Ladies and gentlemen, thank you for standing by, and welcome to the 360 DigiTech second quarter 2022 earnings conference call. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Miss Mandy Dong, our Director. Please go ahead, Mandy.
Thank you. Hello everyone, and welcome to our second quarter 2022 earnings conference call. Our results were issued earlier today, and can be found on our IR website. Joining me today are Mr. Haisheng Wu, our CEO and director, Mr. Zuoli Xu, our CFO and director, and Mr. Zheng Yan, our CRO. Before we begin the prepared remarks, I'd like to remind you of our safe harbor statement in our earnings press release, which also applies to this call. When we refer to forward-looking statements based on our current plans, estimates and projections. Also, this call includes discussions of certain non-GAAP measures. Please refer to our earnings release for a reconciliation between non-GAAP and GAAP ones. Last, unless otherwise stated, all figures mentioned are in RMB. I will now turn the call over to our CEO, Mr. Haisheng Wu.
好，谢谢 Mandy。很高兴跟大家分享我们二季度的业绩。本季度我们这个撮合的放款量达到983亿，同比增长11%，贷款余额是1,505亿，同比增长28%。二季度虽然经历了我们的这个上海的封城、全国多点疫情爆发，这应该是一个非常不寻常的季度。尽管如此，我们仍然取得了非常稳健的成绩，非常不容易。这再次证明我们应对不利的环境、控制业务风险的能力和我们业务的强大的韧性。
Hello everyone, I'm very happy to report another strong quarter. In Q2, total loan origination and facilitation volume reached RMB 98.3 billion, up 11% YOY. Outstanding loan balance reached RMB 150.5 billion, up 28% YOY. Despite an unusually volatile macro environment with the Shanghai lockdown and resurgence of COVID in multiple cities, we delivered a solid performance, which once again demonstrated the resilience of our operations and risk management capabilities facing adversity.
下面我先把那个监管方面的一些情况跟大家做个同步。监管...
在二季度，我们平台经济的专项整改工作取得了进一步的进展，相关的监管会议也多次表明，整改已经进入了收尾阶段。主基调也将转到推动发展上，后续将从规范、健康的、可持续的角度来实施常态化的监管。所以我们看到监管措施趋于稳定，监管的导向也更加地清晰。七月二十八号中央政治局会议部署下半年的经济工作，也明确提出推动平台经济规范、健康、持续发展，完成平台经济专项整改，对平台经济实施常态化监管。八月一号，央行召开二二年下半年的工作会议，对下半年的重点工作进行部署，也提到对大型平台企业整改工作取得显著成效。进一步地督促平台企业完成全面整改，实施规范、透明、可预期的常态化监管，发挥好平台经济创造就业和促进消费的作用。
On the regulatory front, there are further developments in rectification work of platform economy. The recent regulatory meetings have all sent a clear signal that the reform is reaching an ending phase. Going forward, regulators will put emphasis on driving healthy and sustainable industry development through normalized supervision. As the regulatory environment gradually stabilized, we seek clearer guidance. On July 28th, the Central Political Bureau of the Communist Party of China set out economic priorities for the second half of the year. The policymakers pledged to promote healthy, orderly development of the platform economy, complete the rectification work and conduct regular supervision. At a follow up meeting by the PBOC on August 1st, the Central Bank remarked, "significant progress of major platform rectification." It will urge these companies to complete the whole rectification project, place them under regular supervision that is more standardized, transparent and predictable. As a result, this promotes the role of the platform economy in job creation and boosting consumption.
目前我们按照监管的部署和要求，已经完成了大部分领域的自查整改工作，并且向监管部门进行进入这个常态化的数据报送。在个人征信领域，我们已经将方案向监管做了汇报，并且保持和监管的持续紧密的沟通。目前我们按照监管认可的方案在稳步推进。
We have completed most of the rectification work according to the regulatory requirements and now in the stage of regular data reporting. Regarding credit agency reform, 算知联, we have already submitted our execution plans to regulators and have since maintained close dialogue with them. Based on feedback and direction from the regulators, we started to work with other business partners to implement our plans.
