X Financial

Hello, and welcome to the ex-financial third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tanya Nguyen. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. The company's results were released earlier today and are available on the company's IR website at ir.xiaoyingduo.com. On the call today from exponential are Mr. Ken Lee, president, and Mr. Frank Fuyazhan, chief financial officer. Mr. Lee will give a brief overview of the company's business operations and highlights. followed by Mr. Chen, who will go through the financials. They are all available to answer your questions during the Q&A session. I remind you that this call may contain forward-looking statements under the safe harbor provisions of the private security litigation reform act of 1995. Such statements are based on the company's current expectations and the current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forelooking statement. Further information regarding this and other aggressive uncertainties and factors is included in the company's filing with the U.S. Secretariat and Insurance Commission. The company does not take any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. It is now my pleasure to introduce Mr. Ken Lee. Mr. Lee, please go ahead.

Thank you. Hello, everyone. We are very pleased with our strategic execution in the third quarter. Both our known solicitation amount and net income were in line with our guidance. The total loan facilitation amount hit a new high for the second straight quarter. At the same time, the increase in our net income has demonstrated our ability to enhance profitability, boost operation efficiency, and reduce costs. During the third quarter, we further adjusted our pricing structure to comply with the 24% internal rate of return, IRR, regulatory cap. We believe this is the government's initiative to support the real economy and stimulate healthy growth for SMEs and private consumption. The proportion of our non-facilitation amounts subject to the 24% IRR cap improved to approximately 30% of our total non-facilitation amount in September, and we expect it to grow to between 40% and 50% by the end of this year. Beyond the regulatory compliance requirements, We believe that this initiative can help us attract more quality borrowers as the demand for personal financing solutions increases. During the quarter, our total non-facilitation amount reached RMB 50.1 billion, an increase of 87.9% year-over-year and 17.5% quarter-over-quarter. This was mainly driven by the strong growth in the loan facilitation amount of show-in car loan, which increased 120.3% year-over-year and 17.5% quarter-over-quarter. As of September 30, 2021, the total outstanding loan balance of show-in car loan reached RMB 24.4 billion, an increase of 19.9% compared with the previous quarter. In the fourth quarter, there will be a moderate decline in our loan volume due to our institutional funding partners' year-end outstanding loan balance requirements. We continued our effort to improve our risk management capabilities. As of September 30, 2021, the diminishing rate for all outstanding loans that are past due for 31 to 60 days was 0.1%. compared with 0.77% as of June 30, 2021, and 1.06% as of September 30, 2020. Despite the quote-over-quote fluctuation, our answer quality is still within its best start-up range in our operating history. According to a new regulation, loan facilitation platforms are restricted from submitting credit assessment-related personal data directly to financial institutions. And such data transfer must be conducted through a licensed credit agency. In response, we have been working closely with the Baihan Credit, the second largest licensed individual credit bureau in China, in addition to the credit bureau of the People's Bank of China, PBOC, to execute a plan to comply with the new regulation. We have noticed that 14 large companies on the regulator's top list for the are either working on a plan or waiting for approval. We are getting ready and will fully comply with the new regulation. We expect minimal changes to our daily operation activities and cost structure. During the quarter, we continue our efforts to diversify our service offerings. Our microcredit business officially commenced operation in the third quarter. We also made a solid progress in our services to micro and small business and self-employed individuals, which are important target groups for our future goals. We have certain favorable known policies for this group and are adjusting and testing our systems to speed up the qualification and validation process. We believe we are on track towards our goals, and all these efforts are bearing fruit and helping us to drive long-term sustainable goals in a fiercely competitive and strong regulatory industry. Now I will turn the call to Frank, who will go through our financials.