Thank you, Desmond. Good morning, and good evening, everyone. Welcome to Lexin's Third Quarter 2024 Earnings Conference Call. Our results were issued earlier today and can be found on our IR website. Joining me today are our CEO, Jay Xiao; CRO, Arvin Qiao; and CFO, James Zheng. Before we get started, I'd like to remind you of our safe harbor statement in our earnings press release, which also applies to this call. During the call, we may refer to business outlook and forward-looking statements which are based on our current plans, estimates and projections. The actual results may differ materially and we undertake no obligation to update any forward-looking statements. Last, unless otherwise stated, all figures mentioned are in RMB. Jay will first provide an update on our overall performance. Arvin will discuss risk management updates. Lastly, James will cover the financial statements in more detail. I will now turn the call over to Jay. Please kindly note, in today's agenda, Jay will give his whole remarks in Chinese, then the English version will be delivered via Jay's AI-based voice. Jay, go ahead, please.

Good morning, and good evening, everyone. It is my pleasure to share our performance for the third quarter of 2024. In this quarter, we have stayed committed to a careful and steady operational strategy focused on risk management upgrades and deep data analytics. This strategy has helped us reduce the overall risk in our portfolio and enhance our asset quality. With the growth of low-risk new loans, our overall asset structure is gradually improving. In the third quarter, loan originations reached RMB 51 billion, while the outstanding loan balance was RMB 111.3 billion. Our revenue was RMB 3.7 billion, and our net profit reached RMB 310 million, with both revenue and net profit showing a return to steady growth. As the fundamentals of our portfolio continue to strengthen, we anticipate further improvements in revenue and net profit moving forward. Our performance this quarter includes two highlights. Firstly, our persistent efforts in risk management have produced tangible results, with improvements in new asset quality and an overall decrease in portfolio risk. The leading risk indicator, FPD7 of new loans, fell by about 13% from the previous quarter, and the day 1 delinquency ratio of the overall portfolio dropped by about 9%. During the quarter, we focused on promoting high-quality new loans by comprehensively implementing our loan growth strategy across various business lines, supported by several measures. We improved our reach into target customer markets by optimizing key online advertising channels and leveraging our user base of over 200 million registered users. We assessed their potential borrowing needs and conducted targeted reoffers to re-engage dormant high-quality customers. We incorporated multiple third-party data sources and developed a specialized risk model for small and micro business loans, increasing credit identification accuracy for these assets by over 10%. Additionally, we upgraded our intelligent anti-fraud model, enhancing our ability to detect and intercept potential fraud, further bolstering our fraud prevention capabilities. With the ongoing improvement in new loan quality, we expect overall portfolio risk to decline, providing a solid foundation for performance growth next year. The second highlight is our enhanced profitability, which has been driven by a continuous focus on refining operations and optimizing fund and asset matching. In the third quarter, our net profit margin climbed to 8.45%, reflecting an increase of 223 basis points from the previous quarter due to reduced risk levels and improved asset quality. Our assets gained greater recognition from various financial institutions, leading to a more diversified and healthier funding mix, which reduced our funding costs by 98 basis