Earnings Call: Q2 2021

Aug 25, 2021

Ladies and gentlemen, thank you for standing by, and welcome to the LexinFintech second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your first speaker today, Miss Patricia Cheng, Head of Capital Markets. Thank you. Please go ahead. Hi everyone, welcome to LexinFintech second quarter 2021 earnings call. Our results were issued earlier today and are available online. Joining me today on the call are Mr. Jay Xiao, our Founder, Chairman, and CEO. Mr. Kris Qian Qiao, our Interim CFO, Mr. Jayden Qiao, Chief Risk Officer, and Ms. Beryl He, Senior Finance Director. Jay will first provide an overview of our recent performance and highlights. Kris will then discuss the financial results. Jayden will cover credit performance. Before we begin, please note the safe harbor statement in the earnings press release, which applies to this call as well, because we will be making forward-looking statements. The call may include discussions of non-GAAP financial measures. You can find the reconciliation between non-GAAP and GAAP in the earnings press release. Finally, unless otherwise stated, all numbers mentioned during this conference call are in RMB. I will now pass it over to Jay. His remarks will be in Chinese and translation will follow. Jay. 好的，大家好，很高兴再次跟大家交流。第二季度是乐信的一个重要的里程碑，我们在几个关键的经营指标上都创下了历史新高，贷款发放、再贷余额、营收和净利润均取得了突破，这是一个来之不易的结果。在我们发展过程中经历了许多起起落落，我们也一直在积极地面对。对于一直追踪我们的分析师，你们见证了我们过去面临的一些困难和挑战，并目睹了我们的团队如何应对变化，积极调整并取得好的成绩。尤其是去年疫情导致资产的变坏，这也让我们反思并调整了诸多发展策略，并对风险管理体系进行了全面的升级，提升了对资产管理的能力。可喜的是，我们的努力逐步收到成效。过去几个季度，我们的资产质量持续向好，风险也持续下降。在二季度，90天的逾期同比下降100个基点至1.85%。环比看，我们的资产也保持稳定。Jayden稍后也会详细说明这一点。我想强调的是，过去我们一系列的整个调整和升级是非常有效的，这也为我们未来面对行业不确定性打下了坚实的基础。接下来再跟大家谈一谈我们最近比较关心的监管变化相关的事情，尤其是定价24%的上限，它将如何影响我们，以及我们如何应对。这个政策是对行业发展有较大影响的一个调整，对此我们也在积极地准备面对这一重大的变化。首先，我们会放慢我们的增长的速度，更加注重资产质量及保持良好的财务盈利模型。因此，我们决定将全年的贷款发放的指引从之前的2,400亿到2,500亿元下调至2,300亿。对于乐信来说，在面临监管定价上限的时候，健康可持续性的财务模型比规模的增长更重要。我们不会为了一个季度的规模而牺牲公司长期可持续发展的能力。当定价逐步受到24%上限的影响的时候，我们总体的策略是对客户进行更加精细的管理，淘汰部分高风险的客户，重新调整我们的风险偏好，将资产的风险进一步下降至合理的水平。其次，我们也会将部分低于24%的客户的价格上调来对冲一部分下调的影响，并且加大对这一部分客户的运营，提升优质人群的资产规模。其次，我们要全面提升我们的运营效率，提升经营水平，来保持我们的盈利能力。我们相信行业在不停地变化，只要我们积极地应对，影响是可控的。一旦我们的应对措施全部到位，我们的盈利能力将能达到目前的水平。确保核心业务的可持续性和高增长是我们的首要任务。同时，我们也继续进一步发展新消费战略。买吖，即线下后付的产品在二季度保持良好的增长势头，跟超过1,000家商户合作，服务超过60万用户，它贡献了3.49亿的GMV，是一季度的5倍多。我们也会积极地推动新业务，拓展新的发展空间，让乐信的发展变得更加多元化。消费金融的核心是消费和金融，两者齐头并进，未来可以更好地协同发展效果。这是乐信的理念，也是乐信未来的核心竞争力。谢谢大家的关注和支持。接下来我请Kris来讨论一下我们本季度的核心业务数据的一些表现。 [Foreign language] Hello everyone, it's my pleasure to speak to you all again. The second quarter was a major milestone for Lexin. We achieved all-time high in several key metrics. Loan origination, loan outstanding, operating revenue, and net income all made record breakthroughs. This is not an easy victory. We have gone through many ups and downs in our journey, and we have always responded with vigor. For those of you that have been following us, you were witness in some of our most difficult and challenging moments. Saw firsthand how the team responded to change and turned the business around. Especially following the decline in credit performance after COVID-19 last year. The incident made us rethink our strategy and carry out a full upgrade of the risk control system, strengthening our capability in managing our risk asset quality. The efforts have been paying off. Our credit performance continued to trend well in the past few quarters. The 90-day delinquency ratio fell by over 100 basis points to 1.85% year-over-year