $521 million, an increase of 2%, or $10 million, quarter over quarter. Given the backdrop of the pending regulation and the associated industry credit risk volatility, it was not an easy task to achieve this record high profit in the third quarter. During the net profit growth, driving this is the resilience of our business model and the three key factors, one, Our operational agility demonstrated by smooth transitioning between the capital light and capital heavy models. Two, our installment e-commerce steady growth and the profit contribution. Three, our solid financial position underpinned by the adequate and prudent provisioning. Next, I'm going to elaborate a little bit more on these three highlights. First, our operational agility. demonstrated by smooth transitions between the capital light and the capital heavy model. In the third quarter, in order to meet the new regulatory requirements, we started to transition our business by gradually reducing capital light business volume. By October 1st, we've completely stopped facilitating loans with APRs above 24%, and we're fully compliant with the new rules. As a result, in Q3, the mix of capitalized loan volume further reduced from 20 percent to 13 percent, while the ICP business only accounted for 8.5 percent of the new loans. As a new regulatory framework, we continue to serve a selected group of long-tail clients using the capital-heavy model. As such, the mix of capital-heavy loan volume increased from 80 percent to 87% of the total new loan volume, largely offsetting the decline of ICP volume. Thanks to the smooth transitions between the two models, total loan volume only saw a modest decrease of 3.7% compared to the second quarter. As ICP bins primarily serve long-tail customers, it naturally bears higher pricing. Therefore, the wind-down of ICP bins had a negative impact on our overall pricing, which was partially offset by the lower funding costs associated with the capital-heavy model. Driven by the above factors, our tech empowerment service income, which represents income from capital-light model and value-added services, decreased by 45% or 374 million. While our credit facilitation service income, which mainly consists of income from capital heavy model, increased by 15.3%, or 347 million. As a result, revenue from credit business only decreased by 1%, or 27 million, despite a loan volume decrease of 3.7% in the third quarter. demonstrating our operational agility to navigate regulatory changes. Second, steady growth of e-commerce business and its growing contribution in the third quarter. Despite strong demand driven by limited credit availability for long-term customer segments since second quarter, we observed an industry-wide risk volatility in the third and fourth quarter in response we prudently slowed down the growth of e-commerce loan volume as we prioritized quality rather than volume of the assets. As a result, our e-commerce loan volume grew by 15% sequentially to $2.3 billion. For the upcoming fourth quarter, we'll continue to keep a close eye on the asset risk performance and strike a balance between the volume growth and asset quality. As a reminder, if you look at the e-commerce revenue in our P&L, it recorded a decline of 29% to $345 million despite the e-commerce GMB growth of 15%. This is caused by the accounting treatment difference due to the continued volume shift to third-party sellers from company direct sourcing model. For third-party sellers, only platform service fees is recognized as revenue rather than the entire transaction amount and the direct sourcing model. In the third quarter, third-party seller model accounted for 85% of e-commerce GMB compared to 75% from last quarter. As mentioned earlier, our e-commerce business generates two profit streams, namely the gross profits from selling merchandise and the interest income from loan installment services. In the third quarter, the gross profit reached $111 million, representing an increase of 14%. The growth in our e-commerce business gross profit has not only enhanced our overall profitability, but also expanded our targeted long-tail user segments, thereby further mitigating the impact of our business model transition. Going forward, we will continue to grow our e-commerce operations prudently and fully leverage its unique advantages and the new regulatory environment. Third, we continue to maintain a robust financial position characterized by adequate and prudent provisioning. Our total provision saw an increase while the overall asset quality remained healthy, evidenced by by a 15 basis point improvement of 90-day delinquency ratio to 3.0%. However, as the industry transitioned towards the new regulatory framework, we observed an increased volatility in early risk indicators starting from September. While we consider the fluctuations to be temporary, the whole industry may need some time to fully absorb the impacts, and we expect the industry-wide risk volatility to continue into the fourth quarter. In response, we have sustained our strategy of setting aside ample provisions to ensure a strong buffer during the transition period. In the third quarter, our credit costs, including three provision line items and fair value changes of financial guarantee derivatives rose 4% or $40 million to $1.1 billion. Due to the net accounting policy we've adopted for the item, change in fair value of financial guarantee derivatives and loans at a fair value, the actual full provision we set was partially offset by the guaranteed income and recorded as net amount in our P&L. As such, the reported item only represents part of the actual full provision. If excluding the impact of the net accounting policy And in recovering the gross provision, the full provision ratio of new assets calculated by dividing gross provision by capital-heavy loan volume, we increased the sixth basis point from the second quarter to 6.97%, well above the historical highs of vintage charge-offs. As Arvind mentioned, we'll continue to closely monitor asset performance and utilize various post-lending management tools to strengthen collection, while maintaining ample financial buffer to navigate through the credit cycle. As a summary, the above three highlights impacted the net revenue side of the income statement. In short, total revenue reached 3.4 billion, representing a decrease of 5% quarter-over-quarter. This was mainly due to a 29% decrease in e-commerce platform service income which was caused by ongoing shift in the e-commerce business model and the corresponding net versus gross adjustment in the accounting treatment. On the cost and expenses side, total operating expenses, which include processing and servicing cost, sales and marketing expenses, R&D, and the G&A expenses, reduced by 4% to $1.4 billion, reflecting reprocessing of user acquisition costs during the uncertain times of business transition. For balance sheet items, as of September 30th, our cash position, which includes cash, cash equivalent, and restricted cash, was approximately $4.3 billion. Shareholders' equity remained solid at about $11.8 billion. Looking ahead, as Q4 marks the first quarter after the new regulation framework came into force, we expect industry-wide risk fluctuations to remain for some time before the industry enters into a new normal stage. In light of this, we'll continue to adopt a prudent operational approach, prioritizing regulatory compliance and asset quality over business expansion. For the fourth quarter, we expect to see moderate quarter-over-quarter decline in loan volume. Impacted by the ongoing credit risk volatility, net income and the net income take rate will see a sequential decrease. We expect to see more clarity and certainty of credit risks and the profit outlook maybe at the close of the fourth quarter. To conclude, I would like to reaffirm our commitment to enhancing shareholder value. In addition to our semi-annual dividend, will continue to execute our share buyback program. As of October, we have repurchased 25 million worth of ADS alongside the CEO's personal purchase of over 5 million USD worth of shares. On the foundation of current shareholders' return policy, we will continue to evaluate opportunities and explore different ways to ensure we deliver optimal value to our shareholders. That's all our prepared remarks for today. Operator, we are now ready to take questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. We kindly ask participants to please translate your questions into English and to please mute yourselves after finishing your questions. Please stand by while we compile the Q&A roster. Thank you. We will now take our first question. First question today is from Alex Yee from UBS. Please go ahead.

Thank you for the opportunity. I have two questions. First, I would like to ask about the situation since October 1, 2014. So I will translate for my question. The first one is regarding the new regulation on the loan presentation industry, which has come into effect since October 1st. Could you share that with more color on what impact does it have on the business operations? Second question is on the management share more color on the development strategy and outlook of the e-commerce business.

Okay, let me answer these two questions.

