CNFinance Holdings Ltd. Q2 FY2025 Earnings Call

Thank you, and welcome to the CNFinance First Half of 2025 Financial Results Conference Call. Our Director and Vice President, Mr. Jun Qian, will walk us through the operating and financial results. After that, we will have a Q&A section. 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 terminologies 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 these 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.

Hello, everyone. In the first half of 2025, amidst the complex and ever-changing market environment, CNF focused on survival first and victory first, actively addressing challenges while steadily implementing strategic adjustments and business optimizations. Now I'd like to discuss our operational and financial performance for the first half of the year. As of June 30, 2025, we have signed a total of 2,184 sales partners, which represents a year-on-year increase of 2%. We had 1,485 sales partners who introduced borrowers to us, reflecting a growth of 3.3%. However, due to our efforts to control loan issuance and minimize nonperforming loans in our existing portfolio, the number of loan transactions dropped by 78.1% year-on-year, and the total loan origination fell by 85.4%. By the end of the second quarter, our loan balance was RMB 11.2 billion, down 29.6% from last year. We are committed to leveraging existing assets and optimizing new ones, concentrating our resources on risk mitigation and enhancing asset quality. Although this strategy may put pressure on short-term performance, it establishes a strong foundation for long-term steady growth. In the first half of the year, our interest income was RMB 416 million, a decrease of 55% year-on-year. Financing costs went down by 32%, while operating expenses were reduced by 74%, showing our strong cost control capabilities. Our net loss was RMB 40.4 million, mainly due to an impairment loss provision of RMB 31.3 million. As of June 30, 2025, the nonperforming loan ratio was 16.9%. Despite the rise in the NPL ratio, the increase in new NPLs was effectively managed. Through various NPL reduction measures, we achieved a 103% NPL recovery rate in the first half. We also optimized our organizational structure and streamlined personnel, leading to significant reductions in operating costs. Our key priorities during this period included reducing NPLs through innovative and effective reduction tools, stabilizing our funding sources by attracting new institutional investors, primarily local AMCs to ensure smooth financing channels, and expanding into new business areas. We refined our existing products and launched new ones that meet market demands. In the face of ongoing market challenges, we will continue to prioritize survival and victory, focusing on controlling nonperforming loans and optimizing new growth as our core strategy. We will keep dedicating resources to NPL reduction, ensuring stable funding channels, and supporting new business development.

Thank you.

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