LexinFintech Fourth Quarter 2025 Earnings Conference Call

Good day and thank you for standing by. Welcome to the Lexin fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Will Tan. Please go ahead.

Thank you, Operator. Hi, everyone. Welcome to our fourth quarter 2025 earnings conference call. Our results were released earlier today and are currently available on our IR website. Today, you will hear from our Chairman and CEO, Mr. J. Wen Jiexiao, who will provide an update on our overall performance and strategies of our business. Our CIO, Mr. Arvin Zhangwenqiao, will then provide more details on our risk management initiatives and updates. Lastly, our CFO, Mr. James Stem, will discuss our financial performance. 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 will be making forward-looking statements, last, please note that all figures are presented in R&B terms, and all comparisons are made on quarter-over-quarter basis, unless otherwise stated. Please kindly note, Jay and Arvin will give their whole remarks in Chinese first, then the English version will be delivered by Jay's and Arvin's AI-based voices.

With that, I'm now pleased to turn over the call to Mr. Jay when Chairman and CEO of Lexing, please. 比喻周期波动的能力进一步增强,四季度公司实现交易额500亿元,零收30亿元,活跃用户数453万,新增活跃用户数88.4万,2025年全年公司交易额实现2053亿元,净利润17亿元,同比增加52.4。 接下来我跟大家介绍一下四季度以来重点的一些工作进展 第一 积极响应新规要求 以高标准严要求合规经营 四季度伴随行业新规正式落地 公司在前期已经完成的业务调整与系统部署基础上 坚持以用户为中心 持续优化产品矩阵与个性化服务体验 我们严格在合规框架内稳健开展业务 在有效提升公司可持续经营与抗风险能力的同时 通过个人信贷 分期零售 土会金融等多元业务 精准高效链接金融服务与市场需求 助力实体经济发展 促进消费健康增长 第二 全面强化风险管控 行业务稳健发展 四季度以来 行业风险曾上行态使 系统类公司优化风险策略 严控新增资产质量 加强优质客户识别 获取 通过更多的实时数据维度 提升风险识别的前瞻性与精准度 实现新增资产风险指标逐越改善 在存量资产端 我们聚焦优质资产的精细化运营 通过优化受信额度与构建差异化定价体系 提升产品竞争性与客户体验 保障存量资产风险持续稳定 季度内 公司稳住了整体风险大盘 资产质量保持稳定 总体风险指标正在逐月改善 今年1到2月以来 多个风险指标呈现相好趋势 陆吹率相比10月高点下降超过10% 第三 独特的生态业务在行业变革期 优势增强 四季度分期零售业务紧扣生活消费场景 持续完善供应链 丰富吃穿用等商品供给 在双11双12电商大数活动中 持续加强营销和运营 通过免息优惠等措施 带来用户活跃度和交易表现稳步提升 巩固了分期零售的差异化优势 季度内我们持续加强货客能力的建设和投入 有项带助季度内新增受信用户数增长 同时我们聚焦优质老客经营通过差异化的定价定额策略 推动用户活跃度正在持续上升 季度内普惠 数科 海外业务都实现稳健的增长 进一步展显出公司的经营运行 第四 深度运用AI技术提升用户服务体验 四季度公司继续深耕大模型应用技术 客户服务智能体成功应用于受信交易和还款等核心场景 回复信息准确率均在90%以上 平均响应时间在3秒以内 其中受信场景转能功率仅3.4% 大幅提升了服务效率和体验 未来将持续推进夜间无人服务时段落地应用 实现7x24小时的不间断服务 季度内 我们进一步将大模型落地应用在封控的核心环节 如合规质检 大模型辅助系统逐步替代传统的规则式质检 准确率提升至89% 在封控策略环节 大模型辅助策略生成智能体 深度建模客户数据 实现差异化策略的自动生成 与全流程评估 决策准确性与响应效率持续提升 用户运营环节 提论智能体在智能对话中 精准识别用户需求 引导用户自助操作 降低人工服务成本的同时 提升用户的办理体验 公司始终坚持以用户为中心的服务理念 将消费者权益保护视为核心竞争优势 四季度内持续推进服务流程的标准化与自能调度能力优化 整体服务效率与响应速度都有所改善 我们进一步深化用户分群服务的精细化运营 通过持续优化用户自助服务平台功能 提升用户满意度 技术内政策层面相距出台一系列 鼓励消费发展现役经济的举措 为行业发展矛定了方向 我们始终紧紧围绕国家的政策要求 充分发挥自身优势 加大在消费场景 小微产品服务的投入力度 通过免息低吸引补贴手段 以丰富的产品供给 更完善的全服务 切实助力了消费提振 为小微的发展注入金融活水 展望2026年 我们相信市场会有更多的机会 公司将抓住机遇 坚守合规底线 坚持于用户为中心 深耕多元生态业务 持续提升公司经营韧性及对冲周期的能力 In the fourth quarter, we optimized our business operations within the new regulatory framework, successfully achieving our objectives of state-owned business.

