Good day, ladies and gentlemen. Thank you for standing by and welcome to the Jiayin Group's Third Quarter 2023 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Shawn Zhang from Jiayin Group's Investor Relations. Please go ahead.

Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the third quarter of 2023. We released our earnings results earlier today. The press release is available on the Company's website as well as from Newswire services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer; and Ms. Xu Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the Company's public filings with the SEC. The Company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese and I will follow up with the corresponding English translation. Please go ahead, Mr. Yan.

[Foreign Language] [Interpreted] Hello, everyone. Thank you for joining us today to discuss our outstanding results for the third quarter of 2023. This quarter, we have achieved new milestones in key financial and operational metrics. Our loan origination volume reached RMB24.2 billion in the third quarter, a 62.4% increase compared to the same period last year. Net revenue grew by 64% while net income further expanded to approximately RMB324 million. These results once again prove that our development path is healthy and sustainable and our strategy is precise and practical. We are confident and capable of continuously creating value for our investors and growing into a significant employer in the global fintech industry. However, in the third quarter of 2023, both the Global and Chinese economies face significant challenges. Despite the complexity and the constant changes in the global economic environment and ongoing adjustments in monetary policies of major economics, we have observed that China's economy is undergoing a slow recovery process. Although the pace of this recovery has not reached the expected speed, it still demonstrates that underlying strength and the resilience of China's economy. In the domestic financial sector, we have noticed fluctuations in credit market risks during this period, with asset qualities and risk management emerging as key topics in our industry recently. We understand that continual prudent and detailed operation and management are crucial for our long-term stable and healthy development in the current environment. Therefore, whether in the third quarter of this year, the upcoming fourth quarter, or the beginning of next year, we anticipate continuing our cautious business strategy under the premise of maintain stable development and profitability. We will also closely monitor market dynamics with a special focus on controlling risks and tracking changes in asset quality. Over the past two years, our…

Thank you, Mr. Yan, and hello, everyone, for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMD and all percentage changes refer to year-over-year comparisons unless otherwise noted. As Mr. Yan mentioned earlier, we carried through our robust growth momentum over the past year to achieve new milestones in the quarter. Our loan origination volume grew by 62.4% to 24.2 billion, exceeding our previous guidance. Our net revenue was about 1. 47 billion, up 54% as our other revenue grew to 529.8 million from 101.4 million in the same period last year, mainly driven by the growth in guarantee income from financial guarantee services. Moving onto costs. Origination and servicing expenses were 544.3 million, up from 148. 4 million in the same period last year, driven by increased loan origination volume and expenses related to financial guarantee services. Allowance for uncollectible receivables, contract assets, loans receivable and others grew by 44.1% to 8.5 million from 5.9 million in the same period last year. However, as a percentage of net revenue, it decreased to about 0.6% from 0.7% in the same period last year. Sales and marketing expenses increased by 26.1% to 407. 9 million, mainly reflecting higher borrower acquisition expenses. As a percentage of net revenue, S&M expenses decreased to 27.8% from 36.2% in the same period last year, demonstrating our improving efficiency in attracting and retaining high-quality borrowers. G&A expenses were 53.2 million, up 3.5%, primarily driven by higher staff costs as a result of increased expenditures for employee compensation and related benefits in a quarter. As a percentage of net revenue, G&A expenses reduced to 3.6% from 5.8% in the same period last year. R&D expenses were 70.5 million, up 25%, mainly due to the higher employee compensation as a result of an increase in research and development headcount. As a percentage of net revenue, R&D expenses reduced to 4.8% from 6.3% in the same period last year. Consequently, our net income for the third quarter increased by 30.6% to 323.9 million from 248.1 million in the same period last year. Our basic and diluted net income per share were both RMB1.51 compared to RMB1.15 in the same period last year. Basic and diluted net income per ADS were both RMB6.03 compared to RMB4.60 in the same period last year. We ended this quarter with 180.3 million in cash and cash equivalents compared to 288.9 million at the end of the previous quarter. Regarding our stock repurchase program, as of September 30, 2023, we have bought back approximately 1.8 million of our ADSs for a total of US$5.5 million on our US$10 million share repurchase plan we announced in June 2022 and extended in June 2023. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer and I will answer questions. Operator, please go ahead.

Thank you. [Operator Instructions] Your first question comes from [Guarong] (ph) with Jinyu Asset management. Please go ahead.

[Foreign Language] This is Guarong from Shanghai, Jinyu asset. First, congratulations on the strong results. And I have two questions. The first one is, as you have reported a 62.4% year-over-year increase in loan origination volume in Q3 yet forecast a single-digit growth in Q4 compared to higher growth rates in previous quarters. Is this deceleration solely due to scaling or are there any other factors? How sustainable is the current growth and what trends do you foresee under the current market conditions? And the second question is, what factors are driving the significant increase in your other revenue, which now accounts for over a third of total revenues? Could you provide a breakdown of this segment and your future plans for it? Thank you.

[Foreign Language] [Interpreted] Okay. This is Xu Yifang and your first question is about the loan origination and I will do the answer for you. Okay. So, for your question, I think there are several factors we can consider. And the first one is just as you mentioned that our scale has reached a level of over RMB40 billion. So thanks to the rapid development since the year of 2022, especially the quarter-over-quarter growth in the fourth quarter of 2022. The expected growth in the fourth quarter 2023 will not seem as that significant. So since the beginning of this year, the credit market has been exceptionally active driven by the development of the consumer economy after the COVID-19 period. The ample supply of funds and balancing the demands of performance development and risk indicator management are among the strategic issues our management is focusing on. We hope to continue adhering to a cautious and prudent risk management style to ensure the sustainable and healthy development of the entire platform. So for the third one, the growth of our number of active borrowers is also very rapid. Our refined operations and the risk management models and strategies are closely tracking changes in borrower groups, closely monitoring the effectiveness of operations and risk stratification at each node. The evaluation and iteration of models are accelerating to ensure satisfaction with products and services for active borrowers, especially high quality ones, and to achieve continuous optimization of risk management indicators. And this part of work seems like very important to us right now. And lastly, you just mentioned sustainable and forecast. I would like to say that we are closely monitoring the development of the domestic credit market and looking forward to a stable, orderly and healthy growth for our company's future development. This is my answer for your first question.

