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Yiren Digital Reports Third Quarter 2019 Financial Results

November 14, 2019

BEIJING, Nov. 14, 2019 (GLOBE NEWSWIRE) -- Yiren Digital Ltd. (NYSE: YRD) (“Yiren Digital” or the “Company”), a leading fintech company in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Operational HighlightsWealth Management—Yiren Wealth

-- Cumulative number of investors served reached 2,200, 223, representing an increase of 0.7% from 2,185,513 in the second quarter of 2019 and compared to 2,042,607 in the third quarter of 2018. -- Number of active investors in the third quarter of 2019 was 586,333, representing a decrease of 13% from 671,957 in the second quarter of 2019. -- Total assets under management (“AUM”) for Yiren Wealth’s P2P products was RMB 40,191.7 million (US$ 5,623.0 million) as of September 30, 2019, representing a decrease of 7% from RMB 43,249.9 million as of June 30, 2019. Average AUM per investor reached RMB 152,289 (US$ 21,306) as of September 30, 2019, representing an increase of 1% from RMB 151,378 as of June 30, 2019. -- Total assets under administration (“AUA”) of non-P2P products amounted to RMB 767.2 million (US$ 107.3 million) in the third quarter of 2019, representing an increase of 169% from RMB 284.8 million in the second quarter of 2019. Total AUM of non-P2P products was RMB 645.9 million (US$90.4 million) as of September 30, 2019, representing an increase of 80% from RMB 358.6 million as of June 30, 2019. Non-P2P products include bank’s wealth management products, mutual funds and insurance. -- Number of non-P2P investors was 19,496 as of September 30, 2019, representing an increase of 14% from 17,133 as of June 30, 2019.

Consumer Credit—Yiren Credit

-- Total loan originations in the third quarter of 2019 reached RMB 10.5 billion (US$1.5 billion), representing an increase of 9% from RMB 9.7 billion in the second quarter of 2019 and compared to RMB 11.8 billion in the third quarter of 2018. -- Cumulative number of borrowers served reached 4,593,590, representing an increase of 2% from 4,491,761 in the second quarter of 2019 and compared to 4,161,600 in the third quarter of 2018. -- Number of borrowers in the third quarter of 2019 was 150,280, representing an increase of 11% from 135,246 in the second quarter of 2019 and compared to 174,630 in the third quarter of 2018. -- The percentage of loan volume generated by repeat borrowers was 34.0 % in the third quarter of 2019. -- 45.7% of loan originations were generated online in the third quarter of 2019. -- Total outstanding principal balance of performing loans reached RMB 54,553.7 million (US$7,632.3 million) as of September 30, 2019, representing a decrease of 6% from RMB 58,071.3 million as of June 30, 2019.

“We are pleased to deliver solid performance this quarter amidst a tightening regulatory environment, as highlighted by a 48% increase in net profit to RMB 228.0 million from RMB 154.5 million in the previous quarter, a sign of improvement in our business fundamentals and operating efficiency resulted from the synergies of our business re-alignments,” said Mr. Ning Tang, Chairman and Chief Executive Officer of Yiren Digital. “Looking forward, we will stay focused on driving our credit business and enhancing shareholder value by expanding our product portfolio, achieving further diversification in funding sources and seeking new marketing channels. On wealth management, we rolled out online financial advisory services to selected clients in the third quarter of 2019 and we will continue to focus on building up our investor’s investment portfolio in non-p2p wealth management products.”

“We resumed loan origination growth this quarter with loan volume increasing to RMB 10.5 billion, representing a 9% growth quarter over quarter,” said Mr. Dennis Cong, Senior VP of Yiren Digital. “Our balance sheet remained strong with approximately RMB 3.0 billion of cash and short-term liquidity. In particular, we also generated a positive net cash flow from operating activities of RMB 808.1 million this quarter, indicating a resilient and profitable business model. On institutional funding, we want to highlight that we have increased the line of facility from our institutional partners to RMB 35.0 billion in the third quarter of 2019 from RMB 30.0 billion in the second quarter of 2019.”