stabilizing scale and mitigating risk. During this period of industry adjustment, our unique business ecosystem demonstrated its differentiated advantages, leading to a significant rebound in active users. Guided by our long-term oriented philosophy, we are seeing the resilience of our multi-business synergy become increasingly evident, further strengthening our ability to navigate business cycles. In the fourth quarter, our loan volume reached 50 billion RMB and revenue reached 3 billion RMB. Number of active users stood at 4.53 million, with 884,000 new active users. For the full year of 2025, total loan volume was 205.3 billion RMB. Net profit was 1.7 billion RMB, representing a year-over-year increase of 52.4%. Next, I will walk you through the key initiatives we have undertaken since the fourth quarter. First, we proactively aligned our operations with the new regulatory requirements, adhering to a high standard of compliance. Following the official implementation of the new regulations in Q4 and building on the earlier completion of business adjustments and system deployment, we remain focused on our customer-centric strategy to further optimize our product matrix and personalized service experience. By operating prudently within the regulatory framework, we have not only enhanced our long-term sustainability and risk resilience, but also effectively connected financial services with market demand through our diversified business lines including online consumer finance installment e-commerce and offline inclusive finance we continue to support the real economy and foster healthy growth in consumer spending second we have comprehensively strengthened our risk management to ensure steady business development since the fourth quarter the industry has faced an upward trend in credit risk in response we optimized our risk strategies and maintain stringent standards for new loan quality. By incorporating more real-time data dimensions, we have enhanced the proactiveness and precision of our risk identification, leading to a month-over-month improvement in risk indicators for new loans. Regarding our existing portfolio, we focused on refined operations for high-quality assets. By optimizing credit line allocations and implementing a differentiated pricing framework, we enhanced both product competitiveness and the customer experience, ensuring the continued stability of our existing assets. Overall, we successfully stabilized our risk profile during the quarter, with asset quality remaining steady and key risk indicators improving monthly. Since the beginning of 2026, several key risk indicators have shown a positive trajectory in January and February. Specifically, day one delinquency ratio of our total assets decreased by over 10% from its peak in October last year. Third, our unique business ecosystem has demonstrated greater strengths during this period of industry transition. Our installment e-commerce business remained deeply integrated with daily consumption scenarios. In the fourth quarter, we continued to optimize our supply chain, expanding our offerings across essential categories such as food, apparel, and household goods. During major e-commerce events like Double Eleven and Double Twelve, we ramped up our marketing efforts. Through initiatives such as interest-free promotions, we drove steady growth in both user engagement and transaction volume, further reinforcing our differentiated advantages in installment e-commerce. During the quarter, we continued to invest in our customer acquisition capabilities, which effectively fueled growth in new users with credit lines. At the same time, we focused on deepening engagement with high-quality existing customers, utilizing differentiated pricing and credit line strategies to drive a sustained rise in user activity. Furthermore, our offline inclusive finance, tech empowerment, and overseas businesses all achieved steady growth, further underscoring the overall resilience of our diversified ecosystem. Fourth, we deeply integrated AI technology to elevate the user service experience. During the fourth quarter, we continued to advance our applications of large models. our customer service AI agents are now successfully deployed in core scenarios, including credit approvals, transactions, and repayments. These agents maintain a response accuracy of over 90%, with an average response time of under three seconds. Notably, in the credit approval stage, the human intervention rate was only 3.4%, significantly boosting both efficiency and user satisfaction. Looking ahead, we will expand these automated services to nighttime hours to achieve seamless 24-7 coverage. During the quarter, we further implemented large models in key risk management processes. For example, in compliance quality assurance, our AI-assisted system is gradually replacing traditional rule-based monitoring, raising our QA accuracy to 89%. In risk strategy, our strategy generation AI agents perform deep modeling of customer data to automate the creation and full process evaluation of differentiated risk strategies, consistently improving decision-making precision and response efficiency. In user operations, our credit line adjustment AI agents accurately identify user needs during their dialogues with customers and provide self-service guidance. This not only reduces manual service costs, but also enhances the user experience. The company has always adhered to a user-centric service philosophy, positioning consumer rights protection as a core competitive advantage. In the fourth quarter, we continued to standardize our service processes and optimize intelligent routing, leading to a measurable improvement in overall efficiency and response times. We also refined our tiered customer service model, enhancing our self-service platform to drive higher user satisfaction. During the quarter, a series of macro policies supporting consumption and the county-level economy were rolled out, anchoring the direction for industry development. We have always closely aligned with national policy requirements, fully leveraged our own advantages, and increased investment in consumption scenarios and products tailored for micro and small business owners. Through measures such as interest-free and low-interest promotions, complemented by an enriched product supply and comprehensive services, we are delivering tangible support for the consumption rebound and injecting financial vitality into the growth of micro and small businesses. As we enter 2026, we are optimistic about the market's development potential. We are well positioned to seize growth opportunities while upholding a high standard of compliance and a customer-centric philosophy. By deepening our diversified business ecosystem, we will continue to strengthen our operational resilience and our ability to navigate market cycles. Next, I'll hand over the floor to our CRO Arvin.

