Ladies and gentlemen, thank you for standing by, and welcome to Lufax Holding Limited first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question -and -answer session. Please note this event is being recorded. Now, I'd like to hand the conference over to your speaker host today, Mr. Yu Chen, the company's Head of Board Office and Capital Markets. Please go ahead, sir. Thank you very much. Hello, everyone, and welcome to our first quarter 2021 earnings conference call. Our quarterly financial and operating results were released by our newswire services earlier today and are currently available online. Today, you will hear from our Chairman, Mr. Ji Guangheng, who will start the call with updates on the impact of regulatory developments, as well as our efforts in supporting the growth of small and micro businesses. Our Co-Chief Executive Officer, Mr. Greg Gibb, will then provide a review of our progress and details of our development strategies in the quarter. Afterwards, our CFO, Mr. James Zheng, will offer a closer look into our financials before we open up the call for questions. In addition, Mr. Y.S. Cho, our Co-Chief Executive Officer, and Mr. David Choy, CFO of our retail credit facilitation business, will also be available during the question and answer session. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we'll be making forward-looking statements. Please also note that we'll be discussing non-IFRS measures today, which are more thoroughly explained and reconcile to the most comparable measures reported under the International Financial Reporting Standards in our earnings release and filings with the SEC. With that, I'm now pleased to turn over the call to Mr. Ji Guangheng, Chairman of Lufax. [Non-English content] Thank you, everyone, and thank you for joining our first quarter 2021 earnings call. Before we go through the detailed quarterly results, I would like to provide some general updates on two aspects of our business. First, the recent regulatory developments and their impact on our business. Second, our achievements in supporting small and micro businesses. [Non-English content] Let's start with the recent regulatory development and the impact on Lufax. First, with increased clarity on regulations in the first quarter, we have witnessed how regulatory authorities impose various reform requirements on leading tech platforms. We believe that the intention of the new regulation has three folds. First, all financial businesses must be rooted in finance and powered by technology. Second, all financial activities should be placed under regulatory oversight. Third, the development of the sector must be built on the basis of compliance. These policy directions are largely in line with our previous expectations. [Non-English content] Regulatory compliance has always been a key focus for Lufax. Although we were not directly affected by the recent announcements, we have always upheld our commitment to provide socially responsible, trustworthy, and convenient financial services. [Non-English content] For our retail credit facilitation business, we promote responsible lending practices and educate borrowers on rational borrowing. These efforts help us keep our credit services independent from other incompatible businesses and prevent them misleading customers with excess lending practices. For borrowers who use the proceeds for our loans, we are different from most online consumer credit business, as we focus on serving the small and micro business owners. We support the development of China's real economy, and our mission is fully aligned with national policies. On data security, we have strictly adhered to the principle of compliance minimum and necessity. First, the data we collect that used for the purpose risk assessment are for all payment information, which is strictly compliant with the requirements listed in the Regulation on the Administration of Credit Scoring Industry. Second, all data related to Ping An Group has customer consent and has been scrubbed thoroughly to remove sensitivity. Third, all risk modeling analysis processes are executed in full compliance with industry rules and regulations. Going forward, we will continue to abide by regulatory guidelines, foster prudent innovation, ensure operational compliance, prioritize protection of personal data, and improve financial service efficiency and inclusiveness through technology. [Non-English content] For our wealth management business, we continue to wind down our P2P products in response to regulatory requirements. Thanks to our strong operations and risk management capabilities, P2P products now account for only 0.9% of our total client assets. We have achieved a smooth and compliant transition process as we gradually phase out our peer-to-peer products, making our business more aligned with regulatory guidelines. [Non-English content] Overall, we are fundamentally different from other leading platforms in terms of business model and target customer base. On regulatory compliance, we have adhered to the principle of preemptive diagnosis and swift operational adjustments for timely optimal results to keep our operation in line with regulatory trends. As policy trends become clearer, we believe it will benefit industry leaders such as Lufax in the long term. [Non-English content] Next, I would like to provide an update on our achievements in supporting small and micro businesses. First, we help small and micro businesses to overcome the hurdles of limited access to capital and high cost in financing. Second, we leverage our unique offline-to-online model to provide better services to small and micro businesses. [Non-English content] Lufax has always been committed to promoting inclusive finance. To expand small and micro businesses' access to finance, Lufax has provided credit facilitation services to more than 15 million customers as of March 2021, facilitated over RMB 580 billion of outstanding balance of loans, and extended unsecured loans to nearly 4 million customers residing outside of Tier 1 and Tier 2 cities. To improve financing affordability, we have adhered to regulatory guidelines and implemented an all-in cost ceiling of 24% for all new loans since September 2020. We will remain committed to exploring additional ways to lower