Lufax Holding Ltd (LU) 2024 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Lufax Holding second quarter 2024 earnings call. (Operator Instructions) After the management's prepared remarks, we will have a Q&A. session. Please note this event is being recorded.

女士們、先生們，感謝大家的支持，歡迎參加陸金所控股 2024 年第二季財報電話會議。（操作員指示）管理階層準備好發言後，我們將進行問答。會議。請注意此事件正在被記錄。

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.

現在我想將會議交給今天的演講主持人，公司董事會辦公室及資本市場部負責人劉欣艷女士。請繼續，女士。

Thank you very much. Hello, everyone, and welcome to our second quarter 2024 earnings conference call. Our financial and operating results were released by our newswire services earlier today and are currently available online. Today, you will hear from our Chairman and CEO, Mr. Y.S. Cho, who will provide an update of the recent developments and strategies of our business. Our CFO, Mr. Peiqing too will then provide more details on our financial performance in the business operations.

非常感謝。大家好，歡迎參加我們的 2024 年第二季財報電話會議。今天早些時候，我們的新聞專線服務發布了我們的財務和經營業績，目前可在線查看。今天，您將聽到我們的董事長兼執行長 Y.S. 先生的演講。 Cho，他將介紹我們業務的最新發展和策略。我們的財務長裴慶先生隨後也將提供有關我們業務營運中的財務業績的更多詳細資訊。

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

在我們繼續之前，我想請您參閱我們的收益新聞稿中的安全港聲明，該聲明也適用於本次電話會議，因為我們將做出前瞻性聲明。

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

至此，我現在很高興將電話轉給 Y.S. 先生。曹先生，陸金所董事長兼執行長。請？

Thanks for joining us today for our second quarter 2024 earning call. In the second quarter, the macroeconomic environment remained complex for small-business owners. Despite this, we saw continued improvements in asset quality across both our portfolio and consumer finance businesses, as you continued to implement our prudent strategies. We believe this will provide a solid foundation for our future growth. Let me provide some updates on macro situation before we discuss the various details.

感謝您今天參加我們的 2024 年第二季財報電話會議。第二季度，小企業主面臨的宏觀經濟環境依然複雜。儘管如此，隨著您繼續實施我們的審慎策略，我們的投資組合和消費金融業務的資產品質持續改善。我們相信這將為我們未來的發展奠定堅實的基礎。在我們討論各種細節之前，讓我先介紹一下宏觀情勢的最新情況。

The SME development index trended down by 0.3 points quarter-over-quarter to [RMB89 billion] in June. Meanwhile, the business conditions index published by the Chongqong greatest growth business declined from [50.1 points in March to 49.3 points] in June, falling below the 50 threshold and reaching its lowest level for the first half of 2024. These indicators underscore the persistent challenges faced by the small business sector.

6月中小企業發展指數季減0.3點至[890億元]。同時，重慶最大成長企業公佈的經營狀況指數從3月的50.1點下降至6月的49.3點，跌破50的門檻，創2024年上半年最低水準。這些指標凸顯了小企業部門面臨的持續挑戰。

Now let me provide some updates on our operating results. First, let's take a look at our loan volume. Our total new loan sales in the second quarter of 2024 was RMB45.2 billion, representing a 15.5% year over year decline. The decline was mainly caused by a 35% year over year decrease of poor loans, which comprised 51% of total unit sales in the second quarter, reflecting our continued emphasis on quality over quantity and sluggish demand for prevalence of more high-quality SVRs.

現在讓我提供一些有關我們經營業績的最新資訊。首先，我們來看看我們的貸款量。2024年第二季度，我們的新增貸款總額為人民幣452億元，年減15.5%。下降的主要原因是不良貸款年減 35%，佔第二季總銷量的 51%，反映出我們繼續注重品質而非數量，以及對更多高品質 SVR 普及的需求疲軟。

Meanwhile, our consumer finance business continued to grow and delivered a solid performance during the quarter. Consumer finance loans saw a 23.6% year over year increase in new loan sales, representing 49% of our new loan sales. As a result of our continued efforts to roll out smaller tests and evolving product structures.