points, setting a new historical low. In the third quarter, we aimed to meet the varied needs of younger customers through a range of products. For the small and micro business owner segment, we improved our working capital loan product and expanded our acquisition channels. We optimized strategies related to credit line granting, pricing adjustments, customer retention, and dropout prevention. We also established dedicated funding channels specifically for small and micro business loans. Consequently, our working capital loan product saw a 78% increase in transaction volume quarter-over-quarter. For the super prime salary workers segment, we restructured the pricing strategy for our credit card offering and implemented various measures, including credit line and pricing adjustments, to encourage customer borrowing activities. With overall risk levels remaining stable, the number of drawdown customers increased by 24% from the previous quarter. Based on our new risk-based customer segmentation, we adjusted our fund and asset matching model and introduced a new product, the Intelligent Credit Platform. This platform operates under a light asset profit-sharing model, where the company bears no risk of principal loss while generating technology service revenue through traffic distribution. This allows us to connect various customer segments to funding partners with a complementary risk appetite, enabling us to lower customer acquisition costs, expand our customer base, and boost revenue. Our stable business growth is supported by ongoing investment in technology and research and development. In the third quarter, we invested RMB 149 million in R&D to further strengthen our industry-leading capabilities. Our business management is now fully integrated with an anomaly attribution system that facilitates real-time detection of fluctuations in business and operational metrics, automatically generating quantitative insights. This system now encompasses over 400 key business metrics, significantly reducing the time needed for anomaly attribution to just a few hours or even minutes, compared to the traditional weeks-long process. The accuracy of our proprietary AI model in intensive recognition scenarios has improved to 17% over external solutions, helping to cut costs and boost operational efficiency. In regard to consumer rights protection, a long-standing priority for us, we have enhanced our customer communication and service management processes while strengthening the digitalization and system development of customer services in the third quarter. Key initiatives included refining our issue grading system, introducing a frontline service authorization protocol, and optimizing customer service workflows. These measures greatly improved service handling efficiency, leveraging extensive customer service data from our platform. We analyzed and identified the root causes of customer experience challenges, empowering our frontline teams with enhanced skills in issue detection and resolution, and strengthening collaboration with business units to improve the consumer rights protection review mechanism to better identify and address issues. Looking ahead, we remain committed to a prudent operational approach aimed at lowering the risk level of overall loans and boosting profitability. We will also intensify our customer acquisition efforts to achieve steady business growth. As the proportion of high-quality new loans increases and existing loans gradually mature, we expect continued improvement in the asset quality of our overall loan book. We are confident in our ability to deliver stronger profitability in the coming year. To further reward our shareholders, we plan to increase our dividend payout ratio from the current 20% of net profit to 25% starting in 2025. Now I would like to hand the floor over to our Chief Risk Officer. Thank you.