the financing cost for small and micro businesses. [Non-English content] Lufax's unique offline-to-online business model and technology capabilities have enabled us to support the financing needs of small and micro businesses very effectively. Recently, we noted investor interest in the development of our offline sales team. I would like to mention that our decision to establish an offline sales team was based on the key characteristics of our core customers. Most of our core small and micro business owners have an average age of 39, and the business has average annual revenue of less than RMB 10 million, an average pay of less than 20 employees. Their borrower profiles make it difficult for them to qualify for traditional bank loans. They also lack the time or the experience to apply loans online. With this in mind, we have a sales and service team of nearly 57,000 representatives in over 280 cities. By leveraging our proprietary technology applications, our service team is able to provide professional, convenient, and flexible credit services. For example, the verification of borrower background information is conducted automatically through artificial intelligence online. Thus significantly reducing manual effort in information gathering and decision making, substantially improving the efficiency of our lending process. In the future, we plan to launch a series of new technology applications to further enhance our customer experience, empower our offline sales team, and improve our operational efficiency. [Non-English content] Moving forward, Lufax will continue to adhere to the nation's guidelines on green finance and inclusive finance by executing our mission of providing inclusive and compassionate financial services. We view it as our responsibility to provide individuals and small and micro business owners across China with easy access to timely, convenient, and high-quality financial services. [Non-English content] In conclusion, although recent regulatory developments have impacted the industry, our business was not materially affected thanks to our preemptive interpretation regulatory intentions, and proactive adjustments. These efforts have also enabled us to achieve solid operating results in the first quarter. Our management team will continue to embrace regulatory oversight while maintaining active dialogue with the authorities. We will also improve our capabilities in technology, pricing, and risk management to streamline our operations, optimize our cost structure, and enhance our operating efficiency. We are confident in our ability to maintain the stable growth of our business and continue to provide compassionate financial services to our customers. [Non-English content] I will now turn the call to Greg, who will share our business update for the quarter. Thank you, Chairman Ji. Before I begin, please note that all numbers are in renminbi and all comparisons are on a year-over-year basis unless otherwise stated. Lufax had a strong first quarter. We exceeded our guidance and delivered strong top and bottom line growth. In the first quarter, total income increased by 16.9% to RMB 15.3 billion, and net profit increased by 18.7% to RMB 5 billion. This is exceeding our earlier guidance of RMB 4.2 billion. Our net margin reached 32.6% in the first quarter, an 11 percentage point improvement over the fourth quarter of 2020. Four key trends underpinned our first quarter performance. First, we experienced a significant rebound in our retail credit facilitation unit economics. While keeping all-in costs for new borrowers below 24%, the take rate based on loan balance was 10% in the first quarter of 2021, recovering from 9.1% in the fourth quarter of 2020. Funding cost optimization and credit insurance premium reduction were key drivers of this improvement, as insurance partners lowered their pricing on the basis of better credit and customer quality. We also reduced our sales commissions in January and improved our operating efficiency. As a result, our net margin and lending facilitation essentially returned to the levels we saw prior to price reductions in 2020. As mentioned, reduction in credit insurance premiums is closely linked to credit performance. In the first quarter, our C-M3 flow rate for all loans facilitated was 0.4%, versus the COVID peak of 1% in February 2020. The 30-day-plus past due delinquency rate for all loans facilitated stabilized at 2% as of March 31, 2021, on par with December 31, 2020. The 90-plus day past delinquency rate for total loans facilitated improved to 1.1% as of March 31, 2021, from 1.2% on December 31, 2020. All of the aforementioned operating metrics exclude our consumer finance subsidiary and legacy products, which represent less than 1% of our total loan business. Second, we observed steady volume growth while improving our business mix. On the retail credit side, our new loans facilitated grew by 17.3% to RMB 172.4 billion in the first quarter, largely in line with our expectations. We continue to focus on serving small business owners and improving the risk profile of our borrowers. In the first quarter, excluding the consumer finance subsidiary, 75.7% of the new loans facilitated were disbursed to small business owners, up from 65.9% for the same period of 2020. High-quality borrowers, defined as G1 to G3 borrowers by our own internal classification system, contributed 65.9% of new general unsecured loans facilitated in the first quarter, compared to 58.7% for the same period of 2020. The improved borrower quality led to a sustainable decline in credit insurance premiums and expected credit loss levels. On the wealth management side, our total client assets exceeded our guidance and reached RMB 421.1 billion as of March 31, 2021. Our focus on mass affluent customers who invest more than RMB 300,000 on the platform has paid off as the contribution to our total client assets reached 76.3% as of March 31 of this year. Third, we continue to make progress on executing our plan for a more sustainable risk-sharing business model. It is encouraging to see that our funding and insurance partners have remained supportive and are embracing the new risk-sharing business model. As of March 31, 2021, our outstanding balance of loans facilitated with guarantees from third-party