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

Ladies and gentlemen, thank you for standing by, and welcome to the Lufax Holding Limited Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question-and-answer session. Please note, this event is being recorded. Now, I'd like to hand the conference over to your speaker host today, Ms. Lu Xinyan. the company's head of board office and capital markets. Please go ahead, madam.

Thank you, operator. Hello, everyone, and welcome to our third quarter 2023 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 chairman and CEO, Mr. Y.S. Cho, who will provide an update of our latest business strategies the macroeconomic trend, and the recent developments of our business. Our co-CEO, Mr. Greg Gibb, will then go through our third quarter results and provide more details on our business priorities. 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. With that, I'm now pleased to turn over the call to Mr. Y.S. Cho, Chairman and the CEO of FluFacts. Y.S., please.

Thank you for joining today's call. While the macroeconomics recovered gradually in the third quarter, the small business segments still face a complex landscape and need more time to recover. We continue to pursue a strategy of de-risking and diversification, maintaining our assets' quality, with the goal of improving our asset quality for long-term, healthy and sustainable growth. During the third quarter, while high-quality loan demand from SCBO remained weak, our consumer finance business recorded a healthy growth, with a new loan sales volume increase of 15.3% sequentially and 48.5% from the same period last year. We are also taking steps to further diversify our operations by acquiring a virtual bank in Hong Kong. Let me now provide some updates for the third quarter. On the regulatory front, the State Council released guidance on promoting high-quality development of inclusive finance. The guidance recognizes the value of non-bank institutions such as guarantee, consumer finance, and small lending companies. and encourages market participants to take steps to solve the financial needs of SCBOs, as well as enhance consumer protection. We believe the guidance and recent regulatory development will promote healthy development of the industry and benefit leading players that operate businesses in a compliant manner and with proper licenses. As for the macroeconomic conditions Recent data has shown that China's economy is gradually recovering. GDP in the third quarter increased by 4.9% from the same period last year, putting the economy on track to meet the annual growth target of 5%. During the third quarter, large enterprises demonstrated the strongest signs of recovery. while SMEs continued to face pressure from the broader macro situation. The SME Business Conditions Index published by the Cheong Kong Graduate School of Business declined from 50.2 in June to 49.9 in September. The Small and Medium Enterprises Development Index published by the China Association of Small and Medium Enterprises was also below the critical threshold of 100 in the third quarter, indicating that the SVO segment will likely recover more slowly than the rest of the economy. Let's explore the impact of these factors on our business. Under the pressure from complex macroeconomic environment, de-risking is crucial for the stability, sustainability of our business. In the third quarter, we continued our strategy of prioritizing asset quality over quantity. We have completed the shortage adjustment initiated in the beginning of the year by reducing our footprint in less economically resilient regions with relatively high risk and optimizing our direct sales force. We believe these difficult but necessary steps will establish the foundation for long-term sustainable growth. As high quality demand for SBO loans remained weak, and we continued to prioritize prudence in our strategic execution, neuron sales decreased slightly from 53.5 billion RMB in the second quarter to 50.5 billion RMB this quarter. In terms of asset quality, risk performance of the old book, which are loans enabled before 2023, has stabilized. Meanwhile, all indicators suggest that asset quality of new loans enabled in 2023 is in line with our expectation, although not yet recovered to pre-COVID levels. Next, let me show some strategic updates. We have completed our transition to a business model under which our guaranteed subsidiary provides 100% of our credit enhancement, as CGI premiums remain elevated due to the impairment losses suffered by CGI partners. At present, we have secured sufficient credit lines from our funding partners to support our 100% guaranteed model for the remainder of 2023 and throughout 2024. We are able to make this shift in large part due to our strong capital position. At the end of third quarter, the leverage ratio of our guaranteed subsidiary was only 1.6 times, well below the maximum relative limit of 10 times. Switching to our 100% guarantee model will play an important role in alleviating the impact of elevated CGI premiums, resulting in a 13% to 14% take rate from a long-term perspective, but exerting pressure on medium-term profitability as upfront provisions are recorded for new business. Last quarter, We mentioned our strategy to grow our consumer finance business by leveraging the advantages of our consumer finance license and synergies with the poor business. And we continued to implement this strategy. During the third quarter, the neuron sales of our consumer finance business was 20.6 billion, representing a 15.3% quarter-on-quarter and 48.5% year-over-year growth. The NPL of our consumer finance business decreased to 1.9% in the third quarter from 2.2% in the second quarter. The competitive advantages of our consumer finance business have made it an increasingly important part of our business. With our consumer finance license, we can operate this business in full compliance with regulations and benefit from lower funding costs enabled by interbank money markets. With the SCBO segments likely to face continuing challenges from the macro environment in the near term, the consumer finance business serves as a good supplement to the pool business, enabling us to further mitigate risk and diversify product offerings Together with our transition to the 100% Guarantee Model, we will be able to provide more comprehensive products to our target customers with a simpler and better customer experience. Now let's turn to a new initiative we are undertaking to further diversify our business. Subject to approval from the Hong Kong Monetary Authority and OneConnect shareholders, we 100% of the shares of Ping An One Connect Bank, or PAOB, from One Connect, at a cash consideration of HK$933 million, representing 2.2% of our cash at bank as of the end of September. As one of the eight virtual banks in Hong Kong, similar to traditional banks, but without fiscal operating branches. As of June 30, 2023, TAOB's loan balance was HK$1.8 billion, and its capital adequacy ratio was 100%, which was substantially higher than relevant regulatory requirements. All of its loans were SME loans in Hong Kong, and a significant portion of outstanding balance is backed by Hong Kong Government's SME Financing Guarantee Scheme. We believe the business and target customers of KAOB think well with our existing operations, enabling us to leverage our operational experience and technological expertise in its business development. From a long-term perspective, the prospects of Greater Bay Area also bring upside potentials via this banking license. We took a number of steps in the third quarter to carry forward our efforts on de-risking and diversification, including the completion of our transition into 100% guarantee model, further developing our consumer finance business, and acquisition of the virtual bank in Hong Kong, aiming to create foundations for long-term sustainable growth. In the short term, as most of our strategic efforts on de-risking had been concluded by the end of the third quarter, we expect volume in neuron cells to be stabilized and we are on track to meet our neuron cell guidance for the full year of 2023 to be in the range of 190 billion renminbi to 210 billion renminbi. I will now turn the call over to Greg for more details on our operating results.