“On credit performance and risk management, we are seeing promising improvements in early delinquencies this quarter indicating an enhanced asset quality” said Mr. Huan Chen, Chief Risk Officer of Yiren Digital. “Despite industry uncertainties our early conservative credit policy adjustment has shown improving trends and we are working with regulators in connecting our data to PBOC.”

Third Quarter 2019 Financial Results

Total amount of loans facilitated in the third quarter of 2019 was RMB 10,496.3 million (US$1,468.5 million), compared to RMB 11,781.9 million in the same period last year. As of September 30, 2019, the total outstanding principal amount of the performing loans was RMB 54.6 billion (US$7.6 billion), decreased by 6% from RMB 58.1 billion as of June 30, 2019.

Total net revenue in the third quarter of 2019 was RMB 2,056.1 million (US$287.7 million), compared to RMB 2,187.6 million in the same period last year. Revenue from Yiren Credit reached RMB 1,515.5 million (US$ 212.1 million), representing a decrease of 8% from RMB 1,643.8 million in the third quarter of 2018. Revenue from Yiren Wealth reached RMB 540.6 million (US$75.6 million), representing a decrease of 1% from RMB 543.8 million in the third quarter of 2018.

Sales and marketing expenses in the third quarter of 2019 were RMB 1,160.4 million (US$162.3 million), compared to RMB 1,449.6 million in the same period last year. Sales and marketing expenses in the third quarter of 2019 accounted for 11.1% of the total amount of loans facilitated, as compared to 12.3% in the same period last year mainly due to an increase in customer acquisition and as well as operating efficiencies.

Origination and servicing costs in the third quarter of 2019 were RMB 156.1 million (US$21.8 million), compared to RMB 262.1 million in the same period last year. Origination and servicing costs in the third quarter of 2019 accounted for 1.5% of the total amount of loans facilitated, compared to 2.2% in the same period last year.

General and administrative expenses in the third quarter of 2019 were RMB 168.1 million (US$23.5 million), compared to RMB 367.9 million in the same period last year. General and administrative expenses in the third quarter of 2019 accounted for 8.2% of the total net revenue, compared to 16.8% in the same period last year.

Allowance for contract assets in the third quarter of 2019 were RMB 344.7 million (US$48.2 million), compared to RMB 272.9 million in the same period last year. The increase was mainly attributable to changes in future collectability estimates.

Income tax expense in the third quarter of 2019 was RMB 19.9 million (US$2.8 million).

Net income in the third quarter of 2019 was RMB 228.0 million (US$31.9 million), compared to a net loss of RMB 135.8 million in the same period last year.

Adjusted EBITDA (non-GAAP) in the third quarter of 2019 was RMB 274.2 million (US$38.4 million), compared to an adjusted EBITDA loss of RMB 12.3 million in the same period last year. Adjusted EBITDA margin1 (non-GAAP) in the third quarter of 2019 was 13.3%, compared to -0.6% in the same period last year.

Basic income per ADS in the third quarter of 2019 was RMB 2.46 (US$0.34), compared to a basic loss per ADS of RMB 1.47 in the same period last year.

Diluted income per ADS in the third quarter of 2019 was RMB 2.45 (US$0.34), compared to a diluted loss per ADS of RMB 1.47 in the same period last year.

Net cash generated from operating activities in the third quarter of 2019 was RMB 808.1 million (US$113.1 million), compared to RMB 216.9 million in the same period last year.

Net cash used in investing activities in the third quarter of 2019 was RMB 924.1 million (US$129.3 million) which includes a payment of RMB 846.0 million made to CreditEase as part of the contingent consideration for the business realignment.

As of September 30, 2019, cash and cash equivalents was RMB 2,633.0 million (US$368.4 million), compared to RMB 2,706.5 million as of June 30, 2019. As of September 30, 2019, the balance of held-to-maturity investments was RMB 8.1 million (US$1.1 million), compared to RMB 9.5 million as of June 30, 2019. As of September 30, 2019, the balance of available-for-sale investments was RMB 426.3 million (US$59.6 million), compared to RMB 387.5 million as of June 30, 2019.