Thanks. 流动性收紧对行业规模和风险持续造成比较大的影响和冲击 针对行业风险周期四季度我们持续加强风险管控 提升优质资产占比 优化资产结构 保障风险可控 具体风险表现来看 环比三季度全量资产入催率上升了约百七左右 全量资产90加不良率上升了百三左右 但季度内分月来看,在10月风险达到高点后,11月12月连续两个月小幅下降,风险开始起稳回落,呈下降趋势,12月入催率较10月下降百八左右,26年上半年,我们仍将继续加强管控,保持风险下降趋势,逐步控制到风险偏好内。 下面我向大家介绍一下我们在四季度采取的重点风险管理措施 第一在四季度继续加强高风险客户的识别和管控 在模型方面加快风险模型迭代 通过模型自动化更新 按照将最新发生的坏样本数据纳入模型训练 从而能够更快地学习应当前市场、环境变化而引发的逾期客户的特征 策略方面,引入更丰富的实时多头信息、逾期信息、负债信息、收入信息和工作稳定性信息 对短期内高频借贷、高供债、收入负债高的客户实施更加严格的交易拦截与受信敞口控制 另一方面,加强全量资产入催管理,重点提升高入催人群的识别,优化缓款提醒频率,加强代扣能力和链路升级 第二 在四季度继续完善优质资产的经营能力 提升优质资产占比 优化资产结构 存数据模型层面 持续优化优质客户识别能力 对优质客群开发专项额度 价格 返款方式策略 全面提升offer竞争力 另外深化优质客群的一对一专享服务通过管库服务交付式补键大额专项人审等根据客户的需求提供个性化定制化reoffer提升客户的满意度和留存率 第三 在电商方面四季度加大了对客户的消费支持力度 通过专项策略支持电商双11和双12大促活动 在活动期间我们针对3C数码等大额优质消费进行了专项零额支持 此外 针对头部优质客户 我们通过12期24期免息分期活动促进优质规模增长