insurance partners decreased to 86.8% from 95.1% a year previously. Moreover, new loans facilitated with guarantees from Ping An P&C accounted for 78.3% of new loans facilitated in the first quarter, down from 92.5% a year ago. While our funding partners borne the risk for 5.5% of new loans facilitated in the first quarter. Loans where we bear the risk accounted for 12.5% of new loans facilitated in the first quarter, up from 1.3% in the same quarter of 2020. The balance of loans where we bear the risk was RMB 45.7 billion as of March 31st, 2021, representing around two times leverage of our licensed guarantee company's net assets of RMB 19.2 billion. Again, these figures do not include our consumer finance subsidiary. We expect the net assets of our guarantee companies to continue to increase as our retained earnings grow, providing organic support to future business growth. Under a 20%-30% risk-sharing business model and a 10x leverage cap for our guarantee companies, we have ample room to grow our total loan guarantee balance without any additional capital injection this year. The existing capacity of our guarantee company supports a doubling of the current business scale. Fourth, our wealth management client assets and take rate have remained stable despite accelerated P2P runoff and discontinuation of bank deposit products. As of March 31, 2021, our total client assets increased by 18.7% to RMB 421 billion versus a year ago, despite accelerated P2P runoff and discontinuation of bank deposit products. First quarter revenues from wealth management business increased by 52.8% year-over-year. In the first quarter, we accelerated the runoff of RMB 15.4 billion in P2P products. Of that, March 31, 2021, legacy products accounted for just 0.9% of total client assets, compared to 20.6% a year ago. We expect the runoff of our remaining legacy products to be completed in the second quarter. As a result of regulatory restrictions on bank deposit products, deposit-related client assets decreased RMB 9.1 billion in the first quarter. Our take rate for the wealth business was 28 basis points in the first quarter, with some fluctuation due to decrease in deposit products offset by continued development in standard wealth and insurance products. Next, our upgraded guidance for the first half. We expect continued growth momentum in the second quarter with steady business development, further cost optimization, and strong credit performance. We are increasing our first half of 2021 guidance for total income growth to be between 17% and 18%, up from our previous guidance of 11%- 14%. We are also increasing our first half of 2021 guidance for net profit growth to be between 19% and 22%, effectively doubling our earlier guidance of 7%-10%. In the first half of this year, we expect growth in new loans facilitated to be between 12% and 15% growth, down from our prior guidance of 20%. This is really due to our greater focus on improving product mix and margins. We plan to prioritize the growth of unsecured loans over secured loans, as unsecured loans provide higher operating margins, but with smaller ticket sizes. We expect overall unit economics for new loans this year to be largely in line with the average for new loans in 2020. Our expectation is that wealth management client assets will grow 9%-12% in the first half from the same period of last year, as we will continue to focus on higher margin asset management funds and insurance products. Finally, I do want to share our priorities for technology development. Our focus is on four fronts. First, we continue to expand our use of legally compliant big data and AI capabilities to augment our strengths in the end-to-end risk management for small business owners. Second, we are developing industry content and real-time planning tools to better support the productivity of our unique O2O sales force. Third, we are integrating infrastructure and services across our lending and wealth management customers to capture greater business synergies. We've already begun to integrate lending and wealth client sourcing with the third-party channels, and will move to an integrated app for all services during the course of this year. Fourth, we are exporting our technology and proven online operating models via cloud solutions to our banking partners in China, Hong Kong, and Southeast Asia to extend our market reach and deepen these important ecosystem relationships. We will measure our progress in technology deployment by our ability to increase customer sourcing and financial institution partnerships, to enhance our O2O sales productivity, and to promote deeper product cross-selling, and finally, to achieve greater operating efficiencies. With ongoing changes in regulation, we believe that our ability to combine our D&A, improving financial services with innovative technology, will enhance our competitive differentiation and sustain our growth trajectory for the long run. I will now turn the call over to James Zheng, our CFO, to go through the financial details. Thank you, Greg. I will now provide a closer look into our first quarter financial results. Please note that all numbers are in RMB terms, and all comparisons are on a year-over-year basis unless otherwise stated. As Greg mentioned, we have experienced significant rebounds in retail credit facilitation unit economics driven by lower funding costs, insurance premiums, and optimization of operating expenses. As a result, we have delivered strong financial results in the first quarter. Our total income was RMB 15.3 billion, up 16.9% year-over-year. Our net profit increased by 18.7% to RMB 5 billion in the first quarter. Our net margin further expanded to 32.6%. Now let's take a closer look into our Q1 numbers. During the first quarter, our total income increased by 16.9%, driven by strong business volumes and increased take rate. On the back of this growth, our retail credit facilitation business is seeing a change in revenue mix as our business and risk sharing model evolves. While our platform service fees decreased by 9.4% to RMB 9.7 billion, our net interest income grew 111.7% to RMB 2.9 billion, and our guaranteed income grew 597.5% to RMB 551 million. In addition, other income directly linked to delivering services to our financial partners