Yiren Digital Reports Fourth Quarter and Fiscal Year 2019 Financial Results

BEIJING,March 26,2020 -- Yiren Digital Ltd. (NYSE: YRD) ("Yiren Digital" or the "Company"),a leading fintech company in China,today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31,2019.

Fourth Quarter and Fiscal Year 2019 Operational Highlights

Wealth Management—Yiren Wealth

Cumulative number of investors reached 2,210,530 as of December 31,2019,representing an increase of 0.5% from 2,200,223 as of September 30,2019 and compared to 2,105,339 as of December 31,2018. Specifically,as of December 31,the cumulative number of non-P2P investors was 174,391 and the cumulative number of P2P investors was 2,202,875. Non-P2P products include mainly bank's wealth management products and mutual funds.

Number of current investors was 246,561 as of December 31,representing a decrease of 8.8% from 270,402 as of September 30,2019.

Number of current non-P2P investors was 21,360 as of December 31,representing an increase of 9.6% from 19,496 as of September 30,2019 and compared to 15,250 as of December 31,2018.

Total assets under administration ("AUA") for P2P products on Yiren Wealth was RMB 34,264.8 million (US$4,921.8 million) as of December 31,representing a decrease of 14.7% from RMB 40,191.7 million as of September 30,and compared to RMB 49,886.6 million as of December 31,2018.

Total AUA for non-P2P products on Yiren Wealth was RMB 1,026.9 million (US$147.5 million) as of December 31,representing an increase of 64.0% from RMB 626.2 million as of September 30,and compared to RMB 217.7 million as of December 31,2018.

Gross Merchandise Volume ("GMV") of non-P2P products amounted to RMB 2,548.4 million (US$ 366.1 million) in the fourth quarter of 2019,representing an increase of 232.2% from RMB 767.2 million in the prior quarter and compared to RMB 81.3 million in the same period of 2018. For fiscal year 2019,GMV of non-P2P products amounted to RMB 3,929.1 million (US$564.4 million),compared to RMB 2,730.1 million in 2018.

Consumer Credit—Yiren Credit

Total loan originations reached RMB 8.0 billion (US$1.1 billion) for the fourth quarter of 2019,representing a decrease of 24% from RMB 10.5 billion in the prior quarter.

Cumulative number of borrowers served reached 4,695,487 as of December 31,2019.

Number of borrowers served in the fourth quarter of 2019 was 125,622. For the fiscal year 2019,total number of borrowers served was 541,955.

The percentage of loan volume generated by repeat borrowers was 16.5% in the fourth quarter of 2019.

Approximately 34% of loan originations were generated online in the fourth quarter of 2019.

Remaining principal of performing loans reached RMB 51.2 billion (US$7.3 billion) as of December 31,2019.

"We have made significant progress in our strategic transformation to re-position our business as we enter 2020. We have completed our full operational integration of Yirendai with CreditEase's Inclusive Finance and online wealth management business to form Yiren Digital,the leading fintech platform providing an array of credit products to consumers and asset allocation based wealth management services to mass affluent clients in China." said Mr. Ning Tang,Chairman and Chief Executive Officer of Yiren Digital. "We are also making good progress in expanding our creditech business model into a loan facilitation as well as licensed lending operation model. And we believe our online wealth management business is poised for significant growth in the year to come with strong momentum."

"For our creditech business,we are rolling out new product services to better serve our borrowers which include short tenure revolving loans and auto loans. Diversifying our funding source continues to be a top priority and we expect a significant portion of our new loan origination volume to be funded by institutional investors in 2020." Mr. Tang continued to comment,"and as to our wealth management business,we are gaining significant traction in growing our non-P2P products and services. In the fourth quarter of 2019,AUA for non-P2P products grew 64% quarter-over-quarter,sales volume grew 232% quarter-over-quarter and the number of current investors investing in non-P2P products grew 10% from last quarter. We are seeing a strong demand for our online product offerings. In 2020,we expect the strong growth momentum for our wealth management business to continue,as we continue to roll-out non-P2P products and services by working with industry leading partners,such as Principal Global Investors (Hong Kong) Limited.,a subsidiary of Principal Financial Group; and a global leader in asset management,retirement services and insurance solutions. In addition,we obtained a Hong Kong stock brokerage license in December 2019 and officially launched our stock trading APP in the same month to provide stock trading and consulting services to our clients. We strive to become the true one-stop shop asset allocation-based wealth management platform for mass affluent investors in China."