in the second quarter. Sequentially, the level was held steady. Jayden will elaborate on this later. What I would like to highlight is a series of changes we have implemented and the capability that we have built up. They have laid a solid foundation, helping us to face any industry headwinds that may come our way. Now let me get to what you are most interested in, the regulatory change, especially the 24% pricing cap, how it will affect us and how we will be responding. This will have a major impact on the industry, and in response, we are also embarking on a transition ourselves. First of all, we will slow down our pace. We will step up the focus on asset quality and profitability of our business model. We have therefore decided to lower full year loan facilitation volume to RMB 230 billion from RMB 240 billion-RMB 250 billion previously. At Lexin, a healthy and sustainable business model is more important than scale. We will not sacrifice the long-term health of the company for the sake of volume in one or two quarters. With pricing affected by the 24% cap, we will embrace more precision and differentiation in our customer strategy. We will scale back from low-quality customers. We set a risk preference in order to adjust down overall asset risk. For customers currently at below 24%, there's scope for pricing to go up. We will increase the intensity on servicing this group and increase their size. In addition, we will also enhance our operational efficiency, with the ultimate goal of maintaining profitability of our business. The industry will never stop evolving. We are confident that any impact will be transitory and manageable, and once the measures get all put in place, profitability will return to current levels. Ensuring quality and sustainable growth of the core business is a top priority. At the same time, we will also continue to further develop our new consumption strategy. Momentum for MaiYa, that is our buy now, pay later product, remained strong in the second quarter. Working with over 1,000 merchants and serving over 600,000 consumers, it generated GMV of RMB 349 million, more than five times the amount we got in the first quarter. The initiative will allow us to tap into new opportunities and diversify the revenue base. At the core of consumer finance lies consumption and finance. The two can drive a much stronger outcome when they go hand in hand. This is the belief of Lexin and also our core competence. Thank you for your interest and support. Next, I would like to invite Kris to go through the financials in more detail. Kris, We are proud of the performance in the second quarter. Customer metrics, top line and bottom line all reached record high. Let me explain the drivers in more detail, starting with the top line. Number of active users reached 8.4 million in the quarter, 24% high year-over-year. Loan origination rose by 47.6% to CNY 60.6 billion year-over-year, and loans outstanding increased by 46.2% to CNY 90.5 billion. Total revenue went up by 10.5% to CNY 3.3 billion as a result, setting another record level. It was also higher sequentially by 11%. Platform-based services income was the biggest revenue driver, up by 47.9%. The part of revenue without any credit exposure, that is platform-based services plus online services, now made up a third of our total revenue. Moving on to credit cost and funding. Both maintained good momentum in the second quarter. Provision held steady