七月份，银保监会向银行下发了关于加强商业银行互联网贷款业务管理、提升金融服务质效的通知，也就是十四号文。这个文件与之前下发的2021年二十四号文以及2020年九号文精神是保持了一致，并且延长了实施的过渡期。这个应该说是再次肯定了商业银行在互联网贷款中与相关机构合作的业务模式。文件中也提出了各项规范性的要求，其主要内容，应该说在我们的这个业务实操层面早就得到了一个贯彻落实。
In July, the CBIRC published a notice on strengthening the management of internet loan business of commercial banks and improving the quality and efficiency of financial service, namely Circular No. 14. The document is consistent with earlier guidance, including Circular No. 24 in 2021 and Circular No. 9 in 2020, with the grace period extended for one year till June 30, 2023. In addition, the document once again acknowledges the collaborative business model between commercial banks and related parties in internet lending business. We have already implemented the specific requirements outlined in this circular in our daily operations.
二季度尽管宏观经济和疫情带来了重重的阻碍，但我们应该说是保持了良好的战略定力，在成功地应对了波动的基础上，我们年初制定的各项经营战略都在稳步推进。在我们的资金工作、产品和风控，还有客群方面，我们应该说都取得了很不错的进展。在我们的科技升级战略上，应该说也有非常好的成果。
In Q2, despite multiple headwinds from the macro economy and unexpected pandemic resurgence, we remain committed to our strategic set at the beginning of the year. In this extremely volatile market, we successfully executed our operational strategies and made great progress in funding, product, risk management, and customer base, as well as tech upgrading.
在资金端，我们进一步地优化了金融合作机构的结构，上线对接了十余家股份制以及万亿管理规模以上的大型的城农商行。这让我们的储备资金更加充裕。由于资金的充裕性持续提升，以及我们ABS的发行，担保助贷资金成本显著下行，环比下降了21个BP。二季度以来，我们成功发行了33亿的ABS，综合平均成本低至5%。
On the funding front. We further optimized our funding structure. During the quarter, we added 10 more joint stock banks and major urban and rural commercial banks with over CNY 1 trillion AUM, which make our funding supply more abundant. Thanks to improved funding supply and the resumption of issuance of ABS. Our funding cost for credit driven loans decreased by 21 basis points on a sequential basis. Since the beginning of Q2, we have issued a total of CNY 3.3 billion ABS at an average funding cost of 5%.
在产品端进一步地优化我们的产品结构，降低整体定价。我们全面完成了监管对于定价的整改要求。
On the product front, we continued to optimize product portfolios and lowered our average price. This marks our full compliance of 24% regulatory requirements.
在获客方面，我们继续执行我们的客群升级战略。通过提升我们的精准投放模型RTA的覆盖度，进一步地扩大了优质客群的规模，客群质量也进一步的提升。我们精准投放模型RTA覆盖度从Q1的50%提升到Q2接近100%。从我们的投放端来看，Q2的优质客户，也就是我们内部定义的就是十八定价客群的用户，首授信客户数量相比Q1增加了51%。从我们所有渠道来看，也就是投放渠道以外的所有渠道来看，我们优质客群的质量季度环比上升20%。同时我们不断地提升获客的精准度，迭代用于获客质量模型的筛选的模型。我们也同时进一步拓展这个优质媒体联合建模的这个合作伙伴。我们跟ByteDance也达成了这个联合建模的合作。已有的合作伙伴，我们跟Baidu、Tencent、Kuaishou等也在不断地迭代我们的这个精准模型。
另外我们还做了一些升级我们的智能投放平台，也带来了一些降本增效的工作。同时我们也新增了一些别的获客的渠道和资源，包括百度的一些开屏广告、头条站内的一些RTA的资源等等。
On the customer acquisition front, we continued to upgrade our user base during the quarter by expanding the coverage of our intelligent market RTA, namely real-time API model. We further increased the number of high quality users and improved overall user quality. The coverage ratio of our precise targeting RTA increased from 50% in Q1 to almost 100% in Q2. In the online advertising channels, the number of high quality users with granted credit line increased by 51% from Q1. Looking across all customer acquisition channels, the credit approval rate of high quality users increased by roughly 20% on a sequential basis. Meanwhile, we continue to enhance effectiveness of targeted customer acquisition. On one hand, we continuously upgrade our model for user quality screening.
On the other hand, we expanded our media partner network for joint modeling and onboarded new partners such as ByteDance. For our existing partners such as Baidu, Tencent, and Kuaishou, we continue to upgrade our models. In other areas, we optimize the cost efficiency of user acquisition by upgrading our intelligent marketing platform. We also connected to new user acquisition resources such as Baidu Open-Screen Ads and Toutiao's RTA resource.
