CNFinance Holdings Limited (CNF) 26 May 232023 Q1 Earnings call transcript

Hello and welcome to the CNFinance First Quarter of 2023 Unaudited Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Matthew Lou, Investor Relations Manager. ahead. go Please

walk morning CFO, Quarter Good today's Welcome the will results Q&A Qian, to our followed a operating Thank the have Li. by XXXX and After Financial First financial will Jun Mr. of Vice our In through Results CNFinance the Director, results Acting you. from President, evening. us Mrs. Conference session. call, we Call. that,

within and call the would I to you contains like of of forward-looking conference Securities Private XXXX statements in XXXX. of Before Act we start, Act US the meaning that remind Litigation XXE as Section of this Reform the Securities Exchange as defined amended

targets, terminologies as identified These forward-looking anticipates, be statements and will, such can similar statements. forward, going outlook believes, future, by estimates, expects, intends, plans,

upon to and Such results, involve events to current forward-looking which other factors performance which statements and those company's company's the current to materially in all risks, and or may expectations from which that conditions operating statements. control, cause market the differ actual uncertainties predict based the of management's many difficult are of and are relate beyond known achievements unknown or and are

these in the and uncertainties Further information filings is US included risks, regarding factors the Securities or and other Commission. with company's Exchange

not or except as otherwise, does update any law. of events future forward-looking obligation company undertake The to result required any information, statements as new a under

Now please welcome Jun Mr. Qian.

Language] [Foreign

session. the attend quarter Q&A time and taking and for call. operational followed financial everyone Thanks, [Interpreted] and by of CNF's first conference will in Today, your this we XXXX results a introduce

in financial volume In our under commercial have momentum this quarter quarter, first billion from and RMBX.X partnership. RMBX.X key same increased including achieved of the XX% we the origination period In XXXX billion, growth indicators. bank year-on-year loan XXXX, and operational to maintained of

was RMBXXX under income RMBXX.X a The million, XXXX. for XXXX commercial and for of first total X%. fees interest partnership at model in year-on-year million increase revenue came quarter QX Net bank the the of representing

were Net services continued charged first XXXX income repurchase to installment following works. million. million. We RMBXX the loans XXXX, delinquent quarter provide to to the partners recorded income of we of and support and have year-on-year sales RMBXX.X In partners in QX for obligated XX% increased to sales done funding interest

We promote in continued ratings general refine partnership. and commercial partnership capital bank products own borrowers have lending require to bank of credit the commercial company. less and of bank better Targeted

this from the second XXXX, has the deepening private cooperation market, in After of partnership commercial increase of to low interest in bank recognition origination gained first the and the gradually launch grow its because with banks, partners, XXXX and in Since the quarter continued to products model quickly rate. of XXXX. bank of our began lending half volume

products further risk loans loan the we revenue company's accounted lending partnership quarter, exposure. bank into of XXXX, by and brought commercial become company sales QX has and bank originated major XX% have streams. partners this the volume total reduced of origination the In for one our of In

and We financing mix. have diversified funding reduced the cost the

and are our million. in partners the rates funding reducing XXXX, As second with we have interest half RMBXXX fees has reached XXXX of interest year-on-year, X% consensus in decreased QX expense

partners' repurchase and business. established provided we to support third-party significant and motivated a to were expand improved who of consistent funds partners AMC couple needed With liquidity successfully sales their loans. In quarter, with sufficient for sales and this funding that

X to on X, defaulted business loans. In major improved factor Tier Based operations, analysis new quarter, the our have the conducted in analyzed we refined loan We asset and cities. this our Tier model on shifted risk we results, and originations for historical other assessment risk quality. prioritization

end of the decreased as As compared XXXX of at [Technical QX of a the end has ratio to result, Difficulty]. delinquency the

inclusive high-quality China's made industry [Technical to that same pursue to window financing very us Difficulty] environment time, it uncertain in continued has for At be its development [Technical [Technical important is confident the expand Difficulty] period. We business Difficulty]. our

on will increasing origination volume. We focus loan

to and take continue support high service measures will sales growth. partners better their quality to We

commercial will refining partnership, lending We opportunities [Technical deepen discovering and to collaboration bank keep Difficulty]. promoting trust our with model,

We based our products adjust conditions. on will market

looking rolling than quarter annual are We forward lending XXXX. the out rate a charges second bank new that interest of less in to an product XX%

We our funding will model. and refining keep

trust will dialogues partners with the [Technical maintain we of company First, adjusting on trust structure Difficulty].

