Summary of the Conference Call Company Overview - The conference call was held by Yuxin Technology, discussing the company's performance in the first three quarters of 2025, highlighting the overall operational strategy and financial results. Key Points Financial Performance - **Revenue Growth**: The company reported fluctuations in revenue with no significant growth, but net profit excluding share-based payments increased by 29% year-on-year, while the net profit including share-based payments saw a 205% increase [2][3]. - **Investment Income**: There was a decrease in investment income of approximately 30 million compared to the previous year, contributing to perceived volatility in quarterly profits [3]. - **Cash Flow**: The software business experienced a significant cash inflow, with a 157% year-on-year increase in operating cash flow, indicating strong operational quality and customer recognition [3][4]. - **Gross Margin Improvement**: The gross margin for core business increased by 1.2 percentage points year-on-year, with specific improvements in banking technology solutions [4][5]. Business Segments - **Innovation Operations**: The innovation operations segment grew by 30% in the first three quarters, benefiting from overseas contributions [5]. - **Non-Banking IT Solutions**: This segment saw a 7.8% growth, attributed to an increased hardware component [5]. - **Client Base**: Major banks and joint-stock banks accounted for 50% of revenue, with a focus on large clients [5][6]. Strategic Initiatives - **AI Development**: The company is actively developing AI solutions, including a collaboration with rural commercial banks for an AI model integration [17][18]. Orders related to AI are expected to double compared to the previous year [18]. - **Digital Currency Projects**: Yuxin Technology has established itself as a key player in digital currency projects, having successfully launched a digital wallet and smart contract system for overseas markets [20][21][22]. - **Financial Cloud Services**: The company is enhancing its financial cloud services, focusing on GPU-based solutions to empower small and medium-sized banks [33][34]. Market Outlook - **IT Budget Trends**: Large banks are expected to maintain stable IT investments, while small and medium-sized banks may face challenges due to budget constraints and the need for operational changes [40][41]. - **Opportunities in Overseas Markets**: The company sees significant potential in overseas markets, particularly in the context of digital currency and Web 3.0 developments [51][52]. Challenges and Risks - **Market Competition**: Small and medium-sized banks may struggle with competition and operational efficiency, leading to potential consolidation in the sector [41][42]. - **Regulatory Environment**: The company is navigating a complex regulatory landscape, particularly concerning digital currency and financial technology [46][47]. Additional Insights - **R&D Investment**: The company maintains a high R&D investment rate of around 13%, crucial for sustaining technological leadership [7][8]. - **Talent Acquisition**: There is a focus on attracting talent related to AI and Web 3.0 to support ongoing innovation [12]. Conclusion - Yuxin Technology is positioned for growth with a strong focus on innovation, AI, and digital currency projects, while also facing challenges in the competitive landscape and regulatory environment. The outlook for the next year appears optimistic, particularly in overseas markets and emerging technologies.

Core Viewpoint - The establishment of bank fintech subsidiaries has not led to the expected growth and profitability, with many returning to their parent banks due to operational challenges and market competition [9][15][37]. Group 1: Industry Overview - The fintech subsidiary of SPDB, PuYin JinKe, opened in Shanghai on August 5, 2024, but this does not indicate a revival of bank tech subsidiaries, as the industry has seen a decline in new establishments since 2022 [4][6]. - Over the past decade, more than 20 banks have established fintech subsidiaries, driven by the need for improved cybersecurity and competition from internet financial companies [7][8]. - Despite initial hopes, these subsidiaries have struggled to generate independent revenue and often rely on their parent banks for survival [9][15]. Group 2: Financial Performance - Financial reports indicate that many fintech subsidiaries have failed to achieve profitability. For instance, ZhongYin JinKe reported a net profit of only 0.11 million yuan in the first half of 2024, while Financial One Account has accumulated losses of 7.33 billion yuan from 2017 to 2023 [18][19]. - The business model of these subsidiaries often leads to losses, as seen with XingYe ShuJin, which reported a net loss of 1.67 million yuan in the first half of 2019 [19]. Group 3: Market Dynamics - The fintech market has become increasingly competitive, with major players like Alibaba and Tencent dominating the financial cloud market, leaving bank subsidiaries struggling to gain market share [29]. - Regulatory changes have also impacted the ability of these subsidiaries to operate independently, as new guidelines restrict the outsourcing of core IT functions [26][27]. Group 4: Future Outlook - The trend of fintech subsidiaries returning to their parent banks is expected to continue, as their primary revenue source remains servicing the parent bank, which diminishes their independent operational significance [37][39]. - The lack of competitive advantage and the challenges in providing innovative solutions further complicate the sustainability of these subsidiaries [39][40].

Group 1 - The core viewpoint of the article highlights the stagnation and challenges faced by bank technology subsidiaries in China, with many struggling to achieve profitability and relevance in the market [1][10][30] - The establishment of new technology subsidiaries has significantly slowed down, with only one new subsidiary being formed each year from 2022 to 2024, primarily by smaller banks [2][30] - Many previously pioneering technology subsidiaries, such as Xinyue Shujin and Zhongyin Jinke, are now considering returning to their parent banks, indicating a trend of consolidation and reduced independence [3][30] Group 2 - The newly opened Pudong Bank's technology subsidiary, Puyin Jinke, has been operationally inactive since its establishment in May 2021, and its recent opening signifies a gradual start to business activities rather than a revival of the sector [4][30] - The primary functions of Puyin Jinke include building an IT shared service center for group subsidiaries, supporting non-transactional business system construction for overseas branches, and collaborating with the parent bank to identify non-banking business scenarios [7][30] - The technology subsidiaries have largely failed to establish themselves as independent profit-generating entities, relying heavily on their parent banks for survival [6][10][30] Group 3 - Financial technology subsidiaries have not been able to achieve their initial goals of generating income through technology output, leading to a reevaluation of their operational models [5][6][10] - The financial technology market has become increasingly competitive, with major players like Alibaba and Tencent dominating the financial cloud market, leaving bank subsidiaries struggling to gain market share [22][30] - Regulatory changes have imposed stricter requirements on technology outsourcing, further complicating the operational landscape for these subsidiaries [20][30] Group 4 - The article outlines the financial struggles of various technology subsidiaries, such as Zhongyin Jinke, which reported a net profit of only 0.11 million yuan in 2024, and Financial One Account, which has accumulated losses of 7.33 billion yuan from 2017 to 2023 [11][12][30] - The shift from a focus on external technology output to internal service provision has become a common trend among these subsidiaries, as they prioritize serving their parent banks over expanding into the broader market [23][30] - The lack of competitive pricing and operational flexibility compared to external outsourcing firms has diminished the appeal of these subsidiaries, leading to a perception of them as less effective service providers [31][30]