We're pleased to deliver another solid quarter with healthy margins as we are moving towards more diversified business models under a challenging regulatory environment. Total net revenue for the quarter was RMB 2.4 billion,up 15% from previous quarter. Net profit for the quarter was RMB 404 million up from RMB 228 million in the previous quarter. " said Mr. Zhong Bi,Chief Financial Officer of Yiren Digital. "We are seeing meaningful operation leverage synergies as we complete the full operation integration for our business realignment. And we are also proactively managing our overall cost structure through both improving operation efficiency with technology and rationalizing our capacity to better prepare for the near term economic uncertainties due to corona virus. As such,with a lean and more efficient operational workforce,coupled with our strong balance sheet with approximatelyRMB 3.6 billionof cash and short-term liquidity,we believe we are on solid footing in the dynamic environment. "

"On credit performance and risk management,we are maintaining our overall risk performance inline with our expected ranges,despite the tightening collection practices,and to a lesser extend,limitation on external data usage." said Mr. Michael Ji,Chief Risk Officer of Yiren Digital. "To promptly respond to a potential economic slowdown due to the recent coronavirus outbreak,we have been actively tightening our risk policy,adjusting our product portfolio and optimizing our risk data sets. The latest data suggested that the delinquencies had been coming down in recent weeks,showing a very encouraging trend,which led us to expect that the impact from the corona virus would rather be short term than be prolonged."

Fourth Quarter 2019 Financial Results

Total amount of loans facilitatedin the fourth quarter of 2019 was RMB 7,998.0 million (US$1,148.8 million),compared to RMB 13,595.8 million in the same period last year. As of December 31,the total outstanding principal amount of the performing loans was RMB 51.2 billion (US$7.3 billion),decreased by 25% from RMB 68.4 billion as of December 31,2018.

Total net revenue in the fourth quarter of 2019 was RMB 2,363.6 million (US$339.5 million),304.5 million in the same period last year. Revenue from Yiren Credit reached RMB 1,841.8 million (US$264.6 million),representing an increase of 1% from RMB 1,816.0 million in the fourth quarter of 2018. Revenue from Yiren Wealth reached RMB 521.8 million (US$75.0 million),representing an increase of 7% from RMB 488.5 million in the fourth quarter of 2018.

Sales and marketing expensesin the fourth quarter of 2019 were RMB 960.4 million (US$138.0 million),compared to RMB 1,236.7 million in the same period last year. Sales and marketing expenses in the fourth quarter of 2019 accounted for 12.0% of the total amount of loans facilitated,as compared to 9.1% in the same period last year mainly due to a decline in the amount of loans facilitated.

Origination and servicing costsin the fourth quarter of 2019 were RMB 173.9 million (US$25.0 million),compared to RMB 227.1 million in the same period last year. Origination and servicing costs in the fourth quarter of 2019 accounted for 2.2% of the total amount of loans facilitated,compared to 1.7% in the same period last year.

General and administrative expenses in the fourth quarter of 2019 were RMB 139.9 million (US$20.1 million),compared to RMB 361.7 million in the same period last year. General and administrative expenses in the fourth quarter of 2019 accounted for 5.9% of the total net revenue,compared to 15.7% in the same period last year.

Allowance for contract assetsin the fourth quarter of 2019 were RMB 588.3 million (US$84.5 million),compared to RMB 209.0 million in the same period last year. The increase was mainly attributable to changes in future collectability estimates.