increased 241.8% to RMB 1 billion. As a result, our retail credit facilitation platform service fees as a percentage of total revenue increased to 63.4% from 81.8%. As we continue to fund more with consolidated trust plans providing lower funding costs, our net interest income as a percentage of revenue increased to 19.1% from 10.5% in the previous year. As we see more credit risks generating more guarantee income, our guarantee income as a percentage of total revenue increased to 3.6% from 0.6%. Through expanded services to our credit enhancement partners in account management, collections, and other value-added services, our other income as a percentage of total revenue increased to 6.8% from 2.3%. In wealth management, our platform transaction and service fees increased by 52.8% to RMB 625 million in the first quarter, from RMB 409 million in the same period of 2020. The increase was mainly driven by the increase in fees generated from our current products and the revenue recognition arising from accelerated P2P runoff. Moving on to our expenses. In the first quarter, total costs grew by 17.1% to RMB 8.5 billion. Total expenses excluding credit impairment losses, financial costs, and other losses, however, grew by only 10.1% as a result of the improved operating efficiencies in most cases. Our sales and marketing expense, which includes borrower and investor acquisition expense and the general sales and marketing expense, increased by 5.5% to RMB 4.2 billion during the first quarter. Our borrower acquisition expense, which is a major component of overall sales marketing expenses, increased by only 0.2% to RMB 2.6 billion from a year ago. Mainly driven by further optimization in sales productivity and sales commission. Our investor acquisition and retention expense decreased in the first quarter versus the year before, mostly driven by the improved acquisition efficiency as we leverage the data to achieve greater precision in investor profiling and targeting. Our general sales and marketing expense, which is mainly comprised of payroll and related expenses for marketing personnel, brand promotion costs, consulting fees, development costs, as well as other marketing and advertising costs increased by 24.8% to RMB 1.5 billion in the first quarter from RMB 1.2 billion a year ago. This increase was mainly due to lower base in the first quarter of 2020, resulting from this postponement of certain marketing campaigns due to COVID-19 at that time. Our general administrative expenses increased by 24.1% to RMB 854 million during the first quarter from RMB 688 million a year ago. This increase was mainly due to lower base in the first quarter of 2020 and a subsequent headcount expansion to support new business development, including the consumer finance business. General administrative expenses as a percentage of revenue decreased to 5.6% from 7.4% during the fourth quarter of 2020. Consistent with the growth of our outstanding balance of loans facilitated, and in turn, the expanded loan repayment volume, our operation and servicing expenses increased by 17.7% to RMB 1.5 billion during the first quarter from RMB 1.3 billion a year ago. Our technology and analytics expense increased by 8.2% to RMB 447 million during the first quarter, as we continue to invest in technology research and development. Our credit impairment losses increased by 109.8% to RMB 1.1 billion during the first quarter of 2021, from RMB 502 million during the same period of last year. This increase was due to increased loan-related risk exposure as our business model continued to evolve, leading to higher credit impairment losses upfront. Excluding the consumer finance subsidiary, the proportion of loans for which we bear the risk accounted for 12.5% of new loans facilitated in the first quarter, up from 1.3% from the same period of 2020. It is worth noting that the increase in impairment losses is purely a function of the increase in the proportion of credit risks borne by us, while the overall credit profile of our borrowers continued to improve. High-quality borrowers, defined as G1 to G3 borrowers by our internal classification system, contributed to 65.9% of the new general unsecured loans facilitated in the first quarter of 2021, compared to 58.7% for the same period of last year. In addition, our loan-quality indicators such as flow rate, DPD 30+, DPD 90+, have stabilized and in some cases improved substantially from a year ago. Our finance costs decreased by 36.3% to RMB 284 million in the first quarter from RMB 446 million a year ago, mainly due to the decrease in interest cost. Additionally, our effective tax rate decreased to 36% during the first quarter of 2021 from 37% in the same period of 2020. Consequently, our net profit increased by 18.7% to RMB 5 billion during the first quarter from RMB 4.2 billion in the same quarter of 2020. Our basic and diluted earnings per ADS were RMB 2.09 and at RMB 1.96 in the first quarter of this year. As of March 31st, 2021, we had a cash balance of RMB 34.5 billion, compared to RMB 34.2 billion as of December 31st, 2020. Now, let me provide you with some guidance for the first half of 2021. For the second quarter of 2021, as we prioritize improvement in our loan mix and unit economics, we expect our new loans facilitated to be in the range of RMB 145 billion-RMB 155 billion. The clients' assets to be in the range of RMB 410 billion-RMB 420 billion. As we maintain our growth momentum and we continue to improve our operating efficiency, we expect our total income to be in the range of RMB 14.9 billion-RMB 15.1 billion, and a net profit in the range of RMB 3.7 billion-RMB 3.9 billion in the second quarter. As indicated before, our quarterly financial results are subject to seasonality and fluctuation as a result of accounting treatment. However, as our underlying unit economics improve, our second quarter guidance translates into an estimated year-over-year net profit growth of 19%-22% in the first half of 2021, a level which we believe should be sustainable for the remainder of the year. These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Certainly. We will now begin the question -and -answer session. To join the question queue you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speaker phone please