Next, I will provide a review of our key initiatives and achievements in risk management for the fourth quarter. The fourth quarter of 2025 marked the full implementation of the new loan facilitation regulations. The resulting liquidity tightening across the sector created significant headwinds for both industry scale and risk performance. In response to the cyclical volatility, we maintained a disciplined approach to risk management throughout the quarter, increasing our mix of prime assets and optimizing our portfolio structure to ensure overall stability. Specifically, in the fourth quarter, day one, delinquency ratio of total assets increased by 7%, and 90 days plus delinquency ratio edged up by 3% quarter over quarter. On a month-over-month basis, our risk indicators saw a marginal decline in November and December after peaking in October, signaling that asset risk performance has begun to stabilize. In December, day one, delinquency ratio declined by 8% compared to October. We will sustain our rigorous risk controls through the first half of 2026 to reinforce this downward trajectory and gradually bring our asset risks back within our target risk appetite. Next, I would like to walk you through the key risk management initiatives we have implemented during the fourth quarter. First, we continue to intensify the identification and management of high-risk customers. From a modeling perspective, we accelerated the iteration of our risk models by implementing automated weekly updates. By incorporating the most recent default samples into our training sets every week, we were able to more rapidly capture and learn the shifting characteristics of delinquent borrowers in the current market environment. On the strategy front, we integrated a broader range of real-time data dimensions, including cross-platform borrowing, delinquency history, leverage ratios, personal income, and employment stability. This allowed us to apply more stringent transaction interception and credit exposure controls to customers exhibiting frequent borrowing, excessive cross-platform debt, or high debt-to-income ratios. Furthermore, we reinforced our day-one delinquency management across the entire portfolio. We placed a particular emphasis on improving the identification of high-risk cohorts at the earliest stage of delinquency while optimizing the frequency of repayment reminders and strengthening our auto-deduction efficiency and payment-clearing infrastructure. Second, we continued to refine our operational capabilities for high-quality assets, consistently increasing the mix of prime assets and optimizing our portfolio structure. At the data and modeling level, we continuously optimized our prime customer identification capabilities. We developed dedicated strategies including credit line allocation, pricing and repayment, tailored to Prime segments, comprehensively enhancing our offer competitiveness. In addition, we deepened our one-on-one exclusive services for Prime customers through account management services via instant messaging, interactive supplementary document submission, and dedicated manual reviews for large ticket loans. We provided customized re-offer based on customer needs, thereby boosting customer satisfaction and retention. Third, regarding our installment e-commerce business, we significantly intensified consumer support during the fourth quarter through initiatives tailored for the Double 11 and Double 12 shopping festivals. During these events, we provided dedicated temporary credit lines to support large-ticket purchases, particularly in the 3C and consumer electronics categories. Additionally, for our top-tier prime customers, we launched 12- and 24-month interest-free installment campaigns to further accelerate high-quality volume growth. Looking ahead to the first quarter of 2026, we will continue to strengthen risk controls over existing and new loans while intensifying our efforts in managing and phasing out high-risk segments to ensure a sustained downward trend in risk levels. Next, I will hand over to our CFO, James, to provide a review of the company's financial performance for the fourth quarter.