sequentially, indicating stable asset quality of our portfolio and our ability in managing risk, which Jayden will talk more about later. Additionally, funding costs continued to go down quarter-over-quarter. Driven by the positive trend in volume, risk, and funding, take rate improved both year-over-year as well as quarter-over-quarter. While spending in sales and marketing went up in the second quarter as in line with the industry trend, and we maintained our discipline in administrative and other expenses. From business mix to risk management, funding structure, and cost control, all this came together to drive the 87.7% growth in net income. Amid the regulatory headwinds, we will continue to stay prudent in risk management and cost management. As Jay said at the beginning, we will not compromise on quality for the sake of scale. Next, I would like to turn the call over to Jayden to discuss our credit performance. Jayden, over to you. Thank you, Chris and Patricia. As both Jay and Chris mentioned, asset quality remained stable in the second quarter. Our 90-days plus delinquency ratio finished quarter at 1.85%, down over 100 basis points year-over-year. It remained steady to first quarter's 1.84%. Moreover, the 30-days plus delinquency ratio improved to 3.37% from 3.6% in the first quarter. In terms of charge-off, the vintage rate was also stable at about 3.5% for loans originated during the 12 months ended June 30th. The new customers that we acquired in the second quarter so far have proven to be as good as first quarter, as shown by the first payment default rate for 30-day plus. FPD 30 for new loan originations remained at below 1%. Of course, we cannot be content with our existing efforts. Regulatory changes will lead to changes in industry and credit quality. We need to make sure that our system can screen in quality assets, set the right pricing, and monitor performance. To this end, risk management remains the key focus. I took on the CRO role earlier this year with clear mandate to solidify our risk control initiatives. We have been instituting changes before the latest policy changes. These include refining risk strategies across customer life cycle, as well as strengthening the risk models for each product and channel. We have also stepped up the collection effort. All these aim at boosting Lexin's capability to weather any market uncertainties. With that, I conclude our prepared remarks. Operator, please proceed with the question and answer session. Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Please note there may be a short pause as we collate the questions. Your first question comes from the line of Abby Long of Bank of America, Merrill Lynch. Please ask your question. 谢谢。我先用中文问一下，然后自己再翻译一下吧。两个小问题，第一个，Jay，你也讲到这个regulation的问题，然后我们也把我们那个原本的目标的一个贷款的额度可能会缩减一下。想问一问，这从用户的一个角度来讲，我们会不会在一个未来，从一些渠道或是获客的一些形式有一些改变？另外一个问题是想问一问这个买吖这个问题。想问一问他们的一些用户，我们做了大概半年左右，看得见他们的特性是什么类型的一些用户呢？然后这一个跟原本我们这比较主流的一些贷款的客户，有没有一些特性的不一样？I have two quick questions. The first one is about the regulation. As Jay mentioned that you guys would be adjusting down the full-year loan growth target. On a user perspective, how would that change our user acquisition channel or our marketing activities? Secondly about buy now, pay later initiative. Any demographic or user profile characteristics that you can share with us? How these users may be different from the mainstream users of our loan borrower user base? Thank you. 好的，那我来回答一下这两个问题。