再说一下我们的风险方面。二季度我们应对疫情做了快速的策略调整，包括获取优质新客，逐步清退高风险的存量用户，深度挖掘用户特征，进行归因，进行模型的大版本迭代。因此，在新增放款的风险表现取得了非常不错的效果。新户新增放款首期的入催率从Q1的3.56%下降到Q2的3.01%。Q2新用户的FPD30不到0.25%。同时所有存量资产的入催率也逐步下降，从三月份的5.11%下降到六月份的4.71%。并且这些良好的趋势在七月份也得到了进一步的延续。七月day one的入催率为4.64%。全部资产的M1回收率从三月份的85.2%也回升到六月份的86.9%。
In Q2, we quickly adjusted our risk strategies in response to resurgence of the pandemic, including acquiring higher quality customers and gradually cutting off high risk users. We also completed major upgrades of our risk models to further leverage on users' data. As a result, risk performance of new loan origination was great. First payment day one delinquency rate of new customers dropped to 3.01% in Q2 from 3.56% in Q1. First payment delinquency 30 days was less than 0.25% in Q2. In the meantime, day one delinquency rate of our current loan book gradually went down to 4.71% in June from 5.11% in March. Such positive trends continued into July, with day one delinquency rate further dropped to 4.64%.
The overall M1 collection rate of current loan book trended up to 86.9% in June, compared to 85.2% in March.
尽管受到疫情影响，但是我们的资产质量在一系列的调整下仍然在变好，尤其是新增放款的质量。这说明我们的策略应对疫情是非常有成效的。在宏观区域逐渐平稳的前提下，我们目前的风控策略预计会在下半年持续推动公司整体风险指标的进一步改善。
Despite the impact of the pandemic, our overall asset quality improved in Q2, especially for new loan origination. This reflected the effectiveness of the adjustments we made and our ability to counter pandemic-related challenges. As macro circumstances stabilize for the rest of the year, we expect our risk management strategies to bring further improvement in asset quality. In terms of tech upgrading strategy, we maintain that 55.7% of the loans originated and facilitated was under the capital-light model and other tech solutions in Q2. In the long run, we plan to modularize our leading technology into more products and better serve diverse financial institutions. In addition, the China Academy of Information and Communications Technology, namely CAICT, granted us among the first batch of companies under the Business Security Initiative, namely BSI. Together industry giants including China Mobile, Ant Group, Baidu and et cetera.
This was a strong statement of our capabilities in business security management and technology. In Q2, we navigated through the extreme pandemic situation of citywide lockdown and other multiple macro fluctuations with strong operational and financial results. Looking ahead into Q3, we will stay vigilant on the macro economy environment and the pandemic development. Meanwhile, we are seeing an increasingly stable policy environment and a healthier industry ecosystem. We will maintain a prudent operational strategy, continue to upgrade our technology and customer base, and finish our rectification tasks.
Okay. Thank you, everyone. Thank you, Haisheng. Good morning and good evening, everyone. Welcome to our second quarter earnings call. As Haisheng discussed, we delivered another solid quarter, in the rather challenging period of time from a macroeconomic perspective. Early in the quarter, COVID lockdowns in Shanghai and other regions of the nation noticeably weakened consumers' confidence and altered consumption pattern for many. Since the lockdown removed in June, we have observed some recovery in consumers demand for credit. Although the pace of the recovery are expected to be gradual and modest. Despite the impact from COVID and a generally soft macro-environment, we continue to push for steady improvement in overall asset quality throughout the quarter and the year.
With optimization of the risk model and contribution from high quality new borrowers, overall day one delinquency has been declining sequentially each and every month since beginning of this year. Even during the peak of the COVID lockdown in April and May. It was 4.9% for Q2, versus 5.2% in Q1, and further declined to 4.6% in July. Particularly, day one delinquency for new borrowers in Q2 was well below 4%, indicating clear better quality versus existing borrowers. Thirty-day collection rate remains stable at around 86% in Q2. COVID lockdowns significantly hampered our collection operation in April and early May. Thirty-day collection rate hit the lowest point of this cycle in April at less than 85%, then start to recover. By July, it was already above 87%, the highest point so far this year.