Delinquency rates. As of September 30, 2019, the delinquency rates for loans that are past due for 15-29 days, 30-59 days and 60-89 days were 1.0%, 1.8%, and 1.6%, respectively compared to 1.1%, 1.8%, and 1.9%,as of June 30, 2019.

Cumulative M3+ net charge-off rates. As of September 30, 2019, the cumulative M3+ net charge-off rate for loans originated in 2016 was 9.4%, compared to 9.2% as of June 30, 2019. As of September 30, 2019, the cumulative M3+ net charge-off rate for loans originated in 2017 was 15.3%, compared to 14.0% as of June 30, 2019. As of September 30, 2019, the cumulative M3+ net charge-off rate for loans originated in 2018 was 11.6%, compared to 8.7% as of June 30, 2019.

Non-GAAP Financial MeasuresIn evaluating the business, the Company considers and uses several non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin as supplemental measures to review and assess operating performance. We believe these non-GAAP measures provide useful information about our core operating results, enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in our financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The non-GAAP financial measures have limitations as analytical tools. Other companies, including peer companies in the industry, may calculate these non-GAAP measures differently, which may reduce their usefulness as a comparative measure. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. See “Operating Highlights and Reconciliation of GAAP to Non-GAAP measures” at the end of this press release.

Currency ConversionThis announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB 7.1477 to US$1.00, the effective noon buying rate on September 30, 2019, as set forth in the H.10 statistical release of the Federal Reserve Board.

Conference CallYiren Digital’s management will host an earnings conference call at 7:00 p.m. U.S. Eastern Time on November 14, 2019, (or 8:00 a.m. Beijing/Hong Kong Time on November 15, 2019).

Dial-in details for the earnings conference call are as follows:

International: +65 6713-5091 U.S. Toll Free: +1 866-519-4004 Hong Kong Toll Free: 800-906-601 China Toll Free: 400-620-8038 Conference ID: 9299687

A replay of the conference call may be accessed by phone at the following numbers until November 22, 2019:

International: +61 2-8199-0299 U.S. Toll Free: +1 646-254-3697 Replay Access Code: 9299687

Additionally, a live and archived webcast of the conference call will be available at ir.yirendai.com.

Safe Harbor StatementThis press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 21E of the Securities 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 terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “target,” “confident” and similar statements. Such statements are based upon management’s current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Yiren Digital’s control. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to Yiren Digital’s ability to attract and retain borrowers and investors on its marketplace, its ability to introduce new loan products and platform enhancements, its ability to compete effectively, PRC regulations and policies relating to the peer-to-peer lending service industry in China, general economic conditions in China, and Yiren Digital’s ability to meet the standards necessary to maintain listing of its ADSs on the NYSE or other stock exchange, including its ability to cure any non-compliance with the NYSE’s continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in Yiren Digital’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Yiren Digital does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

About Yiren Digital Yiren Digital Ltd. (NYSE: YRD) is a leading fintech company in China connecting investors and individual borrowers. The Company provides an effective solution to address largely underserved investor and individual borrower demand in China through online and offline channels to efficiently match borrowers with investors and execute loan transactions. Yiren Digital deploys a proprietary risk management system, which enables the Company to effectively assess the creditworthiness of borrowers, appropriately price the risks associated with borrowers, and offer quality loan investment opportunities to investors. Yiren Digital’s marketplace provides borrowers with quick and convenient access to consumer credit at competitive prices and investors with easy and quick access to an alternative asset class with attractive returns. For more information, please visit ir.Yirendai.com.

For investor and media inquiries, please contact: Yiren DigitalInvestor RelationsEmail: ir@Yirendai.com

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1 Adjusted EBITDA margin is a non-GAAP financial measure calculated as adjusted EBITDA divided by total net revenue.