首先就是面临政策的不确定性，我们主动去下调目标，我们主要还是要在24的这个利率的上限上面，如何去进一步提升我们的资产质量。当我们整个的一个定价下调，意味着我们可能的收入要减少，那我们对应着我们要去掉一些高风险的用户，这也是帮助我们去减少我们的风险。所以说我们希望在这样的一个调整下面，能够帮助我们保持一个比较健康的整个take rate，还有我们持续的整个的盈利的能力。那我觉得这个24的影响，为什么我开头就说这个影响会比较大，这个不仅仅影响了我们整个的资金的一个资金方，我觉得它对我们的影响是我们存量客户的经营，包括还有我们整个的获客策略、获客渠道的一些调整。我觉得这个对于乐信来说还是一个相对比较系统的一个工程。所以说我们在获客上面，我们其实早就在为这个事情做了一些积极的调整和准备。我觉得未来我们在整个的一个评估用户的整个的一个质量，我们将会用24的整个的标准来进行获客。我们在整个的一个广告的整个投放方面，我们会对整个的客群的筛选会进行重新的整个的调整。像过去那种小金额高利率的客户比例，我们肯定会下降，我们会加强对24的整个的一个核心客群的获取。当然这个可能会造成一定的整个成本的一个上升。其次呢，我们会加大我们在线下的整个的获客的整个能力的建设。大家也知道，我们一直有一个很强大的线下的团队，这一块的整个增长也是我们过去非常快的一个获客的渠道。我们的普惠在线下的获客有几个非常显著的特点。首先它的所有的定价全在24以内，而且它的所有的风险也都是比我们整个的一个大盘的风险要显著的低。其次，它的客单价也会比较高。这样算下来，其实我们线下的整个的普惠，它就会变成我们未来在面临24的这个利率的时候，是一个非常重要的获客的抓手。所以说我们接下来会重点加强对线下的这一块的投入，而且我们的投入在最近的三季度已经开始见到成效。我们从今年年初的大概1,000多人的一个团队的规模，现在已经涨到了2,000了。而且我们可以看到我们的普惠每月线下的获客的规模和交易规模比起年初基本上已经翻倍的这样一个规模。那其次呢，就聊一下满押跟我们分期乐的原来我要不要翻译一下？你让我翻译一下。Let me do very quickly the translation of this. On the regulatory change, we have decided to revise our guidance because quality is very important to us. That's why in this process, we need to reduce high risk users. The purpose is to maintain take rate and profitability of our business. You can see that the changes that we have to make include funding and also how to service our existing users, and also in terms of our customer acquisition strategy. There's going to be major adjustments that we have to do and also we have been doing. We have been adjusting our business as a result. For our customers, now when you look at them based on the 24% criteria, we have to adjust how we screen and how we do the advertising. We will not go after small amount loan size and also a high pricing rate. We also have to strengthen our reach to this core group of our customers. Of course, there will be some increase in the cost. In terms of the offline, we will also step up our offline team and build out. When you look at our 普惠 business, the offline business, all the pricing is below 24%. Also the asset quality is better than the overall average. Also the average loan size is also higher. So this is a main channel for us and one that we will continue to invest in. At the beginning of the year, there's about 1,000 people in the team. Now it's about 2,000. We already started to see the impact in the third quarter. When we look at the monthly contribution from the 普惠 team, it's almost double from the beginning of the year. [Foreign language] 好的。那买吖的用户跟我们分期乐的整个信贷客户，他是有很大的显著的区别的。我们今天其实看到我们在使用买吖的用户，他的整个的用户的质量是明显要好于分期乐本身这种信贷客户的质量的。因为买吖有两个核心的特性。首先它是对消费者免息的。免息的这个情况下，它天然会吸引到更多的这种优质的人群。因为金融里头你收费，他就会有一个逆向选择，你收的利息越高，坏的人就越不会在意这个利息。那相反，好的人就会越会在意这个利息的高低。所以买吖它天然是一个免息的一个产品，它可以吸引到原来更多的等款付款的这一部分用户，所以他们的整个天然的这种客户客群的质量就会变得更好。其次，我们可以看到买吖的整个用户，我们由于是在线下的整个的商场、品牌连锁店进行获客的。那今天能够在线下的去消费的这些人，尤其是整个百货商场去消费的这些，并且是消费这些品牌的人，更多的人，他们的整个经济的能力和消费的能力，他的客户的整个的一个质量都明显要好于今天我们整个现在的消费人群。所以我们目前看起来它的整个风险，还有未来这个客户的消费的潜力，都是比今天的分期乐的用户都要好很多。 On MaiYa, the quality from the MaiYa users is significantly better than Fenqile. There are two characteristics. First of all, MaiYa the product itself is interest-free installment. When you look at interest-free, naturally it's going to attract good quality customers. When you have high interest rates, only the poor quality guys would actually go for the high interest rates because they cannot get loans elsewhere. For this one, it's interest-free. It naturally attracts the good quality users. Then second characteristic is data. We do it offline together with malls and other brands. Nowadays only customers with a certain income level would go to a mall and these shops. Again, for that one, we are able to attract better quality customers this way. So far, when you look at the potential and risk, we do see that MaiYa is better than our Fenqile. 