Hi, everyone. Thanks, Arvin. I will now provide a detailed overview of our fourth quarter financial results. Please note that all figures are presented in revenue terms and all comparisons are made on a quarter over quarter basis unless otherwise stated. The fourth quarter marked a pivotal transition for the industry as the new regulatory framework officially came into force. We have strictly followed these regulatory requirements, ensuring that the comprehensive of interest rate for all new loans is capped at or below 24%. Following the implementation of these new regulations, we observed elevated volatility in industry-wide credit risk. This complex market environment created challenges for our performance. In the fourth quarter, our net income reported $214 million. This sequential decrease was primarily driven by the planning adjustment to strictly comply with a 24% cap, coupled with a contraction in loan volume resulting from outrudent strategy to proactively manage risk exposure. Furthermore, heightened market volatility led to increased credit costs and more conservative provisioning. Lastly, operating expense did not decline proportionately with the revenue due to the fixed cost and expense recognition seasonality. Now let's take a holistic review of our fourth quarter financial results. First, net revenue of the credit business, which is derived by adding up credit facilitation service income and a tech empowerment service income net of credit cost including provisions and fair value changes and the funding cost was 1.4 billion representing a 586 million decrease quarter over quarter the overall decline was primarily driven by a 132 million drop in credit facilitation service income stemming from contracting the loan volume in our online consumer finance business that decreased overall pricing during the during the fourth quarter we did average APR of new loans originated was 21.7% a 140 business points decline quarter-over-quarter this was compounded by approximately 185 million increase in credit cost reflecting elevated risk volatility and our prudent provision. Additionally, our tech empowerment service income decreased by 286 million mainly due to the wind down of the ICP business, although this was partially offset by revenue growth in our value-added services. Second, net revenue of the e-commerce business defined by e-commerce revenue net of cost of inventory sold increased by 56 million to 167 million so the total net revenue summing the credit and the e-commerce business added up to 1.5 billion a 26% or 530 million decrease quarter over quarter on expense side Operating expenses, including the sales and marketing, research and development, general and administrative expenses, processing and servicing costs, decreased by 11% or $147 million to $1.2 billion. As I mentioned earlier, because this 11% reduction in operating expenses was outpaced by the and 26% decline in net revenue. The difference weighed on our debt profit for the quarter. Tax and others decreased by 76 million to 86 million. Consequently, total expenses added up to 1.3 billion, a decrease of 223 million. By deducting total expenses of 1.3 billion from the total revenue of 1.5 billion, we arrived at a net income of $214 million, a decrease of $307 million quarter-over-quarter. Although the complex environment posed challenges to our performance, we demonstrated our operational resilience. Next, I will elaborate on three key business highlights that underscore our strength during this transitional period. the resilience of our VINCE ecosystem, our prudent provision coverage, and the further reductions in funding costs. The resilience of our VINCE ecosystem. Amid the cycle of adjustment, while our online consumer finance VINCE was significantly impacted, other VINCE lines actually provide critical stability. Specifically, regarding our e-commerce VINCE, Although the GNV declined slightly as a result of our prudent operational strategy, gross profit continued to achieve steady growth, recording $167 million during the fourth quarter. Notably, the e-commerce gross margin calculated as the gross profit divided by GNV reached 7.8%, representing a quarter-over-quarter increase of 295 rating points. In parallel, our tech empowerment business continue to expand, acting as a vital counterbalance to the volume decline in the online consumer finance business. Under this model, where we work together with internet super platforms like ByteDance and banking partners, we assist our banking partners with customer risk assessment while assuming the corresponding credit risk. Given the better quality of this consumer base, these loans carry lower pricing. It is worth highlighting that since this model recognizes revenue over the loan tenor rather than upfront, and it carries lower take rate consistent with its lower risk nature, it creates a temporary time lag between the revenue recognition and the loan volume. However, this mixed shift is accretive to our long-term asset quality and steady financial performance. Furthermore, our offline inclusive finance business progressed steadily, maintaining stable risk performance and acting as a stabilizer for our overall portfolio. The resilience of our business ecosystem demonstrates that we have built a comprehensive product matrix that serves a broader spectrum of the market. Our business lines now cover a wide range of interest tiers, from competitive rates for client users to standard rates for the mass market. This allows us to effectively match users with the right products, maximizing our reach and retention amidst the evolving regulatory environment. Second, prudent provision coverage. In the fourth quarter, impacted by heightened volatility in industry risk. Our total credit cost, including the three provision line items and the fair value changes of financial guarantee derivatives in the income statement, rose by $185 million to $1.3 billion. While we observed early signs of improvement in December following our credit tightening measures, overall risk indicators remain at elevated level and we expect that the industry will need time to fully digest the risks. Consequently, we adopted a more prudent approach to provisioning for new loans facilitated during this period. To better illustrate our provisioning strength, I would encourage you to focus on the growth provision, which excludes the impact of the net accounting policies in the item change in fair value or financial guarantee derivatives and loan values in the income statement. Specifically, the gross provision ratio of new loans calculated as the gross provisions divided by the capital heavy new loan volume increased by 27 basis points from the third quarter to 7.24%. Please note that for an effort to effort comparison, this volume metric excludes loans from tech empowerment services. This level stands well above our historical peak vintage charge-off rate of around 6.1%. We view this elevated provision ratio not just as a reflection of the current volatility, but also as a buffer to future-proof our performance against potential macro uncertainties. Third, the optimization of funding costs. With the implementation of the new policy, institutional funding that was previously allocated to segments priced above 24% was released in the fourth quarter resulting in ample funding supply. Consequently, our funding cost declined substantially from 4.4% in third quarter to 3.8%. Looking ahead to 2026, as the industry landscape shifts to a new normal stage and the new regulatory framework, we anticipate a structural flight to quality. Funding will increasingly congregate towards platforms that are fully compliant and possess strong risk management capabilities. Currently we have successfully secured our place on the whitelist of our key funding partners, laying a solid foundation for our steady development in the future. To summarize, the above three highlights mainly impacted the net revenue side of the income statement. On the cost and expense side, total operating expenses reduced by 11% or 147 million to 1.2 billion, mainly due to the decrease of sales and marketing expenses reflecting our disciplined planned approach to user acquisitions during this industry transition. However, our total operating expense reduction was slower than the decline in the net revenue. This was primarily due to fixed costs and seasonal impacts. For balance sheet items, as of December 31st, our cash position, which includes cash, cash equivalents, and restricted cash, was approximately $4.0 billion. Shareholders' equity remains solid at about $12 billion. To conclude, I'd like to reaffirm our commitment to enhancing shareholder value. As of March 2026, we have repurchased $39 million worth of ADS alongside the CEO's personal purchase of over $10 million worth of ADS. On the dividend front, our Board of Directors has approved a dividend of $0.188 per ADS, bringing our total dividend for 2025 to $0.2382 per ADS. This represents a more than 100% increase compared to $0.182 in 2024. On the foundations of our current shareholder return policy, we'll continue to evaluate opportunities and explore different ways to ensure we deliver optimal value to our shareholders. Looking ahead, while our asset quality continues to show positive momentum, we maintain a prudent approach given the ongoing macroeconomic uncertainties. We expect the total loan origination to remain relatively stable in the first quarter of 2026. That's all our prepared remarks for today. Operator, we're now ready to take questions.