Unaudited Condensed Consolidated Statements of Operations (in thousands, except for share, per share and per ADS data, and percentages) For the Three Months Ended For the Nine Months Ended ---------------------------------------------------------- -------------------------------------------- September 30, June 30, September 30, September 30, September 30, September 30, September 30, 2018 2019 2019 2019 2018 2019 2019 ------------- ------------- ------------- ------------- ------------- ------------- ------------- RMB (Recast*) RMB RMB USD RMB (Recast*) RMB USD Net revenue: Loan facilitation 1,251,834 1,237,718 1,286,923 180,047 6,303,575 3,579,687 500,817 services Post-origination 269,874 241,321 103,073 14,420 854,749 640,673 89,633 services Account management 508,625 549,024 489,673 68,508 1,302,170 1,527,037 213,640 services Others 157,301 188,577 176,439 24,685 479,095 505,759 70,758 ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Total net 2,187,634 2,216,640 2,056,108 287,660 8,939,589 6,253,156 874,848 revenue ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Operating costs and expenses: Sales and 1,449,556 1,208,647 1,160,365 162,341 5,421,523 3,496,957 489,241 marketing Origination and 262,050 162,945 156,073 21,835 834,187 491,141 68,713 servicing General and 367,894 175,534 168,092 23,517 1,394,173 601,333 84,130 administrative Allowance for contract assets 272,889 500,861 344,742 48,231 783,596 1,036,707 145,041 and receivables ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Total operating costs and 2,352,389 2,047,987 1,829,272 255,924 8,433,479 5,626,138 787,125 expenses ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Other income/ (expenses): Interest income, 8,440 25,213 13,825 1,934 58,088 62,913 8,802 net Fair value adjustments related to 55,658 5,787 (1,323 ) (185 ) 203,278 39,462 5,521 Consolidated ABFE Others, net 1,089 17,480 7,112 995 (5,834 ) 184,815 25,857 ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Total other 65,187 48,480 19,614 2,744 255,532 287,190 40,180 income ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Income before provision for (99,568 ) 217,133 246,450 34,480 761,642 914,208 127,903 income taxes ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Share of results of equity (917 ) (816 ) 1,505 211 (5,946 ) (4,268 ) (597 ) investees Income tax 35,307 61,856 19,924 2,788 161,802 158,314 22,149 expense ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - - ----------- - Net income (135,792 ) 154,461 228,031 31,903 593,894 751,626 105,157 ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - - ----------- - Weighted average number of ordinary shares 185,024,291 184,608,337 185,548,214 185,548,214 183,933,356 185,095,873 185,095,873 outstanding, basic ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Basic income per (0.7339 ) 0.8367 1.2290 0.1719 3.2289 4.0607 0.5681 share ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Basic income per (1.4678 ) 1.6734 2.4580 0.3438 6.4578 8.1214 1.1362 ADS ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Weighted average number of ordinary shares 185,024,291 186,667,233 186,351,678 186,351,678 186,088,414 186,433,058 186,433,058 outstanding, diluted ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Diluted income (0.7339 ) 0.8275 1.2237 0.1712 3.1915 4.0316 0.5640 per share ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Diluted income (1.4678 ) 1.6550 2.4474 0.3424 6.3830 8.0632 1.1280 per ADS ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - Unaudited Condensed Consolidated Cash Flow Data (Recast**) Net cash generated from/ (used in) 216,874 36,352 808,148 113,064 (2,505,496 ) 186,065 26,032 operating activities Net cash provided by/ (used in) 2,220,043 240,896 (924,146 ) (129,293 ) 2,426,607 (933,181 ) (130,557 ) investing activities Net cash (used in)/ provided by (2,307,038 ) (73,385 ) 6,886 963 (2,272,048 ) 426,890 59,724 financing activities Effect of foreign exchange (119,172 ) 1,532 3,193 448 (122,031 ) 2,529 354 rate changes Net increase/ (decrease) in cash, cash 10,707 205,395 (105,919 ) (14,818 ) (2,472,968 ) (317,697 ) (44,447 ) equivalents and restricted cash Cash, cash equivalents and restricted cash, 1,996,647 2,617,311 2,822,706 394,911 4,480,322 3,034,484 424,540 beginning of period Cash, cash equivalents and 2,007,354 2,822,706 2,716,787 380,093 2,007,354 2,716,787 - 380,093 restricted cash, end of period ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - ----------- -

