Yuxuan Chen

Yuxuan Chen from Huatai Securities asked about the outlook for profit margins in light of new regulations and questioned the key drivers behind the quarter's improved risk performance. Chen also sought clarity on potential asset quality volatility from tighter market liquidity and the company's response measures.

Answer

A company spokesperson (translating for management) attributed the strong profit margin to record loan volume driving economies of scale, an optimized revenue mix with higher-margin facilitation services, and operational efficiencies from AI investments. Chief Risk Officer Xu Yifang explained that improved risk performance was due to ongoing investments in risk models, a larger loan volume denominator, and proactive research on risk cycles. She added that the company is managing exposure for repeat borrowers and adjusting acquisition channels for new ones to mitigate liquidity-driven risks.

Yuxuan Chen from Huatai Securities asked about the primary drivers behind the significant 97.5% year-over-year increase in net profit for the quarter and the company's profitability outlook. He also sought clarification on the company's view of new loan facilitation guidelines from Chinese regulators and their expected business impact.

Answer

Sam Lee, Head of Investor Relations, attributed the profit surge to three factors: a 58.2% increase in loan facilitation volume creating economies of scale, an optimized revenue mix favoring higher-margin facilitation services over guarantees, and improved operational efficiency from AI investments. Yifang Xu, Chief Risk Officer, added that the new regulations are viewed positively as they formalize the industry, and the company is adapting its products to meet all requirements ahead of the deadline.

Yuxuan Chen inquired about the reasons for the year-over-year decline in net revenue and net profit in Q3, and asked for an outlook on future profit margins. Chen also questioned if the current loan facilitation volume growth rate could be sustained or even accelerate.

Answer

CFO Fan Chunlin explained that the profit decline was a strategic choice, driven by a significant increase in borrower acquisition and R&D expenses, while shifting the revenue mix towards higher-quality facilitation services. He anticipates margins will improve as these investments mature. Chief Risk Officer Xu Yifang added that while they are confident in sustaining strong growth, the pace will be prudently managed based on macroeconomic conditions.