[Foreign Language] [Interpreted] Okay. Hello, Guarong. This is Fan Chunlin, the CEO of the company. And I will answer your second question. Your second question is about the proportion of other revenue out of our total revenues. And you also mentioned a breakdown of the segment and future plans. And firstly, I would like to say that other revenue, yes, it amounted to RMB530 million, mainly including revenue from financing guarantee services, referral services, and overseas business. Among them, the revenue from financing guarantee accounted for the highest proportion just as what you mentioned. Maintaining rapid growth each quarter of this year with that part of revenue in the third quarter of 2023 approaching RMB 400 million. And within the listed group system, there is a financing guarantee firm. And just as requested by some financial institution partners, this will provide financing guarantee services for some projects. Okay. So however from the perspective of the overall business development strategy of our group, the listed group will focus on borrower acquisition and risk control services. With guarantee services shall mainly be provided by independent third-party financial guarantee companies. Therefore, this part of business and corresponding revenue growth of this part will be relatively stable in the future. Additionally, the margin of the guarantee business is relatively lower if you compare with the borrower acquisition and risk control services, which will reduce the overall operating profit margin of the listed group. So from a financial metrics perspective, borrower acquisition and risk control services will continue to account for the vast majority of our revenue. And the company will reasonably manage the balance of different business subtypes in revenue share. So this is my answer for your second question. And let's see if you have any other questions. Thank you.

Guarong, did you have a follow-up?

Yes. Thanks. [Foreign Language]

Okay. Thank you. So, operator, we can get the next question, please.

Thank you. Your next question comes from Yuxuan Chen with Huatai Securities. Please go ahead.

[Foreign Language] Hello, management. Thanks for giving me this opportunity to ask questions. This is Yuxuan Chen with Huatai Securities. I got two questions. The first one is about your risk management strategy with a stable delinquency rate. Could you provide insight into your risk management strategies and their evolution in the [indiscernible] stability. Also, do you expect your risk profile to remain stable going to Q4 and 2024? The second one is about your expenses. We have observed a consistent reduction in operating expenses as a percentage of revenue over the past year. Is this because of your cost control, efficiency improvement or both? Can this trend be expected to continue in Q4 and 2024? Thanks.

[Foreign Language] [Interpreted] Hello, Mr. Chen. This is Xu Yifang and your first question will be answered by me. Okay. So you just mentioned the strategies and the stabilities and these are actually the goal and also the result of our risk management work. So we have some different approaches to that. The first will be, we will pay attention to the development trends of the market, especially the overall income to debt ratio of our borrower group and also the debt situation and also the willingness and activity of your credit application. So the second one is for our models and strategies and as the borrower group of us is growing so fast. It is very important for us to accelerate the monitoring process. So, and at the same time, we also need to updating and to update our models and strategies. And the interrelation of them is also very important. So the third one is that we think the risk management works shall not only be on the decision stage, but to strengthen the management and operation of the entire life cycle of our borrower group from a risk perspective is also very important. And with that, we also can see that the risk indicators are getting better because of it. So after the loan facilitation process, we also need to differentiate the strategies to further enhance the experience of our high quality borrowers thereby to improve the retention and loyalty of them. And we can also see that those improvements also makes our risk indicators getting better. So for the goal of the fourth quarter of this year and the whole year of 2024, we are expecting to maintain and further optimize these risk management approaches. And this will be really important for all of our team. And this will be some ideas of our risk management works and my answer for your question. Let's see if you have other questions.

[Foreign Language] [Interpreted] Okay. So your second question is about our expenses. I think from the first quarter to the third quarter of this year, the proportion of our G&A expenses, S&M expenses, and also R&D expenses in the revenue has continuously decreased. In the third quarter, the proportions of G&A expenses, R&D expenses, and S&M expenses in the revenue were reduced to 3.6%, 4.8%, and 27.8% respectively. And the main reasons are two-fold. Firstly, because the scale effect brought by the growth in facilitation volume and also revenue. And the fixed costs are relatively stable and the variable costs are getting more efficient. If you compare with other kind of expenses and their growth percentage is much lower than that of revenue growth. And second reason would be the efficiency improvements both by the application of AI technology and also our refined smart operations. So in the short to medium term, in line with our strategy of high quality growth and smart operations, our proportion of G&A and S&M expenses will remain relatively stable. And we will also continue to increase investment in R&D and strongly enhance the application of AI technology in various business processes. And just as Mr. Yan just said, our company has been officially named as Jiayin Technology and we will continuously strengthen our technology attribute. Okay. Through the refined operation, we are very confident to make our non-profit margin to maintain above a relatively sustainable and healthy level. And just as Mr. Yan just mentioned that our second dividend distribution plan is almost decided and we are very confident to give out more to our investors in the future.

So Yuxuan hope those will answer your question.

[Foreign Language]

Thank you.

We've reached the end of the call. I will return the call back to Shawn for closing remarks. Please go ahead.

Okay. Thank you, operator, and thank you all for participating on today's call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

That does conclude our conference for today. Thank you for participating. You may now disconnect.