同時，我們的消費金融業務持續成長，本季表現穩健。消費金融貸款新增貸款年增23.6%，占我們新增貸款的49%。由於我們不斷努力推出較小的測試和不斷發展的產品結構。

Furthermore, we are pleased to observe notable improvements in asset quality to be up as we adopt more stringent credit standards with focus on higher quality customer segments and resilient geographies, bolstered by our enhanced risk assessment system. (inaudible) improved 2.9% from 1.0% in the previous quarter, mainly driven by the increment of C-M3 of unsecured loans.

此外，我們很高興地看到，隨著我們採用更嚴格的信貸標準，重點關注更高品質的客戶群和有彈性的地區，並在我們增強的風險評估系統的支持下，資產品質將顯著改善。 （聽不清楚）較上季的 1.0% 提高 2.9%，主要是受無抵押貸款 C-M3 增量的推動。

Our personal finance loans also saw asset quality improvements with NPL ratio decreasing to 1.4% from 1.6% in the first quarter.

個人理財貸款資產品質也有所改善，不良貸款率由第一季的1.6%下降至1.4%。

Next, let's take a look at our loans under the 1% model as discussed previously. Since the fourth quarter of 2023, all new fully loans have been enabled under the 1% guarantee model. As our full loan balance increasingly represents loans enabled under this model, our balanced take rate has trended upwards, reaching 9.3% during the second quarter as the negative impact from high CGI premiums has been eliminated.

接下來，我們來看看我們前面討論的1%模式下的貸款。自2023年第四季起，所有新增全額貸款均已在1%擔保模式下啟用。隨著我們的全部貸款餘額越來越多地代表在該模式下啟用的貸款，我們的平衡利率呈上升趨勢，在第二季度達到 9.3%，因為高 CGI 溢價的負面影響已被消除。

Thanks to this improved asset quality, our credit costs have remained stable despite increased risk exposure. However, it is worth noting that due to decrease in loan balances, our unit operating expenses have increased, which has become a key drag on our units profitability.

由於資產品質的改善，儘管風險敞口增加，我們的信貸成本仍保持穩定。但值得注意的是，由於貸款餘額減少，我們的單位營運費用增加，這已成為拖累我們單位獲利能力的關鍵。

Let me now provide some of these updates on our newly acquired PAO or PAObank by leveraging strategic synergies with Lufax following the acquisition, PAObank delivered solid growth in the first half of 2024, it's total loan balance stood at RMB2.4 billion by the end of second quarter, representing a 45% year over year increase.

現在我來介紹我們新收購的PAO或PAObank的一些最新情況，透過收購後與陸金所的策略協同，PAObank在2024年上半年實現了穩健的成長，截至2024年底，其貸款餘額總額達到24億元人民幣。

Going forward, PAO Bank is planning to roll out new initiatives, including insurance, wealth management products to better serve SMEs and retail customers. To reinforce the strong license severity we have discussed in the past, we recently acquired a nationwide small lending license. We believe this new license will help further reduce our funding costs, diversify our products and improve our capital management efficiency.

展望未來，PAO銀行計劃推出保險、理財產品等新舉措，以更好地服務中小企業和零售客戶。為了強化我們過去討論過的嚴格牌照嚴格性，我們最近獲得了全國性小額貸款牌照。我們相信這張新牌照將有助於進一步降低我們的融資成本、豐富我們的產品並提高我們的資本管理效率。

Now turning to the progress of special dividends, I'm pleased to announce that we've completed the distribution of special dividends at the end of July as scheduled. After receiving the script dividend, Ping An Group's ownership increased to 56.8%, and Ping An Group now consolidate our financial results. Officially remain on independent entity listed on New York Stock Exchange in Hong Kong.

現在談談特別股息的進展情況，我很高興地宣布，我們已按計劃於7月底完成了特別股息的分配。收到腳本股利後，平安集團的持股比例增加至56.8%，平安集團現在合併了我們的財務表現。正式保留在香港紐約證券交易所上市的獨立實體的地位。

Meanwhile, we seek to enhance synergies with Ping An Group, primarily in the following three key areas. First is branding. Ping An Group is a Fortune 500 company and a leading global financial institution. Its strong global reputation and financial standing will serve as a powerful endorsement for effects, deepening trust among our customers and funding partners. This enhanced brand association will improve our domestic and international standing and can potentially help lower funding cost.

