Financial Performance - For Q3 2024, total revenue was RMB 5,543 million (approximately USD 790 million), down from RMB 8,050 million in Q3 2023, representing a decrease of 31% year-over-year[8]. - The company reported a net loss of RMB 725 million (approximately USD 103 million) for Q3 2024, compared to a net profit of RMB 131 million in the same period last year[8]. - Total revenue for Q3 2024 was RMB 5,543 million (approximately USD 790 million), a decrease of 31% compared to RMB 8,050 million in Q3 2023[14]. - The net loss for Q3 2024 was RMB 725 million, compared to a net profit of RMB 131 million in Q3 2023[21]. - The company reported a net loss of RMB 725,254 thousand for the three months ended September 30, 2024, compared to a profit of RMB 130,973 thousand for the same period in 2023[26]. - Basic earnings per share for the nine months ended September 30, 2024, was a loss of RMB 1.98, compared to earnings of RMB 1.51 for the same period in 2023[26]. Revenue and Expenses - Technology platform revenue for Q3 2024 was RMB 1,633 million, a decrease of 49.9% compared to RMB 3,259 million in Q3 2023, primarily due to reduced loan balances and the exit from the Lufax Jin Tong business[15]. - Net interest income for Q3 2024 was RMB 2,687 million, down 18.8% from RMB 3,307 million in Q3 2023, mainly due to decreased loan balances, partially offset by increased net interest income from consumer finance[16]. - Total expenses decreased by 19% to RMB 6,262 million in Q3 2024 from RMB 7,747 million in Q3 2023, primarily due to a 50% reduction in sales and marketing expenses[17]. - Sales and marketing expenses fell to RMB 1,148 million in Q3 2024, a 49.9% decrease from RMB 2,290 million in Q3 2023, attributed to reduced loan-related expenses and the exit from Lufax Jin Tong[18]. - Credit impairment losses increased by 9.0% to RMB 3,270 million in Q3 2024 from RMB 3,001 million in Q3 2023, mainly due to increased provisions related to loans and certain investment assets[19]. Loan and Borrower Statistics - As of September 30, 2024, the total loan balance was RMB 213.1 billion, a decline of 41.8% from RMB 366.3 billion as of September 30, 2023[10]. - New loans enabled in Q3 2024 totaled RMB 50.5 billion, unchanged from RMB 50.5 billion in the same period of 2023, with consumer finance new loans increasing by 27.8% to RMB 26.4 billion[10]. - The number of cumulative borrowers increased by 24.1% to approximately 24.8 million as of September 30, 2024, up from approximately 20.0 million a year earlier[10]. - The NPL (Non-Performing Loan) ratio for consumer finance loans was 1.2% as of September 30, 2024, down from 1.4% as of June 30, 2024[11]. - The proportion of loans under the company's risk (including consumer finance subsidiaries) increased to 64.2% as of September 30, 2024, from 31.8% a year earlier[10]. Financial Position - As of September 30, 2024, the company's bank deposits were RMB 27,039 million, down from RMB 39,599 million as of December 31, 2023[22]. - Customer loans amounted to RMB 111,370,640 thousand as of September 30, 2024, down from RMB 129,693,954 thousand as of December 31, 2023, indicating a decrease of 14.2%[27]. - Total assets decreased to RMB 206,449,110 thousand as of September 30, 2024, from RMB 237,023,009 thousand as of December 31, 2023, reflecting a decline of 12.9%[27]. - The company’s total liabilities were RMB 120,108,859 thousand as of September 30, 2024, down from RMB 143,339,227 thousand as of December 31, 2023, a decrease of 16.2%[27]. - The company’s cash and cash equivalents, including restricted cash, totaled RMB 27,038,935 thousand as of September 30, 2024, compared to RMB 39,598,785 thousand as of December 31, 2023, a decrease of 31.9%[27]. - The company reported a total equity of RMB 86,340,251 thousand as of September 30, 2024, down from RMB 93,683,782 thousand as of December 31, 2023, a decrease of 7.9%[28]. Strategic Focus and Advisory - The company is focused on empowering small and micro business owners through financial services, indicating a strategic commitment to this market segment[8]. - The