In the first quarter, we continued to adhere to the strategy of tightened risk standards and profitability enhancement, focused on generating more high-quality assets and improving the accuracy and efficiency of high-risk asset control. We also upgraded the real-time anti-fraud detection capability, further refined the third-party data management system and built a real-time interactive risk management capability. Leading risk indicators for new assets and the overall assets continued the downward trend from the previous quarter. FPD7 of new assets decreased by about 13% compared to the second quarter and the overall asset day 1 delinquency rate decreased by about 9% compared to the second quarter. We expect this downward trend of leading risk indicators will continue in the fourth quarter. Specifically, in terms of risk management for new assets from new customers, we have made significant progress in both new customer acquisition through online advertising channels and activating dormant customers within Lexin's existing user base. In terms of new customer acquisition through online advertising channels, we have focused on key high-quality channels and accelerated the phasing out of long-tail high-risk channels. Meanwhile, we have continuously strengthened our risk identification capabilities and upgraded risk strategies for new customers, resulting in a stable decline in the risk level of new customers acquired through online advertising channel. Compared to the second quarter, the risk level of new customers acquired through this channel has decreased by 10%. By the end of the third quarter, leading indicator FPD7 for new customers has significantly decreased by about 50% compared to its peak in Q4 last year. Currently, the risk level of new customers acquired through online advertising channels has generally declined to a reasonable range. In terms of reactivation and conversion of dormant customers, we have deeply explored the borrowing needs of over 200 million customers on Lexin's existing user base. To fully leverage Lexin's large customer base advantage, we have strengthened our risk identification capabilities and improved our risk strategy system to identify high-quality users. Through targeted reoffers and coordination with our operational team, we have precisely reached and reactivated high-quality dormant customers with potential borrowing demand. In the third quarter, the number of reactivating dormant customers nearly doubled compared to the second quarter with the credit drawdown rate of approved customers increasing by 47% comparatively. Moreover, the customer acquisition cost of reactivated dormant customers is low and the risk level is about 20% lower than that of new customers acquired through online advertising channels. In the fourth quarter, we will continue to intensify efforts to reactivate and convert existing customers in order to sustain the growth of new customers at low cost and low risk. On the front of new loans from existing customers, in the third quarter, we focused on three major projects: management of high-risk assets; portfolio structure optimization; and tailored risk management for different customer segments. In terms of managing high-risk assets, we strengthened control measures of alerted high-risk transactions and further upgraded our anti-fraud detection capabilities. The extensive use of risk strategy robots enables us to accelerate the early alerting and disposal of medium to high-risk assets. In terms of portfolio structure optimization, we continuously improved the proportion of high-quality assets by optimizing various elements of our financial products. By continuously growing the volume of high-quality assets, we further enhanced a stable decline trend in risk levels. The proportion of prime and super prime assets in newly issued loans to existing customers and new customers has exceeded 75%. In terms of tailored risk management for different customer segments, we focused on optimizing risk management of micro and small business customers in the third quarter. Through a dedicated acquisition model, the introduction of micro and small business operational data and the specialized risk identification model for micro and small business owners, we have strengthened our ability to manage the risk level of micro and small customers' loans. This has also improved the user experience to micro and small business owner customers with our offers and reduce the risk associated with these customers. In terms of data management capability, we have established a full life cycle management platform for third-party data, integrating data onboarding, data performance evaluation, feature derivation, performance monitoring and decommissioning evaluation into a single management platform. This has significantly improved efficiency as well as the standardization and optimization of data management. Also, we have established data linkage, enabling real-time monitoring, automatic alerting and coordinated handling across the entire chain of data, features, models and strategies. This greatly improves the effectiveness of data applications and enhances the efficiency of decommissioning ineffective or inefficient third-party data. Looking ahead into the fourth quarter, we will continue to strengthen our capabilities of risk management, credit identification, risk decision-making and risk-based pricing. Our goal is to reduce the proportion of delinquent assets and increase the generation of high-quality assets, further optimizing the health of our asset structure. At the same time, we will continue to enhance the performance and stability of risk scoring across all business lines and implement intelligent decision-making tools for credit lines and pricing to improve the efficiency and accuracy of our risk management. Through these efforts, we aim to ensure that the risk levels of total assets continue to decline and profitability continues to improve. In the meantime, we will accelerate the development of risk-sharing models among the new risk-based customer segmentation, increase the proportion of our capital-light business, and smooth the impact of credit cycles on our profitability.

