CNFinance Holdings Limited (CNF) 27 May 212021 Q1 Earnings call transcript

Good morning and welcome to CNFinance First Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note that this event is being recorded.

Now I'd like to turn the conference over to Mr. Matthew Lou. ahead. go Please

followed and will Financial everyone CEO the First And operating CNFinance Zhai our results Good Mr. a CFO, Conference welcome Q&A Call. XXXX Li. results the through Results walk that our the In Quarter financial will from we morning after us to by have today's Mr. call, section.

statements Exchange such like within plans, expectations factors current of result otherwise not any a based Act law. this current obligation conference can identified undertake future or company's filings any going involve Exchange of does and company statements upon differ forward-looking as the factors information statements actual the market Before beyond predict are And with information, and these which many of target, in which of and statements and and as except uncertainties is in those that the XXXX other from achievements all are as we conditions Further Act and call which the unknown risks, the to company's or and under or that to expects, Securities of events Such and anticipates, to you included XXXX. cause outlook events performance difficult as beliefs, The Securities the start, the by of US as results control, may forward-looking company's required statements. amended. US materially Commission. to Securities new forward-looking remind relate in the are other estimates, or These known uncertainties forward-looking update regarding I Litigation future, XXE meaning to would intends, of Section terminologies defined contains management's Reform forward, be operating statements. will, similar Private risks

Now Zhai. our please CEO Mr. welcome

blurry. to We're is Sorry, reach little trying him. our CEO a

first financial Ning. us operational followed Please will our still Li trying Mr. Zhai. Li Mr. Mr. Zhai. the CEO, are through results We from our part walk welcome by Mr. to reach CFO, the

for through give all our first today. all Okay. in stated is will on be that stated, best Unless performance. to year-over-year give otherwise changes to you financials. going us RMB. will going our comparison first I'm everyone the I Also review Thank percentage joining way quarter XXXX basis. believe unless to numbers will We of be I'm walk you otherwise

the loans RMBXXX.X decreased XXXX, agreement application by compared principal rate the million rates first and to first income the impact XX.X% Net model, same net X.X% of primarily XXXX. to borrowings of compared to as benefit RMBXX.X primarily expenses financing million. mainly in into attributable to first due to billion period RMBXX.X loan RMBXX.X under quarter the and for with provisions effort losses sales was expenses million decreased million attributable RMBXX.X default the more total loan expenses increased of and partners. outstanding from positive of in Risk XX.X% amend led the repurchased paid the income purchasers from And the of was interest advertising up economic were increase was RMB the and million billion with as to profitability that Supreme model outlook the account concerning an by associated million authorities, partners. compared expenses XXX.X as pandemic, RMB first fees income decreased other XX.X regulations of second combined was costs XX% pandemic. effect credit by Court First, XX.X% business service facilitated decreased primarily quarter attributed RMBXX.X in interest was cases of to on lowered Provision the RMBXXX.X was of period to quarter sales the XXX of in issues prior by from compared loan increased to of first Position COVID-XX XXXX to collaboration before RMBXX.X to loss relevant million average issued expenses Interest XXXX. the to Income RMBXXX.X under RMB transferred by the of due the on RMBXX.X increased The to million, model. repurchase expenses XX.X% XXXX the operating to PRC the for Collaboration to private X.X under million decisions million under Other RMBXXX.X the for billion we Net expenses and the sales first million, of issued to that and balance X,XXX.X by the from facilitation in recovery million to to which increase million of the in expenses before credit compared under collaboration People's of fact the current increased second income losses lower tax under trips traditional volume of model under of comply to the was expected including sales income increase RMBXX.X due X% to COVID-XX by third-party March several the to sales loans promotion among million. the the RMBXX.X and RMB to partners, model. with an RMBXX.X by compared lending the million fees and put during a of Mitigation Interest representing of RMB XXXX loan XXXX. XXst, regulatory on rules primarily to compared XX% tax August and loan to collaboration outstanding NPLs origination of the the Total to lower of RMBXX.X the the employees. lien to of sales Total X.X Credit XX% by of by to XXXX which quarter lien. law due of year. trial million borrowings that incentive million, RMBXX.X the recorded partners tax in on which decrease for same million principal gains loss million, tax takes of guaranteed growth China a primarily the RMB by

of restricted which collaboration As rate loans RMBX.X by collaboration equivalents structured had the of for delinquency billion, March rate including cash from rate grant only NPL cash company actual loans new XX, by fund, XXXX. as XX, be could The delinquency and was March loans actual originated actual The XX.X% model used cash, XX.X% the XXXX, the of was was to X%. rate activities. actual XX.X%. the was model and as the billion Under RMBX.X of Under for originated NPL XX, company XXXX. March the company the