Income tax expensein the fourth quarter of 2019 was RMB 80.9 million (US$11.6 million).

Net incomein the fourth quarter of 2019 was RMB 404.0 million (US$58.0 million),compared to RMB 985.9 million in the same period last year.

Adjusted EBITDA(non-GAAP) in the fourth quarter of 2019 was RMB 508.1 million (US$73.0 million),compared to an adjusted EBITDA of RMB 1059.3 million in the same period last year. Adjusted EBITDA margin[1](non-GAAP) in the fourth quarter of 2019 was 21.5%,compared to 46.0% in the same period last year.

Basic income per ADSin the fourth quarter of 2019 was RMB 4.35 (US$0.63),compared to a basic income per ADS of RMB 10.65 in the same period last year.

Diluted income per ADSin the fourth quarter of 2019 was RMB 4.34 (US$0.62),compared to a diluted income per ADS of RMB 10.56 in the same period last year.

Net cash generated from operating activities in the fourth quarter of 2019 was RMB 60.2 million (US$ 8.7 million),compared to a loss of RMB 1,453.6 million in the same period last year.

As of December,cash and cash equivalents was RMB 3,198.1 million (US$459.4 million),633.0 million as of September 30,2019. As of December 31,the balance of held-to-maturity investments was RMB 6.6 million (US$1.0 million),compared to RMB 8.1 million as of September 30,the balance of available-for-sale investments was RMB 461.0 million (US$66.2 million),compared to RMB 426.3 million as of September 30,2019.

Delinquency rates. As of December 31,the delinquency rates for loans that are past due for 15-29 days,30-59 days and 60-89 days were 1.2%,2.0%,and 1.7%,respectively compared to 1.0%,1.8%,and 1.6%,as of September 30,2019.

Cumulative M3+ net charge-off rates. As of December 31,the cumulative M3+ net charge-off rate for loans originated in 2016 was9.4%,compared to 9.4%as of September 30,the cumulative M3+ net charge-off rate for loans originated in 2017 was 16.0%,compared to 15.3% as of September 30,the cumulative M3+ net charge-off rate for loans originated in 2018 was 13.8%,compared to 11.6% as of September 30,2019.

[1] Adjusted EBITDA margin is a non-GAAP financial measure calculated as adjusted EBITDA divided by total net revenue.

Fiscal Year 2019 Financial Results

Total amount of loans facilitatedin 2019 was RMB 39.1 billion (US$5.6 billion),compared to RMB 63.3 billion in 2018.

Total net revenue in 2019 was RMB 8,616.8 million (US$1,237.7 million),compared to RMB 11,244.1 million in 2018. Revenue from Yiren Credit for fiscal year 2019 was RMB 6,440.6 million (US$ 925.1 million),representing a decrease of 30.4% from RMB 9,257.2 million in 2018. Revenue from Yiren Wealth for fiscal year 2019 reached RMB 2,176.2 million (US$ 312.6 million),representing an increase of 9.5% from RMB 1,987.0 million in 2018.

Sales and marketing expensesin 2019 was RMB 4,457.4 million (US$ 640.3 million),compared to RMB 6,658.3 million in 2018. Sales and marketing expenses in 2019 accounted for 11.4% of the total amount of loans facilitated,as compared to 10.5% in 2018 mainly due to a decline in the amount of loans facilitated.

Origination and servicing costsin 2019 was RMB 665.1 million (US$95.5 million),061.3 million in 2018. Origination and servicing costs in 2019 accounted for 1.7% of the total amount of loans facilitated,remaining stable when compared to 1.7% in 2018.

General and administrative expenses in 2019 was RMB 741.3 million (US$106.5 million),755.8million in 2018. General and administrative expensesin 2019 accounted for 8.6% of the totalnet revenue,compared to 15.6% in 2018 mainly due to realizing operational efficiency synergies from the Company's business realignment transaction.