Again, we see clear outperformance by new borrowers versus existing borrowers. For new borrowers, thirty-day collection rate was above 90% in Q2. These risk metrics continue to support our current user acquisition strategy, which focus on high quality segment of the market. Total net revenues for Q2 was CNY 4.2 billion, versus CNY 4.3 billion in Q1, and CNY 4 billion a year ago. Revenue from credit-driven service, capital heavy, was CNY 2.9 billion, compared to CNY 2.9 billion in Q1 and CNY 2.4 billion a year ago. The year-on-year growth was mainly due to growth in loan volume and longer average tenor of the loans, more than offsetting the negative impact from decline in average prices of the loans. Capital-heavy facilitation revenue take rate actually improved modestly versus Q1, also due to longer loan tenor.
Revenue from platform service, Capital-Light, was CNY 1.2 billion, compared to CNY 1.4 billion in Q1 and CNY 1.6 billion a year ago. The year-on-year and sequential decline was mainly due to the decline in loan volume and the average price of the Capital-Light loan facilitation. During the quarter, Capital-Light loan facilitation, ICE and other technology solution combined account for roughly 56% of the total loan volume. Given the challenging macroenvironment, we purposely increased the portion of the loans processed through ICE and other technology solution to further mitigate potential risks so far this year. Such services typically have different commercial terms compared to regular Capital-Light loan facilitation. Overall, in the long run, we will continue to pursue technology-driven business model and expect Capital-Light and other technology solutions to eventually become a significant majority of our business.
During the quarter, average IRR prices of the loans we originated and/or facilitated further dropped to between 22% and 23%, well within the 24% rate cap requirement. We expect pricing to be relatively stable for the coming quarters. Sales and marketing expenses increased approximately 11% sequentially in Q2, mainly because of the increase in high quality user acquisition. Specifically, if we exclude back-end expenses, the increase in average cost to acquire a 360 new credit line user through third-party traffic sources were roughly in line with the increase in the average size of the new credit lines. As such, the average cost per dollar amount new credit line remained relatively stable Q-on-Q.
As always, we will continue to use lifecycle ROI and LTV as key metrics to determine the pace and scope of our user acquisition strategy to ensure the sustainability and profitability of our operations. Although the overall risk profile of our loan portfolio continued to improve in Q2 due to the contribution from new loans from high-quality new users, impacts from macro-uncertainty and COVID were still apparent on old loans from existing users. Therefore, we continue to take prudent approach in booking provisions against potential credit loss. New provisions for contingent liability for loans facilitated in the quarter was approximately CNY 1.3 billion.
With strong operating results and stable contribution from Capital-Light model, our leverage ratio, which is defined as risk-bearing loan balance divided by shareholders' equity, was at a historical low of 4.0 times in Q2, compared to 4.8 a year ago. We expect to see rather stable leverage ratio for the time being until Capital-Light and other technology solution contribution become a bigger portion of the business in the future. We generate RMB 1.1 billion cash from operation in Q2, compared to RMB 1.4 billion in Q1. The sequential decline in operating cash flow was in part due to some COVID-related timing issue.
As Shanghai being gradually reopened in late Q2, some of the business and administrative procedures within the financial system were still not running as efficient as what normally should be, therefore, causing some delays in collecting receivables from some of our financial institution partners. Total cash and cash equivalents was RMB 11.4 billion in Q2, compared to RMB 9.8 billion in Q1. Non-restricted cash was approximately RMB 7 billion in Q2 versus RMB 6.2 billion in Q1. As always, a significant portion of our cash will normally be allocated to support the security deposit with our institution partners in normal business course.
As we continue to generate healthy cash flow from operations, we believe our current cash position is sufficient to support the growth of our business, to invest in key technologies, and to satisfy potential regulatory requirements, and to return to our shareholders. In accordance with the dividend policy approved by our board last year, we declared another quarterly dividend of $0.18 per ADS for Q2.
The cash dividends represent approximately 20% of our Q2 earnings. Finally, regarding our outlook for 2022. As we discussed previously, we believe 2022 will be a fairly challenging year for the industry, as the participants are settling in a new regulatory environment. Meanwhile, the on and off outbreak of COVID, as well as associated measures to control the outbreak, added additional uncertainties to an already soft macro economy. Therefore, we want to maintain a prudent approach to plan our business and mitigate potential risks.
