Please note this event is being recorded. I would now like to turn the conference over to Matthew Lou, IR Manager. Please go ahead. Thank you, Kate. Good morning and evening, and welcome to the CNFinance second quarter and first half of 2023 financial results conference call. In today's call, our Director and Vice President, Mr. Qian Jun, will walk us through the operating results, followed by the financial results from our acting CFO, Ms. Li. After that, we will have a Q&A session. Before we start, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, target, going forward, outlook, and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict, and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, or factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. Now, please welcome Mr. Jun Qian. [Foreign language] Thank you for taking the time to join this conference call. We will discuss CNFinance's second quarter and first half of 2023 operating and financial results, followed by a Q&A session. Thank you for taking the time to join this conference call. We We will discuss CNFinance's second quarter and first half of 2023 operating and financial results, followed by a Q&A session. [Foreign language] During the second quarter and first half of 2023, the company achieved year-over-year growth in major performance indicators. In the second quarter of 2023, the total loan origination volume was RMB 4.5 billion, representing a year-on-year increase of 45%. Total interest income was RMB 430 million, representing a year-on-year increase of 5%. Net income came in as RMB 44 million, representing a year-on-year increase of 142%. In the first half of 2023, total loans originated was RMB 8 billion, representing a year-on-year increase of 43%. Total interest income was RMB 885 million, representing a year-on-year increase of 7%. The net income was RMB 93 million, representing a year-on-year growth of 52%. In the first half of 2023, we focused on achieving high-quality development and accomplished the following tasks. [Foreign language]. First, we continued to promote commercial bank partnership. Since the launch of commercial bank partnership model, it has gradually gained recognition of the market and our partners, given its competitive price and high quality borrower base. ...After deepening the cooperation with private banks in the second half of 2022, the commercial bank partnership started to scale and has become an important part of the company's business and source of income. In the first half of 2023, we originated loans of RMB 3 billion under the commercial bank partnership, accounting for 40% of the overall loan origination volume, and the associated net revenue was RMB 50 million. 第二，继续压降资金成本，并实现了特殊资产规模的阶段性突破。结合当前的市场形势，公司持续与资金方就降低资金成本、优化融资结构展开谈判，并取得了积极的进展。公司继续推进特殊资产基金项目，截止到2023年第二季度末，特殊资产基金累计融资已达RMB 7亿元。特殊资产基金项目为贷款伙伴的不良资产贷款的回购提供了持续稳定的资金，帮助他们降低了流动性的压力，并为其进一步地扩大业务规模提供了保障。 Second, we continued to reduce funding costs and achieved a breakthrough in the scale of funds raised to support sales partners who are obliged to repurchase delinquent loans. Under the current market condition, the company continued to maintain dialogue with funding partners on lowering the cost and optimizing the financing structure, and made positive progress. As of the end of the second quarter of 2023, the accumulated amount of funding raised to support sales partners default repurchase was RMB 700 million, which has helped to ease their liquidity pressure and has provided strong support to further expand their business. 第三，不断精进信审策略。今年以来，通过对历史逾期借款人进行因子分析，以及引入优秀商业银行的风控模型，我们优化了对于借款人的信用评估。同时，通过全面地推广投盘评级系统，我们加强了对于抵押物价值的评估手段。截止到2023年6月30号，公司发放贷款的逾期率约为45%，较去年年末的18%有所下降。 Third, we continued to refine our credit decisioning mechanism. Since the beginning of the year, we have optimized our borrower assessment. We analyzed influential factors of historical defaulted borrowers and started trial run of a risk control model procured from a well-established commercial bank. At the same time, we have strengthened the evaluation of collateral value by applying the property rating system. As of June 30, 2023, the delinquency rate of loans originated by the company was approximately 15%, down from 18% as of the end of 2022. 当前，宏观经济的不确定性依然存在，房地产市场下行的趋势没有扭转。但同时，我们认为，随着国家提出的发挥总量和结构性货币政策工具作用，大力支持科技创新、实体经济和中小微企业的发 展，中国的普惠金融行业将继续处于战略机遇期。在此大背景下，为了迎接挑战，抓住机遇，我们将继续坚持高质量发展的主题，统筹规模、质量、合规之间的关系。具体举措包括： Currently, there are still uncertainties associated with China's economy, and the downward trend of the real estate market has not been reversed. However, we believe that with China proposing to give full play the role of both aggregate and structural monetary policy tools, and to vigorously support scientific and technological innovations, the real economy, as well as the development of SMEs, China's inclusive financial system will continue to be in a period of strategic opportunity. Against this backdrop, in order to overcome the challenges and seize the opportunities, we will continue to pursue high quality development by coordinating growth of scale, asset quality and ensuring compliance. Our plans include: 第一，继续提升业务规模。