Allowance for contract assetsin 2019 were RMB 1,625.1 million (US$233.4 million),compared to RMB 992.6 million in 2018. The increase was mainly attributable to changes in future collectability estimates.

Income tax expensein 2019 was RMB 239.2 million (US$34.4 million).

Net incomein 2019 was RMB1,155.6 million (US$166.0 million),579.8 million in 2018.

Adjusted EBITDA(non-GAAP) in 2019 was RMB 1,491.3 million (US$214.2 million),compared to an adjusted EBITDA of RMB 1,968.2 million in 2018. Adjusted EBITDA margin1 (non-GAAP) in 2019 was 17.3%,compared to 17.5% in 2018.

Basic income per ADSin 2019 was RMB 12.5 (US$1.8),compared to a basic income per ADS of RMB 17.2 in 2018.

Diluted income per ADSin 2019 was RMB 12.4 (US$1.8),compared to a diluted income per ADS of RMB 17.0 in 2018.

Net cash generated from operating activities in 2019 was RMB 246.3 million (US$ 35.4million),compared to net cash used in operating activities of RMB 3,959.1 million in 2018.

Recent Development

Termination of Contingent Consideration Payment to CreditEase

Effective December 2019,CreditEase has agreed to waive the remaining RMB 1.2 billion of contingent consideration payment for the Company's business realignment transaction.

Management Change

Mr. Chunjiang Ji,will assume the role of Chief Risk Officer of the Company to replace Mr Huan Chen who will continue to serve as director for the board of the Company. Mr. Ji has over 18 years of experiences in risk management and decision science with multiple top financial organizations. Prior to joining the Company,Mr. Ji has held several senior positions at Citigroup,JPMorgan Chase,and Fleet Boston Bank.

Mr. Jiangxu Xiang,will assume the role of Chief Technology Officer of the Company. Mr. Xiang is a technology veteran with 30 years of experience in the software,internet and fintech industries. Before joining the Company,he was Executive Vice President of R&D and Managing Director of Suning Global Research at Suning Commerce Group,a global fortune 500 company from 2016 to 2018.

Non-GAAP Financial Measures

In evaluating the business,the Company considers and uses several non-GAAP financial measures,such as adjusted EBITDA and adjusted EBITDA margin as supplemental measures to review and assess operating performance. We believe these non-GAAP measures provide useful information about our core operating results,enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in our financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The non-GAAP financial measures have limitations as analytical tools. Other companies,including peer companies in the industry,may calculate these non-GAAP measures differently,which may reduce their usefulness as a comparative measure. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure,all of which should be considered when evaluating our performance. See "Operating Highlights and Reconciliation of GAAP to Non-GAAP measures" at the end of this press release.

Currency Conversion

The U.S. dollar (US$) amounts disclosed in this press release,except for those transaction amounts that were actually settled in U.S. dollars,are presented solely for the convenience of the readers. The conversion of Renminbi (RMB) into US$ in this press release is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of December 31,which was RMB6.9618 to US$1.00. The percentages stated in this press release are calculated based on the RMB amounts.

Conference Call

Yiren Digital's management will host an earnings conference call at8:00 p.m. U.S. Eastern TimeonMarch 25,2020,(or 8:00 a.m.Beijing/Hong Kong Time onMarch 26,2020).Dial-in details for the earnings conference call are as follows:

International

+65 6713-5090

U.S.

+1 845-675-0437

Hong Kong

+852 3018-6771

Chinese Mainland .

400-620-8038

Conference ID

5738805

A replay of the conference call may be accessed by phone at the following numbers untilApril 2,2020:

International

+61 2-8199-0299

U.S.

