Hello and welcome to the Deutsche Bank Deposit Receipts Investor Conference, DBVic. I'm Zahra Ziz from the Deutsche Bank team. I'm pleased to announce our next presentation will be from Yiren Digital Limited. Before I introduce our speaker, a few points to note. Please submit your questions in the questions box. All of today's presentations will be recorded and can be accessed via the Deutsche Bank website, adr.db.com. At this point, I'm very pleased to welcome Yiren Digital Limited, that trades on the New York Stock Exchange using the symbol YRD. Good morning or good evening, depending on where you are. My name is William Hui. I am the Senior Vice President of the Capital Market at Yiren Digital, based in Hong Kong. Yiren Digital is a leading Asian consumer finance company, headquartered in Beijing. We are growing rapidly in Southeast Asia, and we are listed in 2015 at the New York Stock Exchange with the ticker symbol YRD. Our business is largely driven by domestic consumption, which is more resilient to geopolitical tensions or the trade war. Our growth is built on solid performance from our core business in consumer lending and insurance brokerage. We use part of the cash flow from the core business to fund the growth of our new business. Recently, we have invested heavily in technologies to improve our internal efficiencies. We have also successfully monetized these technologies through various technology service contracts to institutional clients. We increased our dividends in Q4 2024 by 10%. Our dividend yield stands at 6.75%, and we will continue to reward our shareholders as we review our dividend policy this year. Let's talk about the industry. The per capita consumption in China is projected to grow at about 4% per year in the next five years. The consumer finance market is growing even faster and is expected to reach about $3.5 trillion by loan volume by 2027. That represents 7% CAGR. The outstanding loan balance will reach CNY 8.1 trillion by 2026, and that is 5.7 times the 2017 figures. The growth is driven by the government's stimulus policies, the AI technologies that make access to loan easier for consumers, and also some industry consolidations. What is Yiren Digital? We are listed since 2015, and we have been doing lending for 19 years. We have accumulated 19 years of data to make lending more efficient and safe. The significant part of the business is consumer finance, building on strong cash flow from this business. We have developed our insurance brokerage business and used the AI to make operation and customer experience more efficient. Our 2024 revenue was RMB 5.8 billion, or $800 million, and the operating cash flow is RMB 1.4 billion, or $200 million. Let's talk about our three main business lines. Our financial services use technologies to optimize borrower acquisitions and retentions, risk management, and debt collections. On the insurance brokerage, we are building on a solid customer base and are leveraging our relationship with our asset management partners and insurance carriers to develop new embedded insurance products to the market. On the lifestyle segment, we offer a suite of investment products, insurance solutions, and non-financial products to our high-end customers. We will get into the detail of each business segment. For the financial services, our target customers are the people at the age of 25- 40. In this age group, most customers have decent jobs or are self-employed with a stable income. This segment has the highest credit qualities and the largest appetite for borrowing. We estimate there are about 734 million potential customers in this market. Our digital-first strategy leverages optimization algo in consumer acquisitions through online channels, better risk management, and customer services. The average loan size is CNY 8,000, or roughly about $1,100. Our total loan facilitation in 2024 was CNY 53.6 billion, or $7.5 billion. The number of repeated borrowers is also increased by 10% year on year. Here's the business model. The financial institutions, like licensed banks and asset management companies, provide capital to us as their operation is not cost-efficient enough to lend small ticket-sized loans to consumers. It makes sense for them to provide wholesale capital to us, and we help them to deploy the capital and generate higher risk-adjusted returns than the average loan book. We charge a service fee and will provide all services required to produce returns to investors. This includes borrower acquisitions, credit analysis, risk management, customer service, and debt collection. The funders are also paying us for the technologies to help them to be more sophisticated in formulating their credit decisions. Our consumer finance platform, Yixianghua, uses social media such as TikTok, WeChat, or Weibo to interact with the customer and for customer acquisition and engagement. The average loan size, as mentioned, is about RMB 7,000-8,000, and the loan tenure is 3, 6, 9, or 12 months. We use AI extensively in our workflow, starting from borrower acquisitions, where our system will filter sales leads that give us the best conversion based on our proprietary model. Our internal operation and customer services use our own language model, Zhiyu, to give the best digital experience to our customers. Our fraud detection model is trained by over 800 million lines of proprietary customer data in the past. For debt collection, our model studies the borrower's digital behavior and finds the right time during the day to reach out and design a repayment plan that works for them. Our risk management is a combination of 19 years of experience and use of AI technologies and over 100 engineers from the companies and our parent group. The combinations of human know-how and the technologies allow us to license our technologies to our funding partners as they develop their capabilities in other businesses, such as wealth management. While China is our biggest market, we are actively expanding to overseas markets