In the third quarter, the company took the initiative to adjust some of our businesses in advance to meet the new regulations. On October 1st, we have actively suspended more than 24% of all businesses to ensure that the entire business was reconfigured. Currently, all new loan interest rates are in the 24th category. After moving to the 24th category of business, we took the initiative to give up some high-risk customers. It has a certain impact on the scale and pricing. After the new rule, due to the entire collection of funds, the entire industry risk has fluctuated. From September and October, most platforms have stopped pricing more than 24. China China China China It is still relatively effective. At present, we have seen that in the risk of increasing and saving the entire asset, there is a sign of a steady and good turn. In the long term, Zhudai Xinggui will promote the industry to a new stage of high-quality development that can go towards a regular, healthy and sustainable high-quality development. As the framework is gradually clear, the market resources will also focus on the head-to-head regulatory platform that will further strengthen the wind control capability and operate stably. Lexin, as the main market, we have always adhered to the business concept of the customer as the center. We insist on harmonious, risk-resistant, and safe development of the entire principle. In addition, Lexin also has a diversified ecological business layout. Faced with the influence of new rules, our business has still performed better. Currently, our entire online sales record business has been to advance the gradual transformation and enter all the white lists of major cooperating financial institutions. Currently, our general meeting business has also entered the low-end stage and effectively served the general meeting small and medium customers. In the current environment, we see that the risk performance of the general meeting business is still very stable, and it also verifies the entire value of the low-end market. Our separate retail business is deeply rooted in young customers and consumer scenes. Using a new model to serve the market, This is a translation for Jay's remarks.

In the first quarter, we have actively made business adjustments to comply with the new regulations. By October 1st, we have stopped underwriting loans with APR above 24% and ensured business compliance. All new loans issued by the company carry an APR at or below 24%. After shifting to business with pricing below 24%, we gave up higher risk customers, which have some impacts on both business volume and average loan pricing. Following the implementation of the new regulation, industry-wide rates have increased due to tighter funding. Starting in September and October, most platforms stopped offering products with APR above 24%, leading to significant short-term volatilities in risk. Although the overall impacts remain manageable, the industry will need some time to fully digest the associated credit risk. For Le Xin, as we have taken effective measures Our risk performance for new loans or existing loan portfolios have shown signs of stabilization and improvement now, validating the effectiveness of our risk management system. In the long run, the new regulation will pave the way for a more compliant, healthy, and sustainable stage of high-quality development in industry. When the regulatory framework becomes clearer, market resources will be increasingly concentrated towards leading compliance practices with strong risk control capabilities and stable operations. Slushing has always adhered to a customer-centric business philosophy, prioritizing compliance operations as a quality and prudent development. Furthermore, it's worth noting that Leshing's diversified business ecosystem has demonstrated strong resilience in adapting to the new regulations. More specifically, our online consumer finance business is progressing steadily and has been included in the wide list of all major financial partners, paving the way for future development. Our offline inclusive finance business focuses on small and micro business owners in lower-tier markets. Its asset quality remains stable in the quarter, validating the value of the lower-tier markets. The installment e-commerce business targets at young segments in key consumption scenarios, fulfilling the consumption and financing demands of long-tail customer segments through innovative models. Those type of empowerment and overseas businesses achieve stable volume terms in the quarter. Under the new regulatory environment, Lexin will gradually unlock the unique competitive advantages of its business ecosystem.

Okay. E-commerce business is an important component of Lexin's ecological business. E-commerce is also an important component It can also help us to further expand our entire business boundary. In terms of development strategy, over the past year, we have been continuously upgrading our entire e-commerce platform. Especially in the supply chain, we have introduced many brands and merchants. Gradually, we are enriching our entire supply chain in order to meet the consumer demand. In the third quarter, the cost of living consumption, In fact, we have seen a growth of 58.5% and a growth of more than 100% in the same ratio. In the past Double 11, the previous presentation also talked about the obvious growth of our entire e-commerce transaction volume. In fact, we still have an independent risk management system for this e-commerce platform. We have the ability to monitor the balance of quality and risk. In the future, we will continue to expand our entire product line. In terms of the overall pace of development, we have always been more cautious and prioritized. In the third and fourth seasons, we have seen the risks of the industry fluctuate. So in the third season, we still actively control the growth rate of our entire e-commerce. In the short term, considering the risks of the industry, we still need time to digest. We will continue to control the growth rate of the entire e-commerce.

As a crucial component of Lexin's ecosystem, our installment e-commerce business will continue to play a key role in customer acquisition, engagement, and expanding our operational boundaries. In terms of business development strategy, over the past year, we have comprehensively upgraded the e-commerce platform supply chain, introduced branded merchants from various industries, and expanded to meet users' essential daily consumption needs. In the third quarter, The transaction volume of essential lifestyle product categories increased by 58.5% quarter-over-quarter and 133.8% year-over-year. During the recent Double 11 Shopping Festival, the e-commerce GMB also experienced significant growth. Meanwhile, leveraging the e-commerce platform's independent risk management system is able to balance business quality with scale. Moving ahead, we will continue to optimize and expand our product category on our platform to meet users' consumption and financial needs while effectively managing risk, further expanding our operational boundaries. In terms of development pace, we have consistently adhered to the principle of prudent operation and prioritized asset quality. The third and fourth courses, as we observe increased industry-wide risk fluctuations, we have actively moderated the price-pay of our installed equipment. In the near term, given that industry rates do require time to stabilize, we will continue to exercise caution in growing our installment e-commerce business. When industry-wide credit rates show signs of stabilization, we will gradually resume the growth pace in order to capture the next phase of rapid expansion opportunities.

Thank you. We will now take the next question. And this is from Judy Zhang from Citi.

Please go ahead. Let me translate my question. So during the transitional period before and after the implementation of the new regulation, the industry credit risk has already fluctuated significantly. And as the companies updated the risk control system, How are we managing this round of risk cycle? And what improvements have been made in the risk management system? Thank you.

Okay. After Xinggui was launched, based on our past experience, we expect Xinggui's landing and implementation will have a big impact on the liquidity and risk of the entire industry. Therefore, we have actively taken effective measures from the beginning of the second quarter to deal with and respond and make changes and adjustments to the business. In terms of risk response, we actively save this recognition level to identify customers who are affected by this industry impact impact and fluidity tightening impact. high income, high debt, low income, and work stability is relatively poor, and then borrowers with a higher rate of borrowing, these customers, strengthen the recognition of these customers, and then after the recognition, we use our intelligent tools, and then conduct an automatic risk inspection, and then accelerate this kind of withdrawal and disposal, Then reduce the proportion and weight of this customer in our new add-on. Effectively respond to the risk of these customers after the entire flow is tightened after the fall of the new rule. Then control the degree of risk fluctuation of stock and new assets. At the same time, at this stage, we increase the management of high-quality customers. Through this increase in the competitive price, optimize this repayment deadline and repayment method, promote the growth of this value-added scale, adjust the asset structure, store the share of the share in two aspects, to effectively improve our performance in this risk cycle. Then, through this early application of effective measures, We actually observed that our entire risk performance is relatively stable in this risk period. The inflow rate of all assets, our Q3 compared to Q2, increased by about 5BP. Our new installments in Q3 Compared to Q2, it is also expected to be able to control about 5 BP. Overall, whether we are saving assets or increasing assets, the impact and impact of the risk is relatively controllable compared to the industry. Q4 is the first quarter of the new rule. The overall risk and scale and profit are all a relatively large quarter. The expected pressure and challenge are still relatively obvious. Based on our latest risk performance, we have a double impact on the entry rate of all assets in October and November. The entry rate reached a high point in October and November due to the double impact of the first month of the fall and the long-term period of the national holiday. Then, based on the latest data in November and November, our entry rate in November compared to October has begun to rise and fall in the same period. At the same time, we have further strengthened and tightened the first month of the new release in October. Therefore, we estimate that the FPD30, which is the new release in October, will be stable even in September. So overall, under the impact and impact of this round of risks, we will act as soon as possible and then take a steady business. After they roll out of the new regulation, we're anticipating