+1 646-254-3697

Replay Access Code:

5738805

Additionally,a live and archived webcast of the conference call will be available atir.yirendai.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934,as amended,and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" 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 Yiren Digital's control. Forward-looking statements involve risks,uncertainties,and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include,but are not limited to,uncertainties as to Yiren Digital's ability to attract and retain borrowers and investors on its marketplace,its ability to introduce new loan products and platform enhancements,its ability to compete effectively,PRC regulations and policies relating to the peer-to-peer lending service industry in China,general economic conditions in China,and Yiren Digital's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE or other stock exchange,including its ability to cure any non-compliance with the NYSE's continued listing criteria. Further information regarding these and other risks,uncertainties or factors is included in Yiren Digital's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release,and Yiren Digital does not undertake any obligation to update any forward-looking statement as a result of new information,future events or otherwise,except as required under applicable law.

About Yiren Digital

Yiren Digital Ltd. (NYSE: YRD) is a leading fintech company in China,providing both credit and wealth management services. For its credit business,the Company provides an effective solution to address largely underserved investor and individual borrower demand in China through online and offline channels to efficiently match borrowers with investors and execute loan transactions. Yiren Digital deploys a proprietary risk management system,which enables the Company to effectively assess the creditworthiness of borrowers,appropriately price the risks associated with borrowers,and offer quality loan investment opportunities to investors. Yiren Digital's marketplace provides borrowers with quick and convenient access to consumer credit at competitive prices and investors with easy and quick access to an alternative asset class with attractive returns. For its wealth management business,the Company targets China's mass affluent population and strives to provide customized wealth management services,with a combination of long-term and short-term targets as well as different types of investments,ranging from cash and fixed-income assets,to funds and insurance. For more information,please visit ir.Yirendai.com.

Unaudited Condensed Consolidated Statements of Operations

(in thousands,except for share,per share and per ADS data,and percentages)

For the Three Months Ended

For the Year Ended

December 31,

2018

September 30,

2019

December 31,

2018

December 31,

2019

RMB

(Recast*)

RMB

RMB

USD

RMB

(Recast*)

RMB

USD

Net revenue:

Loan facilitation services

1,344,229

1,286,923

1,602,341

230,161

7,647,804

5,182,028

744,352

Post-origination services

408,273

103,073

117,110

16,822

1,263,022

757,783

108,849

Account management services

504,562

489,673

489,641

70,333

1,806,732

2,016,678

289,678

Others

47,461

176,439

154,536

22,198

526,556

660,295

94,845

Total net revenue

2,304,525

2,056,108

2,363,628

339,514

11,244,114

8,616,784

1,237,724

Operating costs and expenses:

Sales and marketing

1,236,747

1,160,365

960,396

137,953

6,658,270

4,457,353

640,259

Origination and servicing

227,102

156,073

173,942

24,985

1,061,289

665,083

95,533

General and administrative

361,655

168,092

139,935

20,100

1,755,828

741,268

106,476

Allowance for contract assets and receivables

208,985

344,742

588,344

84,510

992,581

1,625,051

233,424

Total operating costs and expenses

2,034,489

1,829,272

1,862,617

267,548

10,467,968

7,488,755

1,075,692

Other income/(expenses):

Interest income,net

15,829

13,825

10,454

1,502

73,917

73,367

10,538

Fair value adjustments related to Consolidated ABFE

39,844

(1,323)

(35,596)

(5,113)

243,122

3,866

555

Others,net

696,041

7,112

6,942

997

690,207

191,757

27,544

Total other income/(expenses)

751,714

19,614

(18,200)

(2,614)

1,007,246

268,990

38,637

Income before provision for income taxes

1,021,750

246,450

482,811

69,352

1,783,392

1,397,019

200,669

Share of results of equity investees

(3,349)

1,505

2,088

299

(9,295)

(2,180)

(313)