Unaudited Condensed Consolidated Balance Sheets (in thousands) As of ------------------------------------------------------ December 31, June 30, September September 2019 30, 30, 2018 2019 2019 ------------ ------------ ------------ ----------- RMB RMB RMB USD (Recast*) Cash and cash equivalents 2,606,939 2,706,530 2,632,952 368,364 Restricted cash 427,546 116,176 83,835 11,729 Accounts receivable 40,326 27,212 67,231 9,406 Contract assets, net 3,909,263 2,958,476 2,598,202 363,502 Contract cost 145,460 141,480 143,066 20,016 Prepaid expenses and other assets 2,552,319 1,142,757 1,280,784 179,188 Loans at fair value 1,375,221 677,354 552,648 77,318 Financing receivables - 25,175 24,630 3,446 Amounts due from related parties 1,361,805 1,791,515 1,678,499 234,831 Held-to-maturity investments 329,597 9,542 8,051 1,126 Available-for-sale investments 835,565 387,519 426,321 59,644 Long term investments 217,636 143,047 144,552 20,224 Property, equipment and software, net 266,002 230,078 213,962 29,934 Deferred tax assets 184,136 149,269 150,363 21,037 Right-of-use assets - 398,154 383,545 53,660 Total assets 14,251,815 10,904,284 10,388,641 1,453,425 ---------- - ---------- - ---------- - --------- - Accounts payable 307,046 54,158 62,313 8,718 Amounts due to related parties 8,276,459 169,189 289,820 40,547 Liabilities from quality assurance program and 9,950 6,539 5,644 790 guarantee Deferred revenue 569,469 390,621 381,899 53,430 Payable to investors at fair value 626,207 - - - Accrued expenses and other liabilities 2,193,576 2,265,288 2,351,078 328,928 Refund liability 2,145,748 2,039,998 2,002,785 280,200 Deferred tax liabilities 486,773 329,347 267,647 37,445 Lease liabilities - 341,364 322,832 45,166 Contingent consideration - 2,626,734 1,780,734 249,134 Total liabilities 14,615,228 8,223,238 7,464,752 1,044,358 ---------- - ---------- - ---------- - --------- - Ordinary shares 77 77 121 17 Shares to be issued - 2,754,444 - - Additional paid-in capital 1,293,968 1,106,153 3,872,219 541,743 Treasury stock (254 ) (37,097 ) (37,097 ) (5,190 ) Accumulated other comprehensive income 16,390 18,367 25,225 3,529 Accumulated deficit (1,673,594 ) (1,160,898 ) (936,579 ) (131,032 ) Total (deficit)/ equity (363,413 ) 2,681,046 2,923,889 - 409,067 ---------- - ---------- - ---------- - --------- - Total liabilities and equity 14,251,815 10,904,284 10,388,641 - 1,453,425 ---------- - ---------- - ---------- - --------- -