为了覆盖更广泛的贷款客户，我们将继续完善产品矩阵，推出低利率差异化的产品，同时利用科技赋能销售。 First, we will focus on growth. In order to reach a wider range of borrowers, we will continue to improve our product mix, launch differentiated products with low interest rates, and leverage technology to empower sales. 第二，精进信审策略，优化资产质量。我们将继续把业务向一线、新一线城市核心区域倾斜，我们还将围绕着好人、好物、好伙伴，加强对伙伴的管理和对抵押物的评估水平，继续压降贷款逾期率，减轻伙伴的压力。 ...Second, we will refine credit decisioning mechanism and optimize asset quality. We will continue to shift our business to core areas in first tier and new first tier cities. In credit decisioning process, we will thoroughly evaluate the quality of borrower, collateral, and the sales partners introduced such borrower. We will better manage sales partners and evaluate collateral to reduce the delinquency rate and continue to help sales partners release pressure. 第三，继续加大科技投入，加强科技赋能。目前我们正在开发一套大数据模型，我们希望通过结合优秀商业银行的风控模型，以及自身超过近20年的行业数据积累，此大数据模型能够增强我们对借款人质量的评估判断。目前，开发人员已经完成了前期的调研工作，正在全力以赴地进行系统开发。我们也将关注市场上能够与泛华的业务形成协同发展的金融科技企业，并对其开展合作，乃至投资此类企业，秉持开放态度。 Third, we will continue to invest in science and technology to empower our business. We are developing a big data model to enhance our capability to evaluate borrowers. We are working on making the risk control model procured more suitable to our business using historical loan data we have accumulated in the past two decades. Our developers have completed the preliminary research and are working on developing the system. At the same time, we are also looking for opportunities to collaborate with or invest in other fintech companies whose advantages could be synergistical with our business. 第四，不断加强合规检查与稽核，通过开展常规检查、个案稽查和合规培训等手段，进一步降低合规风险。 Fourth, we will strengthen compliance inspections and audits to further minimize compliance risks by means of routine inspections, case audits, and compliance training. 下面我将时间交给你，交给李静女士，并由她向您介绍2023年第二季度和上半年的财务状况。 Now, I would like to hand the call over to Miss Jing Li, who will walk you through our second quarter and first half financial results. Thank you! Now, I would like to go through the second quarter and first half financial. Please notice that the currency will be in RMB. All comparisons will be on a quarter-on-quarter basis as otherwise. For the second quarter of 2023, total interest and fee income increased by 5%, RMB 431.4 million and interest and financing service fees increased by 6% to RMB 390. Pardon me, everyone. Please hold on for the speaker line to be reconnected. ... We have the speaker line rejoined. Please go ahead. Thank you, Kate. Sorry. Now please welcome, Ms. Jing Li to continue with the financial results of CNFinance. Total interest and fee expenses decreased by 3% to RMB 182 million, compared to RMB 187 million, primarily due to lower funding costs from trust companies. Net interest and fee income was RMB 250 million, representing an increase of 12% from RMB 223 million. Net revenue under the commercial bank partnership model, representing fees charged to commercial banks for services, including introducing borrowers, initial credit assessment, facilitating loans from the banks to the borrower, and providing technical assistance to the borrower and banks. Net of fee paid to third-party insurance company and the commissions paid to sales channels was RMB 29 million as compared to RMB 0.7 million. The company has been collaborating with commercial banks since 2021, and such collaboration grew and scaled in the second half of 2022. The outstanding loan principal under the commercial bank partnership was RMB 4.5 billion as of June 30, 2023, as compared to RMB 0.3 billion as of June 30, 2022. Collaboration cost for sales partners was RMB 83 million, as compared to seventy-seven million, primarily due to the increase of loans recommended by sales partners under the commercial bank partnership. Net interest and fees income after collaboration cost was RMB 196 million, representing an increase of 33% from RMB 147 million. Provision for credit losses. Representing provision for credit losses, losses under the trust lending model and the expected credit losses of guarantee under the commercial bank partnership model in relation to certain financial guarantee arrangements the company entered into with a third party guarantor who provides guarantee services to commercial bank partners decreased by 26% to RMB 51 million from RMB 68 million, primarily due to the decrease in outstanding loan principals of delinquent loans, resulting from our constantly improving credit risk control mechanism. Realized gains on sales of investments, net, representing realized gains from the sales of investment securities, was RMB 12 million as compared to RMB 8 million. The increase was primarily due to effective fund management. Other gains net decreased by 97% to RMB 0.8 million from RMB 13 million, primarily due to the decrease of credit risk mitigation positions forfeited by