LU - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Lufax Holding Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

Now I'd like to hand the conference over to your speaker host today, Ms. Liu Xinyan, the company's Head of Board Office and Capital Markets. Please go ahead, madam.

Xinyan Liu

much. very you Thank welcome second and conference XXXX call. to everyone, quarter our earnings Hello,

operating by were earlier financial results Our and released are available today currently our online. and services newswire

Mr. performance update of details then recent hear Chairman from business; Today, of the provide in on the operations. who Peiqing our you an and more CFO, developments will Mr. CEO, the provide business will Y.S. strategies our financial our and our Cho, will Zhu,

you continue, to which forward-looking safe applies we I in would earnings we to as refer our to Before statement our like call statements. making harbor press also will release, be this

With and that, call Chairman CEO the of over Lufax. pleased I'm to Please. turn Cho, to Mr. Y.S. now

Yong Suk Cho

'XX remains In macroeconomic for this our finance saw across Thank a we quarter, our the Puhui for second complex continued believe earnings quality customer provide call. prudent strategies. Despite you us improvements second for joining this, growth. foundation environment the both solid We and will base today continued our small owners. for asset we future to implement as in quarter businesses our

half the declined sector. faced from first XX.X These the and XXXX. threshold index XX below me quarter-over-quarter down published its Let updates the in to reaching macro development the before by discuss Chango Gradeco business level by the some by a the falling in business persistent June. SME The the X.X of on March we points Meanwhile, in to indicators details. index June, small lowest for XX situation the XX.X provide challenges trended conditions business underscore

on updates some our operating provide me results. let Now

look at First, let's a loan our volume. take

loans, demand Puhui XX.X% quarter, emphasis mainly quarter the in high-quality of and decrease unit sluggish second representing over XX.X SBOs. were on of which XX% loans year-over-year decline caused reflecting for was comprised sales XX% Puhui our total The the quality sales billion, decline. of quantity XXXX new in total year-over-year CNY on a second Our a continued

quarter. finance to loans new delivered to a loan revolving our year-over-year our smaller the XX.X% a loan grow finance allow Customer structures. our business during XX% product new as performance efforts sales. Meanwhile, sold of and result of representing in continuous customer and continues sales, a solid increase

notable Furthermore, pleased more quarter focus assessment in to the are and we higher-quality observe resilient stringent risk a geographies our we by customer improvement standards adopt bolstered as system. segments on with enhanced credit

For Puhui of by from loans, mainly the the driven X.X% improvement C-MX previous X.X% the to loans. unsecured of rate quarter, flow improved in ratio

NPL also quality decreasing loans to with finance X.X% the in X.X% asset saw ratio improvements from customer quarter. Our first

take a let's look model. the Next, under loans guarantee at XXX% our

As since XXXX, fourth discussed all loans under have of guarantee XXX% new been model. the quarter enabled previously, Puhui the

upwards, quarter, As rate balance trended increased negative has CGI second stable loans remained been credit premiums this eliminated. our have a increasingly model, our has enabled X.X% Puhui the from to risk take impact asset as despite quality, during costs this loan improved exposure. under our balance represents reaching high Thanks our

profitability. have our increased, in noting has a to unit expenses on which drag balances, is that worth it decrease our However, become operating unit due key loan

representing first the Let synergies, at solid Lufax stood quarter, CNY end with balance me Bank. total now updates acquired newly loan the acquisition, billion on PAO increase. XX% in provide a Bank POA By leveraging of following growth some year-over-year our second the X.X its strategic by of delivered XXXX, half

customers. SME and out forward, to retail better planning Going roll management PAO including to is initiatives, wealth serve insurance, Bank products new

funding our new capital further costs, improve strategy efficiency. reinforce in strong management lending reduce license help products We To we license. acquired small our recently past, our the we diversify a the this have license nationwide believe will and

distribution the am to XX.X% to pleased our July increased Ping we of of special ownership end as Group's Group financial Now scheduled. and the progress I An dividend, receiving dividend. special After An announce at the the dividends Ping turning completed now to results. of our that consolidates

remain Stock Group, An primarily Meanwhile, with we in Kong. York on Exchange Lufax X will enhanced areas. synergies independent New Hong listed the an key entity Ping following

First is Lufax, branding. partners. our have endorsement a lower standing global international This is brand funding Ping we trust a and and association funding leading our and deepening will domestic strong improve financial and and company An a XXX institution, serve can Group as is a standing expectation global customers among powerful Fortune costs. potentially enhanced financial for

Second is technology.