Income tax expense

32,485

19,924

80,914

11,622

194,287

239,228

34,363

Net income

985,916

228,031

403,985

58,029

1,579,810

1,155,611

165,993

Weighted average number of ordinary shares outstanding,basic

185,092,973

185,548,214

185,586,690

185,690

184,225,643

185,219,586

185,586

Basic income per share

5.3266

1.2290

2.1768

0.3127

8.5754

6.2391

0.8962

Basic income per ADS

10.6532

2.4580

4.3536

0.6254

17.1508

12.4782

1.7924

Weighted average number of ordinary shares outstanding,diluted

186,807,285

186,351,678

186,322,276

186,270,515

186,535,464

186,464

Diluted income per share

5.2777

1.2237

2.1682

0.3114

8.4813

6.1951

0.8899

Diluted income per ADS

10.5554

2.4474

4.3364

0.6228

16.9626

12.3902

1.7798

Unaudited Condensed Consolidated Cash Flow Data (Recast**)

Net cash (used in)/ generated from operating activities

(1,453,598)

808,148

60,228

8,652

(3,959,094)

246,293

35,378

Net cash provided by/ (used in) investing activities

871,041

(78,146)

1,115,058

160,168

3,297,648

1,027,877

147,645

Net cash provided by/ (used in) financing activities

1,484,026

(839,114)

(620,595)

(89,143)

(788,022)

(1,039,705)

(149,344)

Effect of foreign exchange rate changes

125,662

3,193

(2,336)

(336)

3,631

193

28

Net increase/(decrease) in cash,cash equivalents and restricted cash

1,131

(105,919)

552,355

79,341

(1,445,837)

234,658

33,707

Cash,cash equivalents and restricted cash,beginning of period

2,354

2,822,706

2,716,787

390,242

4,480,322

3,484

435,876

Cash,end of period

3,485

2,787

3,269,142

469,583

3,485

3,583

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

As of

December 31,

2019

RMB

(Recast*)

RMB

RMB

USD

Cash and cash equivalents

2,606,939

2,632,952

3,198,086

459,376

Restricted cash

427,546

83,835

71,056

10,207

Accounts receivable

40,326

67,231

3,398

488

Contract assets,net

3,909,263

2,598,202

2,398,685

344,550

Contract cost

145,460

143,066

160,003

22,983

Prepaid expenses and other assets

2,552,319

1,280,333,221

191,505

Loans at fair value

1,375,221

552,648

418,492

60,113

Financing receivables

-

24,630

29,612

4,254

Amounts due from related parties

1,361,805

1,678,499

988,853

142,039

Held-to-maturity investments

329,597

8,051

6,627

952

Available-for-sale investments

835,565

426,321

460,991

66,217

Long term investments

217,636

144,552

-

-

Property,equipment and software,net

266,002

213,962

195,855

28,133

Deferred tax assets

184,136

150,363

158,164

22,719

Right-of-use assets

-

383,545

334,134

47,995

Total assets

14,251,815

10,388,641

9,757,177

1,401,531

Accounts payable

307,046

62,313

43,583

6,260

Amounts due to related parties

8,276,459

289,820

106,645

15,319

Liabilities from quality assurance program and guarantee

9,950

5,644

4,397

632

Deferred revenue

569,469

381,899

358,203

51,453

Payable to investors at fair value

626,207

-

-

-

Accrued expenses and other liabilities

2,193,576

2,078

2,338,745

335,940

Refund liability

2,145,748

2,002,785

1,801,535

258,774

Deferred tax liabilities

486,773

267,647

331,645

47,638

Lease liabilities

-

322,832

282,334

40,555

Contingent consideration

-

1,780,734

-

-

Total liabilities

14,615,228

7,464,752

5,267,087

756,571

Ordinary shares

77

121

121

17

Additional paid-in capital

1,293,968

3,872,219

5,038,691

723,763

Treasury stock

(254)

(37,097)

(37,097)

(5,329)

Accumulated other comprehensive income

16,390

25,225

21,855

3,139

Accumulated deficit

(1,673,594)

(936,579)

(533,480)

(76,630)