We anticipated that it will affect the industry's liquidity supply. This is based on the experience that we accumulated across multiple cycles. This would, in turn, weigh on the industry's credit rate. Therefore, starting from the second quarter, we made adjustments in our risk management, risk identification, our strategy, and also made business adjustments. We proactively identified customers who were vulnerable to Titan industry liquidity based on factors such as high multi-borrowing, high debt exposure, low income, unstable employment, and high exposure to high pricing credit. Based on this re-identification, we utilized automated re-scanning robot, clearance robot, and credit line robot. to improve the efficiency and effectiveness of account clearing and credit line reduction. This allowed us to respond early in the risk cycle and control the risk fluctuations for both new loans and existing loan portfolios. At the same time, by enhancing pricing competitiveness, optimizing loan tenure and repayment experiences, we've strengthened engagement with prime customers, promoted the growth of quality assets, adjusted asset structure and improve resilience against risk cycles. So in summary, we not only control the formation of delinquent assets, but also try to increase the volume and mix of high-quality assets. Thanks to the proactive measures that we have taken, the overall risk fluctuation for both new and existing loans remain under control in the third quarter. For the overall loan book, D1 delinquency ratio increased by around five basic points compared to the second quarter. For new loans, the magnitude of FPD30 increase is expected to be 5%. Q4 is the first quarter after implementation of the new regulation, so it's expected to be more challenging, not only in risk performance, but also in loan volume and also profit. For the existing loan portfolio based on the latest performance, day one delinquency ratio peaked in October due to the combined impact of the new regulation implementation and the long National Day holiday, and then exhibited month-on-month improvement in November, showing signs of stabilization. For new loans, as we further tighten credit criteria in October, we expect of new loans in October to improve compared to the peak in September. So overall, moving into the month of October, the risk performance of existing loans and new loans both show signs of stabilization.

Thank you.

We'll now take the next question. This is from Dongping Zhu from CICC. Please go ahead.

好的,感谢管理层给的提问机会。 那我这边也是有两个问题想请教一下。 第一个问题是想请教一下管理层如何展望第四季度以及明年2026年的一个业绩表现。 第二个问题是想请教一下我们看到现在公司的一个回购额度已经使用过半了。 那未来股东回报的计划应该如何展望呢? And let me translate my questions, and I have two questions. First, what is the outlook and guidance for the fourth quarter and through year 2026 performance? And second question is, as the company has utilized over half of share repurchase quota, what are the plans for future shareholder's return?

Thank you.

Okay. I guess I will take the first question and ask Jay to take the second.

The first one, the fourth quarter is really the first four quarter following the implementation of the new regulation. Our results will be negatively impacted to the similar extent as other leading players in the industry. On the one hand, we see facilitating loans with APR above 24% starting October 1st. On the other hand, in response to the rising industry-wide risk volatility, we have been proactively controlling the pace of low volume growth. As a result, we expect moderate low volume decline in the fourth quarter. At the same time, we expect industry-wide risk fluctuation to gradually stabilize towards the end of the quarter. Therefore, along with the industry, our risk indicators will also fluctuate in the fourth quarter which will push up the credit costs. Affected by these factors, the Q4 net profit will see a sequential decline. To put things in perspective, it is worth mentioning that in the first nine months of this year, we have achieved a net profit of $1.5 billion, representing a year-over-year growth of 98% in line with our previous guidance. Although the fourth quarter net profit will see some decline related to the regulation, the company's full-year 2025 net profit is still expected to achieve significant year-over-year growth. Looking ahead to 2026, due to the industry and regulatory uncertainties, it is really hard to pin down a clear guidance at this stage. We are under the same pressure as other leading players. For the same reason, the performance in Q4 cannot be simply taken as a base for predicting 2026 profitability. However, I would like to discuss several key factors that may impact the net profit of 2026 for your reference. One, the overall pricing impact. After the implementation of the new regulations, the interest rate on new loans are all below 24%. As this portion of the new loans accumulate over time, the average pricing on the outstanding loan book will gradually drop below 24%. So the decline in pricing will put some pressure on the net profit. Two, risk stabilization. When the credit risk in this cycle bottoms out, when this bottoms out, we're ready to determine when the volume growth and the profitability pick up. So customers with interest rate within 24% exhibit more stable credit risk profiles. Therefore, their credit costs will be lower, which will help offset the decline in pricing to some extent. Three, funding costs trending down. The temporary tightness in the funding supply in Q3, Q4 will gradually ease as the regulations settle in. Therefore, funding costs are expected to follow a downward trend. At the same time, with better quality customers who carry lower risks, funding costs will also be lower. Four, the synergies from ecosystem business, i.e. e-commerce. During this period, our e-commerce business has achieved steady growth. enhancing the company's profitability. Our offline inclusive finance and tech empowerment businesses have maintained stable risk performance despite challenging market conditions, enhancing the company's operational resilience. So the continued growth of the company's ecosystem business will further strengthen our operational resilience and boost the overall profitability. So in conclusion, Q4 will be a temporary dip in our business and financial numbers due to the regulation. When the recovery will resume depends on the industry risk stabilization and further regulatory certainty. However, given the unique ecosystem business and the past three years turnaround effort, we are confident that we are better positioned than many other players. And we will be the first ones to recover when things are more settled, maybe in the early part of next year also.

That's the first question.

Okay. It shows the firmness of the company's prospects for the year, which is close to the original plan. It also proves that the company continues to improve the ability and sincerity of shareholder feedback. If this repurchase plan is fully executed, plus 30% of the shareholding rate, the overall shareholder feedback level of the company will increase to the front of the industry. The company has also been paying attention to shareholder feedback. We have been actively executing the repurchase program.

Both the company's share repurchase program and their personal share repurchase plan have been more than halfway completed, which is well ahead of the original one-year schedule. fully demonstrates the management's strong confidence in the company's outlook and reaffirms our commitment and capability to enhance shareholders' returns. The company's repurchase program is fully executed alongside a dividend payout ratio of 30%. Our total shareholder returns rise above the industry average. The company has always attached high importance on shareholder returns. Once the current share repurchase program is fully executed, we will explore more initiatives to further enhance value for shareholders.

Thank you.

Back to management for closing comments. Thank you.

Thank you. This conference is now concluded. Thank you for joining today's call. If you have any more questions, please do not hesitate to contact us. Thanks again.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Thank you. Thank you. Bye. Thank you. you Good day and thank you for standing by. Welcome to the Lexin third quarter 2025 earnings conference call. At this time all participants are in a 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 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Will Tan. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to our third quarter 2025 earnings conference call. Our results were released earlier today and are currently available on our IR website. Today, you will hear from our chairman and CEO, Mr. J. Wenjie Xiao, who will provide an update on our overall performance and strategies of our business. Our CIO, Mr. Arvind Zangwen Chow, will then provide more details on our risk management initiatives and updates. Lastly, our CFO, Mr. James Zeng, will discuss our financial performance. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements. Last, please note that all figures are presented in Renminbi terms, and all comparisons are made on a quarter-over-quarter basis, unless otherwise stated. Please kindly note Jay and Alvin will give their whole remarks in Chinese first then the English version will be delivered by Jay's and Arvind's AI-based voices. With that, I'm now pleased to turn over the call to Mr. Jay Wenjiexiao, Chairman and CEO of LeXin. Please.