risk measures. AI our We will systems leverage management prevention Ping An technological further food including to resources, strengthen and extensive Group's

owners Our goal small secure financial services. cost-effective to and provide efficient, business is and with consumers

expand channel our direct Group's sales these force. to resources and liberations, online to aim nationwide An and taking channels. by will efforts our This we laws Ping while expansion complement So strengthen adhering extensive off-line network reach our applicable for strictly

their strengthened of In our With be summary, sustaining expense will existing strive an difficulty small vital, our in using expanded us financing. China's relationship An with capabilities, company our micro of better customers, Ping help growth a the economy. to benchmark and and serve law with Group unique we enterprise

deliberate the are on have navigate While strategic sustainable the asset strategic of improvements we projects remains and and quality growth. environment sights encouraged approach achieving continue We committed set economic as the our remain in landscape to by quality to initiatives. the we macro complex, our our

over to financial turn our call now and Peiqing operations. performance will who I more will provide for business the details

Peiqing Zhu

a are results. now numbers our Please basis, will unwise that all you, on note I look comparisons Thank all into year-on-year terms QX and are a RMB stated. closer provide unless

XXXX. QX In

of CNY CNY mainly has to to June CNY loan balance of a from our outstanding decrease model to our XXXX, considered loan as a decreased from due million by partially total higher book. XXXX, income XX, XXX% June XX, proportion CNY interest XXXX, as enabled billion a XXX.X rate by CNY of increased XX.X take offset guarantee XX.X QX billion million X total X.X in Our XX.X% billion by of

among from caused expenses to of declined was The CNY from decrease CNY result guarantee X.X performance, the mainly billion, to income X.X impairment operating operating losses revenues impairment decreased total The CNY losses from which ratio. X.X XX.X% and billion gap losses of a the model. was credit the decreased offset and in billion. which credit provision of X by decrease expenses from CNY in to at of due economy Meanwhile, of the fixed our X resulted scale, actual XX.X% CNY total expenses X billion XXX% decreased to XX.X% credit partially loans upfront by increased as between the by by expenses decrease billion of loans improvement mainly to and CNY billion,

result, CNY million XXX second the net quarter. of a As loss for we recorded a

Turning our business. Puhui economy unique to for

of X% Our mix XXX% by APR model. high-quality XXXX due from as prioritize in QX take to Despite continue to to increased to our balance decrease of we successful decreased from XX.X% rate balance in X.X% primarily XXXX the the in our to the due change XXXX, in to customers. guarantee QX API, the QX customer XX.X% transition

the further and loans increase to expect rate XXX% of percentage guarantee as will enabled the We take continues increase. model

monetary decreased and In support slightly addition, our funding funding the our cost of thanks policy to the partners. also favorable

spread as of to result a more quality, stable, balance. in before. on hand, loans due construction improvement other and model, operating On guarantee This the primarily our for of asset upfront remain margin. our costs losses under marketing expenses enabled while loan we Furthermore, credit provision while expenses the and other recorded decreased was as discussed the sales XXX% net actual

affects first in the anticipate may their short-term to to we our loans matures. profitable, incur While lifetime provisions. part losses it treatment loans lead of that these loan important but financial accounting to performance the be upfront due is improve it's calendar long-term this will higher to as accounting profitability note This portfolio expected year

a few items. key highlight P&L me let Now

a our in income decrease platform loan balance. result decrease mainly credit billion, representing service was retail quarter, due technology fees to this based of XX.X% decrease During X in of outstanding XX%, the CNY a as

In also April close negatively by the business XXXX. addition, the it of in was Lujintong affected

billion, was from year. of decrease the in period income [ decrease and CNY revenue. of the finance XXX was increase result lower income in ] of relatively million, net XX%. an net our a XX.X% Our CNY interest guaranteed X.X income interest Meanwhile, same decrease last The consumer was a

total income of same terms last down platform-based year. XX.X% for of mix, from the period revenue, in technology XX% our In revenue accounted

income XX.X% and for to interest as XX.X% and same XX.X% XX.X%, accounted and guaranteed Net respectively, in last in compared QX income year. the period of revenue total

CNY In to terms of by expenses, our credit impairment X.X billion. losses decreased XX.X%

decreased Our XX% loan-related by as Lujintong asserted the general The to basis for from due reduced new loan business. elimination balances mainly the sales outstanding expenses was in loan expenses, to a our decrease billion total with in resulting and marketing as acquisition well as expenses and QX. expenses, and which of expenses year-on-year CNY well marketing sales X.X decrease costs includes as

X.X XX.X% a control continued of billion with year-on-year and QX, efforts in our by decreased expenses and service CNY offset performance. Operation loan improved expenses, by as associated increased partially commissions result collection balance to to decreased

decreased XX.X% after mainly other convertible expenses period income the million CRM same decreased the and of bank partially finance XXXX, to debts, in from by the Our decrease of of in offset by from CNY CNY XX interest to costs million QX promissory interest XXX due deposits. repayment notes

the of In June end terms XXXX. at of capital

Our main operating well capitalized. entities remain

regulatory finance the X.Xx adequacy subsidiary capital guaranteed above ratio well stood at stood Our ratio and subsidiaries consumer XX.X%, our minimum leverage at XX.X% requirement.