pickup your handset before pressing any keys. To withdraw your question please press star then two. We will pause for a moment as callers join the queue. The first question comes from Winnie Wu with Bank of America. Please go ahead. Thank you very much for this opportunity. Congratulations to Lufax for a very good first quarter result. I have two questions. First, regarding the guidance upgrade. Compared to the guidance provided at the full-year result, I think bottom line number for first half is now 11% higher than previous version, which is actually a quite significant upgrade. Just want to see if management could elaborate on some of the key drivers and also the outlook for full -year. I think James just mentioned expect that momentum to continue into second half. Hopefully, it means the strong growth momentum will be maintained for rest of this year. That's first on the key drivers for the earnings upgrade and potentially some outlook for second half of this year as well. Second is also back to the regulatory front. I think Chairman mentioned that there's more regulatory clarity. I think investors are still concerned regarding stuff, like, will there be further window guidance to reduce APR? What about some of the latest requirement on data, like Ant was talking about, they need to have a credit bureau license to provide the loan facilitation business. Hopefully, second question is if management can give us also some expectation on if there's further requirements from regulator regarding particularly on data and APR front. Thank you very much. Thanks, Winnie. I'll take the first part and then turn the regulatory question over to Chairman Ji in a second. The guidance upgrade really results from a number of improvements that really exceeded even our own expectations, I think at the end of Q4 last year. We've seen continued improvement in funding costs. As we continue to improve the mix of our borrowers, the credit insurance costs are coming down. Those are two significant drivers that allowed the take rates to go back up to 10% in Q1. These advantages that we're gaining on both the credit insurance costs should continue to actually continue to improve as we move through the rest of the year. On our own operating costs, we continue to see efficiencies in our sales force, our commissions, our productivity. These are really the main drivers that allow us to really recovery not only in the take rate line but also in the net margin line. These are things that we think will continue for the rest of the year. As James indicated, we're projecting 19%-22% profit growth for the first half. This is something that we think as a level could be sustained for the balance of the year. Chairman Ji on the regulatory question. [Non-English content] In terms of window guidance, the first one on any further requirements to reduce APR further. Based on our dialogues with the regulators, we've asked, "Is there a specific number or target you'd like us to go to?" We have not received any answer from the regulators apart from that as industry leader, you should continue to show or demonstrate your willingness to lower the financing cost, but there's no specific number mentioned. Based on our own judgment, we think below 24%, where we are today, it is pretty safe at the moment. [Non-English content] Of course, we understand the regulators will always want lower financing costs, and we will continue to maintain very active dialogues with them. In fact, I'm flying over to Beijing this afternoon to speak to a few of the authorities. [Non-English content] We are hoping the regulator understand for a market to exist and to develop in a healthy way. All participants in the market need to have enough room to maintain and grow the operation. [Non-English content] If the APR ceiling continues to go down endlessly during that process, you will see the exit of many credit providers in the industry. I personally don't think that's what the regulator wants to see. [Non-English content] As we enjoy lower funding costs and lower credit and CGI costs as a result of better risk management, and lower operating costs as a result of improvement in efficiency, we hope to pass on those cost savings to lower the overall all-in cost to our borrowers. [Non-English content] We do have our own roadmap in terms of lowering future costs for our borrowers as we optimize the aforementioned costs. [Non-English content] In terms of the credit bureau license or credit scoring license, I want to point out again that we have been using a guarantee license as the main entity, while Ant has been using a micro loan license. Those two licenses are quite different. [Non-English content] The guarantee model has existed for many, many years. In the process, using the guarantee company to collect information and collect customer data. In fact, the scope is much smaller than what a smaller company would collect. [Non-English content] So far, we have received no window guidance or any other communications from the regulators on this front. [non-English content] Of course, we will be adhering to very strict data protection, data privacy. [Non-English content] If we do receive anything further, we'll be letting everybody know. The next question comes from Piyush Mubayi with Goldman Sachs. Please go ahead. Thank you, Greg and Ji, for taking the questions, and congratulations on a good set of numbers. Can I just take you through two particular questions? One is when you talk about the loan book growth that you saw, and with SMEs being a greater percentage, could you take us through color on how that is playing out, the sort of growth rates we can continue to expect into the second quarter? I realize you mentioned the guidance for second quarter, but you also mentioned that the level was sustainable for the rest of the year. Could you just take a step back and take us through where you think this growth in the loans is going to come from, and what the size of the loans are seen as possible? The second question has to do with the far better cost controls that you demonstrated in the quarter. It's clear that you pointed out that it's lower sales commissions that you're paying out for the quarter, as well as better sales productivity. Could you just take us through these two aspects, to look through