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, please press star one and one again. As a reminder, please do translate your questions into English and please remember to mute yourself after asking your question. Thank you. We will now take our first question. Please stand by. First question is from Alex Yee from UBS.

Please go ahead. um so i have two questions the first one is uh given the new regulatory environment so how um is this development strategy uh going to change going forward um and then the second question is Good management, share with us some of the key operating performance outlook for this year.

Thank you very much. 公司正在主动的下降综合贷款利率 据我们四季度新增平均接管利率下降到21.7以后 我们在2026年也会进一步押奖 此外 我们也会持续深耕普惠的这个市场 精准服务小微的消费群体 并依托自己的整个的一个分期零售的平台 丰富场景商品的供给 深度挖掘用户债 衣食住行等刚需多元的消费场景下的一些消费潜力 与此同时我们也会随着科技的输出与海外业务的稳步扩张 公司的收入结构将会变得更加多元化 从而在新的监管框架下持续夯实长期的经营韧性 公司始终还是坚持于用户中心的这样的一个理念 So this is the translation for Jay's answer.

With the full implementation of the new regulation, the industry has entered a new phase centering on quality and compliance. Industry resources will increasingly concentrate on platforms that demonstrate both quality and compliance. Under such new regulatory environment, the key to launching business resilience lies in our user-centric approach and our ability to serve customers across different segments. Our unique business ecosystem enable us to engage and serve users with varying risk profiles and achieve stable growth amid market frustrations. Specifically, we actively respond to regulatory guidance by adhering to a high standard of compliance. Building on the current regulatory requirements, we further lower the overall loan rate. In the fourth quarter, the average loan rate on our new loans was 21.7 percent, which will be further the lowered in 2026. Furthermore, we remain deeply committed to the offline inclusive finance market and serve the micro and small business owner segment. Leveraging our installment e-commerce platform, we enrich the supply of products on our platform across diverse and essential life service categories to tap into the consumption potential of our users. Meanwhile, with the steady expansion of our technology solution empowerment and overseas business, the revenue structure is becoming more diversified, strengthening our long-term operational resilience under the new regulatory framework. Last but not least, we adhere to a user-centric service philosophy, viewing consumer protection as a key part of enhancing our operational resilience. Moving forward, we will continue to improve efficiency and experience of our customer service through process standardization, intelligent task routing, and refined operation, further strengthening consumer rights protection. 至于用户的整体系统的过客策略,我们会提升客户的体验和产品竞争力,聚焦优质的客群,推动业务稳步回归常态化的增长轨道。