Operating Highlights and Reconciliation of GAAP to Non-GAAP Measures (in thousands, except for number of borrowers, number of investors and percentages) For the Three Months Ended For the Nine Months Ended ----------------------------------------------------- --------------------------------------- September June 30, September September September September September 30, 2019 30, 30, 30, 30, 30, 2018 2019 2019 2018 2019 2019 ------------ ------------ ------------ ----------- ------------ ------------ ----------- RMB RMB RMB USD RMB RMB USD (Recast*) (Recast*) Operating Highlights Amount of 18,235,782 11,939,582 9,037,670 1,264,417 53,890,936 32,412,841 4,534,723 investment AUM of 71,950,315 64,476,635 59,792,510 8,365,280 71,950,315 59,792,510 8,365,280 investment Number of 257,159 157,973 113,955 113,955 647,024 319,538 319,538 investors Amount of loans 11,781,947 9,673,818 10,496,261 1,468,481 49,733,287 31,105,001 4,351,750 facilitated Number of 174,630 135,246 150,280 150,280 726,917 423,414 423,414 borrowers Remaining principal of 71,625,593 58,071,303 54,553,702 7,632,343 71,625,593 54,553,702 7,632,343 performing loans Segment Information Wealth management: Revenue 543,857 592,378 540,554 75,626 1,498,458 1,654,366 231,454 Sales and marketing 220,561 213,168 219,390 30,694 1,169,242 576,462 80,650 expenses Consumer credit: Revenue 1,643,777 1,624,262 1,515,554 212,034 7,441,131 4,598,790 643,394 Sales and marketing 1,228,995 995,479 940,975 131,647 4,252,281 2,920,495 408,591 expenses Reconciliation of Adjusted EBITDA Net income (135,792 ) 154,461 228,031 31,903 593,894 751,626 105,157 Interest (8,440 ) (25,213 ) (13,825 ) (1,934 ) (58,088 ) (62,913 ) (8,802 ) income, net Income tax 35,307 61,856 19,924 2,788 161,802 158,314 22,149 expense Depreciation and 35,959 31,112 32,153 4,498 111,356 95,767 13,398 amortization Share-based 60,632 17,732 7,954 1,113 99,931 40,385 5,650 compensation ---------- - ---------- - ---------- - --------- - ---------- - ---------- - --------- - Adjusted (12,334 ) 239,948 274,237 38,368 908,895 983,179 137,552 EBITDA ---------- - ---------- - ---------- - --------- - ---------- - ---------- - --------- - Adjusted -0.6 % 10.8 % 13.3 % 13.3 % 10.2 % 15.7 % 15.7 % EBITDA margin * Prior period financials have been recasted to reflect the acquisition from CreditEase under common control. **The Company reclassified 368.2 million payments made in the second quarter of 2019 related to future acquisitions from cash used in operating activities to cash used in investing activities.

Delinquency Rates --------------------------------------- Delinquent for ------------------- 15-29 30-59 60-89 days days days ----- ----- ----- All Loans December 31, 2015 0.7 % 1.2 % 1.0 % December 31, 2016 0.6 % 0.9 % 0.8 % December 31, 2017 0.8 % 1.0 % 0.8 % December 31, 2018 1.0 % 1.8 % 1.7 % March 31, 2019 0.9 % 1.9 % 1.7 % June 30, 2019 1.1 % 1.8 % 1.9 % September 30, 2019 1.0 % 1.8 % 1.6 % Online Channels December 31, 2015 0.5 % 0.8 % 0.6 % December 31, 2016 0.5 % 0.9 % 0.8 % December 31, 2017 1.1 % 1.1 % 0.9 % December 31, 2018 1.2 % 2.3 % 2.2 % March 31, 2019 1.2 % 2.6 % 2.4 % June 30, 2019 1.4 % 2.2 % 2.6 % September 30, 2019 1.3 % 2.4 % 2.3 % Offline Channels December 31, 2015 0.7 % 1.2 % 1.0 % December 31, 2016 0.6 % 0.9 % 0.8 % December 31, 2017 0.6 % 0.9 % 0.7 % December 31, 2018 0.9 % 1.6 % 1.5 % March 31, 2019 0.8 % 1.6 % 1.5 % June 30, 2019 1.0 % 1.6 % 1.7 % September 30, 2019 0.9 % 1.5 % 1.4 %