company emphasizes that shareholders and potential investors should not overly rely on the Q3 results and should consult professional advisors when trading its securities[7]. - The company’s independent financial advisor has maintained its recommendation regarding the fairness of the offers made to shareholders, advising against acceptance of the offers[5]. - The financial estimates have been reported by the company’s auditors and independent financial advisor, confirming adherence to accounting policies and methods[4]. - The announcement includes forward-looking statements that are subject to risks and uncertainties, which may affect future performance and financial trends[6]. - The company maintained a cautious and diligent approach to its business strategy, focusing on both micro and non-micro enterprise clients[13]. Cash Flow - The net cash used in operating activities for the three months ended September 30, 2024, was RMB 503,690 thousand (USD 71,775)[29]. - The net cash used in investing activities for the nine months ended September 30, 2024, was RMB 4,003,836 thousand (USD 570,542)[29]. - The net cash used in financing activities for the three months ended September 30, 2024, was RMB 8,969,996 thousand (USD 1,278,214)[29]. - The total cash and cash equivalents decreased by RMB 10,433,558 thousand (USD 1,486,770) for the three months ended September 30, 2024[29]. - The company has a significant difference of RMB 17,074 million (USD 2,433 million) between cash and cash equivalents and bank deposits due to time deposits exceeding three months[29].

Financial Performance - Total revenue decreased by 33.1% from RMB 19.35 billion for the six months ended June 30, 2023, to RMB 12.94 billion for the six months ended June 30, 2024[21]. - The net loss for the six months ended June 30, 2024, was RMB 1.56 billion, compared to a net profit of RMB 1.74 billion for the same period in 2023[17]. - The company reported a total comprehensive loss of RMB (1,634,621) thousand for the six months ended June 30, 2024, compared to a total comprehensive income of RMB 1,059,353 thousand in 2023[80]. - Basic earnings per share for the first half of 2024 were RMB (1.45), compared to RMB 1.43 in the same period of 2023, indicating a decline in profitability per share[80]. - The company reported a net loss attributable to owners of RMB (1,662,535) thousand in 2024, compared to a profit of RMB 1,637,325 thousand in 2023[126]. Revenue Sources - Technology platform revenue decreased by 49.9% from RMB 9,086 million for the six months ended June 30, 2023, to RMB 4,552 million for the six months ending June 30, 2024[22]. - The company reported a significant decrease in revenue from zero retail credit empowerment service fees, dropping from RMB 8,978,365 thousand in 2023 to RMB 4,506,407 thousand in 2024, a decline of about 49.9%[108]. - The revenue from technology platform services decreased from RMB 9,086,070 thousand in 2023 to RMB 4,551,892 thousand in 2024, reflecting a decline of about 49.9%[108]. Expenses and Cost Management - Total expenses decreased by 24.0% from RMB 16,920 million to RMB 12,857 million, attributed to cost control measures related to outstanding loan balances and new loan sales[23]. - Sales and marketing expenses decreased by 48.1% from RMB 5,570 million to RMB 2,890 million, due to reduced commissions from new loan sales and optimization of the sales team[24]. - General and administrative expenses decreased by 20.5% from RMB 1,249 million to RMB 993 million, mainly due to reduced taxes and cost control measures[24]. - Employee benefits expenses for the six months ended June 30, 2024, were RMB 4,423 million, down from RMB 6,190 million for the same period in 2023[40]. Assets and Liabilities - The total assets as of June 30, 2024, were RMB 216,930,102 thousand, a decrease from RMB 237,023,009 thousand as of December 31, 2023[82]. - The company's total liabilities decreased to RMB 134,253,699 thousand from RMB 143,339,227 thousand, showing a reduction of approximately 6%[82]. - Cash and cash equivalents decreased from RMB 46,928 million as