距离到核心的几个经营指标 产品及客群方面 我们还是会聚焦优质客群 持续通过优化受信额度 构建差异化的定价体系 来提升用户的整个的一个体验 当时以用户为中心的权益经营的人力 积极拓展优质的客群 在资产质量方面 由于我们可以获得更多的优质客群来改善资产结构 目前我们已经观察到资产的质量已经企稳及看到有不少的编辑改善 如没有新的一些宏观的冲击 预计行业将会逐步消化现有风险

整体的风险指标也会稳步回落到我们风险天后区间 从而积极为获客及业务的复苏奠定一个比较好的基础 Regarding the second question about the outlook of our business operation in the year of 2026, with risk level stabilizing, we will adopt a more proactive user acquisition strategy. By enhancing the customer experience and product competitiveness, we will focus on high-quality segments to bring our business back onto a path of steady, normalized growth. More specifically on our key operational initiative, in terms of products and customer segments, we will focus on the refined management of high-quality assets. By optimizing credit line location and building a differentiated pricing system, we aim to This strengthens both product competitiveness and customer experience. This will reinforce our user-centric operational capabilities to serve different segments of customers and enable us to expand and better serve prime segments. In terms of asset quality, we will improve our customer mix and enhance asset quality by ramping up on acquisition of more high-quality customers. By far, we have already observed early signs of risk stabilization and improvement in asset quality. Barring any new macroeconomic shock, we expect the industry to gradually digest the existing risk, bringing overall risk metrics back within our risk appetite. This will lay a solid foundation for proactive customer acquisition and business recovery. And in terms of long origination, we'll continue to invest in and strengthen our customer acquisition capabilities. Driven by our improved product competitiveness and proactive customer acquisition strategy, we expect our long volume to gradually return to a normalized growth range following a period of bottoming out and stabilization.

Thank you.

We will now take the next question. Next question is from Judy Zhang from Citi. Please go ahead.

The first question is regarding on the risk outlook. Can management share with us the company's latest risk performance and the future outlook? And the second question is, what is the outlook for the company's full-year financial performance for this year? Thank you.

Okay, so I'll answer this question. 要回落到25年上半年相对比较低的水平可能还需要一定的时间出清 针对整个行业风险周期呢我们存四季度就是在四季度化我们继续再加强整个风险的一个管控 同时优化和提升优质资产的一个占比优化我们整个资产结构 存分子分母两个方面来保证我们整体的风险的一个上升幅度和冲击 是处在一个可控的范围之内 落到具体的风险表现上来说 虽然四季度相比于三季度 我们整体的风险有一定的上扬 但是在10月份风险达到高点以后 从11月份起 截止到目前已经连续多个月 我们的风险呈现一个小幅下降的趋势 然后我们展望未来的话 我们觉得整个风险仍将能够保持一个下降的趋势 当前虽然风险有所改善 但是仍然处于一个高位 然后需要时间进一步下降 然后逐步管控到我们整个风险偏好之内

展望整个26年的话我们继续加强整个资产的风险管控 加大高风险客户的处置力度 力争保持风险持续下降到我们的风险偏好之内 This is the translation for Alvin's answer The fourth quarter was the first quarter after the implementation of the new regulation and was a critical period for the entire industry to digest the impact of the new regulation. While industry-wide risk has begun to show signs of stabilizing, it will take some time for this risk to be fully clear and return to the level before the first half of 2025. In response to this route of risk cycle, we continue to strengthen our risk management in Q4 by increasing the proportion of high quality assets and optimizing our asset structure, ensuring risk remain under control. Regarding the specific performance, although the overall risk indicator in Q4 was higher than that in Q3, on a month-over-month basis, starting from the month of November, we have started to see risk trends out for multiple months consecutively, signaling a downward trend and we expect this downward trend to continue. Despite these improvements, it's important to know that risk levels remain elevated in the fourth quarter. Looking ahead to the first quarter of 2026, we will continue to strengthen risk control over loans while intensifying our efforts in managing and phasing out high risk segments to ensure a sustained downward trend in risk levels and gradually bringing the long risk back within our target risk appetite in the second half of 2026.

