Group 1 - The core point of the article is that Zhaolian Consumer Finance Co., Ltd. has obtained a patent for a method related to variable calling, indicating its focus on innovation in financial services [1] - The patent, titled "Variable Calling Method, Device, Computer Equipment and Storage Medium," was granted with the announcement number CN114116256B, and the application date was November 2021 [1] - Zhaolian Consumer Finance Co., Ltd. was established in 2015 and is located in Shenzhen, primarily engaged in monetary financial services, with a registered capital of 1 billion RMB [1] Group 2 - The company has participated in 224 bidding projects and has 146 trademark information entries and 347 patent information entries, showcasing its active involvement in intellectual property and competitive bidding [1] - Additionally, Zhaolian Consumer Finance holds 80 administrative licenses, indicating its compliance and operational capabilities within the regulatory framework [1]

Core Viewpoint - The National Financial Supervision and Administration Bureau's Tianjin Regulatory Bureau has approved the appointment of Lv Qi as the Deputy General Manager of Tianjin JD Consumer Finance Co., Ltd. [1] Group 1: Regulatory Approval - The approval requires the appointed individual to strictly adhere to the regulatory provisions set by the Financial Supervision and Administration Bureau [1] - The appointed individual must report their onboarding status within three months from the date of the administrative decision [1] Group 2: Company Name Change - In May 2025, the National Financial Supervision and Administration Bureau's Tianjin Regulatory Bureau approved the name change of Jiexin Consumer Finance Co., Ltd. to Tianjin JD Consumer Finance Co., Ltd. [1]

Group 1 - The Tianjin Financial Regulatory Bureau has approved the appointment of Lü Qi as the Deputy General Manager of Tianjin JD Consumer Finance Co., Ltd [1][2]

Financial Data and Key Metrics Changes - The company reported growth in adjusted earnings per share despite declines in loan performance and loan volume [14] - Loan performance declined moderately, with 2023 and 2024 vintages decreasing by 0.4% and 0.2% respectively, while other vintages remained stable [14] - Changes in forecasted future net cash flows improved, with a decrease narrowing from $58.6 million (0.5%) in Q3 2025 to $34.2 million (0.3%) in Q4 2025 [15] - Loan unit volume decline improved to 9.1% in Q4 from 16.5% in Q3, and loan dollar volume decline improved to 11.3% from 19.4% [15] Business Line Data and Key Metrics Changes - The company financed nearly 72,000 contracts and collected $1.3 billion overall, while paying $48 million in dealer holdback [14] - The number of active dealers decreased by 2.8% year-over-year, and average unit volume per active dealer declined by 6.4% year-over-year [16] Market Data and Key Metrics Changes - Market share in the core segment of used vehicles financed by subprime consumers was 4.5% for the first two months of Q4, down from 5.4% for the same period in 2024 [16] Company Strategy and Development Direction - The company aims to deepen relationships within its dealer network, support dealers in acquiring new consumers, and leverage data-driven insights [9] - Strategic objectives include generating demand, empowering dealers through preferred channels, and delivering world-class servicing and processing [9] - The company is investing in artificial intelligence to enhance customer service and improve efficiency [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the impact of high inflation on subprime consumers and emphasizes a conservative approach to lending [19] - The CEO expressed confidence in the company's ability to serve subprime customers across various economic cycles [37] - The company plans to maintain a focus on maximizing intrinsic value and disciplined capital allocation [13][38] Other Important Information - The company was named one of America's top 100 Most Loved Workplaces for the second consecutive year, ranking sixth [12] - The new contract origination experience was rolled out to better support franchise and large independent dealers [10] Q&A Session Summary Question: How will the new CEO manage credit lending and underwriting? - The CEO plans to take a long-term and conservative approach to lending while improving customer experience and credit scoring models [19] Question: What drove the increase in provision for new originations? - The increase is attributed to the mix between the portfolio and purchase program, with the initial provision on the purchase program being significantly higher [21][22] Question: What is the competitive environment like, given the decline in market share? - The CEO noted that the competitive environment is evolving, with a focus on being customer-centric rather than competitive-centric [26] Question: How does the company view its leverage and capital distributions? - The company maintains an acceptable leverage range and will continue to ensure capital is available for new originations while considering intrinsic stock value for buybacks [33][38] Question: What factors could affect affordability and used car prices? - The CEO believes the company is well-positioned to serve subprime customers regardless of economic cycles and emphasizes a conservative approach [37] Question: What is the outlook on prepayments in the portfolio? - There has been a decline in prepayments, which may indicate customers are staying in their vehicles longer, despite historical trends suggesting an uptick in competitive environments [43][44]

