Lufax Holding Ltd (NYSE:LU) Q2 2023 Earnings Call Transcript

Y. S. Cho: All right. I think we did have a statement on our full year new loans outlook in our earnings release. It’s due to record gains. Here, let me comment some more about how the top line — but the bottom line may evolve with this kind of changing. First, on the top line, inevitably, the top line will be affected by the decrease of the [indiscernible] as a result of our more stringent credit acceptors criteria that we mentioned earlier. Of course, the decrease in the new sales we return affects the average loan balance, thus will also have an impact to the revenue. These 2 impacts will be mitigated by the improvement in take rate when we transition to the 100% guarantee model. For the bottom line, I think we’ve mentioned before, when our new business model moved towards the 100% guarantee model, a significant portion of our expected credit loss provisions of new loans will be front-loaded in day 1.

From an accounting perspective, of course, they don’t have any impact on the cash profit in that sense. Whilst the revenue is recognized throughout the loan’s life cycle, as such, our bottom line will be suppressed in the second half as we accelerate the transition to the 100% guarantee mode. However, let me reemphasize one more time. This shift, we expect to have positive results in the longer term and support our U-shape recovery once the majority of the portfolio is supported by 100% guarantee model.

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

Liu Xinyan: Okay. Thank you, operator. This concludes today’s call. Thank you all for joining the conference call. If you have more questions, please do not hesitate to contact the company’s IR team. Thanks again.

Operator: Thank you. That concludes the call today. Thank you, everyone, for attending. You may now disconnect.