同時，我們致力於增強與平安集團的綜效，主要在以下三個關鍵領域。首先是品牌塑造。平安集團是世界500強企業和全球領先的金融機構。其強大的全球聲譽和財務地位將成為效果的有力背書，加深我們的客戶和融資合作夥伴之間的信任。這種增強的品牌關聯將提高我們的國內和國際地位，並可能有助於降低融資成本。

Secondly, technology. We will leverage groups extensive technological resources including its advanced AI systems to further strengthen our risk management and forward prevention measures. Our goal is to provide small business owners and consumers with efficient, secure and cost effective financial services.

其次，技術。我們將利用集團廣泛的科技資源，包括先進的人工智慧系統，進一步加強風險管理和前瞻性預防措施。我們的目標是為小型企業主和消費者提供高效、安全且具成本效益的金融服務。

For these channel resources, while we are hearing quickly to applicable laws and regulations, we aim to expand our reach by tipping into Ping An Group's extensive nationwide network of online and offline channels. This expansion will complement our efforts to strengthen our direct sales force.

對於這些管道資源，我們在快速了解適用法律法規的同時，也希望透過利用平安集團覆蓋全國的線上線下通路網絡來擴大我們的影響力。此次擴張將補充我們加強直銷隊伍的努力。

In summary, our expanded relationship with P&G who will help us better serve our customers using their difficulty and expense of financing. With our strengths and capabilities, we strive to be a benchmark company with a unique role in supporting the growth of China's vital small and micro enterprise economy. While the macro environment remains complex, we are encouraged by the improvement in asset quality and the progress of our strategic initiatives. We remain committed to our deliberate strategic approach as we continue to navigate the economic landscape, and we have set our sights on achieving sustainable quality growth.

總而言之，我們與寶潔公司擴大的關係將幫助我們更好地為客戶服務，並利用他們的融資困難和費用。憑藉我們的優勢和能力，我們努力成為在支持中國小微型企業經濟發展中發揮獨特作用的標竿企業。儘管宏觀環境依然複雜，但資產品質的改善和策略措施的進展令我們感到鼓舞。在繼續駕馭經濟格局的過程中，我們仍然致力於採取深思熟慮的策略方針，我們的目標是實現可持續的高品質成長。

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

我現在將把電話轉給裴慶，他將提供有關我們財務業績和業務運營的更多詳細資訊。

Thank you, YS. I will now provide a closer look into our Q2 results. Please note that all numbers, are in RMB terms and all comparisons are on a year-over-year basis, unless otherwise stated. In the Q2 2024, our total income decreased by 35.5% to RMB6 billion from RMB9.3 billion in Q2 2023, mainly due to a decrease of our outstanding loan balance by RMB44.8 billion from full RMB26.4 billion as of June 30, 2023 to RMB235.2 billion as of June 30, 2024, partially offset by our interest increase take of rate as loans enabled and a 100% guarantee model constitute a higher proportion of our total loan book.

謝謝你，YS。我現在將仔細研究我們第二季的業績。請注意，除非另有說明，所有數字均以人民幣計算，所有比較均以同比為基礎。2024年第二季度，我們的總收入從2023年第二季度的93億元人民幣下降35.5%至60億元人民幣，主要是由於截至6月30日的未償還貸款餘額從264億元人民幣減少了448億元人民幣。 。

Meanwhile, our total expenses decreased by RMB20.3 billion from RMB8 billion to RMB6.3 billion, among which the total operating expenses declined by 29.7% from RMB5 billion to RMB3.5 billion and the credit impairment losses decreased by 14.6% from RMB3 billion to RMB2.6 billion. The gap between the decrease of revenues and operating expenses was mainly caused by the decreased economy of scale, which resulted in increased fixed expenses to income ratio.