Hello, everyone. I'm very happy to share with you the performance of our Q3 in 2025. In the third quarter, we completed the adjustment and deployment of the business in accordance with the new rules. This adjustment was carried out smoothly. The key is that the company's continuous risk capability in the past few years and the unique flexibility of the ecological business fully reflect our long-term development concept and the ability to cope with the cycle effectively reduced the impact of the new rules on the company. In the context of the fluctuating cycle of the industry, the company has still achieved stable performance in the third quarter. The actual transaction amount is 508.9 billion yuan and the revenue is 34.2 billion yuan. The net profit is 5.2 billion yuan. The net profit is 2%. The net profit is 68%. The net profit is 2.01%. The net profit is 9BP. The net profit is 92BP. We believe that as the new rule falls, the industry will enter the threshold and will further improve. The market is moving in a healthier and more sustainable direction. Our unique ecological business advantage and co-operative ability can be used as the center of the service system, which will make the company in the future in a favorable position. We believe that the long-term investment in the underlying energy and ecological business in the past will gradually turn into a差異化的競爭優勢。公司一直高度重視股東回報。我們此前宣布下半年分紅比例將由25%提升至30%並積極推進股份回購與增持計劃。 As of now, the related repurchase and real-time progress has exceeded half. Next, I would like to introduce some key work in the second half of the year. First, we have strengthened the recognition of user classification and early response to industry risks. In the third quarter, based on industry risk trends, we have strengthened the recognition and active management of user classification, effectively balancing business scale and capital risks. In the first quarter, through the historical cycle model, we have targeted and identified a group of users who are affected by the cycle and are unstable, and made corresponding risk strategy adjustments to carry out a more detailed division of the customer group, and implement a decentralized interest rate and price. In the third quarter, we added assets to achieve the balance of risk and profit. Secondly, we improved the product experience with the user as the center. In the third quarter, we promoted the upgrade of product and management capabilities, users care about the system, build and achieve the image. Financially satisfy the financial service needs of different users. In the quarter, our joint financial institutions optimize the funding supply, expand the coverage of flexible back-and-forth and other flexible solutions, and use customized Re-Offer to increase user satisfaction and annuality. Effectively improve user flow, good user ratio and contribution, The third step is to speed up the AI technology deployment. The third step is to speed up the AI technology deployment. The third step is to speed up the AI technology deployment. The third step is to speed up the AI technology deployment. The third step is to speed up the AI technology deployment. The third step is to speed up the AI technology deployment. In the third quarter, the company's unique business ecosystem and each segment co-constructed a more resilient ecosystem. Personal consumption is now facing high-quality users to optimize service experience, significantly enhancing user year-on-year. Separate retail, deep-rooted young customer groups and core consumer scenarios continue to optimize supply systems. Life consumption of raw materials in the quarter is increased by 58.5% compared to the exchange rate, which is also increased by 133.8%. In the past, double 11 commercial transaction rates have increased by 38%. The cost of living and consumer goods has increased by 237%. The land exchange business has grown in the low-end market, focusing on small and medium-sized enterprises. The quality of assets has been stable and has verified the value of the low-end market. We will continue to increase the investment in the offline market and continue to improve the offline operating system. The number of overseas businesses has also achieved a steady growth in scale. The company has always maintained the service concept of the user as the center, and the consumer rights protection is the core competitive advantage. In the third quarter, we will strengthen the consumer rights protection system in the system, products, and services. At the system level, we will develop a sustainable strategy for consumer protection, promote consumer protection through a variety of mechanisms, and facilitate the transmission of all business links to actively respond to user needs in the product and service areas. Using online customer service, AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service AI customer service Thank you.

Hi, everyone. Thanks for joining us today for our third quarter 2025 earnings call. In the third quarter, we efficiently completed our business adjustments to comply with the new regulation. The smooth transition was mainly attributed to the company's strong risk management capabilities that we've been enhancing over recent years and the resilience of our business ecosystem. This demonstrates our long-term oriented development philosophy and our strong resilience in navigating business cycles, effectively mitigating the impact of industry fluctuations on the company. Against the backdrop of industry fluctuations, we delivered solid performance in the third quarter. Loan volume reached 50.89 billion RMB. Revenue reached 3.42 billion RMB. Net profit was 521 million RMB, up 2% quarter-over-quarter and 68% year-over-year. Net profit take rate stood at 2.01%, increasing by 9 basis points quarter-over-quarter and 92 basis points year-over-year. We believe that the implementation of the new regulations will further raise industry entry barriers and drive the industry toward a healthier and more orderly development. Our unique advantages in business ecosystem synergy and customer-centric operations system will position us more favorably in the future. We are confident that our long-term investment in the fundamental capabilities and the ecosystem businesses will gradually turn into our distinctive and powerful advantages. We have always placed great emphasis on shareholder returns. As we announced previously, the dividend payout ratio was increased from 25% to 30% of the net profit starting from the second half of this year, In addition to the cash dividend, the company share repurchase plan and my personal share purchase plan are progressing well with each initiative now more than halfway completed. Next, I will walk you through the key initiatives we have made in the third quarter. First, we strengthened user categorization and risk identification and took early actions to address the industry risk In light of the industry risk trends in the third quarter, we enhanced user categorization and risk identification and took proactive measures to manage risk, effectively balancing business volume and asset risk. During the quarter, leveraging our historical cycle models, we systematically phased out users highly sensitive to cyclical impacts and exhibiting instability and adjusted our risk management strategy accordingly. We further refined our customer segmentation and implemented tailored pricing strategies accordingly. As a result, new assets in the third quarter maintained a balanced risk return profile Second, we enhanced user experience by adopting a customer-centric approach. In the third quarter, we upgraded our products and management capabilities, and the development of our customer care system has yielded positive results. This allowed us to fulfill the financial and service needs of different customer segments. During the quarter, we collaborated with financial institutions to optimize funding supply and expanded the coverage of flexible repayment solutions such as flexible borrowing and repayment and bullet loans. In addition, we provided customized re-offers to improve customer satisfaction and loyalty, effectively enhancing user retention. As a result, the proportion and contribution of high-quality customer continued to grow. Third, we accelerated our AI technology deployment, leveraged integrated AI agents to drive digital transformation. In the third quarter, we further advanced our AI initiatives. Our self-developed large model, Lexin GPT, has incorporated multidimensional data, providing AI agents with stronger decision-making capabilities under different scenarios. This has improved the accuracy of user request identification by over 20% and significantly enhanced request solution efficiency. During the quarter, AI Agent has been applied in multiple areas, such as risk management, credit granting, and repayment, and will continue to expand to other areas. Belong to the industry leading integrated AI agent has facilitated data connectivity and task coordination in different scenarios, thereby creating stronger business synergies. We have laid a solid foundation for AI driven digital transformation, providing robust technological support for improving efficiency, revenue growth, and user experience optimization. In the third quarter, different business units within our ecosystem worked together to create synergy and collectively reinforce the resilience of our ecosystem. Online consumer finance business targets at high-quality customers and focused on optimizing service experience, significantly enhancing user engagement and retention. Installment e-commerce business targets at young customers in key consumption scenarios. We continue to refine the supply chain system of our e-commerce platform, GMV, for essential daily consumer goods, grew 58.5% quarter over quarter and 133.8% year over year. During the recent Tingles Day shopping festival, the total GMV of e-commerce platform increased by 38% year over year, with transaction volume for essential daily consumer goods surging by 237% year-over-year. Offline inclusive finance focuses on small and micro business owners in lower tier markets. The asset quality of inclusive finance business remained stable in the quarter, validating the value of the lower tier markets. We will continue to increase investment in offline markets and further improve its operations. Both tech empowerment business and overseas business achieved steady growth in volume during the quarter. The company has always adhered to a user-centric service philosophy, positioning consumer rights protection as a core competitive advantage. In the third quarter, we comprehensively strengthened our consumer rights protection system across multiple dimensions, including policies, products, and services. In terms of policies, we integrated consumer rights protection into our sustainable development strategy, implementing measures across all business processes through various mechanisms. In terms of products and services, we actively responded to user needs by leveraging technological means such as online customer service center and AI-empowered customer support to improve service efficiency and quality. We also proactively gathered user feedback for data analytics, aiming to enhance user satisfaction at the source. In response to frequent violations of consumer rights by illegal activities, we actively followed regulatory requirements and collaborated with the industry to combat such activities, which has achieved positive results. With the new regulations taking effect in the fourth quarter, the industry is now on a healthier and more sustainable path. Having completed our business adjustments, we are well positioned to capture opportunities arising from the industry adjustments by increasing investment in ecosystem businesses and drive steady growth. Looking ahead, we are confident in achieving stable performance growth. Next. I'll hand over the floor to our CRO, Arvind. Thanks.

