Good day, and welcome to the CNFinance Holdings Limited Third Quarter of 2023 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. [Jae] (ph), Manager of Capital Marketing. Please go ahead.

Good morning and good evening, and welcome to CNFinance third quarter Financial Results Conference Call. In today's call, our Director and Vice President, Mr. Jun Qian, will walk us through the operating results followed by financial results from our acting CFO, Ms. Li. After that, we will have a Q&A session. Before we start, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminologies such as will, expect, anticipates, future, intends, plans, beliefs, estimates, targets, going forward, outlook and similar statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to the events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law. Now please welcome Mr. Qian Jun.

[Foreign Language] [Interpreted] Thank you for taking the time to join this conference call. We will discuss CNFinance quarter of 2023 operating and financial results, and followed by a Q&A section. During the third quarter of 2023, the company focused on expanding business scale and improving asset quality and achieved year-on-year growth and all important indicators. During the quarter, the company facilitated loans of RMB5.1 billion, increased by 20% year-on-year, and achieved a net income of RMB53 million, increased by 15% year-on-year. Furthermore, as a result of its [Indiscernible] risk control mechanism, the company’s recovery remained at 110%. The company’s highlights for the quarters including the following. [Indiscernible] expanding business scale during the quarter the company's total loan organization volume was RMB5.1 billion, representing a year-on-year increase of 20% and a 12% increase, as compared to the second quarter of 2023. Among the RMB5.1 billion loans facilitated RMB3.9 billion was under trust lending model and RMB1.2 billion was under commercial bank partnership. Continuing to refine our surface to sales partners and help ease their liquidity pressures. Due to our installment policy, sales partners' liquidity has significantly improved. During the quarter, a few historically defaulted sales partners was able to recommend their install payments. This has effectively reduced the risk exposure of the company. Optimizing products and helps making finance more inclusive. In the third quarter of 2023, the company's average funding and costs were slightly lower than that in the beginning of the year. And the company adjusted [portions] (ph) of the lower interest rate products in its product mix accordingly. By optimizing the product mix and lower customer interest rates, we were able to give real benefits to the MSC owners and lay a good foundation for serving the needs of followers with better credit history. In order to improve the asset quality the company has done continuously refining the factors in this credit adjustments and have fully [Indiscernible] technology to improve the accuracy of the assessment of borrowers and collaterals. In addition, the company has drastically shift its business to core regions. During the quarter, loan facilitated in the first Tier and new first Tier cities has reached 80% of overall loan facilitation. Management believes that China’s market is currently in the period of recovery and the price of real estate market is still fluctuating. At the same time, we believe that China will continue to introduce similar policies and China's inclusive finance industry is still in the opportunity period. We will continue to adopt the guiding principle of high quality development, which emphasizes scale, qualities, and compliance, with the following specific objectives in mind. Optimize the product mix, improve sales capabilities, refine the risk control system, reach to prospective followers with high quality collaterals as well as good credit records. In order to match this goal, the company needs to continuously broaden its financing channels, bringing in new founders and launch new loan products. Continue to promote the application of models, systems, and data in credit approval, make the whole process more standardized, generative, systematized, and intelligent, to reduce human intervention and improve overall efficiency. Continue the transform to the platform model by accelerating the disposal of non-performing loans. The company plan to transfer a bulk of defaulted loans to third-parties before the end of the year to recover cash and reduce the company's risk exposure. Now I'd like to hand the call over to Ms. Jing Li and she will walk you through the third-party financials.