Okay I would take on the second question regarding the financial guidance. The fourth quarter of 2025 was indeed one of the most challenging periods, absorbing the concentrated impact of several factors. This includes revenue compression from pricing adjustments and a deliberate scale down of loan volume in our consumer finance business, a shift in the pace of revenue recognition returned by changes in our business mix due to the tech empowerment business volume growth, short-term uptick in our credit risk and the seasonal impacts on our operational expenses. For the first quarter of this year as I stated earlier, we expected a long volume of originations to be at a similar level as our fourth quarter. Given the ongoing macroeconomic uncertainties and the lower visibility, we are not providing a four-year financial guidance for 2026 at this point. However, I would like to share a few variables that may impact our financial performance. Looking ahead, our four-year financial performance will be primarily influenced by the following dynamics. On the revenue side, number one, volume. While our overall volume will remain stable or even grow a little bit, the short-term revenue contribution from a tech empowerment business will be relatively modest. This is due to its the lower credit cost, lower pricing profile, and the relatively slower revenue recognition accounting schedule. Second is pricing. The proactive downward adjustment to our overall pricing will also continue to weigh on our top line. On the cost and expense side, number one, funding cost. In the near term, frequent regulatory window guidance directed at funding partners has led to a somewhat tightened funding supply in the first quarter. Moving forward, our funding costs will be influenced by a combination of the broader regulatory environment, the quality of our customer cohorts, and the overall funding liquidity. Second, the credit cost. As risk progressively stabilized and we pivot towards the higher quality customer cohorts, we anticipate a gradual optimization of our credit cost while maintaining an ample provision. Third point is the operating expenses will persistently drive cost reduction and efficiency initiatives to optimize our operational leverage and steadily lower our operating expenses. So in summary, in view of the macro We will maintain prudent in our overall business strategy in the execution. At the same time, optimize the profit and the shareholder value and strive to build a long-term, healthy, and sustainable business.

Thank you. We will now take our next question. Please stand by. Next question is from Claire Uyang from Goldman Sachs. Please go ahead.

Can you tell us about how to increase the cash flow rate and return to increase the return rate? I'll quickly translate my question. What is the common future plan for enhancing shareholder returns? In terms of share buyback and cash dividend? Thank you.

This question I'll answer. From 2025 to the beginning of the year, our return rate has increased to 30% of the net. This is the highest rate in the market. 除了现金的分红 截至今天 公司已经累计回购了3900万美元的股票 完成了回购计划的80% 我本人1000万美元的股票真实计划已经全部执行完毕 这些举措体现了管理成对公司前景及长期内在价值的坚定的信心 本次业绩发布后 我们还将继续执行剩余的回购计划 切实践行提升股东回报的承诺 咱们未来 So first, starting from the second half of 2025, our dividend payout ratio was raised to 30% of our semi-annual net profit.

This actually puts us at the forefront of the industry. On top of cash dividends as of today, we have repurchased 39 million U.S. dollar worth of ADS, completing 80% of our current repurchase program. I have also fully executed my personal 10 million U.S. dollar share repurchase plan. This action reflects the management's firm confidence in the company's outlook and its long-term intrinsic value. Following this earnings release, we will continue to execute the remaining portion of our share repurchase program, delivering our commitment to enhance shareholder return. Looking ahead, we will closely monitor market dynamics and, based on our actual operational needs, actively explore diverse initiatives, including further repurchases, to create sustainable value for our shareholders.

Thank you. I will now hand the conference back to Will Tan for closing comments.

Thank you. This conference is now concluded. Thank you for joining us today's call. If you have any more questions, please do not hesitate to contact us. Thanks again.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.