Net Charge-Off Rate for Upgraded Risk Grid ------------------------------------------------------------------------------------------ Total Net Charge- Loan Issued Customer Amount of Loans Facilitated Accumulated M3+ Net Charge-Off Off Rate Period Grade During the Period* as of September 30, 2019* as of Septemb er 30, 2019* ----------- -------- --------------------------- ------------------------------ ------ (in RMB thousands) (in RMB thousands) 2015 I 4,894,936 201,064 4.1 % II 14,492,035 486,144 3.4 % III 11,272,838 711,683 6.3 % IV 11,283,656 1,357,155 12.0 % V 11,199,563 1,718,367 15.3 % -------- --------------------------- ------------------------------ ---- - Total 53,143,029 4,474,413 8.4 % -------- --------------------------- ------------------------------ ---- - 2016 I 5,858,273 234,148 4.0 % II 12,360,346 532,664 4.3 % III 9,951,614 749,365 7.5 % IV 8,652,543 922,419 10.7 % V 16,982,336 2,603,436 15.3 % -------- --------------------------- ------------------------------ ---- - Total 53,805,112 5,042,032 9.4 % -------- --------------------------- ------------------------------ ---- - 2017 I 10,431,218 670,341 6.4 % II 12,270,230 1,507,339 12.3 % III 13,837,922 2,183,484 15.8 % IV 13,663,558 2,356,569 17.2 % V 19,680,365 3,968,677 20.2 % -------- --------------------------- ------------------------------ ---- - Total 69,883,293 10,686,410 15.3 % -------- --------------------------- ------------------------------ ---- - 2018 I 9,451,125 486,383 5.1 % II 14,656,758 1,338,476 9.1 % III 13,903,217 1,624,453 11.7 % IV 13,812,989 1,961,234 14.2 % V 11,326,230 1,886,516 16.7 % -------- --------------------------- ------------------------------ ---- - Total 63,150,319 7,297,061 11.6 % -------- --------------------------- ------------------------------ ---- - 2019H1 I 3,911,679 28,326 0.7 % II 6,050,230 86,221 1.4 % III 4,993,682 97,867 2.0 % IV 3,220,517 63,400 2.0 % V 2,432,632 56,458 2.3 % -------- --------------------------- ------------------------------ ---- - Total 20,608,740 332,273 1.6 % -------- --------------------------- ------------------------------ ---- -

M3+ Net Charge-Off Rate* Loan Issued Period Month on Book ------------------ ------------------------------------------------------------------------ 4 7 10 13 16 19 22 25 28 31 34 2015Q1 0.8 % 2.0 % 3.4 % 4.7 % 5.7 % 6.5 % 7.1 % 7.5 % 7.7 % 7.8 % 7.8 % 2015Q2 0.8 % 2.3 % 3.8 % 5.2 % 6.4 % 7.3 % 7.9 % 8.3 % 8.5 % 8.7 % 8.8 % 2015Q3 0.4 % 1.6 % 3.1 % 4.4 % 5.6 % 6.5 % 7.1 % 7.6 % 7.9 % 8.1 % 8.4 % 2015Q4 0.4 % 1.6 % 3.1 % 4.4 % 5.5 % 6.3 % 6.9 % 7.4 % 7.9 % 8.3 % 8.5 % 2016Q1 0.3 % 1.2 % 2.5 % 3.6 % 4.5 % 5.2 % 5.8 % 6.4 % 7.0 % 7.4 % 7.6 % 2016Q2 0.4 % 1.6 % 3.1 % 4.3 % 5.2 % 6.0 % 6.8 % 7.6 % 8.1 % 8.4 % 8.7 % 2016Q3 0.3 % 1.6 % 3.1 % 4.3 % 5.4 % 6.6 % 7.8 % 8.6 % 9.2 % 9.5 % 9.8 % 2016Q4 0.2 % 1.5 % 2.9 % 4.4 % 5.9 % 7.4 % 8.4 % 9.3 % 10.0 % 10.4 % 2017Q1 0.3 % 1.5 % 3.2 % 5.1 % 7.1 % 8.6 % 9.8 % 10.8 % 11.5 % 2017Q2 1.1 % 2.9 % 5.6 % 8.4 % 10.4 % 12.1 % 13.5 % 14.5 % 2017Q3 0.3 % 2.9 % 6.3 % 9.1 % 11.6 % 13.6 % 15.0 % 2017Q4 0.5 % 3.8 % 7.2 % 10.4 % 13.2 % 15.3 % 2018Q1 0.4 % 3.0 % 6.6 % 10.1 % 12.9 % 2018Q2 0.5 % 3.6 % 7.4 % 10.8 % 2018Q3 0.3 % 2.9 % 6.2 % 2018Q4 0.3 % 2.5 % 2019Q1 0.2 % *As one division has already been spun off from the company, as of third quarter 2019, M3+ net charge-off rates no longer reflect the risk performance of loans generated by this division.