Thank you. Now we will go over the financials. Please note that the currency we use will be in RMB and all comparisons will be made on a year-on-year basis unless otherwise stated. For the third quarter of 2023, total interest and fees income was RMB425 million, as compared to RMB445 million. Interest and financing service fees on loans were RMB388 million, as compared to RMB413 million. The decrease was due to the decrease of weighted average interest rate of loans outstanding. Interest income charged to sales partners was RMB32.7 million, as compared to RMB33.5 million. Total interest and sales expenses decreased by 13% to RMB117 million, as compared to RMB195 million. The decrease was mainly due to the lower funding cost of trust company partners as a result of recent regulatory development. Net interest and fees income increased slightly from RMB254 million to RMB255 million. for the third quarter of 2023, an increase of 0.4% from RMB254.3 million in the same period of 2022. Net revenue under the commercial bank partnership model was RMB27.6 million, as compared to RMB0.4 million. The outstanding loan principle under the commercial bank partnership was RMB5 billion as of September 30, 2023, as compared to RMB0.6 billion as of September 30, 2022. Collaboration cost for sales partners was RMB87 million, as compared to RMB85 million. Next interest and fees income after collaboration cost increased 15.5% to RMB196 million fromRMB117 million. Provision for credit losses decreased by 72% to RMB12 million from RMB41 million. In the third quarter of 2023 some sales partners who forfeited their credit risk mitigation position due to the inability to fulfill their obligation to repurchase delinquent loans in the last few quarters, were able to recommend their payments, which had provided more protection to the loans. Total operating expenses increased by 27% to RMB106 million from RMB83 million. Employee compensation and benefits was increased 16% to RMB58 million from RMB50 million, due to an increase in the performance-based bonuses as a result of an increase in loan origination volume during the third quarter of 2023. Other expenses increased by 71% to RMB35 million from RMB20 million, mainly due to the increase in fees paid to local channels, who are rewarded for referring sales partners to the company and will also receive commissions of a certain percentage of loans recommended to the company by the sales partners they have referred. Net income increased by 15% to RMB53 million from RMB46 million. Now, we would like to start the Q&A session. Operator, please.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from William Gregozeski of Greenridge Global. Please go ahead.

Hey, great quarter. With regards to the trust lending at RMB3.9 billion, that's up quite a bit from where it has been. Can you just talk about where the -- I guess, the demand you saw for that growth came from? And if you expect it to continue going forward?

[Foreign Language] [Interpreted] So, as for the increase of loan originations under the trust lending model, I think the main reasons are two-fold. I think the first one is that in the beginning of the year, we have decided to shift our business more to, you know, Tier 1 and new Tier 1 cities. And also, the second reason was because we kind of focused on our most competitive products, which is large ticket size products with higher value as the collateral. I think those are the two main reasons that gave us the chance to grab the amounts of the borrower in such uncertainties in economy, as well as the fluctuation in property prices. Also, since we have been able to manage to decrease the overall financing cost, it allowed us to reach to customers with better collateral, as well as better credit records. And it also helped to broaden our customer reach as well.

Okay, great. As far as the origination, since we're getting close to 2024, do you guys have any forecast for where you're looking for that for next year on a total basis or broken out by trust and commercial?

[Foreign Language] [Interpreted] So based on the current uncertainty of the current market we have said a rather realistic and also conservative goal for the year of 2024. So our projected loan origination for next year is RMB20 billion with loans under facilitated under the commercial bank model taking up 30% to 35%.

Okay so roughly flat on an overall basis from this year?

[Foreign Language] [Interpreted Yes.

Okay, and last question is with the sales partners flying back into their position in the quarter, is that -- are you seeing your sales partners with more cash to be a little more flexible to not fall behind on payments or what can you just kind of briefly talk about the health of the sales partners financially?

[Foreign Language] [Interpreted] So the first thing that helps to improve their liquidity is we can loosen the terms on their installment payments. And the second reason is that we have made our effort to help the sales partners to dispose their non-performing loans. We have made our efforts to push the legal proceeding, as well as the settlement with borrowers, which also helped the sales partners to get rid of the non-performing assets and also recover cash.

Okay, great. Thank you.

There are no other questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Ms. Jae for closing remarks.

Thank you for joining us today. If you have any questions, please feel free to contact us at ir@cashchina.com. Thank you.

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