At this point in time, we would like to keep our full year loan volume guidance of between RMB 410 billion and RMB 450 billion unchanged, representing year-on-year growth of 15%-26%. We view this transitional year as an opportunity for us to further optimize our operation, strengthen our technology platform and upgrading our customer base to build an even stronger foundation for our future growth. As always, the forecast reflects the company's current and preliminary view, which is subject to material changes. With that, I would like to conclude our prepared remarks. Operator, we can now take some questions.
Thank you, management. We now begin the question and answer section. If you have any questions, please press zero one on your telephone keypad. If you need to cancel, please press zero two. For those who can speak Chinese, please kindly ask your questions in Chinese first followed by English translations. In addition, in order to have enough time to address everyone on the call, please keep it to one question and one follow up, and return to queue if you have more questions. Once again, zero one for questions. Our first question is Yada CICC. Please go ahead.
管理层好，谢谢给我这个提问的机会，我是中金公司的李亚达。今天可能有一个问题想向管理层再进一步请教一下，就是我们其实也看到当前在这个宏观经济承压，然后疫情可能不确定性还有的这样的一个背景下，我们也是看到普遍像金融机构信贷都遇到了一定的压力，然后像我们也看到像用户提前还款可能有所增加，然后定价的调整也越来越考验可能助贷机构，然后包括银行还有消金公司的这个客群筛选能力。所以想请教一下，在这样的一个背景下，就当前以及未来银行与我们的这个合作意愿，然后资金方的资金成本，然后获客成本，以及我们这些实际贷款人群的这些贷款的需求，这几个方面是否发生了一些改变，或者说发生了哪些改变？如果有一定的这个挑战，我们是如何可能去克服的？
Okay, then I'll do the translation part. Under the current macroeconomic and pandemic uncertainties, so we saw most of the retail credit service providers or the financial institutions generally have encountered certain pressure, such as the increase of customers early prepayment, the customer acquisition challenges after the pricing adjustment. I was wondering in the context of these uncertainties, are there any changes in the willingness of our bank partners to cooperate with us? And are there any changes in the funding cost to the customer acquisition cost? And also the actual borrowing demand of our potential customers? And if there were some certain challenges with our plans, then how are we going to overcome it? Thanks management.
好，谢谢亚达。我来回答这个问题吧。对，您看的很对。现在，金融机构普遍在这个信贷业务上都遇到了一些压力，因为宏观经济的考验。我们看到的情况是，正是由于机构们在别的类型的资产上遇到的压力，以及我们过去多年在消费信贷资产上的这种积累的信誉，从而让我们变成在机构眼中更为受欢迎的资产类型。因此，从合作意愿上讲，应该说比以前，比我们以前所经历的这个意愿要更强烈。尽管在二季度，疫情这种背景下，机构本来应该选择更加谨慎，但是我们看到，机构在对我们的资产的选择上依然充满了兴趣。反映在资金成本上，也会有比较大的一个下降。从我们最近七月和八月，因为是Q3的数据了，我们七八月看到的这个趋势来看，这个趋势得到了进一步的延续，甚至下降得更多。这是从机构方面。那从客户、用户这边吧。用户这边我们也看到，疫情的影响确实会对用户的借款意愿，因为大家被封在家里面，在Q2封在家里面，大家可能没有这个实际消费需求，所以用户的借款意愿在疫情之下，确实我们看到有了一个下降。我们在Q2做了大量的工作，去对冲了这种下降的影响，因为我们提高了我们的获客的精准度，所以把这个成本做了一些对冲。但在疫情恢复之后，我们在Q3能看到有一个用户意愿的明显的恢复，加上我们这种精准的投放系统，所以我们能看到，用户方面的这种意愿和成本的优势在Q3将会发挥得更明显。
Yes. I will answer your question, yeah. First, your observation is correct. Due to the impact of macro economy, financial institutions are under some pressures. However, thanks to our number one accumulated credibility in the market that from our consumer loan business. Number two, financial institutions pressure from other asset class. Actually in Q2, our high quality consumer loan assets is in high demand from financial institutions. That is reflected by the drop in funding costs that we already discussed. In July and August, we are seeing the trending down of funding costs further. For your second question, as for the customer acquisition activities, due to the lockdown of pandemic of offline activities, our customer drawdown activities is to some extent negatively impacted. Thanks to our a series of countermeasures that we apply more precise customer targeting that the drawdown activity of our users are boosting.
We have done a lot of work in Q2. We are expecting to see the work bearing fruit in Q3.