Thank you. Next, I will report on the work and progress of the three-segment risk management. The uncertainty of the three-segment new generation industry is still relatively high. With the arrival of new generation regulations, the mobility of the industry is increasingly tight in the system. the impact and impact on the scale and risk of the industry. Due to this impact, the return rate and recovery rate of all assets in the company have increased slightly. As we have been gradually strengthening control and dealing with risk management from the second quarter, the overall risk increase is relatively controllable. In the third quarter, we have further strengthened the management of the growth group at the end, Through the process of clearing out and lowering the amount of money, we can ensure that new funds can be released and the business is in line with the new rules. On the other hand, we continue to increase the quality of customer management and promote the increase in the quality of assets. Next, I would like to introduce the key risk management mistakes we made in the third quarter. First, in the third quarter, we further strengthened the process of digging into high-risk customers. In the model, we increased the digging of key data such as multi-billion debt, price bias, income quality, and so on, to strengthen the identification of sensitive customers with risk fluctuations in the industry. At the same time, we combined the latest risk trends to continue to model the client's modern behavior and better capture the recent customers with abnormal modern behavior, which has further increased the recognition of high-risk customers. In the strategy action, we continue to strengthen the risk management of the risk to the end-growth type of customer, for high debt, high capital, high risk people to be reduced, for weak long-term debt ability, external liquidity collection, people to be reduced, Secondly, in the third quarter, we continue to improve the management ability of high-quality customers. On the model, for high-quality customers, we upgraded the demand model, response model, and loss model, etc. Multi-format model, focus on the method and degree and price matching, improve the quality of modern service for high-quality customers, strengthen the center construction of customers, and focus on upgrading the customer experience of high-quality customers. The price continues to maintain competitiveness according to the flexible configuration of different products. The focus is on low-income and low-income customers to recall and recover. In the way of repayment, it is provided to the high-quality customer group in a random way. The flexible plan of the pre and post-pandemic at the same time strengthens the one-to-one service of the high-quality customer group Provide customized reoffer to continue to improve the satisfaction and age of customers Under this series of strategic optimization, the sales business of the third quarter has maintained a large-scale growth in the high-quality crowd Third, in the field of e-commerce, we continue to improve the risk management system and further strengthen the risk recognition ability In the third quarter, in the face of the uncertainty of the external environment, we actively control the pace of development, balance the scale and risks, and achieve stable and sustainable business development. In terms of risk management and control, in the third quarter, we actively shrink and control the growth scale of sensitive customers in high-risk and environmental conditions. At the same time, we provide specialized prices for high-quality products such as 3C digital and other high-quality products to promote the growth of e-commerce and high-quality GMOs. In the fourth quarter, we will carry out dynamic strategic adjustments according to the risk form of the industry to ensure that the business achieves stable and healthy sustainable development. Fourth, in the field of smart wind control tool construction, we have made significant progress in the construction of a new generation of smart wind control systems. The financial decision-making and control of the smart body completed the development of the top line and the control of the smart body achieved from the selection of the population to the classification of the population and the strategy of generation to the evaluation of the effect. The whole process of automation and intelligentization achieved the transformation from quantum automation to AI automation, resulting in significant improvements in the efficiency and effect of financial decision-making. In the fourth quarter, the impact and impact of new regulations on the mobility and risk of the industry is expected to continue. The scale and risk estimate of this quarter will continue to be suppressed in the first half of the quarter, and the second half of the quarter is expected to be gradually eased and restored. In the fourth quarter, we will continue to strengthen the recognition of risk and increase the management of risk customers to ensure that the risk fluctuation is controllable and business management is stable.

Thanks, Jay. Next, I will provide a review of our key initiatives and achievements in risk management for the third quarter. In the third quarter, industry uncertainty remained elevated. With the new regulations officially took effect in October, industry-wide liquidity tightened further on a month-over-month basis in the fourth quarter. Impacted by the broader industry trends, our day-one delinquency ratio and the collection rate of loan balance saw a minor increase. thanks to the proactive measures we've taken to enhance risk control starting from the second quarter the overall risk volatility remained manageable in response to the complex industry environment we have further tightened risk controls over high-risk customers by phasing out risky accounts and reducing credit lines these measures have helped keep new loan risks manageable and ensure full compliance with regulatory requirements Meanwhile, we doubled down on serving prime customers to promote the growth of high-quality assets. Let me introduce the key initiatives we've taken in the third quarter. First, during the third quarter, we further enhanced risk control measures for high-risk customers. From credit model perspective, we enhanced data mining on key variables, such as multiple borrowing, pricing preference, and income verification. to enhance identification of customers sensitive to industry fluctuations. In the meantime, by integrating the latest risk trends and optimizing our customer credit behavior timeseries model, we were able to identify anomalous signals accurately and swiftly, further enhancing the identification of high-risk customers. From risk strategies perspective, we continued to intensify management of high-risk assets. We systematically phased out customers with excessive shared debt exposure, multiple borrowings and high-risk profiles, and reduced credit line of borrowers with weak repayment capacity or those vulnerable to liquidity tightening. Second, in the third quarter, we continued to enhance our operational capabilities tailored to prime customers. In terms of model and enhancement, we upgraded multi-dimensional models including demand, response, and churn models and made targeted investments in our outreach approach, credit line granting, and pricing alignment to ensure service quality. Also, we have reinforced our customer-centric approach to enhance the customer experience for prime customers. In terms of credit line, we continue to maintain our offer competitiveness. In terms of pricing, we implemented product-based pricing to reactivate dormant and churned customers. In terms of repayment methods, we introduced tailored solutions like flexible borrowing and repayment and bullet loans for prime customers. Furthermore, we enhanced one-on-one services for prime customers by providing customized re-offers, further boosting customer satisfaction and loyalty. Thanks to these initiatives, loan volumes from prime customer segments achieved month-on-month growth in the third quarter. Third, in the installment e-commerce business, our risk management system has been gradually refined with further strengthened risk identification capabilities. In the third quarter, in light of external uncertainties, we proactively adjusted the growth pace of our installment e-commerce business. to strike a balance between scale and risk, and to achieve sustainable business development. We've tightened the risk criteria of our installment e-commerce business, proactively scaling back exposure to high-risk and sensitive customers. At the same time, we've selectively provided support for categories such as high-quality consumer electronics by allocating dedicated credit lines, which help drive e-commerce GMV growth. Looking ahead to the fourth quarter, we will dynamically adjust our strategies based on the industry risk trends to ensure steady, healthy, and sustainable business growth. Last but not the least, in the development of intelligent risk control tools, we've achieved remarkable progress in building the next generation smart risk control system. The risk control intelligent agent for credit decision making, empowered by larger scale models, has been launched. It enables full process automation and intelligence from customer targeting, segmentation, and strategy formulation to results evaluation, marking a paradigm shift from quantitative driven to AI driven risk management. This has significantly enhanced the efficiency and effectiveness of credit decision making. In the fourth quarter, the impact of the new regulation is expected to persist, characterized by industry-wide liquidity tightening and risk fluctuations. As such, business volume and risk performance are expected to remain under pressure in the first half of the fourth quarter and may gradually stabilize and improve in the second half. In response, we will continue to strengthen risk identification and enhance management of high-risk assets in order to ensure risk fluctuations under control, laying a solid foundation for steady and sustainable business operations.