the rest of the quarters and whether this is a structural change that we're seeing in the business, and we can model the new levels of sales and marketing spend? Thank you. Piyush, your lines a bit blurry. Can I just repeat our questions to make sure we are clear? I'll repeat as I go, then I think Y.S. will probably add in. I think on the first question, Piyush, you're asking is really about loan growth that we've seen in the first quarter, then we see a number of indicators that say that SME owners, SME businesses are increasingly using money to grow their businesses and not to repay debt. I think there's a healthy environment there for our customer base. If there's one thing to point to when we look at growth on the second half, we will be prioritizing more the unsecured side. We see the greatest need there. We also see our greatest competitive advantage there. That's something that we will drive a bit more. That has the benefit of really maintaining the revenue growth in particular, into the second half as we meet that demand. On the cost control side, it really is multipart. At the top line level, as I mentioned, we are seeing funding costs continue to come down. We are seeing our credit insurance costs coming down. We expect those credit insurance costs to continue to be optimized because as the new loan book grows as a percentage of the total, our overall customer mix will have improved. The second thing that goes with that, as you may recall from when we first did the IPO, is that as we move more and more to high quality SME owners, which now make up 75% of total new loans, the average ticket size of those loans increase. That's really the rate of, I believe, about 10%- 15% increase, which therefore allows us to reduce commissions at a proportionate level without reducing the absolute income of the direct sales. If you take all that and then the ongoing efforts we're really making on the technology side to really empower our DS more, to bring more of an online engagement with those customers to deepen both on the lending side and other products, that's what allows us to reduce costs while keeping the top line strong. I don't know if there's anything that Y.S. Wants to add. If I add some more numbers. From January this year, we reduced our sales commission by 15%. As Greg said, since we reduced price much, our ticket size increased accordingly. As a result, the overall income per direct sales didn't change at all. That monthly income is still around RMB 8,500 per month, which is very stable. You asked more about unit component change. If you compare first quarter this year with the same period last year, our progress in cost improvement is very obvious. Our effective APR decreased from, I think it's about 29% for new loans, and now it's about 20%. At the same time, funding cost decreased much. It's now close to about 6%, previously about 7%. CGI premium, as Greg said, it was about 9%. Now it's getting close to 6%, which very well indicates our customer mix has been changing a lot since we reduced the highest APR. Interest impact is basically gone since we changed our price charging mechanism based on tools based on balance charge. As a result, take rate is about 10%, which is almost exactly the same as one year ago. That is why there's so much concern about the first half, the overall profit goals. Okay. Can I slip in a third question, please? It's very quick. Richard, if you don't mind. One of the comments is about the company bore risk of 12.5% of new loans facilitated. How does this compare to the 20%-30% range you talk about as a percentage of risk that you take on? The question about our self-risk bearing portion, the change. The first quarter is about close to 15%. If you look at our single month number, our self-risk taking portion is around 17%. We plan to reach about 20% self-risk bearing portion for new loans by the end of June or no later than July. That is our commitment and discussion we had with the regulator. At the same time, the risk-bearing portion, which is done by Ping An P&C CGI, has been gradually reducing. It has gone down to almost 17% by now. The rest are taken by five other insurance partners and then 17 partner banks. We have now 52 partner banks, and out of 52 partner banks, already 17 banks, they joined our risk-sharing model. Going forward, we see that our self-risk-taking portion will go up to 20%, and then Ping An P&C will be further declining, and then you will see that a lot more risk will be directly taken by, either by partner banks or other insurance partners. Thank you very much. The next question comes from Thomas Chong with Jefferies. Please go ahead. Thomas Chong, your line is live. Morning. Go ahead. Thanks very much for taking my questions. Can you comment about the trend in terms of the wealth management take rates in the long term? How should we think about investors' adoption of higher NAV products, insurance products, and financial advisory services? Thanks, Thomas. We would expect the take rate on the wealth management side to improve as we move through the year. That improvement in the near term and the longer term are a combination of factors. In the near term, it is really about continuing to increase our service to the higher-end customer, providing more qualified investor product on the fund side and the asset management side. Those are drivers in the near term which are pulling upward our overall take rate. Then if you go out slightly longer term, so if you move more 6- 12 months out from today, we would expect the insurance business, the insurance products that we have on the platform, continue to grow at a more rapid pace. Those carry attractive economics for the take rate. We will then, over the longer term, obviously, we're still in the process of looking at the financial advisory license. Once we have that, we expect that there would be a further lift from the mutual fund side. Those are in the near term and in the longer term. Generally, we think you should see continued improvement as we move through the quarters of this year. The next question comes from Hans Fan with CLSA. Please go ahead. Hi. Thank you very much for letting me ask questions. I got two questions here. One is about the regulation. Clearly that recently there's a lot of investigations