亚达。
雅达，我们看能不能回答你的问题。
好的，非常清楚，感谢管理层。我这边没有其他的问题了。谢谢。
谢谢。
Next question is Thomas Chong from Jefferies.
早上好，谢谢管理层接受我的提问。我有两个问题，第一个呢，是关于我们 SME 业务方面的。管理层可不可以分享一下呢，在这个宏观不确定的情况下，我们对 SME 这个板块呢，会不会有一个战略上的一个改变？然后在那个销售团队拓展方面呢，也会不会做一些增、减少的一些方案呢？第二个问题是，还是回到那个消费的情绪方面呢，可不可以分享一下现在啊一个 ticket size 呢，从消费者的角度来说，会不会，啊，比以前的啊减少呢？谢谢。 Thanks management for taking my questions. My first question is about our SME strategies. Giving the current macro backdrops, will we scale back the pace of our SME business as well as the offline sales team? And my second question is about the average ticket size. Giving the uncertainties of the macro environment, are we seeing the borrowers are getting a lower ticket size and they are getting a bit more prudent in borrowing? Thank you.
好，谢谢Thomas。我回答这个问题啊。第一个是关于这个SME，我们在疫情期间确实对这个客群采取了更加谨慎的策略，因为他们面对疫情这种封锁的时候，天然脆弱性会更强。因此呢，我们在二季度呢，做了比较大的力度的收缩，在那个批核率上。因此我们看到呢，我们整体这个，严格意义上的这个小额的这个交易量，在二季度呢，是减少了，有个几十亿，应该说因为上个季度应该有一百来亿吧，这个季度大概有个七十多亿，有一个比较大的一个收缩。那同时从这个销售的这个团队上，我们也做了对应的调整。因为过去我们是分这个第三方的这种代理，这个代理团队和我们自营团队，我们在二季度呢，把这个第三方团队呢基本上也做了一个暂停进件的一个调整，这也反映了我们对整个这个，对整个行业的一个谨慎的态度吧。是第一个问题。
Yes. Regarding SME business. Naturally, this is more cycling code than our consumer loan business. Thus, we take a more prudent approach on this business. We have tightened our credit standard for this business. As you can see, the total loan origination authorization in this SME business in Q2 dropped big. This is number one. For the second point, as for that customer acquisition channel for external channels that we have less control, we scale back the volume and more focus on our direct sales team of offline customer acquisition.
再来关于用户消费情绪和这个ticket size。我们确实看到用户这个消费情绪在二季度呢，是有所这个下降，还是那个大家被封在家里面，没有这个消费的这个意愿，对未来收入也有一些不确定性。我们能看到，从我们的调整来看呢，我们首先是对这个批核率做了一些这个收缩，这是第一。第二就是呢，对于客群上，不好的客群呢，我们的ticket size也做了少量的调整。But more of is that we are more strengthen the quality customers a ratio of improvement.
Quality customers reflect on ticket size, it is actually the proportion will be greater. You know, in fact, under the entire offsetting, we average on the whole, ticket size did not occur that a decrease trend.
Yes, Thomas, your observation that the customer consumption willingness drops due to the impact of pandemic is correct. However, we released a few countermeasures. Number one is we've tightened the credit standards. That means the approval rate is lower. Number two, we focus more on the high quality customers, which bring more value to the business. Two measures together that makes our ticket size relatively stable.
Okay. Thomas Chong, just add a couple more points there. One is on the SME. As Haisheng Wu mentioned, if you look at our earnings release this quarter, the new credit line granted to SME is about CNY 4.9 billion. And the actual loan facilitated or originated to SME is about CNY 7.8 billion, roughly. Compared to last quarter, that loan volume was a little bit over CNY 10 billion. So that's the numbers there. But just want to make sure, when we talk about SME, we are talking about rather narrowly defined SME. Meaning like that's real SME as opposed to some of the players talking about more broadly defined SME.
That makes a difference. Secondly, regarding the ticket size, if you look at, for example, average drawdown we look at for Q2 is increased by roughly 5%, sequentially. That's just added point to Haisheng Wu's comments. Once we pass through the lockdown period, we actually still see pretty noticeable growth in terms of ticket size in consumption. Thank you.
Thank you.
As a reminder, please press zero one for questions. Our next question is Alex Ye from UBS.