Financial Data and Key Metrics Changes - The company reported growth in adjusted earnings per share despite declines in loan performance and loan volume [14] - Loan unit volume improved to a decline of 9.1% this quarter, compared to a decline of 16.5% last quarter, while loan dollar volume improved to a decline of 11.3% this quarter, versus a decline of 19.4% last quarter [16] - Changes to the forecast of future net cash flows improved, with the rate of decline narrowing from $58.6 million (0.5%) in Q3 2025 to $34.2 million (0.3%) in Q4 2025 [16] Business Line Data and Key Metrics Changes - The company financed nearly 72,000 contracts for dealers and consumers, collecting $1.3 billion overall [14] - The underperformance of the 2024 vintage was primarily related to loans originated prior to the scorecard change during Q3 2024 [15] - The number of active dealers declined by 2.8% year over year, and the average unit volume per active dealer declined by 6.4% year over year [17] Market Data and Key Metrics Changes - The company's market share in the core segment of used vehicles financed by subprime consumers was 4.5% for the first two months of Q4, down from 5.4% for the same period in 2024 [17] - The loan portfolio increased by 1% year over year on an adjusted basis [17] Company Strategy and Development Direction - The company aims to deepen relationships within its dealer network, support dealers in acquiring new consumers, and leverage data-driven insights [8] - The strategic objectives include generating dealer and consumer demand, empowering dealers through preferred channels, and delivering world-class servicing and processing [9] - The company is investing in artificial intelligence to enhance customer service and improve efficiency [9] Management's Comments on Operating Environment and Future Outlook - The CEO emphasized a long-term conservative approach to lending and credit scoring, focusing on improving customer experience [20] - The management believes the company is well-positioned to serve subprime customers and will continue to focus on making the experience frictionless [37] - The CEO expressed excitement about building a customer-obsessed company while maintaining a disciplined approach to capital allocation [13] Other Important Information - The company was named one of America's top 100 Most Loved Workplaces for the second consecutive year, ranking number 6 [12] - The new contract origination experience was rolled out to better meet the needs of franchise and large independent dealers [10] Q&A Session Summary Question: How will the new CEO manage credit lending and underwriting? - The CEO stated that the approach towards lending and credit scoring will be conservative and long-term focused, with ongoing improvements to credit scoring models [20] Question: What drove the increase in provision for new originations? - The CFO explained that the provision is influenced by the mix between the portfolio and purchase program, with the purchase program having a higher initial provision [22][23] Question: What is the competitive environment like, given the decline in market share? - The CEO noted that the competitive environment is evolving, and the company is focused on being customer-centric rather than competitive-centric [26] Question: How does the company view affordability issues and high used car prices? - The CEO mentioned that the company is well-positioned to serve subprime customers and will continue to take a conservative approach regardless of economic cycles [36] Question: Will there be any changes in capital returns or buyback strategies? - The CEO confirmed that the company will stay the course regarding capital allocation and buyback strategies [38]