from CBIRC regarding the misuse of the consumption loans and business loans from banks for the purpose of property purchase. There's a lot of rounds of investigation going on in Shenzhen, Shanghai, and Beijing. We're just wondering, does that really have any implication on Lufax? How do we usually control and monitor the use of funds? That's number one question. Number two question is really on the other income in the financial statement. Because in the first quarter, there's a notable increase in other income, and just wonder, maybe can management just elaborate regarding what's the key drivers of the other income here, and can this be sustainable in the future? Thank you very much. Let me take the first question, Hans. Thanks for your very tough question. In our business model, our partner banks, as a fund provider, they take the final responsibility for this loan purpose management. We do all we can do within our capacity, from sales, application, underwriting, and collection. In every stage of operation, we pay high attention to loan purpose management. For example, during the application process, the customer need to confirm their loan purpose, and they need to sign on the commitment letter that says that, "I'm very aware, loan proceeds cannot go into property market or stock market." During underwriting process, during remote interview, we ask one more time, and for larger ticket size, we check that intended payment account. If that account is repeatedly used by multiple applicants, then we reject. Lastly, during collection process, after loan, three months after loan, we check previous reports. If we see a record of new mortgage, then we assume customer used our loan proceeds to buy a new house. According to our contract, customer must repay as soon as possible. This is what we are doing because we don't have account, but with our capacity, we do everything we can do. Two, that supports our partner banks. Banks are paying also very high attention to this loan purpose management because they are taking final responsibility. Our partner banks require a little bit different from bank. Some banks, they want our borrowers to open their title accounts so that they can monitor our loan proceeds. Some banks, they want our insurance partners to make all indemnity for the customers or loan purpose violation case. Those we support. However, knowing that our ticket size is about RMB 200,000. This is quite small ticket size, which can be used for the property purchase. We are paying more attention to our secured loan. Those actions we are taking to help ourselves and to help our partner banks. Hans, on the question of other income, a couple points. One is it's actually directly tied to our core business. What it involves is the services that we provide to our financial institution partners on account management and also to the extent that they outsource services back to us, such as collections. This is a number on other income, which you will see continue to be strong at least through the balance of this year. The reason you see it popping up a little bit is as we changed our overall pricing structure in September last year, in terms of how we gather revenue from various partners, you see this increase in other income. For the purposes of understanding the overall impact on the economics, at least for the balance this year, you will see that level of performance in this line item. Thank you much. Thank you. The next question comes from Katherine Lei with JP Morgan. Please go ahead. Hi. Good morning. Thanks for giving me the opportunity to ask this question. I mainly have two questions. The first one, I would like to ask about the take rate, because just now management mentioned about that you will pass on some of the benefits of lowering funding costs and insurance costs to the borrowers, right? Now I think the take rate has improved back to the first Q 2020 level. What is your target for take rate? How much benefits do you expect that you will pass on to consumers? Do you expect take rates within this year to stay at this level or continue to improve? Within, say three, five years, where do you see the take rate goes? This is the first question. Second part of my question is mainly on clarifications of questions asked previously by my peers. Mainly on the risk-taking portion, because for the disclosure, in disclosure that about 12.5% of new loans, the risk-bearing loan by Lufax. What is that on existing stock of loans? Maybe you have talked about that. Third parties, what is the portions on the stock of loans instead of the new loans? Can you just clarify the numbers on that? Thank you. Okay, about the take rate, we think, now our take rate for new business is back to about 10% level, which is almost same as last year. Going forward, we try to deliver 10% take rate, and then we are confident. If we can further improve, further optimize our cost lines like funding cost or insurance premium or our operational cost, then we can return that to our consumers, so we can be more price affordable and competitive. My view is, so we can be sure. As long as we can keep 10% take rate, as much as we have a room, we can further reduce our overall APR by probably 1% or 2%. It depends on our progress, on how much we can further save our operational cost and the funding cost, and then our insurance cost. The second question about the 20% risk bearing, right? We explained the full new loans, and then now you want to understand about our balance, right? In terms of total balance, because our loans are three years duration. Although we are taking more self risk-bearing portion up to 20%, it gradually affects our overall portfolio. In terms of total portfolio, our self risk-bearing portion is about 8.7% as of first quarter this year, and therefore Ping An P&C, they take about 82%. Thank you. The next question comes from Jack Zhou with China Renaissance. Please go ahead. Hi, thanks for taking my questions. I have two questions to ask. Number one is a follow-up on your take rates. Could you help us go through your unit economics for the existing balance in Q1 and for new loans in Q1 and probably in April? That would be very helpful. Second question is also related to regulation. Regarding the Ant Financial rectification plan, the plan to move their