Thank you, Sovereign. I will now provide a detailed overview of our third quarter financial results. Please note that all figures are presented in women B terms. and all comparisons are made on a quarter-over-quarter basis unless otherwise stated. As Jane mentioned earlier, to proactively adapt to the evolving regulatory environment, we initiated a business adjustment in the third quarter. While this adaptation temporarily led to declines in loan volumes and overall pricing, we leveraged our business ecosystem to effectively mitigate these impacts. Despite ongoing adjustments and industry credit risk volatility related to the new policy, we delivered steady net profit growth in the third quarter. Our net income grew by 2% quarter-by-quarter and 68% year-over-year to reach $521 million, a record high in the last 15 quarters. Our net income margin increased to 15 from 14% last quarter. Our net income take rate increased nine basis points to reach 2.01%. We have realized the net income take rate goal of achieving over 2% by year end ahead of the original schedule, as we communicated earlier this year. This underscores the company's resolve and improved ability to execute on our business objectives. Now, let's take a holistic review of our third quarter financial results. First, net revenue of the credit business, which is derived by adding up credit facilitation service income and tech empowerment service income, net of credit costs, including provisions and fair value changes, and the funding costs, reached $1.9 billion, a 3% increase or $59 million decrease quarter over quarter. The decrease was primarily attributable to an increase in credit costs of approximately $40 million, reflecting continuously strengthened provisioning. Second, net revenue of the e-commerce business defined by e-commerce revenue net of cost of inventory sold increased by 14%, or $14 million to $14 million. $111 million. So the total net revenue summing the credit and e-commerce business added up to $2.1 billion, a 2% or $46 million decrease quarter over quarter. Operating expenses, including sales and marketing, R&D, G&A, processing and serving costs, decreased by 4% or $57 million to $1.4 billion. Tax and others increased by 1% for $1.8 million to $162 million. The total expenses added up to $1.5 billion, decreased by 3% for $56 million. By deducting total expenses of $1.5 billion from the total net revenue of $2.1 billion, we get net income of $521 million, an increase of 2%, or $10 million quarter over quarter. Given the backdrop of the pending regulation and the associated industry credit risk volatility, it was not an easy task to achieve this record high profit in the third quarter. During the net profit growth, driving this is the resilience of our business model and the three key factors, one, Our operational agility demonstrated by smooth transitioning between the capital light and capital heavy models. Two, our installment e-commerce steady growth and the profit contribution. Three, our solid financial position underpinned by the adequate and prudent provisioning. Next, I'm going to elaborate a little bit more on these three highlights. First, our operational agility. demonstrated by smooth transitions between the capital light and the capital heavy model. In the third quarter, in order to meet the new regulatory requirements, we started to transition our business by gradually reducing capital light business volume. By October 1st, we've completely stopped facilitating loans with APRs above 24%, and we're fully compliant with the new rules. As a result, in Q3, the mix of capitalized loan volume further reduced from 20 percent to 13 percent, while the ICP business only accounted for 8.5 percent of the new loans. As a new regulatory framework, we continue to serve a selected group of long-tail clients using the capital-heavy model. As such, the mix of capital-heavy loan volume increased from 80 percent to 87 percent of the total new loan volume, largely offsetting the decline of ICP volume. Thanks to the smooth transitions between the two models, total loan volume only saw a modest decrease of 3.7 percent compared to the second quarter. As ICP bins primarily serve long-tail customers, it naturally bears higher pricing. Therefore, the wind down of ICP bins had a negative impact on our overall pricing, which was partially offset by the lower funding costs associated with the capital-heavy model. Driven by the above factors, our tech empowerment service income, which represents income from capital-light model and value-added services, decreased by 45% or $374 million, while our credit facilitation service income, which mainly consists of income from capital heavy model, increased by 15.3%, or $347 million. As a result, revenue from credit business only decreased by 1%, or $27 million, despite a loan volume decrease of 3.7% in the third quarter. demonstrating our operational agility to navigate regulatory changes. Second, steady growth of e-commerce business and its growing contribution in the third quarter. Despite strong demand driven by limited credit availability for long-term customer segments since second quarter, we observed an industry-wide risk volatility in the third and fourth quarter in response. we prudently slowed down the growth of e-commerce loan volume as we prioritized quality rather than volume of the assets. As a result, our e-commerce loan volume grew by 15% sequentially to $2.3 billion. For the upcoming fourth quarter, we'll continue to keep a close eye on the asset risk performance and strike a balance between the volume growth and asset quality. As a reminder, if you look at the e-commerce revenue in our P&L, it recorded a decline of 29% to $345 million, despite the e-commerce GMB growth of 15%. This is caused by the accounting treatment difference due to the continued volume shift to third-party sellers from company direct sourcing model. For third-party sellers, only platform service fees is recognized as revenue rather than the entire transaction amount and the direct sourcing model. In the third quarter, third-party seller model accounted for 85% of e-commerce GNV compared to 75% from last quarter. As mentioned earlier, our e-commerce business generates two profit streams, namely the gross profits from selling merchandise and the interest income from loan installment services. In the third quarter, the gross profit reached $111 million, representing an increase of 14%. The growth in our e-commerce business gross profit has not only enhanced our overall profitability, but also expanded our targeted long-tail user segments, thereby further mitigating the impact of our business model transition. Going forward, we will continue to grow our e-commerce operations prudently and fully leverage its unique advantages and the new regulatory environment. Third, we continue to maintain a robust financial position characterized by adequate and prudent provisioning. Our total provisions saw an increase while the overall asset quality remained healthy, evidenced by by a 15 basis point improvement of 90-day delinquency ratio to 3.0 percent. However, as the industry transitioned towards the new regulatory framework, we observed an increased volatility in early risk indicators starting from September. While we consider the fluctuations to be temporary, the whole industry may need some time to fully absorb the impacts, and we expect the industry-wide risk volatility to continue into the fourth quarter. In response, we have sustained our strategy of setting aside ample provisions to ensure a strong buffer during the transition period. In the third quarter, our credit costs, including three provision line items and fair value changes of financial guarantee derivatives rose 4% or $40 million to $1.1 billion. Due to the net accounting policy we've adopted for the item, change in fair value of financial guarantee derivatives and loans at a fair value, the actual full provision we set was partially offset by the guaranteed income and recorded as net amount in our P&L. As such, the reported item only represents part of the actual full provision. If excluding the impact of the net accounting policy And in recovering the gross provision, the full provision ratio of new assets calculated by dividing gross provision by capital-heavy loan volume, we increased the sixth basis point from the second quarter to 6.97%, well above the historical highs of vintage charge-offs. As Arvind mentioned, we'll continue to closely monitor asset performance and utilize various post-lending management tools to strengthen collection, while maintaining ample financial buffer to navigate through the credit cycle. As a summary, the above three highlights impacted the net revenue side of the income statement. In short, total revenue reached 3.4 billion, representing a decrease of 5% quarter-over-quarter. This was mainly due to a 29% decrease in e-commerce platform service income which was caused by ongoing shift in the e-commerce business model and the corresponding net versus gross adjustment in the accounting treatment. On the cost and expenses side, total operating expenses, which include processing and servicing cost, sales and marketing expenses, R&D, and the G&A expenses, reduced by 4% to $1.4 billion, reflecting reprocessing of user acquisition costs during the uncertain times of business transition. For balance sheet items, as of September 30th, our cash position, which includes cash, cash equivalent, and restricted cash, was approximately $4.3 billion. Shareholders' equity remained solid at about $11.8 billion. Looking ahead, as Q4 marks the first quarter after the new regulation framework came into force, we expect industry-wide risk fluctuations to remain for some time before the industry enters into a new normal stage. In light of this, we'll continue to adopt a prudent operational approach, prioritizing regulatory compliance and asset quality over business expansion. For the fourth quarter, we expect to see moderate quarter-over-quarter decline in loan volume. Impacted by the ongoing credit risk volatility, net income and the net income take rate will see a sequential decrease. We expect to see more clarity and certainty of credit risks and the profit outlook maybe at the close of the fourth quarter. To conclude, I would like to reaffirm our commitment to enhancing shareholder value. In addition to our semi-annual dividend, will continue to execute our share buyback program. As of October, we have repurchased 25 million worth of ADS alongside the CEO's personal purchase of over 5 million USD worth of shares. On the foundation of current shareholders' return policy, we will continue to evaluate opportunities and explore different ways to ensure we deliver optimal value to our shareholders. That's all our prepared remarks for today. Operator, we are now ready to take questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. We kindly ask participants to please translate your questions into English and to please mute yourselves after finishing your questions. Please stand by while we compile the Q&A roster. Thank you. We will now take our first question. First question today is from Alex Yee from UBS. Please go ahead.

