Financial Data and Key Metrics Changes - Net revenue reached RMB3.6 billion, up 13% year over year, driven by a 10% increase in transaction volume in China and a 39% surge in international transaction volume [6][7] - Net income increased to RMB751 million, representing a growth of 36% year over year and 2% quarter over quarter [7][24] - The company has delivered 18 consecutive quarters of year over year growth in both transaction volume and revenue since transitioning to an institutional funding model in 2021 [7] Business Line Data and Key Metrics Changes - International transaction volume increased 39% year over year to RMB3.2 billion, with loan balance rising 50% to RMB2.1 billion [10][19] - The international operations contributed 22% of net revenue, up from 18% in the same period last year [10] - New borrowers in international markets increased by 126% year over year, with 1,100,000 new borrowers onboarded [11] Market Data and Key Metrics Changes - China's GDP expanded 5.12% year over year, exceeding market expectations, with consumer sentiment improving due to a 4.8% increase in overall spending in June [17][18] - The delinquency rate in China rose 10 basis points quarter over quarter to 4.7%, while the 30-day collection rate remained steady at 89% [18][46] Company Strategy and Development Direction - The company is focused on leveraging AI for risk management and fraud detection, achieving a 98.8% detection accuracy against sophisticated AI fraud [12] - ESG remains a core part of the long-term strategy, with significant progress made in consumer protection and fraud prevention [13] - The company aims to continue driving sustainable growth and delivering long-term value through disciplined execution of its local excellence and global outlook strategy [15][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to the evolving regulatory environment in China while driving growth in international markets [25] - The company anticipates a low single-digit quarter over quarter decline in transaction volume in the China market due to regulatory uncertainties [34] - Full year 2025 revenue guidance is reiterated at RMB14.4 billion to RMB15 billion, reflecting a 10% to 15% year over year growth [25] Other Important Information - The company completed a convertible bonds offering in June, which will support strategic priorities and accelerate international expansion [14][24] - The company has repurchased 63,800,000 shares in 2025, reflecting a commitment to returning capital to shareholders [59] Q&A Session Summary Question: Impact of new regulation on loan facilitation in China - Management believes the new regulations will provide more order to the industry and promote consolidation, with manageable impacts on high-quality assets [30][32] Question: Current run rate in July and August for international markets - Strong momentum in international markets is expected to continue, with solid double-digit quarterly growth projected for Q3 [35][36] Question: Drivers for delinquency ratio and collection ratio movements - The delinquency rate ticked up slightly in July but stabilized in August, with proactive risk management strategies in place [46][47] Question: Future shareholder returns and dividend payout ratio - The company has a buyback program in place and is committed to growing dividends, with a new policy range of 20% to 30% of net profit [58][59]

Financial Data and Key Metrics Changes - Net revenue reached RMB3.6 billion, up 13% year over year, driven by a 10% increase in transaction volume in China and a 39% surge in international transaction volume [6][7] - Net income increased to RMB751 million, representing a 36% year over year growth and a 2% quarter over quarter increase [7][24] - The company has delivered 18 consecutive quarters of year over year growth in both transaction volume and revenue since transitioning to an institutional funding model in 2021 [7] Business Line Data and Key Metrics Changes - International transaction volume increased 39% year over year to RMB3.2 billion, with loan balance rising 50% to RMB2.1 billion [9][20] - The international operations contributed 22% of net revenue, up from 18% in the same period last year [9] - The average loan tenure in China extended slightly to 8.3 months, with a stable take rate of 3.4% [17] Market Data and Key Metrics Changes - China's GDP expanded 5.12% year over year, exceeding market expectations, while consumer sentiment improved with a 4.8% increase in overall spending in June [16] - The international markets showed strong growth, with total international transaction volume growing 39% year over year and 6% quarter over quarter [18] - In Indonesia, the outstanding loan balance rose to RMB1.3 billion, up 25% year over year, while the Philippines saw loan volume more than double year over year to RMB1.4 billion [20][22] Company Strategy and Development Direction - The company is focused on leveraging AI for risk management and fraud detection, achieving a 98.8% detection accuracy against sophisticated AI fraud [11] - ESG remains a core part of the long-term strategy, with significant progress in consumer protection and fraud prevention [12] - The company aims to continue driving sustainable growth through disciplined execution of its local excellence and global outlook strategy [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to the evolving regulatory environment in China while driving growth in international markets [25] - The company reiterated its full year 2025 revenue guidance of RMB14.4 billion to RMB15 billion, reflecting a 10% to 15% year over year growth [25] - Management noted that the new regulations in China may foster healthy industry development and benefit leading players in the long term [25] Other Important Information - The company completed a convertible bonds offering in June, which will support strategic priorities and accelerate international expansion [13][24] - The company has repurchased 63.8 million shares in 2025, reflecting a commitment to returning capital to shareholders [24][56] Q&A Session Summary Question: Impact of new regulation on loan facilitation in China - Management believes the new regulations will provide more order to the industry and promote consolidation, with manageable impacts on high-quality assets [30][32] Question: Current run rate in July and August for international markets - Management indicated strong momentum in international markets, projecting solid double-digit quarterly growth in Q3 for both Indonesia and the Philippines [34][35] Question: Drivers for the Q on Q movement in delinquency ratio - Management noted a slight uptrend in delinquency rates but maintained that overall risk levels were largely in check, with proactive risk management strategies in place [45][46] Question: Development of overseas business compared to initial plans - Management reported that international performance has met expectations, with significant improvements in credit quality and profitability anticipated from the convertible bonds [49][52]

Core Viewpoint - Lufax Holding Ltd. is facing significant challenges due to a scandal involving related-party transactions with its parent company, Ping An Group, which has led to the suspension of its Hong Kong-listed shares. The company is deepening its financial ties with Ping An as it seeks to resume trading and stimulate growth [2][3][14]. Group 1: Company Developments - Lufax has been embroiled in a scandal since late last year when a senior executive alerted its auditor, PricewaterhouseCoopers (PwC), about potentially problematic related-party transactions, resulting in PwC being dismissed and the inability to publish its annual report for 2024 on time [3][5]. - The company has hired Ernst & Young (E&Y) as its new auditor and is also working with Deloitte for independent evaluations of its internal controls, particularly regarding corporate governance and related-party transactions [5][6][9]. - Lufax's total outstanding loans decreased by approximately 18% year-on-year to 193.4 billion yuan ($27 billion) by the end of June, despite a nearly 20% increase in the number of users of its services [7]. Group 2: Strategic Shifts - Lufax is shifting its focus towards consumer lending, establishing a consumer finance subsidiary in 2020, which allows it to make direct loans using its own capital, marking a departure from its original model of connecting borrowers with lenders [8][10]. - The company has increased the maximum annual fees it can earn from its consumer finance unit by over 50% to 1.1 billion yuan, anticipating growth driven by government efforts to boost private consumption [12]. - Recent agreements with Ping An include transferring nonperforming loans to an entity owned by Ping An's life insurance unit and extending the sale of Ping An's health insurance products through Lufax's insurance agency subsidiary [13][14]. Group 3: Market Performance and Valuation - Lufax's New York-listed shares have gained over 7% in the past five trading days but remain down more than 90% since their IPO in 2020, trading at a trailing price-to-earnings (P/E) ratio of about 3, which is less than half that of its competitor FinVolution [16][17]. - The valuation gap indicates that Lufax needs to resume trading of its Hong Kong shares and reassure investors of its profitability and independence from Ping An to regain investor confidence [17].