that give us a higher return on capital. We entered into the Philippines in 2023. Our 2024 revenue from the regions has already doubled year on year, and it achieved profitability and positive cash flow after 14 months of operations. In Indonesia, we signed a JV agreement with the AG Group in the countries in March. We expect to start the service in Q3 this year. With these three countries, we already cover a quarter of the world's populations. We will continue to explore opportunities in different markets for better diversification and growth. For our technologies, we are already monetizing our consumer lending technologies to help our clients on improving target marketing, credit risk management, and customer services. Last month, we received regulatory approval for our own language model, Zhiyu, based on the existing model from DeepSeek and Llama 3. It is built for enterprise applications such as meeting management, note-taking, tax form analysis, legal contract analysis, and so on. We will incorporate Zhiyu into our technology service offering. We have also invested in nine AI startups to accelerate our AI innovations on things such as video content generation, debt collection technologies, and digital twins. One of the key R&D focuses is the Aegean Tech AI, which we believe will revolutionize the way the enterprise operates. We will make some key hiring on the technologies to keep up our innovations. Let's talk about our insurance segments. Our platform has over 450 agents at 30 branches in China. We partner with 95 insurers. We focus on high commission and long-term revenue from a stable client base. On the personal insurance side, we sell traditional life and health insurance. On the corporate side, on top of the traditional property and casualty and general insurance products, we design and sell products to cater to unique business scenarios. Recently, we are targeting new scenario types such as the drone economy and climate change protections. We work with our private equities and venture capital partners to develop and promote embedded insurance products for their portfolio companies. Altogether, we have hundreds of companies on the pipeline we can work with. Here are some of the embedded insurance products that we recently launched. We are targeting a high-margin proprietary custom-built insurance product for the new economies. In March, we launched the first enterprise drone insurance product in China. It covers the entire drone fleet from loss due to signal interference, power outage, and weather damage. The margin is much higher, it's about two times the margin of a traditional product. Since March, we had four signings already, and we target the gross premium to reach about CNY 400 million in 2026. Other ideas we are working on include climate change insurance for agriculture industries and cybersecurities. We use a lot of AI in the customer journeys from target marketing, initial engagement, and the automating process to smooth the KYC experience. Our technology automates claim processing, and it identifies the coverage gap and handles the customer complaints. Because of the AI and our people, we are able to move very fast in the markets on the product innovations. Lifestyle Business is a premium membership tailored for affluent customers to give customers access to high-touch investment products. We initially used it as a loyalty program for our insurance and lending customers. The customer retention rate is very impressive at 98%. We recently extended our product offering to luxury products and virtual goods. We will continue to expand more products that give us healthy margins. For future growth, we continue to ride on a solid foundation and sustainable cash flow from our domestic business while creating new products and monetization of our technologies. The technology revenue will become big enough this year that we will start reporting the revenue separately from Q1 this year. Also, we will continue to push our internationalization strategies. We target to grow our overseas revenue to 10% of the total by 2026 and 15% by 2027. Let's look at the financial. The total loan origination volume in 2024 was RMB 53.5 billion, representing 49% growth year on year. We expect the origination volume will grow at about 12% in 2025. That's a remarkable number considering our competitors are forecasting a negative growth in origination this year. The repeated borrower percentage will increase from 65%- 70% in 2025. This will have a positive impact on the borrower acquisition costs and risk management, as repeated customers are cheaper to retain and their risk profile is more visible. The delinquency rate continues to improve because of better macro environments and better debt collection efficiencies and a higher borrower mix from repeated borrowers, as previously mentioned. For the overall financials, 2024 revenue was RMB 5.8 billion. That represents a growth of 19% year on year. Net profit was RMB 1.6 billion, so it's down 24%. The decrease is because in 2023, there was a RMB 400 million one-off revenue from the insurance segment. Also, in 2024, the insurance revenue decreased because of regulatory headwinds on the commission caps. We are in the middle of transitioning in the business to shift from selling traditional products to higher-margin embedded insurance products that are supported by the government. The insurance segment, we expect the insurance segment will turn around in the second half of 2025 as we are pivoting to a more embedded insurance model. For the revenue contributions, we expect the technology revenue will begin to generate revenues. We will focus on growing that revenue as well as the revenue from the lending business. On the insurance side, we signed four drone insurance contracts in March and April. We also launched a retirement savings calculator app in March for pay subscriptions to external wealth managers for sales support and lead generations. The revenue from these new products will offset some of the revenue