X Financial

Hello and welcome to the ex-financial fourth quarter 2023 earnings conference call. All participants will be in a 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 a touchtone 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 Victoria Yu. 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.com. On the call today from Exponential are Mr. Ken Lee, President, and Mr. Frank Fu-Ya Zheng, Chief Financial Officer. Ms. Li will give a brief overview of the company's business operations and highlights, followed by Mr. Zheng, 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 Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions, and relate to events like involved 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 forward-looking statements. Further information regarding leads and other risks uncertainties, factors is included in the company's filing with the US Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required and allowed. It is now my pleasure to introduce Mr. Kent Li. Mr. Li, please go ahead.

Hello, everyone. We are pleased to conclude the year with solid operational and financial results, emphasizing our commitment to a sustained goal. In 2023, we facilitated and originated 43% more loans than 2022, and delivered notable year-over-year growth in both revenue and project. Total net revenue increased 35% on an annual basis, while income from operations increased 33% and the net income improved by 46%. However, as we enter the second half of 2023, particularly in the fourth quarter, we experienced increased risk levels in asset quality. While we strengthened our risk control system and implemented various measures to managing delinquency rates, we also made a strategic decision to proactively reduce loan volumes in the fourth quarter, prioritizing probability over shear volume growth. During the fourth quarter of 2023, our total known amount of facilitated and originated was RMB 26 billion, a 20% year-over-year increase, but an 11% quarter-over-quarter decline. Diminishing rates for known past due for 31 to 60 days and 91 to 180 days were 1.57%. and 3.12% respectively at the end of the quarter compared with 1.02% and 1.93% respectively a year ago. Our team remains vigilant in monitoring asset dynamics and has taken further steps to mitigate risk by reducing our exposure to higher risk areas and adjusting our business approach to ensure sustainable profitability. We aim for continued gradual improvement over the course of 2024 and these measures have begun to have a positive impact on our risk indicators. For fiscal year 2024, our strategic approach will remain consistent and somewhat conservative, aligned with current market conditions in China. We believe the regulatory environment has become stable and the government is committed to promoting economic recovery. However, we recognize that challenges and uncertainties exist as the country undergoes a transformative shift in its economic growth model away from a rapid expansion of the past. And structural adjustments are imperative. All of this has far-reaching impacts on various sectors, including our target market. Despite these challenges, we remain committed to executing our strategy and prioritizing profitable growth. Our commitment to delivering value to shareholders is unwavering and we intend to pay dividends when probability and smooth operation allow. This overall approach reflects our decision to navigate in the evolving economic landscape while ensuring the sustainable success of our business and returning value to our shareholders. Now, I will turn the call to Frank, who will go through our financials.