During the Period, the Group’s total income was RMB1.2 billion, which was largely supported by the powerful financial technology of the Group in terms of effective risk management and enhanced asset quality, amid the outbreak of COVID-19. Based on an in-depth analysis conducted on proprietary data, the Group enhanced customer acquisition algorithms. A series of targeted risk control measures were implemented, resulting to gradually improved asset quality which returned to levels even lower than before the COVID-19 outbreak. In addition, the Group has introduced new consumer finance companies, banks and trust companies into the ecosystem. By June 30, 2020, the Group has successfully established partnerships or collaborations with 64 Chinese licensed institutions in terms of capital and credit enhancement cooperation. Meanwhile, the Group has strengthened its cooperation with existing funding partners to further control the Group’s funding costs through a tiered pricing scheme based on the loan volume amount originated each month.
The Group has successfully transformed into a pure online consumer finance platform. During the period, the Group’s Loan Origination Volume of consumption credit products, which represented 79.2% of total Loan Origination Volume, increased by 36.23% against the trend to RMB10.54billion. In the first half of 2020, despite the volatilities and economic uncertainties caused by the COVID-19 pandemic, the Group continued to commit its technology-driven development strategy and to steer the Group’s business operation return to normal.
In 2020 Q1, the Group’s first payment delinquency ratio(1) reached 2.0%, but with its effective risk management policies, the ratio declined to 0.8% in 2020 Q2. The Group revamped risk models and adopted more prudent and tightened risk credit policies by granting credits to customers with better risk profiles, and reduced credit exposure to customers in geographic areas and industries more seriously impacted by the COVID-19 pandemic. The Group has developed a more intelligent score card system to identify existing customers’ credit risks for prompt and appropriate customer maintenance. The Group’s first payment delinquency ratio will remain at a level of about 1.0% in 2020 H2. The corresponding M1- M3 ratio(2) and M3+ ratio(3) are also expected to peak out in 2020 Q3 and gradually come down to the pre-pandemic level in 2020 Q4 similar to its experience of the market disruptions caused by the promulgation of Circular 141 at the end of 2017 and M3+ delinquency ratio culmination in 2018 Q2 followed by normalization in subsequent quarters.