Core Insights - The U.S. stock market achieved its third consecutive year of double-digit returns in 2025, primarily driven by technology stocks, but is currently trading at high valuations and extreme concentration levels [4][9] - The Davis Opportunity Fund (DOF) outperformed the S&P 1500 Index with a return of +22.02% compared to the index's +17.02% in 2025, indicating strong performance driven by selective investment choices [8][9] - Active management is recommended in the current market environment to navigate high valuations and to capitalize on opportunities in well-chosen equities [5][19] Market Performance - The S&P 1500 Index is trading at a forward price-to-earnings (P/E) multiple of nearly 26 times, indicating high valuation levels [4] - The index is more concentrated than it has been in nearly three decades, with a significant portion of its value tied to a few megacap technology companies [4] Investment Strategy - The company advocates for a shift from passive index exposure to actively managed equity portfolios, emphasizing the importance of selective security choices and rational diversification [5][19] - The portfolio of DOF consists of 47 holdings compared to the S&P 1500 Index's 1,506, with a forward P/E ratio of 14.3x, significantly lower than the index's 25.6x [10] Sector Focus - The fund's investments include healthcare services, technology shares, and financial services, with a focus on companies that exhibit financial strength and competitive advantages [11][12][14] - Key holdings in healthcare include UnitedHealth, Viatris, and Quest Diagnostics, which are expected to benefit from the expanding U.S. healthcare market [12][13] Technology Investments - The fund holds positions in major technology companies such as Meta Platforms, Alphabet, and Amazon, while also investing in semiconductor firms like Applied Materials that offer strong value [14] - The strategy includes trimming positions in the "Magnificent 7" based on valuation considerations [14][22] Financial Sector - Capital One Financial is highlighted as a core holding, trading at a forward P/E of 13-14x, which is attractive compared to many technology firms [15][16] - The company is noted for its strong consumer finance division and significant AI-related patents, positioning it for future growth [16] Unique Opportunities - The portfolio includes special situations like Wesco International, which has outperformed the benchmark due to strong business fundamentals [17] - Investments in energy and commodities, such as Coterra and Teck Resources, reflect a strategic interest in sectors critical to electrification trends [18] Future Outlook - The company believes that the current market environment presents opportunities for active management to outperform passive strategies, especially given the valuation bubble in major indexes [19] - There is a call to reconsider surplus cash allocations in light of potential falling interest rates and the attractiveness of equities [19]

Financial Data and Key Metrics Changes - Bread Financial reported a net income available to common stockholders of $53 million for Q4 2025, with adjusted net income of $95 million and earnings per diluted share of $2.07, reflecting a strong performance [12][13] - For the full year 2025, credit sales reached $27.8 billion, a 3% increase year-over-year, while average loans decreased by 1% to $17.9 billion [15][16] - The company achieved a tangible book value per common share growth of 23% year-over-year to $57.57, with a return on average tangible common equity of 20% for the full year [12][22] Business Line Data and Key Metrics Changes - Co-brand credit sales comprised 52% of total credit sales in Q4 2025, up from 48% in Q4 2024, indicating a positive trend in brand partnerships [8][9] - The direct-to-consumer deposit balances increased by 11% year-over-year, now representing 48% of total funding, up from 43% a year ago [9][10] Market Data and Key Metrics Changes - Consumer finance health remained resilient, driving a 2% year-over-year increase in credit sales due to higher transaction sizes and increased transaction frequency [13][14] - The delinquency rate for Q4 was 5.8%, down 10 basis points year-over-year, while the net loss rate improved to 7.4%, down 60 basis points from the previous year [25][26] Company Strategy and Development Direction - The company aims to capitalize on strengths while fortifying its business to offset potential external pressures, focusing on responsible growth and disciplined credit management [33][34] - Continued investment in technology modernization and product innovation, including AI, is expected to drive growth and efficiencies [29][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers and the gradual improvement in credit metrics, anticipating a positive trajectory for loan growth entering 2026 [13][14] - The outlook for 2026 includes expectations for low single-digit growth in average credit card and other loans, supported by a stable partner base and new business launches [27][30] Other Important Information - The company returned $350 million in capital to shareholders in 2025, including $310 million in common share repurchases and a 10% increase in the quarterly common stock dividend [10][24] - A credit rating upgrade from Moody's and Fitch was received, reflecting the company's strengthened financial resilience [10][22] Q&A Session Summary Question: What is driving the loan growth into 2026? - Management noted that loan growth is driven by resilient consumer behavior, sales momentum, and stable partnerships, with no loosening of underwriting standards [37][39] Question: How does the company view the impact of the labor market on credit quality? - Management is encouraged by underlying data, observing improvements in roll rates and credit metrics, indicating a resilient consumer base despite potential economic pressures [41][43] Question: What are the objectives for direct-to-consumer deposits? - The company aims for direct-to-consumer deposits to reach 70% of total funding over time, benefiting from competitive pricing due to its online presence [59][60] Question: What is the outlook for the reserve rate? - The reserve rate is expected to improve in line with credit quality, with management optimistic about gradually moving risk weightings back to neutral [62][63] Question: How does the company plan to achieve positive operating leverage in 2026? - Management indicated that positive operating leverage will depend on macro conditions impacting revenue, with a focus on operational excellence and continuous improvement initiatives [84][85]