-- the are strategic with of asset we deal to and broader economic complexity the growth in encouraging strategy shift consumer we quality the XXX% in and finance business. seeing model, our environment signs As terms of guarantee of our

remain sustainable, to I our success. committed value to long-term, as strategy foundation will commitment will future a to seek investors. we our We bringing solid to our for prudent build uphold

prepared we remarks Operator, ready are questions. to That our concludes today. take for

Operator

America Emma The Bank Xu comes Securities. with question Instructions] first of [Operator from

Emma Xu

Actually, I questions. X have

first loan demand. So about the question is the

the the that loan quarter, at and year XX.X the RMB loans full currently? So issued reached RMB XX% how half beginning new year. for XX.X in to cumulative XX% of accounting overall of you loans new the of first the guidance is billion the second demand we billion, around your in see granted So amount

you asset point will full to third continued is of the you And question loan quality. do your the improving congratulations So meet think target? when And see on are the turning we growth your track still on recovery? year the that

X MX declined row has in the floor X.X% quarter. in second down quarters your a to rate So and

improvement the will can how do in see try good trend? to the you continue you And this management think rate? to flow sustain So

Yong Suk Cho

Thank question. you, your Emma, for

overall still weak. first loan loan question, Yes, The is demand. demand

loan For environment on largely macro recovery, depends it improvement. growth

our more from stable. business, is keep demand see and So we actually while on on that the lending, consumption prudent we our CF

near So contraction volume loan more is we declining demand to large consumption with in loan significant. term, where especially more loan HCV focus our regions relatively finance cope consumer and the

balance portfolio, loan keeps portfolio And for But your takes accounts them not bigger is is, that second we mean with from question, XXXX we to continuous declining. I know of while which what and now the it more flow whole account. all improvement, part XXXX better improve and is easy mix see a more rates

our model and put underwriting So in continuous quality process. with improvements. we management also same collection and believe measured by tremendous then our quality And efforts also, upgrade model we risk asset model

So asset all of quality that Thank going forward. we our sustainability all, in are confident about you.

Operator

CICC. Yada with The Li next question comes from

Yada Li

I have today. X questions

Firstly, what I with do collaboration future areas potential wondering An in see Group? we Ping the in more the was

investors? quarter to to hiked quarter and And Looking why that all. ask be secondly, what distribute ratio to improve the the the -- in and the wondering available future I'd I I I'll at decreased further room cost cost. the outlook the this to what's That's ask plans potential amount hand any I ratio? to do second for do ask, second have was size, the funding income returns? the at shareholder And we the any to in could see increase OpEx to the want will slightly loan notice the falling further future cash Third, like we

Yong Suk Cho

Okay.

Let me question this answer -- QX. your Thanks, Yada. on

in so using areas been so finance a for And increased dividends, An have with working An see online, the maturing. me much with my reputation and very An and their the that Group's has notes special like sourcing, Group customer closely But Let technology development key offline from close Ping few XX.X%. right, now, we to -- channels XX%, after bonus cost standing. funding reduce Ping beginning Ping we expect to ownership increased in

also your cost loan decreasing comes So of optimizing. small with this third funding or license, We And acquisition believe with will We about that costs. better trend actually, funding is is continue. believe -- lending cumulatively question license, that cost low-funding forward. nationwide going that the

improvements. further we cost funding So confident the are about

as determined first has management time no Board but time. that value out And although paid seek change, we to dividend second the which made pay then net XX% to in them potential of policy, demonstrated always And to this recorded that returning is be for we a special half of the at We is annually, dedicated not net shareholder loss annual our of the question, Directors returns shareholders. XX% this ways increase dividend XXXX, unchanged. semiannual dividend will remain to profit this policy because does and

Peiqing Zhu

the I Okay. share About some. funding to like cost, would

enable which For partnered our enjoy that synergy of the they and release policy the -- to our expect will our the Ping the cost. us definitely of enable the low Together Puhui were loan, monetary a policy, support of that course, because Bank funding An -- will partners. we just will with market support to companies. And variable the to Group Central

finance And consumer we our will the second market, will that optimistic funding that another That generally, expect that interest led the will the in market. say rate right, see low to we are that to going down. rate overall about the bank believe lower remain level. back also income to in the decrease. And cost at continue actually, cost our loans, continue center can funding to increased question to interbank I was a And quarter. a we For you ratio the in such relatively to trend we by

loan during scale material cost was led we this OpEx economic to Although our due in the scale. trend our that mainly committed to to decline to remain contraction, This quarter. optimization, upwards a income

expenses contributed addition, limit some fixed of the to the In to increase.

the the you. improve Ping together and will our Thank leveraging continue our Group and to work internal the synergy by An we forward, Looking efficiency operational efforts. the with and technology and digitalization

Operator

today. management call now our our turn for over to That question-and-answer the remarks. session I concludes for will back closing

Xinyan Liu

conference Thank call. all for today's concludes you joining This you. Thank the call.

contact If more Lufax's IR you Thanks do questions, team. have please again. hesitate not to

Operator

has conference This you. Thank now concluded.

You disconnect. may now

Lufax Holding (LU) 22 Aug 242024 Q2 Earnings call transcript