Ladies and gentlemen, thank you for standing by, and welcome to the 360 DigiTech Third Quarter 2022 Earnings Conference Call. Please also note today's event is being recorded. At this time, I’d like to turn the conference call over to Ms. Mandy Dong, IR Director. Please go ahead, Mandy.

Thank you. Hello, everyone, and welcome to our third quarter 2022 earnings conference call. Our results were issued earlier today and can be found on our IR website. Joining me today are Mr. Wu Haisheng, our CEO and Director; Mr. Alex Xu, our CFO and Director. Before we begin the prepared remarks, I’d like to remind you of our Safe Harbor statement in our earnings press release, which also applies to this call. We may refer to forward-looking statement based on our current plans, estimates, and projections. Also, this call includes discussions of certain non-GAAP measures. Please refer to our earnings release for a reconciliation between non-GAAP and GAAP ones. Last, unless otherwise stated, all figure mentioned are in RMB. I will now turn the call over to our CEO, Mr. Wu Haisheng.

Hello everyone. I am very happy to report another strong quarter. First of all, let me share some recent developments in the market environment. China’s consumer finance industry has reached from rapid extension to quality growth in the past two years. The industry has achieved substantial grants in preventing systematic risks protecting consumer rights and benefits, driving compliant business operations and promoting competition. This has created a healthy ecosystem for the development of the consumer finance market. Over the past two years, the industry regulatory frame work gradually come into shape and the rectification project of the platform economy continued to progress. Currently regulator landscape had settled down in an article titled presenting and improving modern financial supervision published in the guide book of the 20th National Congress of the Communist Part of China Mr. Guo Shuqing, the Chairman of CBIRC said, financial innovation must be conducted under the premise of prudent supervision. We shall impose normalized supervision on the financial business of the internet platform companies and they promote the healthy, sustainable development of the platform economy. This implies that the Fintech industry enters into the state of regular supervision. Since the beginning of 2022, the macro economy and whole income have put pressure on China’s consumer and in terms of market demand and asset quality. However, the market started to slowly improve in Q3 as we saw credit demand began to gradually recover and asset quality became relatively more stable than Q2. Meanwhile financial institutions demand for high quality assets continue to inject liquidity into the industry boosting funding supply efficiency. Now moving on to our operations. Given the macro environment with complexity and uncertainties we maintained a prudent operating strategy and a leverage technology to drive quality growth. Thanks to our practical, prudent, and risk management first…

Okay. Thank you, Haisheng. Good morning and good evening everyone. Welcome to our third quarter earnings call. Before I start my regular update, let me first introduce a new member of our capital market team, Ms. , recently joined us as a Senior Director of Capital Market. She will be providing valuable insights, experience, and the leadership to our capital market and IR team. With our upcoming listing in the Hong Kong Stock Exchange, we really look forward to having and other team members offer better services to our shareholders and broader investment community. As Haisheng discussed earlier, we delivered another solid quarter in changing macro environment. From July to September, demand for consumer credits through our platform grew sequentially each and every month, although the velocity and the magnitude of such improvement were modest. During the quarter, we continued to push for steady improvement in overall asset quality by further engaging high quality new borrower base. Overall day one delinquency has been on a steady declining trend month-after-month so far in 2022, against a difficult macro trend early in the year. It was 4.5% for Q3 versus 4.9% in Q2 and further declined to 4.3% in October. The continued improvement in day one delinquency further validate our strategy, strategic focus on high quality user segment. 30-day collection rate also improved in Q3 and reached the best level in 2022. During the quarter, we resumed most standard collection activity to the pre-COVID lockdown level, which drove the improvement of the metrics. Once again, we see clear outperformance by new borrowers versus existing borrowers. Total net revenue for Q3 was 4.1 billion versus 4.2 billion in Q2 and 4.6 billion a year ago. Revenue from credit driven service capital heavy was 2.9 billion, compared to 2.9 billion in Q2 and 2.6…

Thank you. Your first question comes from . Please go ahead.

Okay, then. I will do the translation part. So, the first one is about the loan structure of the origination volume, so I noticed that you’ve disclosed origination volume of the risk management task and I was wondering if you could elaborate more about the growth trend and it’s contribution out of the total in the future and how we balance the contribution between the capital light and the risk management side when we cooperate with a new financial institution? This is the first one. And the second one is about the customer acquisition. I noticed that our cost control of sales and marketing expenses this quarter been effective and average customer acquisition cost on the new users with credit lines has dropped a lot. So, can you give us more color on what have been done differently on the customer acquisition strategy this quarter compared with before and what is the trend in the future? Thanks.

Okay. Let me translate. Tax upgrading has always remained our long-term strategy for our company. In the recent years, we gradually advanced to more tax solutions starting from capital light to ICE to models. Recently, we are hybrid new business model that provides both our leading credit tax system and operation agent service. All of these tax surveys caters to customized need of different financial institution. In this year, we are exploring different models together with various financial institutions. Going forward, as we serve more financial institution customers and transact more loan volumes under this new model. We can further our products pursuing higher take rate model and serve more customers. This new tech model cannot only boost our tech solution business portion and sustain our business sustainability, but also open additional markets for our long-term growth. The reason to our customer acquisition effectiveness is starting from the end of last year, we spent a lot of efforts on upgrading our IT infrastructure for online customer acquisition, which starts to bear fruit recently. Moreover, we also further expand and diversified our customer acquisition channels. For example, we not only upgrade our online advertising channels, but also apply our team model on channels. And also, we cooperate with a lot of traffic platforms, including the platforms, app stores, etcetera. In addition, we pay close attention to the market. For example, this year, there is a very popular mobile game in Chinese . We closely watched the market with that opportunity to acquire our group quality customer. As far as we know, we are only credit tax traffic benefit of . Overall, we will continue to take the prudent business approach and that’s kept long-term life time value of our customers in our operation. We not only just care about the short-term cost for our customer acquisition. We expect good quality customers will bring down cost and create more value. Next operator?