the sales partners as a result of our refined management on sales partners. Total operating expenses increased by 8% to RMB 99 million, compared with RMB 91 million. Employee compensation and benefits was RMB 51 million as compared to RMB 49 million, primarily attributed to an increase in the performance-based bonuses as a result of an increase in loan origination volume during the second quarter of 2023. Other expenses increased by 26% to RMB 36 million from RMB 29 million, primarily due to the increase in fees paid to local channels for introducing sales partners to the company. Net income increased by 142% to RMB 44 million from RMB 18 million. For the first half of 2023, total interest and fees income increased by 7% to RMB 885 million from RMB 827 million. Interest and financing service fees on loans increased by 5% to RMB 807 million from RMB 766 million, primarily attributed to the increase of average daily outstanding loan principals in the first half of 2023 as compared to the same period of 2022. Interest income charged to sales partners increased by 18% to RMB 66 million from RMB 56 million, primarily due to the fact that the company allowed more sales partners to repurchase the default loans in installments to help sales partners ease their pressure on cash flow in the first half of 2023. Total interest and fees expenses decreased by 6% to RMB 366 million from RMB 388 million, primarily due to lower funding costs from trust companies in the first half of 2023. Net interest and fee income was RMB 580 million, representing an increase of 18% from RMB 439 million. Net revenue under the commercial bank partnership model was RMB 15 million as compared to RMB 0.9 million. Collaboration costs for sales partners increased by 6% to RMB 166 million from RMB 156 million in the same period of 2022, primarily due to the increase of loans recommended by sales partners under the commercial bank partnership. Provision for credit losses increased by 136% to RMB 130 million from RMB 55 million. The increase was the combined effect of the increase in expected credit losses of guarantee under the commercial bank partnership model as origination volume grow and scale rapidly in the first half of 2023, and a reversal of allowance in the first quarter of 2022, due to the fact that the company disposed the remaining loans under the traditional facilitation model to third parties, and the allowance of such loans was reserved. Net losses on sales of loans was RMB 4 million, as compared to RMB 42 million in the same period of 2022. The net losses in the first half of 2022 was primarily attributed to the fact that the company disposed the remaining loans under the traditional facilitation model, which were all facilitated prior to 2019 to third parties in bulk during the first quarter of 2022. Other gains net decreased by 65% to RMB 17 million from RMB 48 million in the same period of 2022, primarily due to the decrease of credit risk mitigation position forfeited by the sales partners as a result of our refined management on sales partners. Total operating expenses increased by 5% to RMB 179 million, compared with RMB 171 million in the same period of 2022. Employee compensation and benefits increased by 4% to RMB 95 million from RMB 92 million in the same period in 2022. Other expenses increased by 14% to RMB 60 million from RMB 53 million, primarily due to the increase in fees paid to local channels for introducing sales partners to the company. Net income increased by 52% to RMB 93 million from RMB 61 million in the same period of 2022. As of June 30, 2023, the company had cash and cash equivalents and restricted cash of RMB 1.9 billion, compared with RMB 1.8 billion as of December 31, 2022, including RMB 1.3 billion and RMB 1.2 billion from structured funds as of June 30, 2023 and December 31, 2022, respectively, which could only be used to grant new loans and activities. The delinquency ratio, excluding loans held for sale for loans originated by the company, decreased from 18.3% as of December 31, 2022, to 15.2% as of June 30, 2023. The NPL ratio, excluding loans held for sale for loans originated by the company, increased from 1.1% as of December 31, 2022, to 1.4% as of June 30, 2023. Now we would like to start the Q&A section. Operator, please. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw from the question queue, please press star then two. ...The first question is from William Gregozeski of Greenridge Global. Please go ahead. Hi. I was hoping you could kind of provide an update on the demand you're seeing from the SME clients, in terms of the number of SMEs trying to take out loans, the size, the type, whether it's the trust or the commercial, and how does that compare to last year? 他的问题是想向您请问一下目前小微企业的需求是怎么样的？从您看来，特别是这个申请贷款的人，向您申请贷款的人数以及申请贷款的金额，并且这个信托模式和银行模式之间是怎么分，分别有多少，然后这些数字和去年相比有什么变化。 从那个七月份整个社会融资数据报告来看的话，整个当前小微企业主的整体的，贷款需求是有所下降的。我这里有一组数据，七月份社会融资总体的规模增量为5,282亿元，比去年同期，比去年同期是减少了2,703亿元。其中对于整个实体经济发放的人民币贷款增加了364亿元，但同比也少增了3,892亿元。