CNFinance Holdings Limited (NYSE:CNF) Q2 2022 Earnings Conference Call August 24, 2022 8:00 AM ET

Company Participants

Jane Jenn - IR

Jun Qian - VP

Jing Li - Acting CFO

Bin Zhai - Chairman and CEO

Conference Call Participants

William Gregozeski - Greenridge Global

Jane Jenn

Good morning and good evening, and welcome to CNFinance Second Quarter and First Half of 2022 Financial Results Conference Call. In today's call, our Director and Vice President, Mr. Qian Jun, will walk us through the operating results followed by the financial results from our acting CFO, Ms. Jing Li. After that, we will have the Q&A section.

Before we start, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended, as defined in U.S. Private Securities Litigation Reform Act of 1995. This forward-looking statement can be identified by terminology such as will, expect, anticipates, future, intends, plans, beliefs, estimates, targets, going forward, outlook and similar statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

Further information regarding this and other risks, uncertainties or factors is included in the company's filing with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law.

Now please welcome Mr. Qian Jun.

Jun Qian

[Foreign Language] Thank you, everyone, for joining us in this conference call. On today's call, we will introduce the company's financial and operational results in the second quarter and the first half of 2022, followed by a Q&A section.

In the second quarter of 2022, our business was continuously impacted by the pandemic, prevention and control measures, but we were able to maintain stable business volume. During the quarter, we originated loans of 3.1 billion under our collaboration with trust companies and introduce loans of 200 million to the commercial banks.

The interest revenue under the collaboration model for the second quarter were slightly higher than the same period of 2021 and interest expense decreased marginally. After we adjusted our commission policy, our gradation cost decreased significantly year-on-year, which drove up the company's gross profit margin. However, given the impact of pandemic prevention and control policy, as well as the uncertainty of the China's real estate market, we continue to be conservative in evaluating potential losses and recorded a provision for credit losses of 18 million for the second quarter. And this was the main reason for the net income to be lower than the same period of 2021.