Yiren Digital Ltd.

Good day, and welcome to the year-end digital third quarter 2024 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 telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Kia Ha, IR officer. Please go ahead.

Thank you, operator. Good morning and good evening, everyone. Today's call features the presentation by the founder, chairman, and CEO of Credit East, our CEO, Mr. Ning Chang, and our CFO, Mr. Yu Ning Feng. There will be Q&A section after the prepared remarks. Before beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the same hyper-provision of U.S. Private Security's Delegation Reform Act of 1995. Set statements accept risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any set statement. Funding information regarding future risks, uncertainties, or factors is included in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statements as required under the relevant laws. 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 the non-GAAP financial measures and reconciliation to GAAP measures, please refer to our earnings press release. I will now pass it to Ning for opening remarks.

Thank you all for joining our earnings conference call today. I'm pleased to report a stable and healthy quarter with concrete business development and strategic exploration driven by our quality over quantity strategy. This quarter's results underscored our consistent focus on sustainable high-quality growth. Before I go into operational details, I'd like to share some highlights from this quarter. First, our financial services business made notable improvements in asset quality thanks to our continued focus on strong risk management and the borrower optimization. Second, We've been proactively exploring new online business models for our insurance division and have seen visible progress, driving an increase in sales of retirement-themed insurance products. As a tech-powered platform, Yiren Digital prioritizes the use of technology and the digital capabilities to enhance our business models. Our ongoing online business model is expanding from financial services to the insurance brokerage space. Third, ongoing investment in AI is already bearing fruit with proprietary AI applications now largely integrated into our daily operations, driving efficiency and improving customer experience. Altogether, These efforts are laying a solid foundation for the next phase of higher quality growth, one that will continue to drive value for our shareholders in the years to come. Now, let me go through our key business highlights. First, regarding our financial services business, the third quarter of 2024 saw continued growth with total loan volume reaching RMB 13.4 billion, a 36% increase year over year. The number of borrowers stayed relatively stable quarter over quarter at 150 million, a 24% growth compared to the same period last year. Meanwhile, our lending platform, Yixianghua, remains highly popular with monthly active users staying steady at around 4.5 million, a 52% year-over-year increase. Growth has been primarily driven by strong demand for our small revolving loan product and an increase in repeat borrowing from high-quality customers. As I mentioned earlier, we have enhanced the quality of our customer base by focusing on higher quality customers with stronger repayment capabilities and better risk profiles. And now those new customers are contributing to a growing proportion of repeat loans, becoming an important growth driver. Over 60% of the loans facilitated during the quarter came from repeat borrowers, up five percentage points from the previous quarter. As our efforts to upgrade our customer segments use success in phases, we are now focusing on increasing the repeat volume rate among existing customers while maintaining a balanced mix of new and returning customers. Furthermore, as a result of our customer quality upgrade and highly effective AI-driven risk management. We've seen significant improvements across various risk indicators, confirming the effectiveness of our approach. In the third quarter, our SPD 30 plus rate dropped by 32 basis points to a record low. As of September 30th, 2024, delinquency rates for the one to 30 day, 31 to 60 day, and the 60 to 90 day buckets fell by 10, 20, and the 30 basis points, quarter over quarter, respectively. Additionally, M1 recovery rates rose by 1.82 percentage points, reaching an all-time high. The shift in our borrower structure establishes a solid foundation for our sustainable growth. On the funding side, we made essential progress in expanding our funding partnerships. By the end of the third quarter of 2024, we had added nearly 20 new funding partners for the year. Meanwhile, our funding cost saw another 64 basis points reduction quarter over quarter. Moving on to our international business, our growth momentum remains strong. In the Philippines, both loan volumes and revenues posted double-digit increase quarter over quarter. We also began optimizing our customer base there while iterating our product offerings, and we expect these efforts to positively impact the profitability in the fourth quarter of this year. On our AI strategy, we made substantial progress with six proprietary AI systems now, supporting customer acquisition, customer service, asset management, and collections in our daily operations. I will now highlight several updates to demonstrate this progress. Firstly, for our domestic business operations. AI has significantly enhanced our collection and the quality assurance processes. As of the end of third quarter, 77% of day one overdue cases were covered by AI robots, resulting in labor cost savings of nearly RMB 2 million in Q3 alone. Meanwhile, To ensure the high professionalism of our services, we deployed 20 AI models for quality assurance in loan collections and eight AI models for quality assurance in customer service, with the collections models achieving over 96% accuracy. Additionally, we strengthened our AI talent pool by hiring over 50 professionals specializing in AI development, data science, and modeling, further enhancing our digital capabilities. Secondly, in our overseas operations, we fully developed and refined our AI-powered ID verification model in the Philippines, achieving an accuracy rate of nearly 95% in the third quarter, with performance now stabilizing. Moving to our insurance brokerage business, the overall industry has faced the profitability pressure due to regulatory changes, including lower interest rates and the policy of unified commissions and fees in reporting and underwriting. Despite these challenges, our total premiums this quarter recovered to be 1.35 billion. a 27% quarter-over-quarter increase. The rebound was partially driven by our online business initiatives. As I mentioned earlier, we've made progress in customer acquisition through social media, supported by AI-generated content. During the quarter, new policy premiums from social media channels contributed RMB 7.5 million at 7.1 million. This is a promising start. And we also built a dedicated team to focus on private traffic operations, driving efficient customer acquisition and conversion. Additionally, we are working on creating more synergies between our lending platform and insurance services by offering customized insurance products to our borrowers. and we expect to see growth from these efforts in the fourth quarter. In the consumption and lifestyle services segment, our total GMB was RMB 508 million for the quarter, a 10% year-over-year decline. As our customer base evolves, we are refining our product range to better serve our evolving demographic. Looking ahead, we plan to introduce more high-quality tailored products to meet their specific needs. In summary, our priority remains ensuring long-term sustainable growth. In times of external uncertainty and the market fluctuations, it is critical to stay focused on maintaining the quality of our business. We will continue to expand our online operations and enhance synergies across our businesses while further investing in R&D and increasing AI penetration. Furthermore, regarding our AI development, I would like to reiterate that we have been executing our AI strategy through the AI Lab, which incubates, invests in, and provides value-added services to AI startups. targeting enterprises, developers, and consumers. We have made several early stage investments this year, and we are exploring business cooperation with them. Additionally, I'm pleased to share that the commercialization of our proprietary AI systems is already underway, and we expect to see corresponding revenue reflected in our P&L in the near future. Now, I will pass it to Yuning, who will go through our financial performance.