consumer credit, to consumer finance company under that license. Just want to check whether we have any change in terms of our consumer finance license. Just want to check firstly our progress, our consumer finance company successfully, and any change towards our business regarding this license. Thank you. Okay. On take rate, do you want to go first, Y.S.? Sure. About take rate for whole balance, first quarter this year, our take rate 10%. More importantly, if you understand our take rate for new business, because that will affect our future profitability. Take rate for new business in the first quarter is also 10%, despite the effective APR is obviously lower than our portfolio. That means, going forward, 10% take rate can be secured unless we take significant change in terms of our effective APR. We are confident with 10% take rate throughout this year. For new business, second quarter, fourth quarter, so ahead, we estimate about 10% take rate for new business without much change. Second question, consumer finance, Ant is moving its business into consumer finance too. Yeah, maybe I'll comment on that and then Y.S. Cho can add. I think where Ant has come from historically is that what they used mostly was a micro lending license and co-lending with bank partners. Now that the entire industry has to take on more risk bearing, they're obviously at the same time looking for something that is as capital efficient as possible from a leverage perspective. Microfinance companies typically carry a cap leverage of 3-5x. There's some differences by geography, but it's roughly in that range. For Ant to use their consumer finance company, that gives them the opportunity to bear risk at a 10 times leverage for capital. I think that's why you see Ant in their various announcements, moving their model more towards the consumer finance license. Our risk bearing, as Chairman Ji mentioned, is really done through a guarantee company that operates nationwide. That guarantee company, where we're bearing the risk of up to 20% on all the loans going forward, operates at a 10x leverage ratio. For us, we've already achieved what we think in the market is kind of the best efficiency in terms of bearing risk and then putting capital against it. Given our business model is different, right? The Ant business model has been around traditionally those smaller ticket, shorter duration loans that does fit well under a consumer finance license. Our business model, which has been focused on the small business owners, larger tickets, relatively speaking, for longer duration, is best suited by the use of a guarantee company. I think, things that Ant are doing and versus what we do, they're driven by different factors. Right. Thanks, Greg. If we choose between smaller license and the consumer finance license, obviously consumer finance license is better in terms of leverage ratio, and they can also do a nationwide loan disbursement. Right? No regional limitation. Our case, you need to understand our borrowers, the average ticket size is way above 200,000. Yeah, many of them get 300,000 and up to 1 million for unsecured loans. Consumer finance license, it does not support a large ticket size lending. The maximum ticket you can do with this consumer finance license is 200,000. Actually, with regulatory window guidance, it still has to exceed 50,000 on the ticket size. Which is not very applicable to our current business model. I think the result of that, I think that the back part of your question is, today, the consumer finance balances, as a percentage of total, is less than 1% of our facilitated amount. It's a new business. It's got about 300,000 borrowers. As we move in the second half of this year to integrate more our online services across wealth and lending, we believe the consumer finance license will be very helpful to serving a lot of our wealth customers on some of their consumption needs. We would expect the business to continue to show healthy growth, but as a percentage of the total, even by the end of this year, it'll still be probably less than 2%. Thanks, Greg. The next question comes from Chiao Huang with Morgan Stanley. Please go ahead. Hi. Thanks, management. Congratulations on the solid quarter. I have basically two questions. The first one is related to the low economics of the loans that we are providing guarantees as we move closer to the 20% risk-taking. Basically, I want to ask how much in terms of the loan balance that we are taking the risk, how much we could charge on the top-line level, and then how much we could charge in the provision cost in terms of the loan balance that we are taking risk. The second question is in terms of the overall industry. If you view the SME loans as an asset class, I wonder how does management think of the supply and demand side of this industry with all these regulatory changes and the changes of players, how do you see the supply of this asset and the demand for this asset evolve over time? That's my question. Thank you. For guarantee portion in 20%, I don't emphasize, no matter you take 20% or 25% or 30%, it does not fundamentally change our profitability. If you take more of credit risk, it comes with risk premium. Actually, we can be a little bit more profitable by taking more risk. In terms of for the whole portfolio now we have about 8.7% risk taking, and for new business about 17%. Thinking about industry, supply and demand. Demand are huge that we all know about more than 60 trillion demand. Supply, we see that for unsecured larger ticket size business operation loan. We don't see much competitors. We don't see any other companies start providing similar services for small business owners. Either they do, like other banks, we see that more and more banks, they are getting to this market with secured products. That's a pressure that we get when our secured product lines. Our major business lines, unsecured larger ticket size business operation loan, that we still do not see any surprise from banks or other internet finance companies. I think this market is pretty much secure, it's very competitive. I don't think it's easy for others to get into this market. You also have to meet several preconditions like offline channels, underwriting model, and the collection infrastructures, all those.