My question is mainly on your takeaway outlook. Given you have mentioned that your average IRR during the quarter was 22%-23% and expect that to remain stable going forward. You also mentioned that your funding cost is improving and your credit performance is also stabilizing. I'm wondering if we could expand some of specific stabilization or improvement to your takeaway going forward. Thank you.
Sure, Alex. Let me take your question here. You're generally right. Given that we are already reached the point in terms of pricing goal, you know, based on the regulatory guidelines, so we don't see really too much pricing downward trend going forward for the remainder of the year. With that and, you know, the overall take rate, I would say you probably will see a more stable take rate. If anything, there could be some improvement there. But of course, other factors you need to consider is the number one, the microenvironment. You know, that will have a I would say more impact than usual.
If we have a rather stable macroenvironment, then all the assumptions we can assume it will be a stable to, you know, maybe modestly improved take rate. But if something, you know, unexpected happening on the micro front, then there will be another question there. From funding cost, as Haisheng Wu mentioned, sure, you know, second quarter we're at 6.8%, and right now we're sitting at about 6.5%. So, you know, there's maybe still a little bit room to go in terms of lowering funding cost, given the current money supply is pretty, you know, pretty available out there. There may be some room to go.
Overall, I would say from a modeling perspective, we are conservatively, you can model a rather stable take rate. You know, if you wanna add some to it modestly, that's also fine.
Okay, that's very clear. Thank you.
Thank you.
Next question is Richard from Morgan Stanley.
感谢给我这个提问机会。那我主要想问一下这个竞争的格局，因为我们现在利率也是比较低嘛，然后也是低风险，那么这个可能与更多其他的一些平台的这个产品就比较接近了。就在现在这个需求可能逐渐比较弱的情况下，我们看到现在这个竞争的环境是怎么样？会不会跟这个其他的这个平台，比如像蚂蚁啊、度小满啊，还有一些银行的信用卡啊，会更多有一些overlap。Basically my question is on the competitive environment in China at the moment, given 360 DigiTech is also aiming for a low risk bar, you know, basically it's also some overlap with the targeted customer by like Ant banks etc. So what's the competitive landscape at the moment?
从现在的整体利率下行来看，我们跟头部平台的位置会比以前更加接近一些。从这个角度来看，我们会产生比以前更多的overlap。但是我们同时也看到，这个市场其实首先它市场足够的大，大到其实大家互相都很难正面直接竞争，这是第一点。第二点就是我们在客群的分层上，我们依然看到还是有所分层的。像您举到的银行，银行现在有做4%利率的，有做10%利率的，对吧？然后像跟头部的互联网公司蚂蚁，可能会做15%利率左右。我们会在监管要求的20%上下。所以大家从总体上，客群上还是也有所分层的。另外就是第三个点，就是我们其实是在不同的能力上做不同的服务，因为不同的公司有不同自己的场景，像蚂蚁的话，可能会在自己的电商场景内部去做用户。像我们更多的是一个基于全域流量的用户引流，我们今天跟广泛的互联网的所有的这种产品平台都在产生广泛的合作，而他们更多的可能基于自己的场景去做。所以我们应该来讲，从不同的能力和不同的产品上，应该也会产生这个不一样的竞争空间。
Yes, Richard, you are right. After we lower our average product price, the overlap of target markets with other giants like you mentioned Ant or banks, that increase a little bit. However we do not see the direct head to head competition with them. There are a few reasons. Number one, the consumer loan market is a grand market with multi layers. For example, banks they have 10% price product, Ant has 15%. Our price range as we discussed previously is within 22%-23%. Number two, we believe different companies can thrive and prosper based on their unique competence. For example, Ant has Alipay their unique ecosystem. For us, we do not have any e-commerce platform or e-commerce ecosystem. Therefore we can collaborate with all the platform in the market and cover the full spectrum of customer groups.
等一下，请看有没有回答你。好了，感谢，感谢。
Now, next question is Hans Fan, CLSA.