Thank you, Arvin. I will now give a more detailed update on our financial results, noting that all figures are presented in RMB, unless stated otherwise. During the past quarter, we adhered to our principles of prudent operation and continued the upgrading of our risk management capabilities and the transformation of overall business. Our efforts yielded satisfying results, evidenced by stable loan origination volume and strong profitability growth. Total revenue amounted to approximately RMB 3.7 billion, remaining steady compared to Q2. Net profit showed a significant growth, increasing by 36.7% quarter-over-quarter to reach RMB 310 million. Here are three key highlights explaining our robust financial performance. First, substantial profit increase driven by a higher revenue take rate. The sharp increase in net profit was primarily driven by a higher take rate, which reached a record high of 3.25%, up by 35 basis points from 2.91% of Q2 and 81 basis points from 2.44% of the same quarter last year. The take rate calculation is derived by adding credit-oriented income and the tech empowerment income, subtracting funding costs and the various provisions, then dividing by new loan origination volumes for the quarter. A few core drivers supported this increase, including the following. One, the continued improvement in the risk level of new loans in Q3, evidenced by FPD7, which decreased by about 13% from Q2. Two, a new record low in funding cost of 4.28%, which fell by nearly 100 basis points from Q2 of 5.26% and 6.36% of the same quarter a year ago. We achieved this through ample funding and partnerships with cost-efficient national financial institutions. It also underscores the increasing confidence of our funding partners in our assets. Three, continued optimization of user loan early payoff ratio and the revenue from some value-added peripheral services. The second key highlight is the improved asset quality. The asset quality of our total loan book improved in Q3. Total provision cost, the four lines in our income statement, including provisions for financing receivables, contract assets and receivables, provision for contingent guarantee liability and fair value change in our financial guarantee derivatives and fair value loans decreased by RMB 21 million to RMB 1.61 billion from Q2. The day 1 delinquency rate of total portfolios increased by 9% compared to Q2, thanks to our ongoing business transformation initiatives, especially in the risk management upgrading project. As we are gradually phasing out higher-risk existing loans and we generate a better quality of new loans, we believe the peak risk level of our total portfolio is behind us. The third key highlight is the enhanced efficiency in customer acquisition. In Q3, we improved customer acquisition efficiency through two major channels: one, reactivating dormant customers from our over 200 million accumulated registered user base and iterating the RTA model in online advertising channels. New users with approved credit lines increased to 756,000, up by 44% from Q2. However, the acquisition cost for new users with approved credit lines dropped by 35% compared to Q2. Moving forward, we will continue leveraging our large user base to reactivate more high-quality users at relatively low cost. To summarize the aforementioned operational highlights, despite the macro environment and the stable new loan volumes in Q3, we have achieved strong sequential profit growth through healthy and sustainable improvement in revenue take rate, assisted by improved asset quality, lower funding costs and the optimization of overall business operations, including user acquisition efficiencies. Next, I'm going to provide some more detailed overview and explanation of financial statement items. First, on the revenue side. The credit facilitation and service income increased by 11.3% quarter-over-quarter, mainly driven by the higher facilitation volume growth and higher take rate in off-balance sheet loans facilitated, offsetting the lower volume in on-balance sheet loans. Tech-empowered service income fell by 28.2% to RMB 384 million quarter-over-quarter due to the product mix upgrade in Q3. As Jay mentioned, although the newly launched capital-light ICP platform is still in its early stage, we are confident in its future market demand and future volume growth. E-commerce business revenue dropped by 29.5% quarter-over-quarter due to the higher base of GMV in Q2 from the 618 Shopping Festival. We expect e-commerce business lines to return to the growth trajectory in Q4. Next, on the cost and expense items. Processing and servicing costs increased by 16.1% quarter-over-quarter due to intensified loan collection efforts. Sales and marketing expenses dropped by 6.3% to RMB 438 million in Q3 as we focused on reactivating dormant users, which reduced spending on online advertising business. G&A expense decreased by 11.4% quarter-over-quarter due to cost efficiency initiatives. As a summary of the above, the net income improved by RMB 83 million or 36.7% quarter-over-quarter. The overall net profit margin improved from 6.2% in Q2 to 8.5% in Q3. This is primarily driven by higher revenue from the flat quarterly loan volume, lower credit cost, and lower operating cost, partially offset by the increasing processing and servicing costs due to collection and minor losses related to the e-commerce business quarter-over-quarter. This breakdown analysis underscores the healthy profit improvement made in the loan facilitation business despite a flat quarterly loan volume growth. Here is another way to look at the profitability improvement. If we use net income to divide by current quarter GMV, we get the ratio of 0.61% in comparison with 0.44% in Q2. Similarly, if we measure the net income against the average loan balance, it is 1.09% in Q3 versus 0.77% in Q2. For balance sheet items, in Q3, our total cash position was approximately RMB 4 billion, impacted temporarily by the maturity of some trust products. We maintained solid shareholders' equity of over RMB 10 billion. Our provision coverage ratio remained sufficiently at approximately 240% at the end of Q3. As Jay mentioned, we are committed to sustainable value creation for shareholders. The Board has approved an amended dividend payout policy, increasing the payout ratio to 25% of total net profit starting January 1, 2025. We may further increase this ratio as profitability improves in the future. Looking ahead, with the government economic stimulus package gradually taking effect and the continued transformation of our business, we expect net profit to grow at a considerable rate on a year-over-year basis for 2025. Although the profit recovery process may take some time, Q3 has already marked a strong start. For Q4, we still remain patient with the macroeconomic conditions and will continue to adhere to the prudent operating principles to lay a solid foundation for growth and profitability next year. Based on our current estimates, we expect the GMV of loan originations in Q4 to grow at a flat to a lower single-digit rate on a quarter-over-quarter basis. This concludes my portion of the prepared remarks.