of June 30, 2023, to RMB 37,114 million as of June 30, 2024[28]. - The company’s total customer deposits reached RMB 3,126,937 thousand as of June 30, 2024, compared to zero as of December 31, 2023[163]. Credit and Risk Management - The expected credit loss (ECL) provision was RMB 9,374,361 thousand, a decrease from RMB 9,651,158 thousand as of December 31, 2023, representing a reduction of 16%[101]. - The expected credit loss rate increased from 38.02% as of December 31, 2023, to 39.83% as of June 30, 2024[134]. - The total amount of expected credit losses and financing guarantee liabilities related to expected credit losses was RMB 10,729,651 thousand as of June 30, 2024, down from RMB 11,459,365 thousand as of December 31, 2023[101]. - The company’s total expected credit loss model parameters changed, resulting in a net effect of RMB 428,356 thousand on expected credit losses during the reporting period[159]. Shareholder Information - As of June 30, 2024, the total number of issued and outstanding shares is 1,147,095,737 shares[49]. - Major shareholder An Technology holds 285,000,000 shares, representing approximately 24.85% of the total equity[52]. - Major shareholder Ping An Overseas Holdings owns 189,905,000 shares, accounting for about 16.56% of the total equity[52]. - Ping An Insurance holds 474,905,000 shares, which is approximately 41.40% of the total equity[52]. Corporate Governance - The audit committee consists of three independent non-executive directors, ensuring compliance with relevant regulations[69]. - The company has adhered to all applicable corporate governance code provisions during the reporting period, with one exception regarding the dual role of the Chairman and CEO[68]. - The independent auditor has reviewed the interim financial information and found no significant issues[76]. Strategic Initiatives - The company aims to leverage Ping An Group's brand reputation and technological resources to strengthen its market position[18]. - The company completed the acquisition of all issued share capital of PAO Bank Limited on April 2, 2024[33]. - The company has successfully transitioned to a 100% guarantee business model as of Q4 2023, eliminating the need for third-party credit enhancement[34]. Future Outlook - The company has no significant future investment or capital asset plans as of June 30, 2024[34]. - The company will continue to evaluate the separation of the roles of Chairman and CEO as necessary[68]. - The report includes forward-looking statements based on current expectations and involves inherent risks and uncertainties[71].

Financial Data and Key Metrics Changes - In Q2 2024, total income decreased by 35.5% to CNY 6 billion from CNY 9.3 billion in Q2 2023, primarily due to a 44.8% decrease in outstanding loan balance [14] - Total expenses decreased by 20.3% from CNY 8 billion to CNY 6.3 billion, with operating expenses declining by 29.7% [15] - A net loss of CNY 730 million was recorded for the second quarter [15] Business Line Data and Key Metrics Changes - Total new loan sales in Q2 2024 were CNY 45.2 billion, a 15.5% year-over-year decline, with Puhui loans down 35% year-over-year [6] - Consumer finance loans increased by 23.6% year-over-year, representing 49% of new loan sales [6] - The C-M3 flow rate for Puhui loans improved to 0.9% from 1.0% in the previous quarter, while the NPL ratio for consumer finance loans decreased to 1.4% from 1.6% [7] Market Data and Key Metrics Changes - The SME development index trended down by 0.3 points quarter-over-quarter to 89 in June, indicating persistent challenges in the small business sector [5] - The Business Conditions Index fell from 50.1 in March to 49.3 in June, reaching its lowest level for the first half of 2024 [5] Company Strategy and Development Direction - The company is focusing on improving asset quality and implementing prudent business strategies to provide a solid foundation for future growth [5] - The acquisition of a nationwide small lending license is expected to reduce funding costs and diversify product offerings [9] - The relationship