Yiren Digital Ltd.

Good day and thank you for standing by. Welcome to the year-end digital third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's 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 this conference has been recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to our first speaker today, Ms. Kai Wu-Hee. Please go ahead. Thank you.

Thank you, operator. Good evening, everyone. Today's call features a presentation by the founder, chairman, and CEO of CreditEase, and our CEO, Ms. Lin Chang, and our CFO, Ms. Lan Mei, Ms. Xiao Sheng, our SVP, Ms. George Liu, our CRO, and Mr. Raymond Fung, CEO of Yearwell. We'll also join the presenters in the Q&A section. If we're beginning, we'd like to remind you that discussions during this call contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Delegation Reform Act of 1995. Such statements accept the risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any such statement. Certain information regarding potential risks, uncertainties, or factors is included in our filing with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statements as required under relevant law. During the call, we will be referring to certain 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 the U.S. GAAP. For information about those non-GAAP-type financial measures or reconciliation to GAAP measures, please refer to our earnings press release. I will now pass it over to Ning for opening remarks.

Hello, everyone. Thank you for joining us today. We are delighted to announce a solid quarter with visible increase in profitability and a healthy growth in business scale amid a muted macro environment. At the beginning, I would like to reiterate our strategic positionings as a user-centric personal digital financial management platform as our business models continue to integrate and expand. In the third quarter, we saw growing interactions and synergies between business lines. For example, the total number of investors who purchased He Xiang's long-term insurance products on Yiren Wealth platform this quarter increased by 37% compared with the second quarter this year, while the number of borrowers cumulatively served with our insurance products as of September 30th grew 33% compared with the end of last quarter. So by personal digital financial management, we mean to serve our customers in the long run and meet their comprehensive financial management needs including liquidity management, income generation, financial protection, and value enhancement, which corresponds to our credit tax and wealth management services. Now, I will go through our business updates on wealth management first. As of September 30th, 2021, total client assets exceeded RMB 17.4 billion, representing a 19% growth from last quarter and about 250% growth from prior year. Total number of active investors grew 11% quarterly to about 428,000. More specifically, on Eden Wealth Platform, we saw accelerated growth in both new investors as well as average client assets. due to our precise targeting acquisition strategy and optimize the services and products. In the third quarter, the number of new investors on the platform reached nearly 10,000, representing a 33% increase quarter over quarter, excluding insurance products. Average client assets per investor reached RMB 259,000 representing a 125% annual growth. Particularly, the number of investors with client assets over RMB 500,000 grew almost three times compared with last year, and the trend continues going into the fourth quarter, a clear reflection of our enhanced capabilities to serve a higher segment of our investor spectrum. Moreover, As our investor education further penetrates and the concept of balanced asset allocation is becoming increasingly accepted, the number of investors holding at least two different asset classes on Eden Wealth platform grew 168% year over year. Talking about precise targeting acquisition strategy, our Finance Plus Life initiative is worth mentioning. Through years of operation, we found common needs in our investors in four specific scenarios, namely health and sports, study and self-improvement, lifestyle and leisure, child education, and parenting. To better serve our investors and target these common needs, we recently started to offer selective live services and products tailor-made to investors. These non-financial services are proven effective to both attract new investors and to enhance our existing users' LTV. Through finance-plus-life strategies, we are building up a broader even wealth community consisted of high-quality users who have the common pursuit for better wealth, better self, and a more positive life spirit, which is translating into comprehensive growth in Yiren Wealth, and we expect more promising results to come in the following quarters. Next, onto our Hejiang Insurance Brokerage business. We are pleased to deliver a better than expected growth this quarter. Hejiang contributed RMB 735 million in total premiums, up 29% quarter over quarter, and its commission revenue reached RMB 199 million, up 31% compared with last quarter and up 95% from prior year. In the beginning of November, He Xiang had already completed our full year internal target in both premium and revenue. He Xiang is positioned as a national comprehensive customized insurance service provider and it stands out in its strong capabilities in product innovation and customization. For