Thank you. Your next question comes from Hans Fan from CLSA. Please go ahead.

So, I have two questions. This is Hans Fan from CLSA. First one is regarding the Hong Kong Listing plan, congratulations to that because it is the first online in ADR of China to go back to Hong Kong for releasing, just wondering about the details regarding lines and also is there any plan to go for primary listings, ? So, yes, that is the first question. Second one is more about APR. Currently, we are seeing in the past few quarter, our APR has been on a downtrend, but just wondering what’s the outlook for APR if we consider the demand side and also regulatory direction and also our strategy? Thank you very much.

Okay. Sure. So, for the Hong Kong listing time table, as you know we just released the PHIP this morning and the – basically our intention is to follow the normal procedure of the Hong Kong Exchange to push for the final official perspectives release and then the marketing roadshow and then the listing. So, that’s our intention. In terms of exactly how many days or how long it will take, you can refer to some other cases, I believe the normal course in the regular basis, somewhere within two-weeks timeframe, so that is roughly. And secondly it is more about the in the future. That certainly is an area or the direction we’re kind of looking at seriously. Because there are certain benefits to become listing company Hong Kong, but I guess firstly, you need to finish this secondary listing and then when you meet certain criteria’s then you can apply for the dual primary. So, it’s kind of a step-by-step saying, we are just right now still trying to finish the first step and somewhere down the road when the condition is ready, we are pursuing the next one.

In Q3, we see the overall pricing got lower little bit compared to Q2. This is mainly due to our existing loan gradually ran through maturity. Going forward as we see the loan mix from our new customers and old customers that are relatively stable we’ve backed this pricing to remain stable.

Thank you very much.

Thank you. You next question comes from . Please go ahead.

Hi. Thanks management for taking my questions. This is . I have two questions regarding the results itself. The first question is regarding the loan pricing, just wanted to know what exactly is the new loan pricing for the loans granted throughout the third quarter this year? And second question is regarding the loan as Mr. Xu just mentioned, we’re seeing better loan demand in the third quarter compared with the second quarter. So, in our view what is the typical profile that is demanding more new loans? Where are this better loan demand come from? For example, which sectors or segments? Thanks a lot.

Yes. price in Q3 is little bit lower than 22%. In terms of the business nature, actual consumer loan is quite non-technical. We see this demand gradual recovery comes from the customers in the areas that are previously .

Okay. I just want to probably add a little bit color on that. So, to your question, really on the , we’re not really particularly tracking their professional, you know kind of categories then they were seeing. So, that’s not the kind of the focus point and then also that’s not the kind of data we can provide in terms of which professional getting better in terms of the improvement, but just like Haisheng mentioned, if you – you sort can imagine that, you know for those areas that have been locked down, for example in Shanghai during the March, April, and May period when the lockdown get released there certainly will be a pretty noticeable rebound in demand. So, that’s kind of a driven addition part, driven this recovery in the third quarter. Thank you

Okay. Thanks a lot. Understood.

Thank you. Your next question comes from Thomas Chong from Jefferies. Please go ahead.

Thanks management for taking my questions. My first question is about the competitive environment, given that the API is trending down for a lot of the Fintech companies, just want to get a sense about how we should think about landscape in the future? And the second question is about comments about the trend in recent quarters. And my third question is about Q4 guidance. Given the pandemic situation just want to get a sense about the high-end and the low end of the guidance and under what scenario should we expect to hit a low end, should we expect the pandemic to worsen from the current situation? Thank you.

First of all, from the points operator since the 429 in last year, with at least for this meeting. More competitive in compliance deals in the future. Secondly, if you look at the I want to point out, number one, the credit market is large market with multiple layers, different players make cross-over across the different layers a little bit. Secondly, this is the last market that we do not see that different players will compete directly head-to-head. There are two factors when we consider ticket-size. Number one factor, considering the macro environment since we took the prudent approach that risk management strategy will not drive up our ticket-size. Second point, as we are continuously upgrading our customer base this year, we are seeing the good customers can bring more value, create longer life time value and larger ticket-size. As for our outlook for Q4, there are several factors we take into consideration. Number one, there are due to the operation of banking industry. However, as everybody knows there are sufficient China financial system this year, we did not see this factor come into effect this year. Second reason is the macro environment and . This one, we think is the major concern for our guidance.

Sure. Thomas, I just want to add a little bit to your last question regarding the Q4 guidance. Basically, the guidance reflects our view of the current sort of micro condition. Obviously the Chinese market these days are very dynamic given the COVID-related policy changing or pending changing as well as a reaction by the local authority to those kind of new COVID policies. We heard different kind of messages, some say the – some certain local areas are more aggressive to kind of a reopening, where some others still maintain kind of restricted kind of stance there. So, it is kind of a changing dynamic, but based on what we can see today, I think the guidance we provide in the Q4 is within a comfortable level. Then obviously if say for the second half of this quarter, since getting better then we will probably see better performance and vice versa. So, that’s only based on information we get today.

Thank you.

Thank you.

Thank you very much. There is no more questions. Management, back to you for the conclusion remarks.

Okay. Thank you again everyone to join us for this conference call. If you have any additional questions, please feel free to contact us offline. Thank you. Have a good day. Bye-bye.

Ladies and gentlemen, this concludes today’s call. You may now disconnect.