with Ping An Group is expected to enhance branding, technology, and distribution channels, improving overall operational efficiency [10][11] Management Comments on Operating Environment and Future Outlook - Management noted that loan demand remains weak, particularly in the small business sector, and recovery largely depends on macroeconomic improvements [23] - There is confidence in sustaining improvements in asset quality due to ongoing enhancements in risk management and underwriting processes [24] - The company remains committed to a strategic approach aimed at achieving sustainable quality growth despite the complex macro environment [12] Other Important Information - The distribution of special dividends was completed at the end of July, increasing Ping An Group's ownership to 56.8% [10] - The company plans to leverage Ping An Group's technological resources to enhance risk management and fraud prevention [11] Q&A Session Summary Question: What is the current loan demand and outlook for loan growth recovery? - Loan demand is still weak, and recovery depends on macroeconomic improvements, with a focus on consumer finance to cope with declining SBO loan demand [23] Question: Can the improvement in asset quality continue? - Continuous portfolio mix improvement and efforts in risk management and collection processes are expected to sustain asset quality improvements [24] Question: What areas will see more collaboration with Ping An Group? - Collaboration will focus on customer sourcing, technology development, and brand enhancement, which are expected to reduce funding costs [26] Question: Are there plans to increase shareholder returns? - While no semiannual dividend will be paid due to a net loss, management is dedicated to returning value to shareholders and maintaining an annual dividend policy of 20% to 40% of net profit [28] Question: What is the outlook for future funding costs? - Funding costs are expected to continue decreasing due to favorable monetary policies and synergies with Ping An Group [27][29] Question: Why did the OpEx to income ratio increase in Q2? - The increase was mainly due to loan scale contraction leading to a decline in economies of scale, but efforts will be made to improve operational efficiency [30]

Financial Performance - Total income for Q2 2024 was RMB 5,976 million (US$ 822 million), a decrease of 35.5% compared to RMB 9,270 million in Q2 2023[2] - Net loss for Q2 2024 was RMB 730 million (US$ 100 million), compared to a net profit of RMB 1,004 million in the same period of 2023, representing a decline of 172.7%[3] - Net interest income for Q2 2024 was RMB 2,716 million, a decrease of 19.3% from RMB 3,367 million in Q2 2023[10] - Technology platform-based income decreased by 51.0% to RMB 1,999 million in Q2 2024, primarily due to reduced retail credit service fees[10] - Total income for the three months ended June 2024 was RMB 5,976,217, representing a decline of 35.0% from RMB 9,270,322 in the prior year[31] - Net profit for the three months ended June 2024 was a loss of RMB 729,991, compared to a profit of RMB 1,003,618 in the same period of 2023[31] - Basic earnings per share for the three months ended June 2024 was a loss of RMB 0.69, compared to earnings of RMB 0.84 in the same period of 2023[31] Loan and Borrower Statistics - Total outstanding balance of loans decreased by 44.8% to RMB 235.2 billion as of June 30, 2024, from RMB 426.4 billion a year earlier[5] - New loans enabled in Q2 2024 were RMB 45.2 billion, down 15.5% from RMB 53.5 billion in Q2 2023, while new consumer finance loans increased by 23.6% to RMB 22.1 billion[5] - The cumulative number of borrowers increased by 17.4% to approximately 23.2 million as of June 30, 2024, from approximately 19.7 million a year earlier[5] - The company reported a decrease in customer loans to RMB 112,708,888 as of June 30, 2024, down from RMB 129,693,954 as of December 31, 2023[33] Expenses and Costs - Total expenses decreased by 20% to RMB 6,341 million (US$ 873 million) in Q2 2024 from RMB 7,957 million in Q2 2023[14] - Sales and marketing