谢谢，非常帮助。Thank you very much. Thank you. Your next question comes from the line of Evan Wang from CLSA. Please ask your question. 好，谢谢肖总。首先恭喜二季度强劲的业绩。关于24%这个事情想追问一下，我们现在有没有做过一个量化的分析？其实主要就两点，一点是take rate，一个是未来两至三年的这个loan origination。想了解一下肖总目前计划上会看到一个怎么样的变化。第二个问题是关于这个capital-light business model。因为我们过去是一直比较强调capital-light，但是后来有一些变化，想把这个capital-light的百分比保持在一个比较稳定的水平。那未来在这个APR在24%以下这种情况下，这个策略会不会发生改变？我们会不会去做更多的这个capital-light的业务，因为客户质量可能会更好？还是说其实不会，因为在这个转型过程中可能会面临一些挑战。So I have two questions. The first one is still on the regulatory challenge about keeping the APR lower than 24%. Wondering if management has done some quantitative forecast on the impact to take rate and origination in the next 2-3 years. The second question is on the capital-light. This model we've been doing the transformation to capital-light for some years, we decided to keep that percent stable. Wondering under the new 24% APR cap, does that strategy change or we just want to remain at the current level. Thank you. 好的。关于24的这个量化的分析，其实我们自己内部也做了一些分析，并且我们有很多的方案正在测试当中。首先我们今天的客户里面大多数的风险是在24定价内的整个的一个客群。所以这部分用户其实对于我们来说，我们只要把它的定价适当的下调，这些用户就可以继续在未来的整个政策当中能够保持这部分用户的交易。其次，我们有一部分确实是属于他的整个的一个风险范围不在24定价之内的，那我们肯定这部分用户是需要进行淘汰的。我们在内部的整个的一个测算来看，短期之内，在整个切换的过程中，我们期望未来我们整个24的整个用户能够达到更大的一个比例。在这个比例下面，我们对于24的整个的比例，我们需要把整个表内的这一部分用户的风险要下降。也就是说未来如果我们全部的把用户切到24的这个里面，我们一定要把它的对应的风险也要降下去。所以我们期望我们的风险是能够从目前整个大盘的风险，未来要降到一个比较低的一个水平。而且另外这个问题其实跟刚才的整个的一个轻资产分润是关联在一起的。分润其实未来我们的整个的定位，我们也是期望说它保持在今天的水平。如果分润保持在今天的整个的一个风险的水平，那我们未来分润跟入表的整个承担风险的这两个比例如何平衡？我觉得这个我们也会从整个的收益和风险方面来进行计算。那整体来说，我是认为长期来看，未来两到三年，甚至我觉得我们不需要这么久，当我们的结构调整到位以后，我们在我们自己的模型上看到我们是有能力能够达到今天这样的一个take rate的水平。所以我认为长期来看，我们的take rate继续保持在3到3.5之间，这个还是没有太大问题的。 We have carried out internal analysis and models on the 24% impact. At the moment, most of our customers in terms of risk profile, they are below 24%. For this group of customers, definitely we have scope. We can bring down the pricing to meet the criteria, and we will keep these customers and their volume. For the group with risk above 24%, this is the group that we need to reduce. With lower pricing, our aim is to bring down the overall risk. We have to maintain our asset quality. On the profit-sharing model, that is the capital-light model that you mentioned, we aim to at least maintain at today's level. Of course, we would look at the mix between profit sharing and risk sharing. We will adjust the mix. The aim is, of course, to ensure that we meet the requirement and also to keep the asset quality. Once all the measures that we have begun, once they are all put in place, we do expect that our take rate will be about 3%-3.5%. We will be able to maintain at that level. Got it. Thank you. Your next question comes from of MS. Please ask your question. 好的，感谢管理层给我这个提问的机会。我有一个问题是关于咱们earning release里面提到的新的个人信息保护法，然后就想请问管理层现在判断是我们贷款的哪些流程吧，大概哪些流程或者环节有可能会受到影响，从而需要一些的调整，那么我们有没有一些初步的调整的方案？另外就是咱们管理层估计的，可能这里面可能涉及到会有一些额外的合规成本，大概会是一个什么样的规模？这是第一个。第二个问题就是还是想追问一下，关于24的这个定价咱们调整下去之后，咱们有没有一些新的什么样的抓手去撬动更低的一个funding cost，来对部分对冲一下这个take rate的影响。