同時，我們的總費用由人民幣80億元下降至人民幣63億元，減少人民幣203億元，其中總營業費用由人民幣50億元下降29.7%至人民幣35億元，信用減損損失由人民幣30億元下降14.6%至人民幣26億元。收入與營業費用減少的差距主要是因為規模經濟下降，導致固定費用佔收入比率上升。

The decrease of credit impairment losses was mainly due to the decrease in actual losses on loans as a result of improvement of credit performance, partially offset by upfront provision for loans and a 100% guarantee model. As a result, we recorded a net loss of RMB730 million for the second quarter.

信用減損損失減少主要是因為信用表現改善導致貸款實際損失減少，部分被貸款預提撥備和100%擔保模式所抵銷。因此，我們第二季淨虧損7.3億元。

Turning to our unique economy for the poor business, our APR by balance decrease from 20.3% in the Q2 2023 to 19.6% in Q2 of 2024. Primarily due to the change of customer mix as we continue to prioritize high quality customers. Despite the decrease in APR, our take rate by balance increased to 9.3% from 7% in Q2 2023 due to our successful transition to the 100% guarantee model.

談到我們針對貧窮企業的獨特經濟，我們的年利率從 2023 年第二季的 20.3% 下降到 2024 年第二季的 19.6%。主要是由於客戶結構的變化，我們繼續優先考慮高品質客戶。儘管年利率下降，但由於我們成功過渡到 100% 擔保模式，我們的餘額利用率從 2023 年第二季的 7% 增加到 9.3%。

We expect the take rate will further increase as the percentage of loans enabled under 100% guarantee model continues to increase. In addition, our funding cost also decreased slightly, thanks to the favorable monetary policy and support of our funding partners. On the other hand, while sales and marketing expenses remained stable, credit costs and other operating expenses spread on our net margin. This was primarily due to the construction of our loan balance.

我們預計，隨著 100% 擔保模式的貸款比例持續增加，接受率將進一步上升。此外，由於有利的貨幣政策和融資夥伴的支持，我們的融資成本也略有下降。另一方面，雖然銷售和行銷費用保持穩定，但信貸成本和其他營運費用卻影響了我們的淨利潤。這主要是由於我們的貸款餘額的建設。

Furthermore, while the actual losses decreased as a result of improvement in asset quality, we recorded more upfront provision for loans enabled under 1% guarantee model. As discussed before, while we anticipate that this part of the loans will be lifetime profitable, it's important to note that these loans may incur accounting losses in the first calendar year due to a higher upfront provisions. This accounting treatment affects our short-term profitability, but this is expected to lead to improved long-term financial performance as the loan provision portfolio matures.

此外，雖然由於資產品質改善，實際損失有所減少，但我們對1%擔保模式的貸款預提撥備有所增加。如前所述，雖然我們預計這部分貸款將終身盈利，但值得注意的是，由於預付款較高，這些貸款可能在第一個日曆年產生會計損失。這種會計處理會影響我們的短期獲利能力，但隨著貸款撥備組合的成熟，預計這將導致長期財務表現的改善。

Now let me highlight a few of key P&L items during this quarter. Our technology platform base income was RMB2 billion, representing a decrease of 51%, mainly due to the decrease in retail credit services fees as a result of 44.8% decrease in outstanding loan balance. In addition, it was also negatively affected by the closing of Lujintong home business in April 2024. Our net interest income was RMB2.7 billion, a decrease of 19.3% from the same period last year. The relatively lower decrease in net interest income was the result of an increase in consumer finance revenue. Meanwhile, our guarantee income was RMB850 million, a decrease of 26%.

現在讓我重點介紹本季的一些關鍵損益項目。技術平台基礎收入為人民幣20億元，下降51%，主要是因為未償還貸款餘額減少44.8%導致零售信貸服務費用減少。此外，也受到2024年4月魯金通家居業務關閉的負面影響。利息淨收入27億元，較去年同期下降19.3%。淨利息收入降幅相對較小，是消費金融收入增加的結果。同時，擔保收入8.5億元，下降26%。

In terms of revenue mix, technology, platform-based income accounted for 33.4% of our total revenue, down from 44% in the same period last year. Net interest income and guarantee income accounted for 45.4% and 14.2% respectively, of total revenue in Q2 as compared to 36.3% and 12.4% in the same period last year.

