Thomas Chong: My question is about the competitive landscape in overseas market. Can management share your thoughts about the future outlook? And on marketing spending, given we talk about Facebook is one of our channels, can you comment about the customer acquisition cost in overseas versus domestic market?
Jiayuan Xu: [Foreign Language]
Jimmy Tan: Hello, Thomas. Let me do the translation. As you have known, our operations are mainly in the Indonesia and Philippines market and the macro environment in these countries are relatively positive. For example, in Indonesia, the GDP growth has been growing at over 5% for the last 7 quarters. And in 2023, the GDP growth is expected to maintain at around 5%. The Philippines market is slightly slower compared to the Indonesia market, but the GDP growth is still growing at around 4.3%. And the reason why we are able to maintain our leading status positions in these countries are because we have deployed our technology capabilities and operational capabilities into these countries. And in the second quarter, our number of unique borrowers has also reached a new high at 786,000 and we are constantly among the top 3 players.
These markets, Indonesia and Philippines, are huge markets and are at early stages for us. So we will continue to invest and maintain leading positions into these countries as supported by our technologies and operational capabilities. Our efforts and capabilities has also been recognized by local financial institutions. For example, this can be validated by the increase in the proportion of loans funded by local partners from 65% in the second quarter compared to only 39% in the same period last year. For sales and marketing, the amount we spent is around RMB 80 million has been invested into sales and marketing in the second quarter. And apart from Facebook, we are also investing into TikTok. We believe all these information fixed channels will be good channels for us to acquire our new borrowers going forward.
Jiayuan Xu: Do you have any other questions?
Thomas Chong: Thanks, management, for taking my second question. My question is about AI. In the prepared remarks, we talked about we have been investing in AI for many years and apply AI in different scenario. Given LLM, it’s such a hot topic in the Internet sector these days, and people talk about LLM or industry LLM, I just want to get some thoughts from management with regard to this area, whether we are thinking of developing our own LLM or we are seeking a partnership with the top players.
Tiezheng Li: [Foreign Language]
Jimmy Tan: Hello, Thomas. Let me do the translation for Mr. Tiezheng. Honestly, the generative data model is not for a company of our size as it needs to be at a country level where that the huge resources are required for development. Our focus is on the implementation of AI models into our operations and to our daily operations in order — in an attempt to increase our efficiency. And also, we will be looking at specific opportunities that are suitable for us for deployment into our business where we can also consider to work with other partners to increase our efficiency.
Operator: And the next question will come from Cindy Wang of China Renaissance.
Cindy Wang: This is Cindy from China Renaissance. So I have 2 questions. The first question is related to the overseas institutional funding. So we’ve seen the institutional funding testing going up pretty quickly. So in the midterm, what’s the percentage contribution will be contributed from the institutional funding? The second question is related to provisions. So we see the asset quality has been improving in the second quarter. However, the provision compared to first quarter has been slightly up. So can we talk about what’s the difference between here and whether we have any write-back in the second quarter? And how do we foresee the provision in the second half of this year?
Jiayuan Xu: [Foreign Language]
Jimmy Tan: Let me do the translation. We have — as mentioned, we have around 65% of funds — 65% of the loans in Q2 was funded by local Indonesian partners in the second quarter, and we expect this amount to be around 80% by the end of the year. Going forward, we still think that there is opportunity for us to further increase this proportion, but our next focus will be on the funding cost where we need to do some optimization on our funding cost for the international markets. Going to the next question, when we did a look at the provisions, we need to divide into domestic and international provisions. The main reason is because our international business is growing at a very rapid rate. This is the reason for the provision levels to be higher.
In the first quarter, there was a write-back. And now if you take a look at the domestic China recovery, the recovery is still weak and bit slightly below expectations. So we don’t have any plans to write back at the moment, but all these will change when the economy is recovering at a faster pace. And there — we believe there will be opportunities for write-back going forward.
Operator: At this time I would like to turn the call back over to the Company for closing remarks.
Jimmy Tan: Thank you once again for joining us today. If you have further questions, please feel free to contact me or my Investor Relations team. Thank you so much.
Operator: This concludes this conference call. You may now disconnect your lines. Thank you.