So I briefly translate the first question is about the new personal data protection regulations and just want to ask management, based on your judgment, which roughly what part of the process can be impacted and should be modified as a result. Is there any preliminary plan? Related to the extra compliance cost, what would roughly be the impact to the cost side? The second question is related to the 24% pricing cap. Just wonder is there any new levers then Lexin can pull in order for lower potentially funding costs? Thanks. 我回答一下第一个问题，就是个人信息保护法，它其实强调的是一个最小必要性原则，乐信其实已经配合公司的要求，对我们整个的app的申请流程和各个环节做了比较完善的严格的一个把控。所以现在我们的整个信息收集层面全部是遵循这个最小必要性原则的。在这个流程上会涉及一些微小的改动，比如说以前我们在收集用户的信息、获得用户授权的时候，是在总的授权协议上这个操作的，那现在在每一个使用场景，要对用户做一次单独的那个授权，所以这是可能是在流程上的一些小的变动。另外在合规成本上面确实会有一定程度的上升，但它并不会影响我们整个的风控的一个结果。最终其实是监管目前是没有很多定义和细节上的层面的一些颁布，所以具体要怎么改，我们会比较紧密地关注整个监管的一些进一步的一些动向。 On the personal data protection, that one, the principle is based on the minimal requirement. This is a principle that we have always been following in our data collection and process. We have made adjustments to our app as a result, in order to make us more compliant. There are some minor changes. For example, in the authorization process, in the past, there was a master authorization. The users, they would agree to a master policy. Now in each usage scenario, the individual would have to give a separate permission on it. That's going to increase a compliance cost a little bit, but it's not going to affect the results of our risk analysis. At the moment, there are a lot of like definitions and also the details are actually not yet come out from the regulators. Exactly how much change or how much more change we'll have to carry out, we will closely monitor the situation. OK，我来说一下那个第二个问题，就是关于这个24定价的情况下的这个资金成本。我们预期长期来看，整个的这个资金成本仍然会是稳中下行的。因为对于24以下的用户群，我们预期它的整体的风险会比现在的客户群的质量会更好，整体的风险会下降。那的话在更好的资产质量的情况下，我们会有更多的资金方的接受，包括像我们可能会发行更多的ABS等等，那这样的话呢，在整个的结构上会进一步地进行优化我们的资金渠道和资金的组合，然后能达到一个更稳健的一个资金的供给和更优的一个成本。OK。 On your second question about funding costs. In the long run, we do expect the funding cost to be stable and also to go down a little bit. With the pricing cap of 24%, that means risk is going to improve, and asset quality is also going to be better. That will allow us to tap into more funding partners. We will also increase the issuance of ABS, that will help us to improve our funding structure and also the funding cost. Thank you very much. Your next question comes from Alex Ye of UBS. Please ask your question. 好，感谢管理层给我这个提问的机会。首先我有两个问题，第一个关于小微贷款这一块的发展情况，能不能请给我们介绍一下最近的一个情况，包括它的利率其实也是一直在24%以下。那鉴于它如果走在20以下，如果不受这个上限下调的影响的话，明年是不是还可以作为我们这边增长一个比较大的drivers？然后这一块我们是不是会作为一个未来发展的重点？比如说有没有一个目标的一个占比，在未来的两三年内？然后第二个问题是关于买吖的，也给我们介绍一下最新的一些发展情况，包括在目前三季度的前两个月，有没有保持之前一个比较好的增长势头，下一步的发展的重点会来自哪些方面？谢谢。I will translate my question. First one is on your latest development of your SME loans. I'm wondering whether the average interest rate are all capped at below 24% for this type of SME loan. If it is, then I would presume it would be under less affected by the 24% IRR cap. Would you expect this business to continue maintain a stable growth driver for growth for the next year? Do you have any form of targeted volume contribution for this SME lending business in the next 2-3 years? My second question is about MaiYa business. Could you share with us the latest development status for this business, for example, the latest growth status for the past few months? How do you plan to continue to grow this business going forward? Thank you. 首先我回答一下小微的问题。因为小微是我们今年开始投入的一个新的业务，之前也给大家介绍过，其实我们平台里面有一部分用户，他已经是一个小微的经营者，那我们从我们平台里面发掘了一部分客户来做这个业务。那其实我们也做了一些行业里面大家都在做的税务，根据用户的税务、票、税票这些来做整个的贷款。然后我们也为一些场景来做了一些，比如说跨境电商等等，汽车的整个产业的上下游做了一部分。