CNFinance Holdings Ltd. Q3 FY2023 earnings call

• The company focused on expanding business scale and improving asset quality, with loan facilitation up 20% y-o-y and net income up 15% y-o-y.
• Total loan organization volume was RMB5.1 billion, a 20% y-o-y increase and 12% q-o-q increase. RMB3.9 billion was trust lending, RMB1.2 billion was commercial bank partnership.
• Refined sales partners, helping ease their liquidity pressures; some historically defaulted sales partners resumed install payments, reducing risk exposure.
• Optimized product mix, adjusting to lower interest rate products to benefit customers and lay foundation for serving better credit history followers.
• Continued refining credit assessment factors, using technology to improve borrower and collateral assessment accuracy; shifted business to core regions, with 80% of loan facilitation in first Tier and new first Tier cities.

During the third quarter of 2023, the company facilitated loans of RMB5.1 billion, a 20% year-on-year increase, and achieved a net income of RMB53 million, a 15% year-on-year increase. Of the RMB5.1 billion loans facilitated, RMB3.9 billion was under the trust lending model and RMB1.2 billion was under the commercial bank partnership. The trust lending model contributed approximately 76.47% (3.9/5.1) to the total loan facilitation, while the commercial bank partnership contributed approximately 23.53% (1.2/5.1).

• Projected 2024 loan origination at RMB20 billion.
• Loans under the commercial bank partnership model are expected to make up 30%-35% of the 2024 loan origination.

• Forward-looking statements based on current expectations and market conditions, subject to known and unknown risks, uncertainties, and factors beyond the company's control that may cause actual results to differ materially from forward-looking statements. Further risks are detailed in the company's SEC filings.

Q: With regards to the trust lending at RMB3.9 billion, can you talk about where the demand for that growth came from and if it's expected to continue?

A: The increase in trust lending originations was due to shifting business to Tier 1 and new Tier 1 cities and focusing on most competitive large ticket size products with higher value collateral; it's expected to continue given the strategy.

Q: As we're getting close to 2024, do you have a forecast for total loan origination next year and breakdown by trust and commercial?

A: Projected 2024 loan origination is RMB20 billion, with commercial bank model loans taking up 30%-35%.

Q: With sales partners flying back into their position, can you talk about their financial health?

A: Loosening installment terms and helping sales partners dispose of non-performing loans through legal proceedings and settlements has improved their liquidity and financial health.