Financial Data and Key Metrics Changes - Bread Financial reported a net income available to common stockholders of $53 million for Q4 2025, with adjusted net income of $95 million and earnings per diluted share of $2.07, reflecting a strong performance [12][13] - Full-year credit sales reached $27.8 billion, a 3% increase year-over-year, while average loans decreased by 1% to $17.9 billion [15][17] - The company achieved a tangible book value per common share growth of 23% year-over-year to $57.57, with a return on average tangible common equity of 20% for the full year [12][22] Business Line Data and Key Metrics Changes - The Home vertical saw significant expansion with new partnerships, including Bed Bath & Beyond and Raymour & Flanigan, contributing to a 52% share of credit sales in Q4, up from 48% in Q4 2024 [8][9] - The direct-to-consumer deposit balances increased by 11% year-over-year, now representing 48% of total funding, up from 43% a year ago [9][10] Market Data and Key Metrics Changes - Consumer finance health remained resilient, driving a 2% year-over-year increase in credit sales, with notable increases in travel and entertainment spending [13][14] - The delinquency rate for Q4 was 5.8%, down 10 basis points year-over-year, while the net loss rate improved to 7.4%, down 60 basis points from the previous year [25][26] Company Strategy and Development Direction - The company aims to capitalize on strengths while fortifying its business against external pressures, focusing on responsible growth and disciplined credit management [33][34] - Continued investment in technology modernization and product innovation, including AI, is a priority to drive growth and efficiencies [29][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers and the gradual improvement in credit metrics, anticipating a positive trajectory for loan growth entering 2026 [13][14] - The outlook for 2026 includes expectations for low single-digit growth in average credit card and other loans, supported by a stable partner base and new business launches [27][30] Other Important Information - The company returned $350 million in capital to shareholders in 2025, including $310 million in share repurchases and a 10% increase in quarterly dividends [10][24] - A credit rating upgrade from Moody's and Fitch was received, reflecting improved financial resilience and risk management [10][11] Q&A Session Summary Question: What is driving the anticipated loan growth into 2026? - Management indicated that loan growth is driven by resilient consumer behavior and stable partnerships, with no loosening of underwriting standards [37][39] Question: How does the company view the impact of credit quality and potential economic pressures? - Management remains optimistic about credit quality improvements and consumer resilience, despite potential economic pressures [41][43] Question: Can you elaborate on the new travel and entertainment products? - The company has introduced new fee-based products with existing partners, contributing to growth in the travel and entertainment vertical [49][50] Question: What are the expectations for net interest margin (NIM) in 2026? - Management expects NIM to remain stable to slightly higher, influenced by pricing changes and the mix of products [51][52] Question: What is the outlook for direct-to-consumer deposits? - The long-term goal is to increase direct-to-consumer deposits to over 70% of total funding, with competitive pricing expected [59][60] Question: How will the reserve rate evolve with improving credit metrics? - The reserve rate is expected to decrease as credit quality improves, with a target around 10% over time [62][63]

