Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
Please consider a small donation if you think this website provides you with relevant information
| Statement |
|---|
| With the accuracy of user profiling and identification continuously improving, we also further expanded the range of our financial institution partners, strengthening our ability to serve various loan asset segments with more financial partners coming onboard under the ICE or referral model, which further mitigates risk |
| These efforts yielded solid results in Q3 |
| From a long-term perspective, we will further improve our operational efficiency, and we do hope to see a steady increase in our take rate |
| From user segment's perspective, the credit demand from broadly defined SME segment is slightly better than our consumer sector, and we do see some divergence from industry perspective |
| With the quality of our earnings further improving, our non-GAAP net income for the quarter increased by approximately 14% year-over-year |
| In Q3, we saw continued sequential improvement in revenue take rate for both cap heavy and cap light business as early repayment ratio gradually return to normal levels and effective tenors gradually extended |
| To achieve this, we are optimizing resource allocation across customer acquisition, products, risk management and asset distribution to boost operational efficiency and ultimately drive bottom line growth |
| To start with, we continue to explore diversified customer acquisition channels and deploy innovative approaches to attract new customers, which not only improved customer acquisition efficiency but also resulted in notably better quality of new users |
| Compared to consumer segments, the broadly defined SME segment has more stable credit demand and generates higher value |
| We have consistently maintained a leading market share on the platform since the start |
| During the quarter, our embedded finance business generated an impressive 46% sequential increase in the number of new users with approved credit lines |
| The sequential growth was mainly due to continued improvement in overall effective tenor of the loans and strong contribution from ICE |
| Overall funding costs further declined by roughly 20 bps with the help of our strong relationship with financial institution partners as well as additional issuance of ABS |
| They also clearly have better risk performance in terms of short-term delinquency rates as we observed during the first three months with our innovative customer acquisition strategy firmly in place |
| We expect to enhance our ability to identify the user group and use diversified products and services to improve our customers experience and their stickiness as well |
| Against this backdrop, we are confident in our ability to continuously make breakthroughs and create value for our shareholders with better results |
| Through more attractive pricing, we are also able to acquire quality new users to improve our user mix |
| By offering a wider range of value-added services, we are effectively enhancing user engagement and retention, which increases our revenue and profit per user |
| Users who joined the loyalty program demonstrated higher engagement with a double-digit increase in both the rate of drawdown and the number of loans borrowed over a certain period of time |
| For example, our telemarketing system is now able to conduct semantic analysis and extract valuable leads from each conversation, improving our telemarketing conversion rate by more than 5% |
| From a rate-cutting perspective, theoretically, rate cutting can drive down the funding cost of financial institutions and eventually benefit the real economy |
| Our technology solutions business is making solid progress, as we expand the array of solutions we offer to cover the entire credit process |
| Compared to the consumer segment, the SME segment generates much more stable demand and stronger growth potential with similar risk performances |
| Looking ahead, we are confident that there is significant room for growth and value generation over the long term for our broadly defined SME segment, driven by our accurate user identification and differentiated operations |
| Our ability to engage with the lower-tier user segment has significantly improved |
| Despite a challenging macro environment, we remain vigilant about market conditions and improved our earnings quality by further optimizing operations and fine-tuning our business model |
| While macro recovery appears slower than expected, we remain confident to achieve our operational targets for the year |
| As we continue to optimize asset allocation efficiency, we expect our overall profitability to further improve going forward |
| For example, the service sector, like sports, entertainment and also the technology sector are better than the others |
| The sequential increase reflected growth in loan balance as well as continued improvement in effective tenors |
| Statement |
|---|
| Since the start of the year, the momentum of China's macroeconomic recovery has softened after rebounding earlier in the year with effective demand for consumer credit also coming in weaker than expected |
| The uptick in day 1 delinquency mainly reflect borrowers' negative sentiment toward the ongoing macro uncertainties |
| The first is, from a macro perspective, the key macro indicators are below the expectation |
| This modest decline also was driven by macro weakness |
| And I would say, these kind of negative factors related to profitability is already behind us |
| That's why you see the profitability growth is slower than the loan volume growth for 2023 |
| I probably want to add one little point here, is that, this year, in 2023 because the macro factors and also because the first half of the year, we are facing a tough comp in terms of pricing versus last year |
| In particular, credit demand was soft in October, mainly due to the seasonality factor during the national holiday, and after that, it maintained stable into November |
| Regarding your question, stepping into Q4, we have observed the credit demand slightly trending down |
| In Q3, we saw some volatility in asset quality and key leading risk metrics start to fluctuate from historical best levels achieved in previous quarters |
| However, due to the complex macro environment in this year, we didn't see it help that much |
| However, since September, there is some other factors, including government financing, property sectors are also attracting funding flows, which may put pressure on the further reduction of our funding cost |
| As economic conditions remain challenging, we may continue to see some fluctuation of these metrics in the near future, although overall risk level should still be manageable with our continued effort to proactively mitigate risks |
| So in September, we have seen China lowering the mortgage rate for the existing mortgages |
| The sequential decline in cash position was mainly due to increased cash usage in our on-balance sheet lending |
| So in that kind of a backdrop, do you expect the current lower interest rate environment to also translate into some of the downward pressure to our loan pricing in the future? Thank you |
| The fluctuation of our asset quality in Q3 was mainly a result of two factors adding together |
| Wu Haisheng Regarding the funding cost, our cost of funding declined by 20 bps sequentially in Q3 with our ABS issuance costs down by 47 bps |
| Putting together all these efforts, we expect the risk performance of the new loans originated in November and December will stabilize |
| The second reason is that the seasonality of the credit industry in the sense that the liquidity is typically better in the first half than second half, which led to some fluctuation of our asset quality in Q3 |
Please consider a small donation if you think this website provides you with relevant information