First questions will come from the line of Yada Li from CICC.

Congratulations on the impressive results. My first question is about management's perspective on the growth strategy for the fourth quarter, especially in light of the government policy stimulus introduced at the end of September. Can we observe any signs of recovery in consumer loan demand based on the current operational data? Additionally, what are the key factors driving the significant net profit growth this quarter, and will this upward trend in net profit persist in the upcoming quarters?

Since the government introduced the economic stimulus measures at the end of September, we have noticed some positive changes in short-term demand. However, whether this will develop into a long-term sustainable recovery still relies on the ongoing improvement in the overall economic environment. Based on our operational data for the fourth quarter so far, we observe that total loan origination volume is generally stable compared to the same period in the third quarter. We believe this consistency is a result of our cautious operational strategy, which emphasizes maintaining asset quality, particularly in managing higher-risk areas. Consequently, there hasn’t been significant growth in overall loan origination volume. Although total volume remains about the same, we are continuously optimizing our asset structure. We have seen a slight increase in high-quality customers, along with consistent recovery and improvement in high-quality demand. Additionally, we are actively promoting the growth of high-quality assets, increasing the share of these assets, and enhancing overall asset quality. Furthermore, our recent updates to the customer acquisition strategy have proven successful. We are focused on expanding our new customer base, which we believe will establish a strong foundation for our growth next year.

Okay, this is James. Let me address your second question regarding our net profit for this quarter and the forecast for the next. In Q3, our net profit was approximately RMB 310 million, reflecting a substantial quarter-over-quarter growth of 36.7%. This growth is primarily due to our sustained focus on enhancing core competencies, particularly in risk management, and the ongoing optimization of operations over the past two years. There are two main drivers behind this improvement. First, we have seen an enhancement in asset quality, as both Jay and Arvin have mentioned several times. We are gaining from our strategic focus on risk management, which has led to improved asset quality in Q3. The overall quality has reached a turning point, beginning to stabilize and recover as the batch of higher-risk loans we issued in the second half of last year gradually matures. Based on our initial estimates, we anticipate significant growth in net profit next year compared to this year. We will provide guidance for next year once we report our Q4 results. In this quarter, the FPD7 for new assets decreased by about 13% quarter-over-quarter, and the day 1 delinquency rate for total assets dropped by approximately 9% from the second quarter. We expect this downward trend in risk levels to continue into the fourth quarter and throughout next year. The second driver for profit improvement is the record low funding cost, which results from ample market liquidity and strong demand for high-quality consumer credit assets. The funding cost decreased in Q3, which is around 100 basis points lower than Q4, representing our largest quarterly optimization in recent years. Looking at the financial statements, our pre-tax profit increased by RMB 95 million quarter-over-quarter. Excluding e-commerce revenue, we saw an increase in loan business revenue of about RMB 150 million and a reduction in total risk provisions contributing about RMB 20 million to net profit quarter-over-quarter. On the downside, e-commerce gross profit dropped by approximately RMB 30 million in Q3, and there was an increase in processing and servicing costs for collections and operating expenses of about RMB 50 million. When we combine both the positive and negative impacts, we achieved an increase in pre-tax profit of about RMB 108 million, leading to an increase in net income of about RMB 83 million quarter-over-quarter, marking a record growth of 36.7%. We are pleased with the Q3 results and expect further profit growth next year, with more detailed guidance to come after we report our Q4 results. I hope this clarifies your question.

The next questions come from Yuying Zou from CLSA.

Let me provide the translation. The first question is about how the risk level of new loans has been continuously optimized each quarter and how overall asset quality has improved compared to Q2. Could you explain the main measures taken in Q3 to optimize the risk level of new loans and share your outlook on the expected recovery of overall asset quality in the future? The second question concerns the newly launched Intelligent Credit Platform model. Can you provide more insight into the future plans for this new business line and its impact on the company's business scale and profitability?

In Q3, we concentrated on enhancing key aspects of risk management, including risk identification, decision-making, pricing, and risk-bearing models. For the new customers gained through online advertising, we implemented four key measures. Firstly, we prioritized high-quality channels and accelerated the removal of long-tail high-risk channels. Secondly, we developed joint models with leading platforms using scenario data. Thirdly, we improved our anti-fraud detection capabilities. Lastly, we extended our loan growth strategy across all business lines. This led to enhanced risk identification and an upgraded risk strategy for new customers, resulting in a steady decline in risk levels for this channel, with a 10% reduction compared to Q2. By the end of Q3, the leading indicator FPD7 for new customers had decreased significantly, by around 50% compared to the peak in Q4 last year. Furthermore, we were able to slightly increase the approval rate to support the growth of high-quality loans for these customers. We anticipate that the risk level for new customers from online advertising will align with the leading industry platforms by the close of 2024. As for the overall asset quality recovery, the day 1 delinquency rate for total assets fell by 9% in Q3 compared to Q2, and we expect this downward trend to persist into Q4. Given our ongoing improvements in risk management, we are optimistic about optimizing our asset structure, reducing delinquent assets, and generating high-quality assets. According to our scheduled risk management initiatives, we foresee a significant increase in net profit by 2025.

