Lufax Holding Ltd American Depositary Shares, each representing two (2) Ordinary Shares

Ladies and gentlemen, thank you for standing by and welcome to LUFAX Holding Limited second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we'll have a Q&A session. Please note this event is being recorded. Now I would like to hand the conference over to your speaker host today, Ms. Niu Xin Yan, the company's head of broad office and capital markets. Please go ahead, madam.

Thank you very much. Hello, everyone, and welcome to our second quarter 2022 earnings conference call. Our quarterly financial and operating results were released by our Newswire services earlier today and are currently available online. Today, you will hear from our newly appointed chairman and CEO, Mr. Y.S. Cho, who will start the call by discussing changes to our management team and then provide an update of the latest regulatory developments microeconomic and COVID impacts and our latest business strategies. Our co-CEO, Mr. Greg Gibb, will then go through our second quarter results and provide more details on our operations. Afterwards, our CFO, Mr. David Choi, will offer a closer look into our financials before we open up the call for questions. 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. Please also note that we will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under the International Financial Reporting Standards in our earnings release and the findings with the SEC. With that, I'm now pleased to turn over the call to Mr. Y.S. Cho, Chairman and CEO of LUPEX. Please.

I thank you all for joining our second quarter 2020 Earnings Conference Call. I will start with today's call with changes to our management team and then provide an update of the latest regulatory developments, macroeconomic and COVID impact, followed by updates on our latest business strategies. Earlier this month, our board approved the resignation of Chairman Ji Guanghong and my appointment as Chairman and CEO of LoopX. We would like to thank Chairman Ji for his contributions to LoopX and wish him every success in his new position as Deputy General Manager of Ping An Group. We have also appointed Chun Dong Chi as our General Manager and David Choi as our CFO and YJ Lin as our CRO. Greg, in continuing to serve as our co-CEO, will take an expanded role in our overall business going forward. In addition to continuing to oversee our wealth management efforts, Greg will oversee our finance, treasury, IT, IR functions, having CFO and CTO reporting to him, and play a lead role in developing new business initiatives, which we'll share more about at a later stage. joined Puhui in 2013 and has had various senior management positions, including serving as a general manager for Puhui since 2020. Prior to joining Puhui, Dong Chi served in multiple Kinan subsidiaries starting from 1996. David has served as a CFO for our retail lending business since joining four years ago. Before joining us, Debbie was the head of Treasury Department of Ping An Group and has served in various leaders roles within Ping An Group finance planning functions for 11 years. YJ joined the group in 2008 and has been overseeing the risk management function of our retail lending business for almost 14 years. Prior to joining us, YJ served in two risk management positions with several global banks, accumulating 25 years' experience in consumer risk management. Greg, Dongchi, and I, together with the management team, will continue to drive Loopback's business development, strategy, and operations in the future. On the regulatory front, our observation is that the overall sales environment is improving. Recently released policy statements seek to balance incentivizing and regulating the platform economy to bolster its healthy development over the long term. We have also seen positive recognition for the role credit enhancement plays in supporting credit availability for small businesses. In terms of PBOC requirements of no direct data connection with financial institutions, we can continue our current partnership model with funding partners through our guarantee company. Under this bank-oriented model, we are not required to work with third-party credit agencies. As to the April 29th rectification process, we have completed most of April 29th rectification-related initiatives and have detailed action plans for the new remaining items. On the customer front, the COVID-19 resurgence in China in the second quarter has had a negative impact on small business owners, creating challenges for our operations. With April and May being the most adversely impacted months, our C2M3 monthly flow rate, which is leading risk indicator, peaked in April at 0.83% and decreased to 0.61% in June. We believe in terms of domestic credit environment, the worst is now behind us. Nonetheless, domestic and international macro uncertainties, including COVID-19 resurgence, inflation, and recession fears continue to persist, and we likely place near-term pressure on our business operations and growth prospects. In the face of this difficult macro operating environment, We remain prudent in our operations and are prioritizing quality over volume growth for the balance of this year. While we remain cautious, key initiatives launched last year are starting to bear fruit for the medium term. We believe the sourcing contribution from Ping An has buttoned out and is now stabilized. contributing about 22% of our new-run sales in the second quarter. Our reduced loan growth this year is largely the result of a proactive focus on quality. Our selective tightening of credit standards by customer segment and geography has resulted in a meaningful narrowed scope of new business sourcing in the first half. However, as a result of careful targeting of new growth by our direct sales team in better performing regions, we have been able to offset some of the sourcing contraction brought by these title credit standards. As of June, the percentage of high quality talents in our direct sales force increased as we continue to execute our channel transformation Our direct sales made up 53.6% of new loan sales in the second quarter, up from 49% a year ago. As and when the COVID impact recedes in negatively impacted regions, we'll be able to quickly adjust our credit policy and fully deploy our strengthened sales force for accelerated business growth. While the specific timing for acceleration requires more observation, we are confident that when it occurs, we are very well positioned to adjust quickly. In fact, in the second quarter, we witnessed a 17% increase in number of loan applications per direct sales year on year. Market demand and policy support is clearly evident, and it is now a matter of picking the right timing to expand our customer sources. Finally, I would like to share some updates on our business strategies. In the long term, we'll continue to focus on serving the financial needs of small business owners who represent an important and growing share of China's middle-class West formation and enhance our capabilities in the small business owner or SBO segment In the second quarter, our loans to small business owners made up 86.1% of union sales versus 77.6% a year ago. Going forward, we expand our offerings to meet all rounded needs of SBOs, such as providing industry insights, online tools, and other value-added services to help SBOs with their mix and set of these functions. On this sort of foundation, we move to offering comprehensive financial services, including lending, wealth management, and insurance products through expanded partnerships. This strategic direction seeks to extend our customer life cycle, deepen data-driven insights, strengthen customer loyalty, and optimize our customer acquisition and management costs. For our wealth management business, will continue to focus on serving customers in the online fund distribution space, helping them to achieve their financial planning objectives through improved content and tools, both pre and post investment. The online technology developed historically in the wealth management business for dynamic customer management will be further leveraged and aligned with future services for small business owners. LUPEX has a long and proven history of making adjustments to anticipate and respond to the changing operating environment. In response to today's environment, we are further integrating our mid- and back-office and technology teams and realigning our structure to achieve greater nimbleness and optimize resource allocation. Recent adjustments create more shared resources to better position our company for future growth opportunities. The scope of this adjustment will not trigger material changes in our revenue or cost structure in near term. Overall, we are confident in the steps we have taken and will continue to support the growth and development of small and micro businesses and the real economy at large. We also plan to adjust our dividend distribution to twice a year from once a year to deliver value to our shareholders. With that, I will turn the call over to Greg, who will share our business updates in detail.