好的。感谢管理层给我这个提问的机会。我是CLSA的Hans。我想请教一下关于资产质量的问题。其实刚才管理层提到说我们目前看下半年会出现一个整体风险指标的改善。那么能不能大体上给我们估一下，说这个改善的路径是一个缓慢的、蹦起的，还是说是一个比较明显的一个向上这样的趋势。因为最近也能看到就是还是有一些疫情的这个爆发，然后宏观的数据在七月份其实也是没那么好。所以想问一下，我们对于改善的这个预期是在一个什么样的一个区间。然后同时具体问一下我们的九十天delinquency大概会在什么时候会见顶？这个是我的问题。So let me translate. My question is more about asset quality. Management just mentioned that the look into the second half we're going to see improvement in the overall risk indicator. My question is more about how do we see the path of this improvement, is like a gradual bumpy one or like a notable uptrend, especially regarding the COVID flare-ups recently across many cities. And also when do we expect the 90-day delinquency ratio to peak? That's my question. Thank you.
好，谢谢汉斯。这个问题请我们那个CRO郑燕回答一下。
整体我们风险侧，其实在Q2的时候，联动其他团队做了几个调整。前面CEO也提到过这些。一个是我们提高了整体的客户质量，通过RTA的全面覆盖以及PRE-A模型的一些迭代，使得我们最优质的客户的量比Q1提升了50%。那第二，是我们加大了样本然后征信报告的一些数据挖掘力度。我们组织了全公司算法上面最精锐的一个部队，成立了联合项目组，然后我们从这个样本的、然后征信报告中衍生出了1.8万个有效的变量。这些变量涉及若干模型的一些优化，包括竞品offer的一些探索、优质客户的识别、尾部客户的识别、客户的职业模型以及收入负债的模型。同时，我们在策略端也更加谨慎地去对待这些尾部的客户。那第三块，是在结构上我们跟运营侧一起去提升对优质客户的资源倾斜，包括定价额度和触达资源的一些倾斜。那么在这些组合动作下，新成交的交易结构就变得更加健康。我们看到Q2的FPD30已经较Q1下降了约20%，而且在七月份、八月份还保持下降的趋势。那么我们会认为，在突发的疫情情况下，我们团队还能逆势去压降风险，这个还是充分说明了我们经营的资产的抗压性，当然以及包括团队的韧性。上面我们提到的一些动作，部分动作成效还没有得到完全的体现，那部分是灰度测试的，特别是在结构性上的调整，这些是部分测试的，因为我们需要观察更长的周期，以去释放更多的灰度比例。所以当这些灰度能在逐渐打满的过程中，我们也非常有信心去应对未来的各种突发情况。同时我们也预计，风险会在未来的一段时间缓慢地得到进一步的改善。那整体来说，我们会认为余额，就是九十天delinquency这个数值，可能在三季度会见底，但我们应该不是特别关注这个指标，我们更多的还是在关注类似日催、回收、FPD30这么一些指标。这些指标其实在五月份开始已经是在逐步下降的。目前七月份的FPD30基本上是达到了历史最低的一个点。那么整体如果说中旬的话，三季度、四季度，这个取决于我们的期限结构。但整体，我们会把这个目标定在2.5到3之间的一个数值。好的，那我请我们同事帮忙翻译一下。
Okay, our risk management team has been working with other teams closely to make several adjustments in the second quarter. Firstly, improving the quality of newly acquired customers with a comprehensive coverage of RTA and the integration of the PRE-A model. The number of our best quality customers has been doubled compared with the first quarter.
Secondly, improving the data mining of the People's Bank of China credit report. We have set up a joint project team and derived 18,000 effective variables from the credit report, covering the optimization of several models, including competitive offer exploration, high quality customers identification, bad customers identification, career model, income and liability model, etc. In the meanwhile, we evaluate customers with poor credit performance more cautiously. Thirdly, we improve the resource allocation to high quality customers on the operation side, including pricing, credit lines and promotion.
With these actions, the credit performance of new transactions has been improved. We have seen that FPD30 days Q2 dropped by about 20% compared with first quarter, and it maintained a downward trend in July and August. With the epidemic outbreak, we can still lower our risks, which fully demonstrates the resilience of our team and our asset. Moreover, the results of some actions mentioned above have not been fully reflected as some actions are in pilot testing.
We need to observe long term performance. Therefore with full adoption of these actions, we are very confident to maintain stable risk performance in the future. As for 90-day delinquency rates, it will be lower in third quarter. As we focus more on 30-day delinquency rates, it has been the lowest in July, and our future target will be within 2.5%-3%. Hope this can clarify your question.
好的，感谢。很清楚。谢谢。
This is the end of our question and answer sections. Now I hand back to management for conclusion.
Okay, thanks again for joining us on the conference call. If you have any additional question, please feel free to contact us offline. Thank you.