那么泛华在2023年第二季度和上半年的发放贷款笔数分别为6,269笔和11,812笔，那么同比是增长，分别为18%和16%。那么放款量为45亿和80亿人民币，同比增加了45%和43%。 So, based on the released data and figures of July, we're seeing the overall loan demand of MSE owners to decrease. So I have a set of data for you here. The new loans in July, China's new loans in July was RMB 528 billion, which has decreased RMB 270 billion as compared to the same period of last year. And among them, new loans issued to the real economy was RMB 36 billion, which has decreased by RMB 389 billion as compared to the same period of last year. As of CNFinance, in the second quarter and the first half of 2023, our number of transactions were 62, 69 and 11,812, respectively, which representing a year-on-year growth of 18% and 16%. And the loan origination volume was RMB 4.5 billion and RMB 8 billion in the second quarter and first half of 2023 respectively, which representing a year-on-year growth of 45% and 43% respectively. 整个投放的那个贷款笔数里面，信托模式的投放笔数在第二季度占比，笔数是4,101笔。银行模式，它的那個投放笔数是2,167笔。整个上半年，迎来信托模式的投放笔数是7,734笔，那么银行模式那个投放的笔数，约4,000笔。 As for the split from trust model and bank, bank model. So in the second quarter of 2023, we originated 4,101 loan transactions under the trust lending model, and that number under the commercial bank partnership was 2,167. As for the first half of 2023, the number of transactions under trust lending model was 7,734, and that number under commercial bank partnership was 4,774. 在整个市场需求的状况下，我们同比去年取得增长，在我看来有以下两个方面的原因。 So, I think the reason why we achieved growth when the entire market is going on a downward trend, has the two... the reason was twofold. 第一呢，这个去年同期呢，因为受疫情的影响，去年整个放款的基数相对比较低。 So first of all, in the same period of 2022, our business was under the negative influence of the pandemic control and prevention, so the business number is rather low. 第二来讲的话呢，整个泛华的规模总量还不够大，整个市场的占比相对还比较低。在我们持续地加强销售力建设和产品力建设的同时，我们在上半年的整个市场下行的状况下，我们依然保持了增长的态势。 ...And I think the second reason of our growth is that, we are still relatively small and our market share is relatively low. So with our continued efforts to build our sales to to push out more products, we were able to achieve a growth when the entire market is on a downward trend in the first half of 2023. [Foreign language] As for the average ticket size, so in the same period of 2022, our average ticket size was somewhere near RMB 600,000, and it has increased in 2023 to around RMB 700,000. [Foreign language] So I think the reason behind the increase of average ticket size was mainly due to that we have since the fourth quarter of 2022 to maintain the overall asset quality, we have made a decision to shift our business to the core area of Tier 1 and new Tier 1 cities. [Foreign language] So I think the reason behind the increase of average ticket size was mainly due to that we have since the fourth quarter of 2022 to maintain the overall asset quality, we have made a decision to shift our business to the core area of Tier 1 and new Tier 1 cities. [Foreign language] So we still believe, despite the overall downward trend and uncertainties associated with the China's real estate market, the assets in the core area of Tier 1, new Tier 1 city, will still maintain its value and even gradually go up. Thank you. Great. Thank you for all that. Are you guys, even with the uncertainty of the economy, do you still think you'll see, you know, origination growth over the remainder of the year? [Foreign language] First off, we're still sticking to the target we made at the beginning of the year of reaching loan origination of RMB 20 billion. [Foreign language] Secondly, we will still insist on our high quality development. We will not giving in, in the evaluation of borrower as well as the estimation of collateral value. [Foreign language] So as I have mentioned, our market share is still relatively low, even though given the RMB 20 billion origination target. Thank you. Okay, thanks. And then last question is regarding the sales partners. The interest on the loans to the sales partners was down this quarter. Is that a sign of just less loans going into default or sales partners having more liquidity? And what's kind of the... You know, how active are the sales partners right now? [Foreign language] So we see this change as a positive indicator. So, we believe that means there are less defaults and, which indicates that the overall asset quality is improving, which has caused less sales partners to have to repurchase the defaulted loan, and that has caused such number to decrease. And also, I think, in the future, if this number keeps going down, it only means that our business is, it's getting better. Means our sales partners are doing better, are performing well. Any, any- Okay. Anything else? Thank you. That concludes the question and answer session. I would like to turn the conference back over to Matthew Lou for closing remarks. Thank you. Thank you again for joining us today. If you have any other questions, please feel free to contact us at ir@cashchina.cn. Thank you.