Yiren Digital Ltd.

Ladies and gentlemen, thank you for standing by and welcome to Urien Digital's second quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ms. Lydia Yu. Thank you. Please go ahead.

Thank you and welcome to the second quarter 2020 Earnings Conference Call. Today's call features the presentation by the Founder Chairman and CEO of Credit East and CEO of D&G, Mr. Ning Tang, CFO of D&G, Mr. Zhong Bi, and CRO of D&G, Mr. Michael Chee. Before beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the state private provisions of the U.S. Private Securities Litigation Reform Act of 1995. and others. These statements are subject to risk, uncertainties, and factors that can cause actual results to differ purely from those containing any such statement. Further information regarding potential risks, uncertainties, or factors is included in the Indian Digital's value to the U.S. Securities and Exchange Commission. Indian Digital does not undertake any obligation to update any foreign statements as that is required under applicable law. During the call, We will be referring to several non-GAAP financial measures and supplemental measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release. I will now turn it on to our CEO, Ning, for opening remarks.

Thank you all for joining our second quarter 2020 earnings conference call today. With the pandemic still not far behind us and the changing market environment in the second quarter, we are making comprehensive progresses toward our business transition in our credit tech business and have achieved meaningful scale in our wealth management business growth. For our credit tech business, I will provide an update on our three key areas of focus this year, as mentioned on our last call. First, on product expansion. Our new product initiatives are tracking very well. In connection to the launch of our new revolving loan product, Yixianghua, We have launched an e-commerce installment consumption platform in August to provide a more integrated service to our customers and establish a longer lasting relationship with them to realize more lifetime value. Yi Xianghua accounted for 13% of our total loan volume this quarter, growing over 500% quarter over quarter. On another hand, leveraging our vast offline service network coverage, we are ranking up auto loans nicely, achieving a 51% growth from last quarter. In terms of customer acquisition strategy, we are building up a credit ecosystem, connecting consumption scenarios with our financial products and services. and we are rapidly expanding our partnerships with large traffic channels including Sina Weibo, 58, Xiaomi and many others are in the pipeline. Due to our channel partnership strategy, we have significantly cut our online customer acquisition costs and improved conversion efficiency. As of June 2020, online and others. Customer acquisition costs represent 3% of loan volume. Secondly, on our transition to institutional funding, we have made great progress in repositioning our credit business by moving from a P2P funding model to a loan facilitation model. In the second quarter, 63% of loans facilitated were funded by institutional partners compared to 40% in the previous quarter, and we expect this proportion to continue to reach close to 100% by the end of this year with a diversified partner base. Lastly, on risk performance, with our prudent credit policy, ongoing effort to upgrade our borrower base and the new initiatives in loan rework and collection. We have achieved positive results on the asset quality of our loan book this quarter, and we noted a clear decline in delinquencies that's trending to pre-pandemic levels. Next, on wealth management business. We are seeing very strong growth momentum, particularly for our fund products. As of June 30, 2020, the number of current non-P2P investors increased 20% from last quarter to 31,530, and the total asset under administration, or AUA, for non-P2P products increased by 48% quarterly to RMB 2.5 billion. More specifically, new investors for non-P2P products in Q2 increased by 62% from Q1, and AUA for bank products and funds increased 48% as compared with prior quarter. Moreover, Average AUA per investor for non-P2P products also sees steady growth, with average AUA per investor for banks' fixed-income products exceeding RMB 100K and for funds over RMB 50K, which is well above industry average. In June 2020 alone, sales volume for fund portfolio products reached Triple-digit growth month-over-month to RMB 162 million. For banks' fixed income products, total AUA exceeded RMB 1.5 billion as of June month-end, and the demand continues to be strong in July and August. We are also rolling out our insurance service offerings. and expect this to become a meaningful revenue contribution of our wealth management business toward end of this year. To better position Yiren Wealth in China's digital wealth tech market and better serve our investors, we have invested in two new strategic initiatives. This quarter, we completed the acquisition of a licensed insurance broker. To date, the brokerage has established partnerships with 20 insurance companies covering over 190 insurance products. This will provide strong and vital support for us to diversify our product offering and expand our insurance business. We are also preparing for the launch of a new securities business in the third quarter which will provide our investors access to the capital and financial markets. Looking into the second half of the year, our main priorities for Yiren Wealth will be centered around customer acquisition, enhancing user management, including connecting each investor with exclusive financial advisors, diversifying product mix, and expanding our investment advisory services. For customer acquisition, we aim to enhance our online customer acquisition capabilities through investment in new social media channels as well as offering free high-quality online introductory investment courses to attract users. Finally, I would like to announce changes in our management team. Let me introduce our newly appointed CFO, Ms. Na Mei. She has served as financial controller for Credit East Credit Business Unit since 2015, and she brings over 12 years of experience from PwC in finance, tax, internal controls, and consulting. I would also like to thank Jun for his contributions to the company, and I wish him the best in his future endeavors. With our strategic focus to drive wealth management business growth, we also made several key talent hirings to strengthen our management team. Riemann Yau-Kang Feng will be joining us as Yiren Wealth COO. and he brings over 28 years of experience in marketing and brand management. In addition, we have also hired three highly experienced and senior personnel to manage our insurance, funds and securities business lines who have previous working experiences with leading financial institutions and technology companies. I look forward to working with each of them in their new capacity. as Yiren Digital enters its new era of growth. With that, I will now turn the call over to our CFO, Jun, who will discuss our financial results for the quarter.