Yiren Digital Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to Year End Digital Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session, at which time, if you wish to ask a question, 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 Lydia Yu. Thank you. Please go ahead.

Thank you, and welcome to EARN Digital's third quarter 2020 earnings conference call. Today's call features the presentation by the founder, chairman, and CEO of Credit East, and CEO of EARN Digital, Mr. Ning Tang, CFO of EARN Digital, Ms. Nan Mei, and CRO of EARN Digital, Mr. Michael Ji. Ms. Mei Zhao, Senior VP of EARN Digital, and Mr. Dennis Tong, Director of EARN Digital, will join the presenters in a Q&A session. Before beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the State Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties, and factors that can cause actual results to differ materially from those containing any such statements. Further information regarding potential risks, uncertainties, or factors is included in the U.S. Securities and Exchange Commission. UNDETAILS does not undertake any obligations to update any forward-looking statements as 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 financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and reconciliation of GAAP measures, please refer to our earnings press release. I will now pass it on to Ning for opening remarks.

Hi, everyone. Thank you all for joining our third quarter 2020 earnings conference call today. We are very pleased to deliver a solid quarter, and we continue to make progress in our business transitions and strategic repositioning. as we drive our online wealth management business into scale and ramp up our new credit tech product offerings. We have achieved profitability and meaningful growth on both our wealth management and credit tech business lines. For our wealth management business, we are seeing promising growth momentum in wealth management products and services. and the demand remains strong. As of end of September, total AUA of wealth management products increased by 71% quarter over quarter to RMB 4.3 billion. And the total sales volume of wealth management products increased by 110% quarter over quarter to RMB 4.6 billion. New investors of wealth management products on Yiren Wealth in this quarter stood over 58,200, representing a 255% growth compared to last quarter. More specifically, mutual fund products continue to enjoy strong popularity among customers, with AUA reaching RMB $1.4 billion, up 34% from last quarter. The average AUA per investor for mutual funds stood at RMB 58,000, increasing by 15% from prior quarter. It's worth mentioning that our fund portfolio products see remarkable popularity among investors, which took more than 80% of the total fund sales volume this quarter, and are becoming a strong driver of our wealth management business as we continue to make strong efforts into new product design and sourcing. Meanwhile, our insurance business has grown rapidly, exceeding our expectations. As mentioned at our last call, we completed the acquisition of the insurance broker He Xiang and as of September month end, sales volume and the revenue of this segment have already exceeded our full year target and began to contribute meaningful income to our wealth management businesses through its life and property insurance offerings. and accelerated growth is expected to our insurance business as He Xiang begins operation in its full swing. Furthermore, our securities business in its final stage for product and service launch and will provide our investors with quality stock trading service and easy access to both Hong Kong and the US capital and financial markets soon. Apart from that, we are also establishing an online investor education channel, which will further enrich our wealth management full-spectrum service offerings to our mass affluent investor base on Yiren Wealth Platform. Next, onto our credit tech business. Let me highlight three key initiatives as we continue to drive our sales volume growth. new product offering and expansion. Our new products continue to show strong growth as we shift towards small revolving loans and auto secured loans. For the small revolving loans, we have seen a quarterly increase of close to 100%, accounting for 19% of the total loan volume of the quarter. Meanwhile, Auto-secured loans grew 76% compared to the last quarter and took almost half of the total sales volume. Leveraging our nationwide offline network to provide high quality services to this customer segment, we expect our auto-secured loans to continue their strong growth in Q4. and will be the main growth driver to our credit tech revenue with superior credit risk performance. On our borrower acquisition strategy, we are continuing to strengthen our cooperation with large traffic platforms such as Xiaomi and 58.com. We also begin to work closely with channel partners to provide customized small revolving consumption loan products. and potentially expand our partnership from CPS-based model to profit-sharing model, further diversifying our product offerings and enriching consumption scenarios of the credit ecosystem. Driven by the effective channel partnerships, we have cut our online customer acquisition cost to low single-digit percentage of loan volume in the third quarter. on our transition to financial institutional funding. I'm pleased to announce that starting in September, we funded 100% of our loan business with financial institutional funding, successfully completed the full transformation of our credit business into loan facilitation model. For this quarter, 98% of our loans were funded by financial institutions. compared to 63% of last quarter, and we are further diversifying our partner base. Lastly, on risk performance, with our product mix shifting to inherently lower credit loss product offerings, an ongoing effort to upgrade our borrower base and tighter credit policy. we have seen significant improvement in asset quality and a sharp decline in delinquency, which already outperforms the pre-pandemic level. Looking into the fourth quarter and the year ahead, our top priorities will be to grow our online wealth management business into scale. with multiple product and service offerings to provide a holistic investor experience to our mass affluent customer base and to execute on our credit tech business transition into financial institution-funded business model with strong channel partnerships for customer acquisition. while migrating our borrower base to better credit quality spectrum to optimize our product pricing and credit performance. With the large growing market opportunities in both wealth management and credit tech businesses, we believe Yiren Digital is well positioned as China's leading digital platform providing comprehensive personal financial services. With that, I will now turn the call over to our CFO, Na, who will discuss our financial results for the quarter.