從收入結構來看，科技、平台收入占我們總營收的33.4%，低於去年同期的44%。第二季淨利息收入和擔保收入分別佔總收入的45.4%和14.2%，去年同期為36.3%和12.4%。

In terms of expenses, our credit impairment losses decreased by 14.6% to RMB2.6 billion. Our total marketing expenses, which includes expenses for acquisition cost as well as general sales and marketing expenses, decreased by 46% year on year basis to RMB1.4 billion in Q2. The decrease was mainly due to reduced loan related expenses resulting from decrease in new loan sales and outstanding loan balances, as well as the elimination of expenses associated with our Lujintong companies.

費用方面，我們的信用減損損失下降14.6%至人民幣26億元。第二季度，我們的總行銷費用（包括收購成本費用以及一般銷售和行銷費用）年減 46% 至 14 億元人民幣。減少的主要原因是新貸款銷售和未償還貸款餘額減少導致貸款相關費用減少，以及與魯金通公司相關的費用被消除。

Operation and service expenses decreased by 15.8% year on year to RMB1.3 billion in Q2. As a result of a decreased loan balance and our continued effort to control expenses, partially offset by increased commissions associated with improved collection performance.

第二季營運及服務費用較去年同期下降15.8%至人民幣13億元。由於貸款餘額減少以及我們不斷努力控制費用，部分被與收款績效改善相關的佣金增加所抵消。

Our finance cost decreased by 19.2% to RMB13 million in Q2 from RMB136 million in the same period of 2023, mainly due to decreased interest expenses after the repayment of a C-Round convertible promissory notes and other debts, partially offset by the decrease of interest income from bank deposits.

我們的財務成本從2023 年同期的人民幣1.36 億元下降到第二季度的人民幣1,300 萬元，下降19.2%，主要是由於償還C 輪可轉換票據和其他債務後利息支出減少，但部分被利息減少所抵銷銀行存款收入。

In terms of capital as of the end of June 2024, our main operating entities remain well capitalized. Our guaranty subsidiaries leverage ratio stood at 2.4 times, and our consumer finance subsidiaries, capital adequacy ratio stood at 14.7%, well above the 10.5% minimum regulatory requirement. As we deal with the complexity of the broader economy environment and our strategic shift to the 100% guarantee model, we have seen encouraging signs in terms of the asset quality and the growth of our consumer finance business. We will remain committed to our prudent strategy as we seek to build a solid foundation for long-term sustainable future success. I will uphold our commitment to bringing value to our investors.

截至2024年6月末，公司主要經營主體資本狀況良好。擔保子公司槓桿率為2.4倍，消費金融子公司資本適足率為14.7%，遠高於10.5%的監理最低要求。隨著我們應對更廣泛的經濟環境的複雜性以及向100%擔保模式的策略轉變，我們在資產品質和消費金融業務的成長方面看到了令人鼓舞的跡象。我們將繼續致力於審慎的策略，為未來長期可持續的成功奠定堅實的基礎。我將恪守為投資人帶來價值的承諾。

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

我們今天準備好的演講到此結束。接線員，我們準備好回答問題。

We will now begin the question and answer session. (Operator Instructions) Emma Xu, Bank of America Securities.

我們現在開始問答環節。（操作員指令）Emma Xu，美國銀行證券。

Thank you for the opportunity for the first question. Actually, I have two questions. So the first question is about the loan demand. So how is the overall loan demand currently? So we see that second quarter you granted RMB45.2 billion new loans and the accumulated amount of the new loans issued in the first half rigid RMB93.3 billion, accounting for around 42% to 49% of your full year guidance at the beginning of the year. So do you think you are still on track to meet your full year target and will we see the turning point of the loan growth recovery?

感謝您給我回答第一個問題的機會。其實我有兩個問題。所以第一個問題是關於貸款需求。那麼目前整體的貸款需求情況如何呢？所以我們看到第二季新增貸款452億元，上半年新增貸款累計剛性933億元，佔年初全年指引的42%至49%左右。那麼您認為您仍有望實現全年目標嗎？

And the second question is that, congratulations on the continued improving asset quality. So your M3 flow rate has declined two quarters in a row and are down to 0.9% in the second quarter. So do you think you can continue to see the improvement in the flow rate and how well management try to sustain this good trend? Thank you.