expenses decreased by 46% to RMB 1,372 million (US$ 189 million) in Q2 2024 from RMB 2,540 million in Q2 2023[15] - General and administrative expenses increased by 3.5% to RMB 511 million (US$ 70 million) in Q2 2024 from RMB 493 million in Q2 2023[15] - Credit impairment losses decreased by 14.6% to RMB 2,560 million (US$ 352 million) in Q2 2024 from RMB 2,998 million in Q2 2023[17] - Finance costs decreased by 90.2% to RMB 13 million (US$ 2 million) in Q2 2024 from RMB 136 million in Q2 2023[17] - Total expenses excluding credit impairment losses, finance costs, and other (gains)/losses decreased by 30% to RMB 3,485 million (US$ 480 million) in Q2 2024 from RMB 4,954 million in Q2 2023[14] Cash and Assets - The Company had RMB 37,114 million (US$ 5,107 million) in cash at bank as of June 30, 2024, down from RMB 39,599 million as of December 31, 2023[20] - Cash and cash equivalents at the end of the period as of June 30, 2024, were RMB 20,398,545, down from RMB 25,459,557 at the beginning of the period[35] - Net cash generated from operating activities for the three months ended June 2024 was RMB 2,997,614, an increase of 50.4% from RMB 1,994,730 in the same period of 2023[35] - The company’s total assets as of June 30, 2024, were RMB 216,930,102, a decrease from RMB 237,023,009 as of December 31, 2023[33] Strategic Initiatives - The company aims to deepen synergies with Ping An Group to enhance market position and operational efficiency[8] - No semi-annual dividend will be paid due to the net loss recorded for the six months ended June 30, 2024[21] Loan Quality - The non-performing loan (NPL) ratio for consumer finance loans was 1.4% as of June 30, 2024, down from 1.6% as of March 31, 2024[7]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 Lufax Holding Ltd 陸金所控股有限公司 （於開曼群島註冊成立的有限公司） （股份代碼：6623） （紐交所股票代碼：LU） 截至2024年6月30日止六個月 未經審計中期業績公告 陸金所控股有限公司（「本公司」）董事會（「董事會」）欣然宣佈本公司及其子公司 及併表實體截至2024年6月30日止六個月的未經審計中期業績。本公告列載本公 司2024年中期報告（「2024年中期報告」）全文，並符合香港聯合交易所有限公司 （「聯交所」）證券上市規則有關中期業績初步公告附載資料的相關規定。該等中期 業績已由本公司審核委員會及本公司核數師羅兵咸永道會計師事務所審閱。 本業績公告將刊載於聯交所網站 (www.hkexnews.hk) 及本公司網站 (https://ir.lufaxholding.com/)。2024年中期報告將於上述聯交所及本公司網站刊 載，其印刷本將於適當時候寄發予本公司股東（如有 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 陆金所控股 LUFAX Lufax Holding Ltd 陸金所控股有限公司 （於開曼群島註冊成立的有限公司） （股份代號：6623） （紐交所股票代碼：LU） 內幕消息 截至2024年6月30日止季度的未經審計財務業績 | --- | --- | |---------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------| | | | | 本公告乃根據《香港聯合交易所有限公司證券上市規則》第 13.09 《證券及期貨條例》第 XIVA 部刊發。 | 條及第 571 章 | | 陸 金所控股有限公司（「 本公司 團 」 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ...

Financial Performance - Total revenue decreased from RMB 58.116 billion for the year ended December 31, 2022, to RMB 34.255 billion for the year ended December 31, 2023[7]. - Net profit fell from RMB 8.775 billion for the year ended December 31, 2022, to RMB 1.034 billion for the year ended December 31, 2023, resulting in a net profit margin of 3%[7]. - Total expenses decreased by 27.7% from RMB 45,102 million in 2022 to RMB 32,610 million in 2023, attributed to operational expense optimization and reduced loan sales[72]. - Net profit dropped by 88.2% from RMB 8,800 million in 2022 to RMB 1,000 million in 2023, influenced by various factors including reduced revenue[76]. - Cash and cash equivalents decreased from RMB 43,882 million in 2022 to RMB 39,599 million in 2023[77]. - Operating cash flow for 2023 was RMB 15,030 million, significantly higher than RMB 4,455 million in 2022[78]. Loan Issuance and Balances - As of December 31, 2023, Lufax's loan balance was RMB 315.4 billion, a decrease of 45.3% compared to December 31, 2022[7]. - The total new loan issuance for the year ended December 31, 2023, was RMB 208 billion, down from RMB 495.4 billion for the year ended December 31, 2022[7]. - The new loan issuance for consumer finance in the year ended December 31, 2023, was RMB 71.2 billion, with a non-performing loan ratio of 1.5%[7]. - Lufax aims for new loan sales in 2024 to be between RMB 190 billion and RMB 220 billion, with year-end loan balances projected between RMB 200 billion and RMB 