. So I will translate for my question. The first one is regarding the new regulation on the loan presentation industry, which has come into effect since October 1st. Could you share with us more color on what impact does it have on the business operations? Second question is on the management share more color on the development strategy and outlook of the e-commerce business.

Okay, let me answer these two questions.

In the third quarter, the company took the initiative to adjust some of our entire business to meet the requirements of the new rules. On October 1, we have actively suspended more than 24% of all businesses to ensure that the entire business was reconfigured. Currently, all new loan interest rates in the company are within 24. After moving to business within 24, we actively gave up some high-risk customers. It has a certain impact on the scale and pricing. After the new rule, due to the entire collection of funds, the entire industry risk has fluctuated. From September and October, most platforms have stopped pricing more than 24. China China China China China It is still relatively effective. At present, we have seen a sign of steady and good turn in the entire asset risk of new and existing assets. In the long term, Zhudai Xinggui will promote the industry to a new stage of high-quality development that can go to the standard, healthy and sustainable. As the frame of the building is gradually clear, the market resources will also focus on the head-to-head regulatory platform that will further strengthen the wind control capability and operate stably. . . . . To advance the gradual transformation and enter the white list of all major cooperating financial institutions So now our general meeting business is also deep into the low-end layer High-efficiency service to the general meeting small and micro customers In the current environment We see the risk performance of the general meeting business is still very stable Also verified the whole value of the low-end market Our branch retail business is deeply rooted in young customer groups and consumer scenarios Use the new model to serve the scenario This is a translation for Jay's remarks.

In the first quarter, we have actively made business adjustments to comply with the new regulation. By October 1st, we have stopped underwriting loans with APR above 24% and ensured business compliance. All new loans issued by the company carry an APR at or below 24%. After shifting to business with pricing below 24%, we gave up higher risk customers, which have some impacts on both business volume and average loan pricing. Following the implementation of the new regulation, industry-wide rates have increased due to tighter funding. Starting in September and October, most platforms stopped offering products with APR above 24%, leading to significant short-term volatilities in risk. Although the overall impacts remain manageable, the industry will need some time to fully digest the associated credit risk. For Le Xin, as we have taken effective measures Our risk performance for new loans or existing loan portfolios have shown signs of stabilization and improvement now, validating the effectiveness of our risk management system. In the long run, the new regulation will pave the way for a more compliant, healthy, and sustainable stage of high-quality development in industry. When the regulatory framework becomes clearer, market resources will be increasingly concentrated towards leading compliance practices, strong risk control capabilities, and stable operations. Slushing has always adhered to a customer-centric business philosophy, prioritizing compliance operations as a quality and prudent development. Furthermore, it's worth noting that Leshing's diversified business ecosystem has demonstrated strong resilience in adapting to the new regulations. More specifically, our online consumer finance business is progressing steadily and has been included in the wide list of all major financial partners, paving the way for future development. Our offline inclusive finance business focuses on small and micro business owners in lower-tier markets. Its asset quality remains stable in the quarter, validating the value of the lower-tier markets. The installment e-commerce business targets at young segments in key consumption scenarios, fulfilling the consumption and financing demands of long-tail customer segments through innovative models. Both tech empowerment and overseas businesses achieve stable volume terms in the quarter. Under the new regulatory environment, the machine will gradually unlock the unique competitive advantages of its business ecosystem.

Okay. E-commerce is an important part of Lexin's ecological business. E-commerce is also an important part It can also help us further expand our entire business boundary. In terms of strategic development, over the past year, we have been continuously upgrading our entire e-commerce platform. Especially in the supply chain, we have introduced many brands and merchants, and are gradually enriching our entire supply chain to meet the consumer demand. In the third quarter, the supply and demand of living consumption In fact, we have seen a growth of 58.5%, which is more than 100% of the same. In the past Double 11, the previous presentation also talked about that our entire e-commerce transaction volume has still increased significantly. In fact, our independent e-commerce platform, we still have an independent risk management system. We have the ability to monitor quality and risk balance. In the future, we will continue to expand our entire product line. In terms of the overall pace of development, we have always been more cautious and prioritized. In the third and fourth seasons, we have seen the risks of the industry fluctuate. So in the third season, we still actively control the growth rate of the entire e-commerce industry. In the short term, we still need time to digest the risks of the industry. We will continue to control the growth rate of the entire e-commerce industry.

As a crucial component of Lexin's ecosystem, our installment e-commerce business will continue to play a key role in customer acquisition, engagement, and expanding our operational boundaries. In terms of business development strategy, over the past year, we have comprehensively upgraded the e-commerce platform supply chain, introduced branded merchants from various industries, and expanded to meet users' essential daily consumption needs. In the third quarter, The transaction volume of essential lifestyle product categories increased by 58.5% quarter-over-quarter and 133.8% year-over-year. During the recent 2011 shopping festival, the e-commerce GMB also experienced significant growth. Meanwhile, leveraging the e-commerce platform's independent risk management system is able to balance business quality with scale. In the future, we will continue to optimize and expand our product category on our platform to meet users' consumption and financial needs while effectively managing risk, further expanding our operational boundaries. In terms of development pace, we have consistently adhered to the principle of prudent operation and prioritized asset quality. The third and fourth courses, as we observe increased industry-wide risk fluctuations due to actively moderated post-haste of our installed equipment. In the near term, given that industry rates do require time to stabilize, we will continue to exercise caution in growing our installment e-commerce business. When industry-wide credit rates show signs of stabilization, we will gradually resume the growth pace in order to capture the next phase of rapid expansion opportunities.

Thank you. We will now take the next question. And this is from Judy Zhang from Citi. Please go ahead.

Okay. Let me translate my question. So during the transitional period before and after the implementation of the new regulation, the industry credit risk has already fluctuated significantly. And as the companies updated the risk control system, How are we managing this round of risk cycle and what improvements have been made in the risk management system? Thank you.