第二個問題是，恭喜資產品質持續改善。所以你的M3流量已經連續兩季下降，第二季下降到0.9%。那麼，您認為您可以繼續看到流量的改善以及管理階層如何努力維持這一良好趨勢嗎？謝謝。

Thank you Emma for your question. The first question, loan demand, yes, loan demand in overall is too weak. As for loan growth recovery, it largely depends on macro environment improvement. So why we keep our prudent strategy on SVR lending, we see that from our CF business, the consumption on demand is actually more stable. So we focus more on consumer finance and relatively large size consumption loan to cope with declining extra loan demand in near term, especially in the regions where our loan volume contraction is more significant.

謝謝艾瑪的提問。第一個問題，貸款需求，是的，貸款需求整體上太弱了。至於貸款成長的恢復，很大程度上取決於宏觀環境的改善。所以為什麼我們對SVR貸款保持謹慎的策略，我們從我們的CF業務上看到，按需消費實際上是更穩定的。因此，我們更重視消費金融和規模較大的消費貸款，以因應短期額外貸款需求下降的情況，特別是在我們貸款量收縮較為嚴重的地區。

And for your second question, as we all know that it is not easy to improve C-M3 flow rates, why loan balance keeps declining, but with continuous portfolio mix, implement our M&A, and now we see them more and more accounts from 2023 and 2024 which takes a bigger part of the core portfolio, which is better quality accounts. So we believe our asset quality measured by C-M3 flow relate with continuous improvements. And also we are putting tremendous efforts in our risk model, underwriting model and also collection model upgrade and then a safe quality management process. So all in all we are confident that about sustainability of our asset quality going forward.

對於你的第二個問題，我們都知道提高C-M3流量並不容易，為什麼貸款餘額不斷下降，但是透過持續的投資組合，實施我們的併購，現在我們看到他們從2023年開始越來越多的帳戶2024 年將佔據核心投資組合的更大部分，這是品質更好的帳戶。因此，我們相信透過 C-M3 流量衡量的資產品質與持續改善相關。我們也在風險模型、核保模型和催收模型升級以及安全品質管理流程方面投入了巨大的努力。總而言之，我們對未來資產品質的可持續性充滿信心。

Thank you.

謝謝。

Yada Lee, CICC.

李雅達，中金公司。

Hello management. Thank you for taking my questions. I have four questions today. Firstly, I was wondering what areas do we see more collaboration potential in the future with Ping An Group? And secondly, I like to ask, but do we have any plans to further increase the shareholder returns? Looking at the cash at hand and the future loan size, what could be the potential amount available to distribute to the investors?

管理層您好。感謝您回答我的問題。我今天有四個問題。首先我想知道未來我們和平安集團在哪些領域有更多的合作潛力？其次，我想問一下，我們有沒有計劃進一步提高股東回報？看看手頭上的現金和未來的貸款規模，可分配給投資者的潛在金額是多少？

Third, I would notice that the funding costs decreased slightly in the second quarter. And I was wondering what's the outlook for the future funding costs? And I want to ask on why the OpEx to income ratio hike in the second quarter? Do we see any room to further improve this ratio? That's all. Thank you so much.

第三，我注意到第二季的融資成本略有下降。我想知道未來融資成本的前景如何？我想問為什麼第二季營運支出與收入比率會上升？我們認為這個比率還有進一步的空間提升嗎？就這樣。太感謝了。

Okay. Let me answer your question from one to three. I think Yada -- let me see my notes here. So as a special dividend, Ping An Group's ownership increased much close to 57% to 56.8% and that we've been working closely with Ping An Group from the very beginning in future areas like customer sourcing. Right, using their online offline channels and technology development and their brand sharing, but with increased piano group owners now we expect it will help us to reduce funding cost in light of their good reputation finance standing.