230 billion[8]. - The total new loan volume for consumer finance loans in 2023 was RMB 71.2 billion, accounting for 34.2% of the total[25]. Risk Management - The company has implemented five major risk mitigation and diversification measures to adapt to the challenging macroeconomic environment affecting small and micro enterprises[8]. - The company has gradually reduced reliance on third-party credit enhancement providers, focusing on internal credit ratings for borrowers[9]. - The non-performing loan ratio for consumer finance loans as of December 31, 2023, was 1.5%, unchanged from the previous year[36]. - The company employs a dynamic risk rating system for borrowers, categorizing them from R1 (lowest risk) to R6 (highest risk), focusing on higher-rated borrowers[55]. - The company’s risk pricing model considers the borrower's risk rating, debt-to-income ratio, and asset value to determine appropriate risk pricing[50]. Operational Changes - The company completed a business transformation to a 100% guarantee model in Q4 2023, eliminating the need for third-party credit enhancement for new loan transactions[9]. - The company has established partnerships with 85 financial institutions, many of which have been partners for over three years[7]. - The company has successfully transitioned to a 100% guaranteed business model for new loan transactions as of Q4 2023[83]. - The company has established agreements with funding partners to regulate financing arrangements and financial guarantees under the 100% guarantee business model[41]. Employee and Operational Metrics - The company employed over 1,500 staff for targeted telemarketing and online sales activities as of December 31, 2023[20]. - The average monthly contribution of new loans per employee in the telemarketing and online sales channel was RMB 78,200 (approximately USD 11,000) in 2023[20]. - The company employed a total of 36,215 employees as of December 31, 2023, with a total employee benefit expense of RMB 12,529 million for the year[88]. - The sales and marketing department accounted for the largest share of employees, with 24,665 staff members[89]. Governance and Compliance - The company has adopted the Corporate Governance Code as a benchmark for its governance practices since its listing date until December 31, 2023[91]. - The board consists of a balanced mix of executive and non-executive directors, ensuring strong independence and effective decision-making[93]. - The company has maintained at least three independent non-executive directors, meeting the listing rules requirements[99]. - The board is responsible for overseeing the company's operations and financial performance, ensuring robust internal controls and risk management[97]. - The company has implemented a code to regulate all securities transactions by directors and relevant employees, confirming compliance since the listing date[92]. Shareholder Information - The company has 1,146,319,171 shares issued and outstanding as of December 31, 2023, excluding treasury shares[147]. - The company declared an interim dividend of $0.078 per share or $0.039 per American Depositary Share for the six months ended June 30, 2023[154]. - The company has received a waiver from the Stock Exchange to retain treasury shares, subject to specific conditions regarding future share repurchases and issuance[147]. - The company has a robust internal control assessment process conducted regularly by all departments to identify potential risks[119]. Future Outlook and Challenges - The company faces significant risks, including increased credit risk exposure and potential regulatory changes that could adversely affect its business operations and financial performance[140]. - The company reported that its business model updates may not succeed, which could impact future performance[140]. - The company’s ability to obtain sufficient and sustainable funding at commercially attractive costs is uncertain[140]. - The company’s financial performance may be significantly affected by severe or prolonged economic downturns in China or globally[140].