Okay. After Xinggui was launched, based on past experience, we expect Xinggui's landing and implementation will have a greater impact on the liquidity and risk of the entire industry. Therefore, we actively take effective measures from the second quarter to deal with and respond and make changes and adjustments to the business. In terms of risk response, we actively save this identification level to identify customers who are affected by this industry impact impact and fluidity tightening effect. high income, high debt, low income, and low work stability, and then borrow high-priced and borrow high-priced customers to strengthen the identification of these customers. Then after identification, we use our intelligent tools to conduct an automatic risk inspection, and then accelerate this kind of withdrawal and disposal. And then reduce the proportion and weight of this customer in our new add-ons. Effectively respond to the risk of these customers after the whole cycle of living in the new rules has fallen. And then control the risk of stock and new asset fluctuations. At the same time, at this stage, we increase the management of high-quality customers. by increasing the competitive price and optimizing the repayment deadline and repayment method to promote a growth in the value of money and adjust the asset structure to effectively improve our performance in this risk period in the two aspects of shareholder and shareholder. Then, by taking effective measures as early as possible, We actually observed that the entire risk performance is relatively stable in this risk period. The inflow rate of all assets, our Q3 compared to Q2, rose by about 5BP. Our new income in Q3 compared to Q2 is also expected to be able to control about 5BP. In general, the impact and impact of the risk of stock assets or new assets is relatively controllable compared to the industry. Q4 is the first quarter of the new rule. The overall risk and scale and profit are all a relatively large quarter. The expected pressure and challenges are still relatively obvious. From our latest risk performance, In October and November, the inflow rate of all assets, in which October was affected by the double impact of the first month of the new rule and the long holiday period of the National Day, the inflow rate reached a high point. Then from the latest data in November, the inflow rate in November is compared to the inflow rate in October. At the same time, there has been a steady decline and a gradual decline. At the same time, we added a new loan in October. In the first month of the new rule, we have further strengthened and tightened it. Therefore, we estimate that the FPD30 of the new loan in October will be stable even more than in September. So overall, in this round of risk, impact and impact, we will take action as soon as possible, and then take a steady business. After they roll out of the new regulation, we are anticipating

We anticipated that it will affect the industry's liquidity supply. This is based on the experience that we accumulated across multiple cycles. This would, in turn, weigh on the industry's credit rate. Therefore, starting from the second quarter, we made adjustments in our risk identification strategy and also made business adjustments. We proactively identified customers who were vulnerable to Titan industry liquidity based on factors such as high multi-borrowing, high debt exposure, low income, unstable employment, and high exposure to high pricing credit. Based on this re-identification, we utilized automated re-scanning robot, clearance robot, and credit line robot. to improve the efficiency and effectiveness of account clearing and credit line reduction. This allowed us to respond early in the risk cycle and control the risk fluctuations for both new loans and existing loan portfolios. At the same time, by enhancing pricing competitiveness, optimizing loan tenure and repayment experiences, we've strengthened engagement with prime customers, promoted the growth of quality assets, adjusted asset structure and improve resilience against risk cycles. So in summary, we not only control the formation of delinquent assets, but also try to increase the volume and mix of high-quality assets. Thanks to the proactive measures that we have taken, the overall risk fluctuation for both new and existing loans remain under control in the third quarter. For the overall loan book, day one delinquency ratio increased by around five basis points compared to the second quarter. For new loans, the magnitude of FPD30 increase is expected to be 5%. Q4 is the first quarter after implementation of the new regulation, so it's expected to be more challenging, not only in risk performance, but also in loan volume and also profit. For the existing loan portfolio based on the latest performance, day one delinquency ratio peaked in October due to the combined impact of the new regulation implementation and the long National Day holiday, and then exhibited month-on-month improvement in November, showing signs of stabilization. For new loans, as we further tighten credit criteria in October, we expect of new loans in October to improve compared to the peak in September. So overall, moving into the month of October, the risk performance of existing loans and new loans, both show signs of stabilization.

Thank you. We'll now take the next question. This is from Dongping Zhu from CICC. Please go ahead.

And let me translate my questions and I have two questions. First, what is the outlook and guidance for the fourth quarter and full year to 2026 performance?

And second question is, as the company has utilized over half of share repurchase quota, what are the plans for future shareholders' return? Thank you.

Okay. I guess I will take the first question and ask Jay to take the second.

The first one, the fourth quarter is really the first four quarter following the implementation of the new regulation. Our results will be negatively impacted to the similar extent as other leading players in the industry. On the one hand, we see facilitating loans with APR above 24% starting October 1st. On the other hand, in response to the rising industry-wide risk volatility, we have been proactively controlling the pace of low volume growth. As a result, we expect moderate low volume decline in the fourth quarter. At the same time, we expect industry-wide risk fluctuation to gradually stabilize towards the end of the quarter. Therefore, along with the industry, our risk indicators will also fluctuate in the fourth quarter which will push up the credit costs. Affected by these factors, the Q4 net profit will see a sequential decline. To put things in perspective, it is worth mentioning that in the first nine months of this year, we have achieved a net profit of $1.5 billion, representing a year-over-year growth of 98% in line with our previous guidance. Although the fourth quarter net profit will see some decline related to the regulation, the company's full-year 2025 net profit is still expected to achieve significant year-over-year growth. Looking ahead to 2026, due to the industry and regulatory uncertainties, it is really hard to pin down a clear guidance at this stage. We are under the same pressure as other leading players. For the same reason, the performance in Q4 cannot be simply taken as a base for predicting 2026 profitability. However, I would like to discuss several key factors that may impact the net profit of 2026 for your reference. One, the overall pricing impact. After the implementation of the new regulations, the interest rate on new loans are all below 24 percent. As this portion of the new loans accumulate over time, the average pricing on the outstanding loan book will gradually drop below 24 percent. So, the decline in pricing will put some pressure on the net profit. Two, risk stabilization. When the credit risk in this cycle bottoms out, when this bottoms out, we're ready to determine when the volume growth and the profitability pick up. So customers with interest rate within 24% exhibit more stable credit risk profiles. Therefore, their credit costs will be lower, which will help offset the declines in pricing to some extent. Three, funding costs trending down. The temporary tightness in the funding supply in Q3, Q4 will gradually ease as the regulations settle in. Therefore, funding costs are expected to follow a downward trend. At the same time, with better quality customers who carry lower risks, funding costs will also be lower. Four, the synergies from ecosystem business, i.e. e-commerce. During this period, our e-commerce business has achieved steady growth. enhancing the company's profitability. Our offline inclusive finance and tech empowerment businesses have maintained stable risk performance despite challenging market conditions, enhancing the company's operational resilience. So the continued growth of the company's ecosystem business will further strengthen our operational resilience and boost the overall profitability. So in conclusion, Q4 will be a temporary dip in our business and financial numbers due to the regulation. When the recovery will resume depends on the industry risk stabilization and further regulatory certainty. However, given the unique ecosystem business and the past three years turnaround effort, we are confident that we are better positioned than many other players. And we will be the first ones to recover when things are more settled, maybe in the early part of next year also.

That's the first question.

Jay. Okay. This shows the firmness of the management of the company's future. It also proves that the company continues to improve the ability and sincerity of shareholder feedback. If this repurchase plan is fully implemented, with a 30% shareholder return rate, the overall shareholder feedback level of the company will increase to the top of the industry. The company has also been paying attention to shareholder feedback. We have been actively executing the repurchase program.

Both the company's share repurchase program and their personal share repurchase plan have been more than halfway consistent, which is well ahead of the original one-year schedule. fully demonstrates the management's strong confidence in the company's outlook and reaffirms our commitment and capability to enhance shareholders' returns. The company's repurchase program is fully executed alongside a dividend payout ratio of 30%. Our total shareholder returns rise above the industry average. The company has always attached high importance on shareholder returns. Once the current share repurchase program is fully executed, we will explore more initiatives to further enhance value for shareholders.

Thank you. Back to management for closing comments. Thank you.

Thank you. This conference is now concluded. Thank you for joining today's call. If you have any more questions, please do not hesitate to contact us. Thanks again.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.