好的。讓我從一到三回答你的問題。我想雅達——讓我看看我的筆記。因此，作為特別股息，平安集團的所有權增加了近57％至56.8％，並且我們從一開始就與平安集團在客戶採購等未來領域密切合作。是的，利用他們的線上線下管道和技術開發以及品牌共享，但隨著鋼琴集團所有者的增加，我們預計這將有助於我們降低融資成本，因為他們良好的聲譽財務狀況。

So actually your third question is about funding costs. We believe funding costs has been relatively decreasing or optimizing. We believe this trend will continue and also with the acquisition of. That nationwide small loan lending license that that land license that comes with better or low funding costs going forward. So we are confident about the funding cost for the improvements.

所以實際上你的第三個問題是關於融資成本。我們認為融資成本一直在相對下降或優化。我們相信，隨著收購的進行，這一趨勢將持續下去。全國性的小額貸款許可證以及未來融資成本更高或更低的土地許可證。因此，我們對改進的資金成本充滿信心。

And then about the second question, although the Board of Directors has determined that no semi-annual dividend will be paid at this time because we made a net loss recorded for the first half of 2024. But management is dedicated to returning value to shareholders. We will always seek out potential ways to increase shareholder returns, as demonstrated in this special dividend this time, our annual dividend policy, which is 20% to 40% of net profit and we pay semi-annually, that policy does not change, remain unchanged.

然後關於第二個問題，雖然董事會決定目前不派發半年度股息，因為我們2024年上半年錄得淨虧損。但管理階層致力於為股東回報價值。我們會一直尋找潛在的方法來增加股東回報，正如這次特別股息所證明的那樣，我們的年度股息政策，即淨利潤的20%至40%，我們每半年支付一次，這一政策不會改變。

Okay. About the funding cost, I would like to share some of my view, for our loan, we expect that just because the LPR policy and the Central Bank release the variable monetary policy to the market. And to support that, we'll definitely support our partners, and of course, they will pass to our companies together with the synergy of the Ping An Group will enable, which will enable us to enjoy a low funding cost.

好的。關於資金成本，我想分享一些我的看法，對於我們的貸款，我們預期只是因為LPR政策和央行向市場釋放了可變的貨幣政策。為了支持這一點，我們肯定會支持我們的合作夥伴，當然，他們會與平安集團的協同效應一起傳遞給我們公司，這將使我們能夠享受較低的融資成本。

For consumer finance loans, I believe that we will continue to fetch a lower interest rate in the interbank market. Actually you can see the trend also in the interbank market, right. The rate was led by the Central Bank to going down and we expect that funding cost will remain at a relatively low level. And generally, we will say that we were optimistic to our overall funding cost that will continue to decrease.

對於消費金融貸款，我相信我們會繼續在銀行間市場取得較低的利率。實際上你也可以在銀行間市場上看到這種趨勢，對吧。利率在央行主導下行，我們預期融資成本將維持在較低水準。總的來說，我們對整體融資成本將繼續下降持樂觀態度。

And another question about our income ratio increase in second quarter, although we remain committed to the cost of optimization, our assets to income ratio trended upward during this quarter. This was mainly due to our loan scale contraction that led to a decline in economies of scale. In addition, some of the fixed expenses continued to contribute to little bit to the increase. Looking forward, we will continue to improve our operational efficiency by leveraging the technology, and the synergy, and the digitalization, and the work together with Ping An Group and our internal efforts. Thank you.

還有一個關於我們第二季度營收比率成長的問題，儘管我們仍然致力於優化成本，但我們的資產收入比率在本季度呈上升趨勢。這主要是由於我們的貸款規模收縮導致規模經濟下降。此外，一些固定費用對成長的貢獻仍微乎其微。展望未來，我們將透過科技、協同、數位化、與平安集團的共同努力以及我們內部的努力，持續提高我們的營運效率。謝謝。

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.

謝謝。我們今天的問答環節到此結束。我現在將把電話轉回給我們的管理層以供結束語。

Thank you. This concludes today's call. Thank you all for joining the conference call. If you have more questions, please do not hesitate to contact Lufax's IR team. Thanks again.

謝謝。今天的電話會議到此結束。感謝大家參加電話會議。如果您有更多疑問，請隨時聯絡陸金所IR團隊。再次感謝。

Thank you. This conference is now concluded. You may now disconnect.

謝謝。本次會議現已結束。您現在可以斷開連線。