Thank you for your continued efforts to enhance our internal capabilities, particularly in risk management. We have improved our risk identification, allowing us to perform more accurate customer segmentation and introduce the Intelligent Credit Platform (ICP) model. This model operates on a capital-light profit-sharing basis, meaning Lexin does not assume the risk of principal loss. It broadens our market reach while mitigating potential risk fluctuations throughout the credit cycle. With the ICP model, we can more accurately identify customers at different risk levels, provide precise segmentation and differentiated pricing, and then allocate these assets to financial institutions that match their risk appetite. This method enables us to offer customers longer-term services, leading to more sustainable revenue from technology services. Although the ICP model was just launched in Q3 and currently represents a small fraction of our total loan volume, we see it as vital for adjusting our asset structure and transitioning to a more sustainable business model. We believe the ICP model has significant growth potential, and we will keep adjusting our product mix to expand this model. I hope this answers your question, Zou.

The next questions come from Yufeng Chan from Huatai Securities.

Okay. Let me do the translation. I have three questions. The first one is, we noticed management also mentioned that the funding cost hit a new record low this quarter. Could you elaborate on the driving factors behind this and provide an outlook on funding cost for Q4? And the second one is, in Q3, unit customer acquisition cost significantly decreased and the number of new approved credit line customers increased substantially quarter-on-quarter. Could you introduce the main measures taken and whether the customer acquisition cost will continue to drop in the future?

Okay. I will take the first question. Funding cost decreased by approximately 100 basis points to 4.28% in comparison with Q2. This really marks the 11th consecutive quarter of reducing funding cost since Q1 of 2022, reaching a new historic low and achieving the largest quarterly reduction. For the fourth quarter, given that we're already at a historic low funding cost and also considering there is a kind of seasonal tightening of funding typically before the end of the year for financial institutions, we anticipate relatively milder optimizations in funding cost for Q4. Looking ahead to 2025, with the continued implementation of easing money policies supporting the macroeconomic recovery and more recognition from the funding partners as our asset quality continues to improve, so we have confidence that we will continue to optimize the funding cost and enhance our overall profitability next year.

So regarding your question about the cost of customer acquisition, the reduction of this is mainly attributable to several measures. Number one, we have significantly improved our capability and efficiency in customer acquisition through the online advertising channel on a quarter-over-quarter basis. Unit cost of users with approved credit lines dropped by 24% Q-on-Q and the number of users with approved credit lines increased by 22%. As for the portion of good quality and high potential users, the total number with approved credit lines rose by 34% and the total amount of the credit drawdown increased by 30%. Meanwhile, we are able to draw down the unit cost acquisition of good quality users by 40%. As a result, the risk level of new customers dropped by 10% compared to Q2. Moreover, the proportion of good quality users continues to rise and the payback period got shortened. We believe with the strengthened customer acquisition capability, we will probably increase investment in customer acquisition front in the future in order to lay a foundation for the business growth next year. The second measure, we have intensified efforts to activate and convert dormant customers. Over the past 11 years, Lexin has accumulated a large user base, roughly more than 200 million users. In the future, we will continue to refine operations in order to provide more accurate credit line granting and loan pricing for customers to activate dormant customers. In Q3, the total number of reactivated dormant customers nearly doubled compared to Q2 with the credit line drawdown rate of the approved customer increased by 47% comparatively. Moreover, the customer acquisition cost for the reactivated state customer is low and the risk level is about 20% lower than that of the new customer from the online advertising channel. Therefore, in Q4, we will continue to intensify efforts to reactivate and convert existing customers in order to sustain the growth of new customers at low cost and low risk. For the third front, we further strengthened our cooperation with leading KA channels in Q3. By far, the volume growth and profitability look good. We will continue to increase the investment in this channel in the future. I hope this addresses your question. Okay. Then, thank you, everyone, again, for joining us today. If you have further questions, please contact via the contact information on our IR website. Thank you, all. Have a good day, and good night. Bye Bye.

This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.