Total (deficit)/ equity

(363,413)

2,923,889

4,490,090

644,960

Total liabilities and equity

14,531

Operating Highlights and Reconciliation of GAAP to Non-GAAP Measures

(in thousands,except for number of borrowers,number of investors and percentages)

For the Three Months Ended

For the Year Ended

December 31,

2019

RMB

(Recast*)

RMB

RMB

USD

RMB

(Recast*)

RMB

USD

Operating Highlights

Amount of p2p investment

16,776,410

9,037,670

8,790,262,713

70,667,346

41,203,595

5,918,526

AUA of p2p investment

70,282

59,792,510

52,945,825

7,605,192

70,282

52,192

Number of p2p investors

244,069

113,955

105,849

105,849

745,799

348,832

348,832

Amount of non-p2p investment

81,290

767,226

2,414

366,057

2,730,079

3,929,131

564,384

AUA of non-p2p investment

217,692

626,223

1,026,858

147,499

217,692

1,499

Number of non-p2p investors

12,525

12,235

13,896

13,896

83,596

32,668

32,668

Amount of loans facilitated

13,595,780

10,496,261

7,998,046

1,148,847

63,329,066

39,103,048

5,801

Number of borrowers

203,451

150,280

125,622

125,622

922,633

541,955

541,955

Remaining principal of performing loans

68,370,225

54,553,702

51,157,313

7,348,288

68,225

51,288

Segment Information

Wealth management:

Revenue

488,502

540,554

521,849

74,959

1,986,960

2,176,215

312,594

Sales and marketing expenses

73,197

219,390

67,080

9,635

1,242,439

643,542

92,439

Consumer credit:

Revenue

1,816,023

1,515,554

1,841,779

264,555

9,257,154

6,440,569

925,130

Sales and marketing expenses

1,163,550

940,975

893,316

128,318

5,415,831

3,813,811

547,820

Reconciliation of Adjusted EBITDA

Net income

985,993

Interest income,net

(15,829)

(13,825)

(10,454)

(1,502)

(73,917)

(73,367)

(10,538)

Income tax expense

32,363

Depreciation and amortization

36,636

32,153

30,083

4,321

147,992

125,850

18,077

Share-based compensation

20,067

7,954

3,556

511

119,998

43,941

6,312

Adjusted EBITDA

1,059,275

274,237

508,084

72,981

1,968,170

1,491,263

214,207

Adjusted EBITDA margin

46.0%

13.3%

21.5%

21.5%

17.5%

17.3%

17.3%

* Prior period financials have been recast to reflect the acquisition from CreditEase under common control.

** The Company reclassified 846.0 million payments made in the third quarter of 2019 related to contingent consideration from cash used in investing activities to cash used in financing activities due to the payments paid after three months of business realignment

Delinquency Rates

Delinquent for

15-29 days

30-59 days

60-89 days

All Loans

December 31,2015

0.7%

1.2%

0.9%

December 31,2016

0.6%

0.9%

0.8%

December 31,2017

0.8%

1.0%

0.8%

December 31,2018

1.0%

1.8%

1.7%

December 31,2019

1.2%

2.0%

1.7%

Online Channels

December 31,2015

0.5%

0.8%

0.6%

December 31,2016

0.5%

0.9%

0.8%

December 31,2017

1.1%

1.1%

0.9%

December 31,2018

1.2%

2.3%

2.2%

December 31,2019

1.6%

2.9%

2.5%

Offline Channels

December 31,2015

0.7%

1.2%

1.0%

December 31,2017

0.6%

0.9%

0.7%

December 31,2018

0.9%

1.6%

1.5%

December 31,2019

1.0%

1.7%

1.5%

Net Charge-Off Rate for Upgraded Risk Grid

Loan

Issued

Period

Customer

Grade

Amount of Loans

Facilitated

During the Period

Accumulated M3+ Net Charge-

Off

as of December 31,2019

Total Net Charge-Off

Rate

as of December 31,2019

(in RMB thousands)