Financial Data and Key Metrics Changes - In Q1 2024, total new loan sales decreased by 15.6% year-on-year to RMB48.1 billion, primarily due to weak demand from small business owners (SBOs) and a focus on prudent operations [8][14] - Revenue for Q1 2024 was RMB7 billion, a decrease of 30.9% year-over-year, attributed to lower new loan sales and outstanding loan balances, partially offset by an increased take rate [14][23] - The net loss for Q1 2024 was RMB830 million, compared to a net profit of RMB732 million in the same quarter of 2023, mainly due to increased tax associated with the special dividend [14][26] Business Line Data and Key Metrics Changes - New loan sales in the consumer finance business grew to RMB20.3 billion in Q1 2024, representing a 46% year-over-year increase, while new loan sales from the Puhui business decreased by 35.5% year-over-year [8][14] - The consumer finance segment accounted for 42% of total new loan sales in Q1 2024, up from approximately 24% in the same period last year [14][16] Market Data and Key Metrics Changes - The Purchasing Managers' Index (PMI) for manufacturing increased from 49 in December 2023 to 50.8 in March 2024, while the services PMI rose from 49.3 to 52 [6] - The SME development index was 89.3 for Q1 2024, showing minimal improvement from 89.1 in Q4 2023 and 89.3 in Q1 2023, indicating a slow recovery in the SBO segment [7] Company Strategy and Development Direction - The company completed five major de-risking and diversification actions, which have started to yield improvements in asset quality, although operational prudence remains critical for long-term growth [8][12] - The acquisition of Ping An OneConnect Bank was completed in early April 2024, aimed at leveraging strong licenses to expand service offerings and diversify the business [11] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in early risk indicators but emphasized the continued weakness in high-quality loan demand from SBOs, maintaining a focus on quality over quantity [6][12] - The company remains cautious about the sustainability of asset quality improvements and will continue to prioritize prudent operations [10][32] Other Important Information - A special dividend of USD 2.42 per ADS or USD 1.21 per ordinary share was announced, subject to shareholder approval at the AGM on May 30, 2024 [11] - The CFO, David Choy, will resign effective April 30, 2024, and Zhu Peiqing has been appointed as the new CFO [12] Q&A Session Summary Question: Update on special dividend progress and future shareholder returns - Management confirmed that the special dividend is subject to shareholder approval at the AGM and the long-term dividend policy remains unchanged at 20% to 40% of annual net profit [30][31] Question: Sustainability of asset quality improvement - Management acknowledged the improvement in asset quality but remains cautious about its sustainability, attributing improvements to de-risking efforts and a better quality portfolio [30][32] Question: Loan growth outlook for the rest of the year - Management indicated that while there has been early improvement, demand for high-quality loans remains subdued, and they will proceed with caution regarding loan volume expansion [34][35] Question: Unit economics and transition to 100% guarantee model - Management discussed the expected evolution of unit economics, noting that while new loans under the 100% guarantee model may incur initial losses, they are projected to be lifetime profitable [36][37] Question: Risk-bearing percentage outlook - Management stated that the risk-bearing percentage is expected to gradually increase as the new model is fully implemented, with 48.3% of total loan balance currently under the 100% guarantee model [40][41]

Financial Performance - For Q1 2024, total revenue was RMB 6,964 million (approximately USD 964 million), a decrease of 30.9% compared to RMB 10,078 million in Q1 2023[8] - The net loss for Q1 2024 was RMB 830 million (approximately USD 115 million), compared to a net profit of RMB 732 million in Q1 2023, representing a significant increase in losses of 213.3%[8] - Total expenses for Q1 2024 were RMB 6,517 million, down 27.3% from RMB 8,964 million in Q1 2023[9] - The company reported a significant reduction in total expenses excluding credit impairment losses and financing costs, which decreased by 37.0% to RMB 3,580 million[9] - Total revenue for the three months ended March 31, 2024, was RMB 6,963,764 thousand, a decrease from RMB 10,077,752 thousand for the same period in 2023, representing a decline of approximately 30.9%[30] - The net profit for the three months ended March 31, 2024, was a loss of RMB 829,961 thousand, compared to a net profit of RMB 732,370 thousand for the same period in 2023[30] - The company reported a basic and