Difficulty]. negotiate in to reducing on the with [Technical they sales rates further AMCs order [Technical interest Second, will charge we for partners ease Difficulty]

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Excuse moment Thank I This ahead. the you. Please please. Matthew Just is resume. go have operator. one me. to

we'll hung and just we probably up back from wherever up. pick Welcome

Now please Mr. his give again Jun to welcome remarks. Qian

[Foreign Language]

[Interpreted] tasks include. Our future

First, on we will our increasing focus volume. origination

support We and partners measures will continue better take growth. to high-quality to their sales service

with We will lending deepen insurance keep collaboration promoting and commercial refining bank to discovering our partnership, model companies. opportunities trust

adjust conditions. will we market based on products our So

rolling that a to bank forward charges lending looking second XXXX. in are an than product quarter out less rate interest of annual We the new XX%

our refining keep funding model. will we Second,

maintain trust of on First, with partners plans. dialogue company we trust will structure adjusting the

negotiate AMCs rates reducing liquidity on will the ease with further they pressure of sales interest to our order partners. we charge Second, in

of [Technical product in recognize Third, refining and we fully will assessment. in and design importance keep technology Difficulty] risk investing the

continue analyze historical to of originated. will We loans data

Tier or loans areas core and products X served X by We of collaterals Tier in new tailor cities. will

our roll increase analysis to quality trust help share interest order to on also to of lending that risk market and borrowers our refine collaterals lower through improve assessment in will products charge asset deeper market and out resistance fluctuations. factors model different to We

Jay to the who Acting of through financial Li, call would walk you the XXXX. Mrs. I results of to over QX CFO, hand will our Now like

Jun. Thank you, you. Thank

So the first financial quarter of results. XXXX

use will otherwise to on unless stated, in comparisons Before we all remind RMB. Also, year-over-year we basis. made want start, unless is I that otherwise the stated, be currency a you

RMBXXX million and in million financial primarily compared loan to first RMBXXX attributable as loans interest the same the XXXX on average quarter increased of principals of from increase to The to period. by service the daily outstanding fees X%

by the [Technical loans This to sales more default repurchase in partners sales fact partner, the installment year. million to flow. partner to primarily choose their charged company instalments expense allows help to to to is million. due X% representing on RMBXXX million sales ease that repurchase compared cash pressure million RMBXXX Difficulty] in the to to by Difficulty] [Technical RMBXX increased sales to [Technical RMBXX charged Difficulty] from who in last fees decreased fee partner And as

company trust collaborate since with a quarter income million. scaled to second XXXX in such well as collaboration net started commercial income due as from growth funding and in [Technical has fees and decrease to Finally XXXX. bank cost Difficulty] was RMBXX the The company, and [Technical of the and Difficulty]

partnership our billion to to of RMBXX This million paid The first sales Difficulty] outstanding as was average outstanding of sales by as sales to cost daily million period quarter the XXXX in the partners of X% same loan represents period same same RMBXX Collaboration [Technical XXXX the increase to million the principal principal XX, incentives compared bank March compared period. the primarily attributable partners. loan year. under of of as RMBX.X commercial last to

expected XXXX was RMBXX losses Provision credit for partnership relation guarantee trust first under entered commercial the period to the provisions bank reversal The a financial compared credit and model bank model credit arrangements commercial of RMBXX who million for third-party guarantor, under to in the a with in the certain of losses the in the guarantee quarter the services losses. partners of guarantee same company to XXXX. million as provides into of lending

parties to the due primarily was loans year traditional last allowance and the was under loans transfer to in third reversal model reversed. The the such remaining of of facilitation

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to the reintroduce you. call me. your and ahead, like out back disconnect once you'd go to Please location. to sir. operator. If again. is I'd Excuse This Matthew I'll Thank like

Thank you. you. again Thank to this conference call. Welcome

for connection Sorry issue. the

I Mrs. results go Now Li, you our like who the to go Jay ahead. call introduce XXXX. over over would will QX CFO, the Acting of financial Please with hand and

sorry I'm you Thank issues. the for And all.

start. we and reconnected we Now

Now XXXX the first financials. quarter let's go for

Before will on stated, you unless in would otherwise we use to made want also be a start, remind year-over-year basis. comparison otherwise And unless currency that we stated, all be the I RMB.

and in of the principals on increased to X% attributable million of primarily million, loan by average quarter service XXXX. RMBXXX Interest from outstanding as to loans financing same the first compared RMBXXX period daily fee the XXXX increase of to

increased Interest to income charged loans ease fact to to to RMBXX to repurchase pressure that default help sales million to loans partners sales more who their installments primarily partner company partner, flow. XX% choose partner, by repurchase on due fees charged from in allows million, to installment cash RMBXX in the the sales representing deferred sales

daily as X% other primarily million by to RMBXXX decreased from principals outstanding average due to of loan cost the decrease funding expense the and Interest compared well as to fees companies. in trust as million, RMBXXX borrowings