(in RMB thousands)

2015

I

4,894,936

197,679

4.0%

II

14,492,035

485,102

3.3%

III

11,272,838

709,921

6.3%

IV

11,283,656

1,354,765

12.0%

V

11,199,563

1,713,746

15.3%

Total

53,143,029

4,461,213

8.4%

2016

I

5,858,273

236,493

4.0%

II

12,360,346

540,799

4.4%

III

9,951,614

755,406

7.6%

IV

8,652,543

924,154

10.7%

V

16,982,336

2,607,546

15.4%

Total

53,805,112

5,064,398

9.4%

2017

I

10,431,218

697,113

6.7%

II

12,230

1,597,776

13.0%

III

13,837,922

2,290,065

16.5%

IV

13,663,558

2,459,857

18.0%

V

19,680,365

4,123,858

21.0%

Total

69,883,293

11,168,668

16.0%

2018

I

9,476,955

598,343

6.3%

II

14,656,758

1,655,932

11.3%

III

13,903,217

1,987,419

14.3%

IV

13,812,989

2,309,976

16.7%

V

11,326,230

2,154,899

19.0%

Total

63,149

8,706,569

13.8%

2019Q1-Q3

I

6,102,299

92,787

1.5%

II

8,990

248,567

2.9%

III

7,413,040

274,254

3.7%

IV

4,746,047

178,863

3.8%

V

4,216,836

166,903

4.0%

Total

31,137,211

961,373

3.1%

M3+ Net Charge-Off Rate*

Loan

Issued

Period

Month on Book

4

7

10

13

16

19

22

25

28

31

34

2015Q1

0.8%

2.0%

3.4%

4.7%

5.7%

6.5%

7.1%

7.5%

7.7%

7.8%

7.8%

2015Q2

0.8%

2.3%

3.8%

5.2%

6.4%

7.3%

7.9%

8.3%

8.5%

8.7%

8.8%

2015Q3

0.4%

1.6%

3.1%

4.4%

5.6%

6.5%

7.1%

7.6%

7.9%

8.1%

8.4%

2015Q4

0.4%

1.6%

3.1%

4.4%

5.5%

6.3%

6.9%

7.4%

7.9%

8.3%

8.5%

2016Q1

0.3%

1.2%

2.5%

3.6%

4.5%

5.2%

5.8%

6.4%

7.0%

7.4%

7.6%

2016Q2

0.4%

1.6%

3.1%

4.3%

5.2%

6.0%

6.8%

7.6%

8.1%

8.4%

8.7%

2016Q3

0.3%

1.6%

3.1%

4.3%

5.4%

6.6%

7.8%

8.6%

9.2%

9.5%

9.8%

2016Q4

0.2%

1.5%

2.9%

4.4%

5.9%

7.4%

8.4%

9.3%

10.0%

10.4%

10.7%

2017Q1

0.3%

1.5%

3.2%

5.1%

7.1%

8.6%

9.8%

10.8%

11.5%

12.0%

2017Q2

1.1%

2.9%

5.6%

8.4%

10.4%

12.1%

13.5%

14.5%

15.3%

2017Q3

0.3%

2.9%

6.3%

9.1%

11.6%

13.6%

15.0%

16.2%

2017Q4

0.5%

3.8%

7.2%

10.4%

13.2%

15.3%

16.9%

2018Q1

0.4%

3.0%

6.6%

10.1%

12.9%

15.2%

2018Q2

0.5%

3.6%

7.4%

10.8%

13.6%

2018Q3

0.3%

2.9%

6.2%

9.1%

2018Q4

0.3%

2.5%

5.6%

2019Q1

0.2%

2.5%

2019Q2

0.3%

*As one division has already been spun off from the company,as of third quarter 2019,

M3+ net charge-off rates no longer reflect the risk performance of loans generated by this division.

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