diluted loss per share of RMB 0.76 for the three months ended March 31, 2024, compared to earnings of RMB 0.59 for the same period in 2023[30] Cash and Liquidity - As of March 31, 2024, the company's bank deposits were RMB 39,442 million (approximately USD 5,463 million), a slight decrease from RMB 39,599 million as of December 31, 2023[23] - The company’s cash and cash equivalents, including restricted cash, totaled RMB 54,104,707 thousand as of March 31, 2024, compared to RMB 50,744,623 thousand as of December 31, 2023, showing an increase of approximately 6.9%[31] - Cash and cash equivalents at the end of March 31, 2024, totaled RMB 22,235,553 thousand, down from RMB 32,254,754 thousand at the end of the previous year[34] - The company’s cash and cash equivalents increased by RMB 3,755,457 thousand during the three months ended March 31, 2024, compared to an increase of RMB 2,717,243 thousand in the same period of the previous year[34] - The impact of foreign exchange rate changes on cash and cash equivalents was RMB 6,701 thousand for the three months ended March 31, 2024[34] Loan and Borrower Metrics - As of March 31, 2024, the enabled loan balance was RMB 270.2 billion, a decrease of 45.4% from RMB 495.2 billion as of March 31, 2023[9] - In Q1 2024, the newly enabled loans amounted to RMB 48.1 billion, a decrease of 15.6% compared to RMB 57.0 billion in the same period of 2023[10] - The risk-bearing ratio of newly enabled loans (excluding consumer finance subsidiaries) increased from 22.6% in Q1 2023 to 100% in Q1 2024[10] - The overdue rate for loans enabled (excluding consumer finance subsidiaries) for over 30 days was 6.6% as of March 31, 2024, down from 6.9% as of December 31, 2023[11] - As of March 31, 2024, the cumulative number of borrowers increased by 12.4% to approximately 21.7 million from about 19.4 million as of March 31, 2023[10] - Consumer finance loans accounted for 42% of new loan sales in Q1 2024, up from 24% in the same period last year[13] - The NPL rate for consumer finance loans was 1.6% as of March 31, 2024, compared to 1.5% as of December 31, 2023[11] Expense Management - Total expenses decreased by 27% from RMB 8,964 million in Q1 2023 to RMB 6,517 million (approximately USD 903 million) in Q1 2024, mainly due to a 50% reduction in sales and marketing expenses[17] - Sales and marketing expenses decreased by 49.9% from RMB 3,030 million in Q1 2023 to RMB 1,518 million (approximately USD 210 million) in Q1 2024, attributed to reduced loan-related expenses and lower platform service referral costs[18] - General and administrative expenses decreased by 36.2% from RMB 756 million in Q1 2023 to RMB 483 million (approximately USD 67 million) in Q1 2024, due to cost control measures and reduced taxes and surcharges[19] Future Outlook and Strategic Initiatives - The company plans to focus on enhancing its technology platform and expanding its market presence in the upcoming quarters, aiming for a rebound in user engagement and revenue growth[30] - The company has indicated expectations for future growth in retail credit empowerment, driven by increased demand for its services and improved market acceptance[30] - The company is actively exploring potential mergers and acquisitions to strengthen its market position and diversify its service offerings[30] - The company is expected to continue its focus on strategic financial management and operational efficiency in the upcoming quarters[39] Compliance and Governance - The financial results were prepared in accordance with International Financial Reporting Standards, consistent with the accounting policies adopted for the audited consolidated financial statements for the year ended December 31, 2023[3] - The company’s financial advisor and auditor have reported on the estimates made for the financial results, ensuring compliance with relevant regulations[4] - The company cautioned shareholders and potential investors not to overly rely on the Q1 results when making investment decisions[6] - The announcement includes forward-looking statements regarding the company's future business development and financial performance[6] - The company is subject to risks and uncertainties that may affect its future performance, as detailed in filings with the SEC and the stock exchange[6] - The management accounts for the three months ended March 31, 2024, were prepared in accordance with the accounting policies consistent with those adopted in the audited financial statements for the year ended December 31, 2023[38] - The company’s board of directors is responsible for the estimates and has confirmed that they were prepared based on the management accounts[39] - UBS AG has reviewed the basis of the estimates and confirmed that they align with the company’s usual accounting policies[40]