Net XX% commercial March and was in principal billion to half started of the such increased year. scale million. XX, XXXX. with fees of was second XXXX compared bank under million partnership interest from and the commercial since million XXXX period income as loan bank as same the and the RMBXXX company bank has RMBXXX revenue million. to and RMBXX collaborate Net The by model commercial collaboration last RMBXX.X growth RMBX.X to under partnership of of outstanding The

compared of RMBXX incentive partner, compared in quarter to paid increase partner, sales average RMBXX XXXX million last by same the This first million last sales of Collaboration year. to to of year. as attributable loan costs period is for sales representing outstanding in X% daily the the the to primary principal with increased

financial to losses of that in trust the the a credit model credit for into representing under company third guarantor, credit provides relation losses who guarantee bank with loss entered under arrangements third-party model commercial the partnership and services commercial expected partners. bank Provision provision to company for guarantee guarantee the

reversal remaining transfer traditional the XXXX in primarily and the quarter of of allowance million compared the period in first RMBXX loan in the reversals. parties same was last under loans of RMBXX such The model the facilitation reversal year was It with a of due million to of to the year. to last as third

due year. to increased at taxable first RMBXX stable million remained RMBXX million. income million expense in in this RMBXX year expense compared increase the primarily XX% income with same to compared RMBXX RMBXX by The year. the million to last of tax was the income Net million of quarter period last Operating in

XXXX XXXX XX, X.X% The to X.X% compared of December XXst, NPL March the to XXXX, RMBX.X of cash of ratio as for cash RMBX.X cash, the and decreased has XXXX. company delinquency The to December XXst, billion as at ratio XX.X% March from billion company XX, as December loan the by for the originated of of as compared XX, by equivalents restricted of XXst, originated As XX.X% was company XXXX. loan March XXXX.

would we to Now start Please? Q&A and ahead section. like go the

you. Thank

session. go the We question begin Instructions] from will next the [Operator ahead. William Gregozeski now of Global. question-and-answer The -- comes question first Please Greenridge

credit should Thanks. losses the for bounced look at The around purposes? that we for quarters. few modeling How going last forward provision

Language] [Foreign

Language] [Foreign

we model is provided believe [Interpreted] that the have years the we operation, a industry. sales So on based and the And collaboration supported in providing well of auditors are after since ago four provision introduced. we very and it's model peers as the good always loans as partners consistent that guarantee policy. introduced we to financing the our very four years a maintained And by

lower, that's in has model sales And introduced, are provision. providing to especially the model the occurred they And the guarantee our actually loans quarter, less on have and partners the -- provision protection we based ratio delinquency actually why decreased. this is as

and And provision -- macro this lower another our turned And forecast has the quarter. also made why China future. pandemic that that's is the the for a has in since control impacts and in over also the as turn the economy -- good reason is

model answer your to this risk, to So recognized it will think helps scale. collaboration it with have sales hold our and, partnership of the into we we because partners us have our advancement importantly, us we sales going with partners help the commercial question? does also also on Does to future contain brought not expand just collaboration only forward the I as banks, and in that more the

Yes. Thank you.

On think the how the because of past numbers the product lending mentioned commercial you're being you've at that will fast out? around off about level that you now that stay where new a side, around you're third you origination. that's Do are origination the in that given taking and talked rolling of

Could line. first your catch didn't I repeat that? you

Yes.

new You the talked product the think bringing Do you're lending have commercial the in that get how fast it's out? a being higher about guys of past you and will third given about growing origination.

Language] [Foreign Okay.

[Foreign Language]

back actually the think I with look estimation. our for you XX%. pick. data above the to that's [Interpreted] that's think But originated under in accounted quarter, banks So planned loans collaboration well And if the first commercial the our I

volume partnership XX% keeps bank So to overall as the at as in percentage -- origination future, to the the keep long going think kept to the as continue bank commercial commercial I But of growing think will loan XX%. be grow. well the just to originated proportion is partnership -- of I

current out proportion just on charges the the under on that that's our our like interest bank is expectations the for analysis. it current market is based we But -- rate And the conditions us XX% partnership if lower based product loan commercial roll said annually. which and possible than to

a grow cut products as higher Thank you. loans in of And proportion the loan our origination. will will loan the overall -- share it bank facilitated under just think well. just commercial I partnership

And the of Are economy demand kind trust them origination that be you're implying mentioned well. have I traditional you done? more You more that Okay. guess lending you Are will demand that products? for you those since guys question improving. as guys in now to seeing for of seeing the is macro the company previous increasing the kind

Language] [Foreign

[Foreign Language]

the So to rather same kick we And is gradually of going first on second China's status it [Interpreted] as in we are is after demand think and confident the stable to the up And based in quarter the compared the think economy. future. of -- I remain the released looking XXXX I data lending to forward in and XXXX. quarter period

But high-quality So there will business. for we pursue us have as said, still room expand our to we is development.

So billion. in to Thank think the going way. in the I for we why estimation year build focus to loan more keep asset origination are well compliance total a compliant operate way you. fully that a compliance operate will means on RMBXX quality to as -- more the of as we That's our to of

See you Okay. Great. you. week. Thank guys next

there [Operator to over question-and-answer back our turn questions, are conference Matthew any concludes further Lou Instructions] no would to I like this remarks. Seeing session. closing the

And conference again connection again the Thank for you. call just you, this guys, issues. apologize for attending and thank

our a on IR call, this ir@cashchina.cn. have on So at we'll replay website

also If you ir@cashchina.com. have contact again. you any can you. us via questions, you Thank Thank

The concluded. you conference attending presentation. for has today's now Thank

You may now disconnect.