所以我觉得开展这个业务，我们首先还是比较审慎的一个态度。因为中小企业的这种信贷确实是一个比较难的事情，难的是它的金额，相对个人贷款来说，它的金额更大。金额大，它的整个的风险的表现其实也需要更长的时间才能看得清楚。所以我们在今年的目标，其实我们还是把我们今天所做的这些产品能够做足样本的整个的测试，我们能够看清楚它的整个的风险的表现。如果我们今天的整个的风险表现和证明我们今天对这个领域的整个的一个风险模型是比较成熟的情况下，我们明年会去推动它的整个的一个放量。 We started the SME business this year. Because on our platform, some of the users, they are actually small business owners. We started this group. We do the lending based on tax and invoices, and the business that we serve include the cross-border e-commerce and the auto industry. We take a prudent view in this business. Because we can see that, for the SME lending, the loan amount is bigger than retail, and also the duration, it takes longer to see the progression of risk and to monitor the performance. Right now we are starting with a test sample so we can better observe the risk characteristics and also we can fine-tune our risk model. If a risk model proves to be effective, we will go into step up the volume next year. 关于买吖这个，其实大家看到也是我们今年新投入的一个业务。刚才我们也聊到这个产品的，它的整个的客户的质量也很好，它潜在的一个市场的空间也非常的巨大。那我们这个业务在今年的一季度上线，二季度我们是开始做了更多的一些行业的测试，包括我们也跟更多的品牌也开始在测试这个产品。目前我们从整个品牌方收到的效果来看，其实大家这个产品的反馈还是不错的。我们可以看到这个产品在中国整个的一个接受程度，应该随着在整个的我们持续的一个教育下面，大家开始能够更好地去接受。而且我们可以看到，我们在一部分整个的一个品牌里面的应用的效果，它能够显著地提升整个线下品牌的整个的一个销售的连带率，还有它的客单价。这个其实已经受到了我们目前测试品牌的一致的认可。那我们接下来的整个计划，我们在三季度开始，我们开始在逐渐地组建一些区域的团队。我们在二季度我们大部分整个测试都在深圳完成的。在接下来三四季度，我们开始组建区域的团队，我们会开始尝试在全国的一些多点开始来进行整个的一个复制和验证这个模式。所以我们也可以看到，这个业务模式仍然还处在一个比较早期的阶段。我们也相信这个模式在全球能够获得如此成功的情况下，在中国它一样有它的生命力和它的整个的一个增长的空间。那目前来看，乐信我们在这个领域的布局，整个市场肯定是我们是最领先的一个这样的位置吧。 On 买吖, we also started this new business early this year. As I said earlier, the quality have been better than our average user, and also we see strong potential coming from this market. First quarter that was our initial roll out, and the second quarter we are pilot tested the business in more industries. We work with more brands and the feedback from them has been positive. We do see that there's recognition in China for this business and that's going to help drive the GMV. For some brands that we do offline, they have reported back that the average spending has gone up. There's also more additional purchases. From 3Q, we've been building regional teams. In the second quarter, we pilot tested it in Shenzhen, and now we are rolling it out in a few more cities to further test this business model. Now I have to say that it's still in an early stage, but then we look at the buy now, pay later model, it's present globally. I do see that there is strong potential in China. Lexin is definitely one of the leading players in the area. [Foreign language] Thank you. Your next question comes from Jacky Zuo of China Renaissance. Please ask your question. 谢谢管理层，我这边有两个问题咨询一下。第一个也是关于买呀的，因为我们上个季度其实给出了一个3个亿的买呀GMV的一个guidance。那这个鉴于我们也在组建这个区的团队，想请教一下，我们会不会看到一个三季度的一个GMV，一个买呀这边的一个guidance，大概会是怎么样的增长？然后第二个问题是关于也是三季度的一个情况，一个就是loan volume，再一个就是这个APR和take rate。那我的理解，咱们也在做这个关于24% APR的这个调整。那想请教一下，就是三季度so far我们看到的这个volume的情况，那和二季度比的话，这个三季度的这个loan volume预计会是大概一个什么水平？然后APR的话，不知道我们现在是不是已经开始做一些调整，那三季度整体的这个APR大概会是一个怎么样的水平，然后这块会影响到我们的一个短期的一个take rate。然后最后就是刚才Jay也讲到了，这个高风险客户这边可能需要做一些调整，那我们现在有没有一个测算，大概这个高风险客户的这个占比大概是多少？那我来翻译一下。I have two follow-up questions. Number one is also about MaiYa. Given we are starting to assemble our regional teams for MaiYa, do we have any MaiYa GMV guidance for the third quarter? Second question is about also the third quarter so far the loan volume and APR color. For the loan volume so far, what is the expected volume compared with the second quarter? Based on my understanding, we are maybe start to adjust the APR. What is the APR level in the third quarter? How will that impact our net take rate? What is the % of the high risk customers based on our estimate? Thank you. 