part. my for that's Okay,

now And can welcome our Sorry to Mr. will Zhai quarter be a introduce Zhai? for minutes. please XXXX. of results Bin Mr. couple CEO, our Zhai operational first start. Mr. of the

is CEO Our having connection. a bad

please. Go ahead,

you the billion CFO. of our a for X.X able record increase I results just On take last operational origination we originated will be operational I now. XXX% [Foreign the We results the from loan Language] I from will better solid connection everyone please, Thank our -- QX loans same period thank XXXX, introduce a company's questions your results our and you of I conference will operator call. had for company's elaborating were to introducing joining RMB volume I billion, now. will expectations. be with today's And call, of And in XXXX. an RMB -- us then QX, beyond of X.X We and And achieved representing year. the sorry,

credit net collaboration income for quarter and national Please our the during of million, Our revenue, XX RMB model me were and was details. RMB main million respectively. RMB the XXX The the efficiency elaborate provision growth. economy our recovery XX and let for million with drivers of losses

resumed QX GDP second rapid XXXX. and China's production contained QX XXXX, the confidence Firstly, In brings world's of of has The recovery from XXXX XX.X% economies. effectively and rebound QX, the COVID-XX the since XXXX, of future nationwide. from X.X% in half have China grew economy China's

To demand We that pandemic. banks surged standards products MSE manner. provided quarter, in noticed to MSE commercial meet. for Also across sales difficult owners China capital partners this the in are our in and MSE we owners from reached loan recovered their seize qualification business their seeing opportunity, gathered affordable that owners over more the for to revised the out for as timely proactively even the accessible applications, them Chinese with it a our XX made cities the and

optimizing Since kept our of XXXX, origination volume was a refining strong collaboration of with model the and growth collaboration loan sales the the the the have we model. partners. Secondly, in terms efficiency proof

scale has under in reached result, the loan continue and are the outstanding that a RMB billion model X the to the will we future. As grow principal collaboration confident

In to our also trust growth support addition, from was our long-standing partners. the company attributable

mutually have non-standard reducing were with this the our companies trust sufficient in year. comply trust the size trust We have partners able built been total still relationships company secure customers the our growing funding from to Even to needs with and the company long-term our We trust throughout partners quarter. the satisfy of beneficial the to products of regulations.

with sales obliged the maintain collaboration to the loans. liquidity, are to healthy they Under we Mitigation sourced accelerated guarantee disposal Credit the Risk Positions. order in the loans Thirdly, of the delinquent model, partners

risk disposals As the efficiency CNF's we lower. loans. designed the to losses loan even mechanism increased respective under These have back collaboration to defaulted for options sales result, the model. partners liquid the a exposure in the became Moreover, buy

we delinquent During quarter an million loans, the XXX%. recovery by of overall XXX first rate over representing disposing had recovered RMB

this XXXX. tasks. plan we As prioritized may will the Language] year operations the we reviewing sources. rise and funding quarter results continue outstanding tackle we to By momentum in carry in have discussed, following to the of to this out expand that our challenges we First, daily [Foreign recorded

to relying majority We partners provide are currently trust our company of on funding.

enhance actively our founding for terms We fulfill of Ocean demands during with of partners the for time, the Language] partners. our the products XXXX adopting moment with trust started collaborations MSE enable to Meanwhile, limiting Although quarter, met We collaborations are same and funds will our At Blue loan were are in collaborating banks hope our this sources trust we as to new our bringing set to proactively plan the provider. funding strengthen year. to secure with cooperation rapid Bank At in approaches service a We China direct new to the meet capital working owners [Foreign us with in partners. we origination. funding funding our sources. demand to diversifying are our match growth. sufficient with growth regulations the meeting our risks the support are non-standard commercial needs the are we goal

set also a We plan Zhonghai trust structured Trust. up parallel with

will model. in we the to different in continue management future. approaches explore Language] the [Foreign the service to and collaboration collaborating improve We continue mechanism Second, will optimize

Our model the to since plans The quality widely retention our by up sales the origination market. rate based loan our inception. on and achieve of been plan partners, volume we assets provide has quarter various has to In partners sales of introduced. order each recognized terms been the almost high and they collaboration incentive the going refine to volume