slowdown from the traditional product for the insurance. We aim by 2026, this new economy embedded insurance product will contribute to about 25% of the total insurance revenue in 2026 and 50% in 2027. Finally, for the share price, we have a higher growth trajectory than our peers, but our share price has been trailing behind our peers. There are lots of excitement going on to our business, starting from the launch of our language model, Zhiyu, expanding into Indonesian markets and more technology monetization. We hope we will deliver more value to our shareholders. That's the end of my formal presentation. I will go through some of our questions. Okay, there's one question about, can you expand on the global expansion strategies with comparison with your competitors? Yeah, if we compare with our competitors like 360 DigiTech and Lufax Holding and FinVolution Group, I think they are about two or three years ahead of us in their international expansion. They are already in Indonesia, Philippines, Mexico, and Thailand. We are already in the Philippines, and we're doing very well in the Philippines. We just signed JV agreements in Indonesia, so we will start operating in Q3 this year. We are exploring the other market as well, and we are testing the Mexico market as well. We are exploring the other license, another potential license in other countries, such as the Middle East. The next question, for the international expansion, have been to date any color on the expectation for growth and profitability in this segment? To begin with, we started the Philippine business in 2023. As mentioned, in 2024, we have doubled our revenue. We expect the revenue will double again this year. Overall, we expect this year the revenue from the overseas market will account for about 4% of the total. For next year, we expect it will grow to 10%. The next questions, are there still plans for commercially useful AI products? What would that look like? Yes, I think our AI product, it will not be a standalone AI product. It will be integrated into the applications or the technology that we use internally day-to-day on things like the target marketing, how we optimize the client acquisitions, and also the other office automation tools that we are testing right now. We hope to, as we got the approval for Zhiyu last month, make these two smarter with the AI capability. Okay, the next questions, any expectation around the insurance brokerage ability to return to 2023 level of profitability following the regulatory change that took place? Yeah, for traditional products, we expect we will continue to face the regulatory headwinds on the commission cap. We are in the process of pivoting our business model toward more custom products and the embedded insurance product, which will give us higher margins. There will be some investment period. As we see, we are seeing some results from our drone insurance. We hope we can scale up this product and also the other climate change product that we are developing this year. Next questions. Sorry, I'm just jumping through that. How does the AI help in our risk management? That's a good question. I think for AI, based on the 800 million lines of data, there are a few things that help us on the risk management. One is the fraud detections. With the user behavior patterns, we are able to identify fraud about three times as much as the traditional model. Also, based on the demographics and the user's data, we are able to classify the credit ranking for the individuals. This will help us on the risk management and the customer acquisition as well. Can you elaborate on your investment initiative on Southeast Asia? Why is Southeast Asian market? I think it's similar to our competitors. I think the consumer finance or consumer spending pattern in Southeast Asia is very much similar to China 10 years ago. In the market of Philippines and Indonesia that we operate, there's a commonality for them is that there's a significant portion of their populations that do not have a bank account. The access of the credit has been very difficult. That gives us the opportunity for us to expand into this area. Also, in Southeast Asian market, with respect to the consumer finance, it's very similar to China. We can leverage our existing technologies and the know-how that works in China and apply it to Southeast Asia. What is your growth drive for loan facilitation given the overall weakness of the industry? I think for the growth drive, as we see some of our competitors, we will drive for higher repeated borrowers. That will give us the higher loan growth and also a more visible risk profile. We expect the loan facilitation will grow by 12%, and it will still stand high at historical growth at 2025. Okay, let's go through some. Sorry, just going through that. Okay, can you please discuss the question is, can you please discuss the relationship with CreditEase? How does CreditEase do? Are there any services that Yiren Digital provides to CreditEase and vice versa? We work with CreditEase. CreditEase, first of all, it's our parent company. We work very closely with them on the technology development. They have about 200 engineers on their platforms. We collaborate with them on the technology developments. We also share some of the customer acquisitions flow with them as well. I think we work very collaboratively on the loan and on the lendings and the insurance side. What is your, the next question, what is your dividend policies and expectations for 2025? We increased our dividends by 10% last year. Our dividend payout so far is at 20%. We will review our cash flow and we may consider increasing that, review that ratios alongside with our competitors in the industry. I think we are almost time. I see there is still a lot of questions on the list. I will address those questions offline if you leave your contact information to Deutsche. We are also available by email. As you see on the screen, our contact information. Thank you very much for your time. Thank you.