好的，我觉得买呀这个其实我们在三季度肯定是比二季度有明显的增长的。那其实我们在三季度，刚才也聊到，我们开始在组建全国的整个的一个团队，我们也开始在走出深圳，所以说我们的整个的一个更多的增长预计可能会在我们组建团队完以后，它会有更快速的一个增长。所以我觉得在整个三季度最终的整个量级，我们还要看一些最新的一些接入的一些项目，是否能够在这个季度上线。整体来看，我们看到的数字其实三季度比二季度还是有明显增长的。买呀, we do expect meaningful increase from second quarter to third quarter. As I said earlier, we've been building our teams in new cities and going beyond Shenzhen. Of course more meaningful growth will come after the complete build out. At the moment, we do see meaningful increase Q on Q, and also we are trying to bring more cooperation agreements online. 第二个就是我们的整个的APR，包括我们take rate的一些情况，我们在三季度已经开始在调了。所以当这个政策出来以后，我们就第一时间就开始着手在调。我们整个的积蓄的APR就已经是从7月、8月份都在开始下降。我觉得这个主要是我们自己主动在调整的一个结果。那这个将会带来的就可能take rate也会有所下降。但是刚才我聊的我们整个的面对24的整个的模型里面，最核心关键的是，我们这几个下调以后，我们期望我们的风险，我们的资产质量要进一步变好，风险也要对应的下降。那今天其实我们刚调，整个的时间还太短，我们整个的调完以后的风险还没有能够表现出来。所以整体来看，我觉得在整个下降的通道中肯定是一定的。但是对于整个盈利能力是什么样子的，我们还需要等到风险的数字出来才能观测得到。 On your second question about the APR and take rate. We started adjusting our business as soon as the policy came out. In July and also August, APR has been in a downtrend, and it has led to a lower take rate. Of course, in this adjustment process, our risk has also been improving, so therefore the risk cost will be lower. How is a bit too early to say, because we only started this process. You are not going to see any immediate numbers or any immediate results. We do expect that once we complete this process, we will be able to get a better risk and we will be able to maintain our profitability. 好的，谢谢Jay，谢谢。我简单说一下第三个维度，就是我们Q3的高风险用户这个问题。从我们现在的情况下，我们看到的是基于风险维度的高风险用户，就是等于说24定价以上的。从订单角度讲，我们现在的占比其实是不到10%的，所以我们预计在Q3这个占比会进一步下降。因为整个这个影响对我们来说是两方面的，一个是存量用户。存量用户的话，它的主要的影响就是可能对于之前高风险定价的用户，他因为融资跑路可能会出现供债的这个问题，他的还款会出现一定的问题。另外一块就是我们新增客户，因为刚才Jay也讲了，我们其实很早之前就已经针对这个政策做了一些预判，也做了一些调整，从我们的获客端和我们的整个风险层面都做了很多的调整，对用户的风险分层也做了很多的精细化的管理工作。所以我们会发现新增的资产质量会进一步变好。我们的存量用户通过交易管控以及我们对它进行进一步的风险管控的话，存量的这一部分高风险用户会逐步降低，所以它会有一个对冲的作用。在Q3，我们是认为整个的波动对我们来说不会有比较明显的一个变化。 On your third question about the high risk borrowers in the third quarter. At the moment, if you look at our borrowers with actually pricing risk above 24%, this portion is less than 10%. In Q3, we have already started to further lower this part. Let me talk about how we do this in terms of our existing customers and also new customers. For our existing customers, definitely we do expect higher default, some difficulty in the repayment when the liquidity gets tighter. We are going to manage them through a continuous monitoring. At the same time, when you look at our new customers, this group we have fine-tuned our strategy in terms of customer acquisition, further segmentation, and in terms of the new risk that we are acquiring, it will be much better quality. It's going to be able to offset the risk coming from the existing customers. We do expect a more stable performance. 很清楚。谢谢 Jay。 Once again, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. Once again, it is star and 1 if you wish to ask a question. Operator。 Once again. I think we can. Yes。 Yeah, I think we can wrap up the call here. If there's any further questions, we can always continue offline. Thank you. Ladies and gentlemen, that does conclude the conference call for today. Thank you.