We will services in Third, more origination technology to Language] custom-made continue loan partners in specialized to provide in also invest with we step. invest will and technology. [Foreign sales every

customer be achieve aware detail We In integration keeps We the more the on and to to experienced our optimize perspective, assessment data quality to loan of service key the spending invest smart oriented the efficiency many approval and credit as with improve be then but of technologies will believe future and will solid approval are XXXX and another delivered challenges. advanced and the process to collaboration XXXX, we the more deploying a company model procedure to technology our document higher loan visualization. upgrade management first management. signing development. shareholders. plan and results ability technology the We achieve efficiency challenges, year post will From

demand the funding opportunity the ourselves devote seize increasing will costs market lowering to our and securing for of shareholders. create and funding higher value more We sources to

operational was the that our Capital of Vice Zhai on behalf of And CEO, Market results by President Mr. Department Bin.

Operator? session. Q&A we like Q&A open to please. we the Now, would open would like to the session Operator,

now Greenridge Gregozeski session. First [Operator Please from ahead. We'll Global. Instructions] William comes the begin question go with question-and-answer

of now? you disclose right And quarter. transactions you're number total the in were Hey duration the Can Great are of what that quarter? guys. loans the what the seeing

Language] your Li [Foreign will Mr. questions. take

and RMB During the the X.X loan And billion as was the first increase it was number expected, -- a transactions noticed during quarter bit to last limit nearly over we And just loans total we to was APR. the over of the shorter facilitated on volume same quarter X,XXX compared quarter origination total significant a the of last due the the than of year, the regulation we have was changes duration year. average especially the primarily X,XXX.

focusing So, we on quarter. year loans one with the facilitating during a are duration of

And you quite loans than then you was were paying give the a quarter? reported rate Okay. can interest in the bit you guys What was on what looking expense guys -- I was average your the at. the lower

So, the interest if around companies, from X%. interest XX-month the expense duration the X.X% consists you we trust to of capital our And the to are of mainly speaking it paid trust partners. is

XX%. duration that's X.X% For the is around capital than is to longer year

reported, -- that platform? derisked say think do And All the guys you then sales on that how shows these to right. loans look at with through are position partner forfeited you that your fair it's and you the Okay. income

It was the little Could you repeat blurry. again? question a

the Yeah. your that go position high it through think for guys it to at With was shows derisked in platform? loans quarter. forfeited you income how are as partner that that company sales a Is fair how look this and

at that facilitation the losses revenue. on look lower will to traditional collaboration credit provision the see a Under a around statements, look model. and the if which it model, is collaboration X%, our provision the there model, provision was you -- -- percentage a traditional as the for credit is the if And than the you at X.X% way facilitation of So separate losses. model if measure you financial under we for

it think to fair So we derisked. I is say are

do Okay. XXXX? you question, provide and last you for origination And have can XXXX volume expectations all for of

heavily of last all, origination because XXXX the loan under China the pandemic. the of effect heavily QX growth -- was year of First first was of in year-over-year quarter mainly

RMBX.X year-over-year. as quarter was during this RMB fourth we to X.X a we recorded which significant of compared billion there this quarter So increase the quarter facilitated XXXX, -- But we in when billion. and

[Foreign Language]

are go. So huge sufficient CNYX we able are to don't see billion every loan considering if that origination we and now fluctuations I'm securing as we projecting, market doing fund quarter

Okay.

And bottom-line. the that's

you, great. Okay, guys. Thank

Thanks.

go from Our you. comes Please of Instructions] Thank Rongrong question [Operator next Zhang Cathay ahead. Capital.

[Foreign Language]

-- actually cap. Hello noticed I than Mr. million in cash your higher have of you Lee. number around sheet balance that $XXX your that market is and market

that that the -- could on cash? So balance number sheet you that is number -- of is elaborate could you number

Language] [Foreign

had the is we you cash RMBX.X equivalents cash-on-cash we if So in present that and in number renminbi around it billion. that's dollar. And said

[Foreign Language]

introducing I of part financial restricted results and my introducing the a in of the, cash equivalents and cash So had the also quarter, mainly cash. part

new cash, funds, was RMBX.X which -- that actually only had among could loans. billion billion used structured under RMBX.X So of was to grant from be we

what consisting yeah, of So that's -- the in that's balance our cash.

[Foreign Language]

appreciate Thank I it. you.

the call have we remarks. I'd to At to closing turn for management this time, no further back like now questions. over

this again for us Thank conference call. in everyone you joining

please questions at further Thank you. free you cashchina.cn. Thank at everyone. any IR feel us have you If to reach

I appreciate it.

you. Thank