instance, this innovative annuity product launched in May enjoyed an immediate popularity with premium of RMB 285 million as of end of third quarter. Moreover, He Xiang's high standard services also gained market recognition. In the third quarter, long-term insurance renewal rate stood at 98%, much higher than the common industry standard of 85%. Moreover, He Xiang's unique 2B2C business model has proven effective in market expansion. By working with 2B channels with a considerable customer base, He Xiang has embedded their tailor-made insurance products into these 2B platforms and scenarios. This is a win-win solution for both He Xiang and our channel partners. For He Xiang, we have effectively acquired consumers at minimal cost, while for business channel partners, we help them realize additional revenue streams and enhance their customers' LTV. He Xiang is currently operating with over 100 insurers and brokers nationwide, offering more than 510 products. With new products going to hit the shelf in the coming days, we expect a further growth in the quarters to come. Now, I will outline some highlights for our credit business. In the third quarter, our total loan facilitation volume maintained a strong growth trajectory, reaching R&B $6.8 billion for the quarter, representing an increase of 30% quarter over quarter and 117% year over year. Total number of borrowers served this quarter was 548,000, increasing 26% from prior quarter. On loan products, Yixianghua, our small revolving loan products, witnessed a continued rapid growth and a clear increase in borrower base due to our enhanced digital operating capabilities and improved servicing standards. In the third quarter, loan volume of Yixianghua stood at RMB 3.4 billion, accounting for close to 50% of total loan volume and representing almost five times growth compared with prior year. Meanwhile, Monthly active users on our Yixianghua app reached 1.1 million as of September 30th, jumping 82% quarter over quarter. Further increase in customer activity is expected as we start to embed more diversified consumption scenarios on the platform and scale up our own traffic pool. Moreover, As our repeat borrowing rate continues to rise and our consumption traffic base starts to convert into new loans, sales, we have managed to keep our customer acquisition costs at a low level, translating into healthy product unit economics. Furthermore, I want to share with you our progress on SME loans. which we started to focus on in the second half of this year. We are pleased to see robust growth in SME loan business, with its volume increasing by over 400% quarter over quarter, now accounting for 25% of total loan volume. It's worth mentioning that small and medium enterprise loans are priced under 24% APR. And as we are on the full swing to dive into this SME market, we expect the SME loan volume continues to grow in the coming quarters, further optimizing our product mix and paving the way for us to accomplish compliance transition. And talking about compliance, APR cap requirement, we have been executing three concrete strategies to ensure effective transitioning while maintaining profitability. First, like I just mentioned above, we are scaling up SME loans to better support real economy and to respond to regulatory direction. Second, we have been proactively offering lower price revolving loans to our existing customers with higher credit quality. Thirdly, we have been improving our customer mix and acquiring new customers with better credit performance through our diversified online conception scenarios. Through the combination of these three efficient strategies, we are very confident to be able to complete our progressive adjustment by the second quarter next year. Moreover, for the new guidelines related to credit scoring, we have been in close communication with regulators and are exploring different options to ensure our compliance. So far, we have already signed an agreement with the licensed credit rating agency and we are in the stage of testing detailed cooperation models which will take some time due to the complexities surrounding operational flow as well as tech capabilities. We expect to finish the connection within the guided space grace period and the relevant costs will be manageable. We will continue to pay close attention to regulatory guidance as well as industry standards, and make timely adjustments as needed. Last but not least, as we refine our risk management systems and enhance our asset quality, our 15 to 89 days delinquency rate remained low at 2.4%, and we expect our credit performance to remain stable during the transition. and to experience an overall improvement in the long run as we continue to optimize our customer mix. Going forward, we will continue our efforts to drive up our business scale and create stronger synergies, not only within our wealth management ecosystem, but also within the whole year-end digital ecosystem. Meanwhile, as our investors are showing growing demand for higher investable amounts, we will serve them with more diversified products with bigger ticket size, further driving up our profitability. Additionally, as our credit tax business continues to move toward higher quality customer segments, there will be growing synergies and overlap between credit and wealth management businesses in the long run. Now, I will pass it on to Nas. who will provide this quarter's financial update.