Financial Data and Key Metrics Changes - Bread Financial reported a net income available to common stockholders of $53 million for Q4 2025, with adjusted net income of $95 million and earnings per diluted share of $2.07, reflecting a strong performance [11] - The company's tangible book value per common share grew 23% year-over-year to $57.57, and the return on average tangible common equity was 8% for the quarter and 20% for the full year [11] - Credit sales for the full year reached $27.8 billion, a 3% increase year-over-year, while average loans decreased by 1% to $17.9 billion [14][17] - Total non-interest expenses decreased by $72 million or 3%, driven by lower impacts from debt repurchases [14] Business Line Data and Key Metrics Changes - Co-brand credit sales comprised 52% of total credit sales in Q4 2025, up from 48% in Q4 2024, indicating a positive trend in brand partnerships [6] - The company signed seven major new brand partnerships in 2025, including Bed Bath & Beyond and Crypto.com, while renewing multiple existing partnerships [4][5] - The direct-to-consumer deposit balances increased by 11% year-over-year, now representing 48% of total funding, up from 43% a year ago [8] Market Data and Key Metrics Changes - Consumer finance health remained resilient, driving a 2% year-over-year increase in credit sales due to higher transaction sizes and frequency [12] - The delinquency rate for Q4 was 5.8%, down 10 basis points year-over-year, while the net loss rate was 7.4%, down 60 basis points from the previous year [25] Company Strategy and Development Direction - The company aims to capitalize on its strengths while fortifying its business to offset potential external pressures, focusing on responsible growth and disciplined credit management [32][33] - Continued investment in technology modernization and product innovation, including AI, is a priority to drive growth and efficiencies [28][33] - The company plans to optimize its capital structure and return excess capital to shareholders through share repurchases and dividends [24][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate returns and navigate economic challenges, supported by strong capital levels and cash flow generation [13][33] - The outlook for 2026 anticipates continued consumer resilience and gradual improvements in credit metrics, with expectations for low single-digit growth in credit card and other loans [27][30] - Management noted that while there are pressures from anticipated lower prime rates, the company remains optimistic about its credit performance and overall financial health [20][30] Other Important Information - The company returned $350 million in capital to shareholders in 2025, including $310 million in share repurchases and a 10% increase in quarterly dividends [8][9] - A credit rating upgrade from Moody's and Fitch was received, reflecting the company's strengthened financial resilience [9] Q&A Session Summary Question: What is driving the anticipated loan growth into 2026? - Management indicated that loan growth is driven by a resilient consumer and stable partnerships, with no loosening of underwriting standards [36][38] Question: What is the company's outlook on Bread Pay and its growth potential? - Management expects Bread Pay volume to increase with the addition of new partners and improved underwriting [39] Question: Are there any underlying economic pressures affecting credit quality? - Management noted improvements in roll rates and credit metrics, indicating consumer resilience despite potential economic pressures [41][42] Question: What is the company's strategy regarding direct-to-consumer deposits? - The long-term goal is to increase direct-to-consumer deposits to over 70% of total funding, with competitive pricing expected [56][57] Question: How does the company view the reserve rate and its future trajectory? - Management anticipates the reserve rate will decrease as credit quality improves, with a target around 10% over time [60]

Core Insights - The consumer finance company, Mashang Consumer Finance, has become a significant supplier in the non-performing loan transfer market, announcing a new asset package worth approximately 1.07 billion yuan [1] - The asset package consists of over 580,000 personal consumer loans, with a weighted average overdue period of only 121 days, indicating relatively high asset quality [1] - The company has been actively transferring non-performing loans, with previous packages totaling 1.81 billion yuan and 278 million yuan, showing a trend of frequent asset disposals [3][4] Group 1: Asset Quality and Transfer Activity - The latest asset package has a total outstanding principal and interest of about 1.07 billion yuan, with most loans classified as "substandard" and only a small fraction in "loss" status [1] - Previous asset packages included 1.81 billion yuan in overdue loans with an average overdue period exceeding 5 years, contrasting with the current package's shorter overdue duration [3] - The average discount rate for non-performing loans has decreased significantly, with some long-term overdue asset packages seeing discounts below 1% [4] Group 2: Financial Performance and Market Context - Mashang Consumer Finance reported a slight revenue decline to 15.15 billion yuan in 2024, but net profit increased significantly to 2.28 billion yuan [4] - The company's non-performing loan ratios have shown a slight increase from 2.05% in 2022 to 2.49% by the end of 2024, indicating rising asset quality concerns [4] - The consumer finance sector has seen a surge in non-performing loan transfers, with nearly 9 billion yuan in transfers reported since January 2026, positioning consumer finance companies as market leaders in this area [6][7] Group 3: Regulatory Environment and Strategic Adjustments - Recent regulatory changes, including the "Assisted Loan New Regulations," have imposed stricter controls on interest rates and fees, impacting the consumer finance landscape [7] - The current wave of asset disposals is seen as a proactive measure to address internal asset quality pressures and external regulatory challenges [7] - The industry is expected to transition towards a more refined and high-quality development phase, driven by these regulatory changes and market dynamics [7]