Chailease Holding Company Ltd
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Chailease Holding Company Ltd
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Welcome to the Chailease's Second Quarter 2022 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. And for your information, a webcast replay will be available within an hour after the conference is finished.
And now I would like to turn the call over to Vic Wang, Senior Manager of Investor Relations. Ms. Wang, please go ahead.
Thank you. Hi, good evening, everyone. This is Vic. I would like to welcome everyone to Chailease Holding Second Quarter 2022 Earnings Conference Call. With me this evening is Ms. Sharon Fan, Head of IR, and she will open to your question in Q&A period.
I will walk you through this quarter's earnings presentation, which is available for download on our corporate website under the IR section. As a reminder, please refer to the disclaimer regarding forward-looking statements in form of the presentation.
The agenda we are going to cover for today on Slide 3 includes management highlights, second quarter 2022 consolidated performance review, followed by the segment review for our Taiwan, China and ASEAN operation. Without further ado, I would like to start the presentation on Slide 4.
Highlights or an overview of our second quarter 2022 operation results. First, the summary table here shows the loan portfolio growth for the quarter. On a year-over-year basis, Taiwan, China and ASEAN loan portfolio grew 24%, 14% and 21%, respectively. On a consolidated level, we achieved 21% year-over-year loan portfolio increase. As for the year to second quarter loan portfolio growth, Taiwan increased 12%, China increased 4%, ASEAN increased 16% and 10% growth on a consolidated basis.
Consolidated loan portfolio grew slightly higher than yearly planned, as Taiwan and ASEAN grew better than expected. Due to COVID impact and lockdown policy for China and better expected business momentum for Taiwan, the yearly growth guidance for China revised to 10% from around 15% and Taiwan revised up from 15% to high teens.
For ASEAN growth outlook, we expect to achieve the high end of 15% to 20% or close to 20% of portfolio growth this year. Second, the consolidated asset quality remains stable with maintained delinquency ratio. In terms of new delinquent amount for the quarter, it also remained at a healthy level.
Third, in July, the company completed GDR offering and raised USD 388 million to support future business growth and to further strengthen balance sheet. Let's move to the next section, second quarter 2022 performance review.
Moving on to Slide 6. Consolidated loan portfolio reached TWD 614 billion at second quarter end 2022, with 21% year-over-year growth and 10% year-to-date increase as business momentum continued for the quarter.
Next slide, Slide 7, show you the trend of consolidated average loan yield and cost of funds for the past 3 years. As you can see, we maintained relatively stable interest rate. We will discuss the change of each operation region in the next section.
Next slide, Slide 8. On the left-hand side, the consolidated revenue for the first 6 months of 2022 reaped TWD 41.1 billion, representing 19% growth compared to the same period last year. On the right-hand side, second quarter 2022 consolidated revenue increased by 6% from the previous quarter as Taiwan revenue increased 9% sequentially.
Moving on to Slide 9. On the left-hand side, the consolidated net profit for the first 6 months of 2022 totaled TWD 14.1 billion, and earnings per share was TWD 8.87. The EPS here already reflect the deducting preferred shares dividend in May. The higher net profit growth compared to revenue increase was mainly driven by more tax rebate booked in China and consolidated effective income tax rate back to a normal level at around 28% compared to last year.
On the right-hand side, second quarter consolidated net profit was down 4% quarter over quarter. RMB 180 million of tax rebate for China was recognized for the first quarter compared to RMB 50 million for the second quarter.
Turning to Slide 10. This slide shows you our loan portfolio mix and the profit contribution in terms of operating region. On the left-hand side, you can see Taiwan business still accounts for 51% of group's total loan portfolio. China is slightly decreased to 34% and ASEAN remained at 14% at second quarter end 2022.
On the right-hand side, Taiwan net profit contribution accounts for 48% and China decreased to 46%. ASEAN contributed 6% to the consolidated net profit.
Moving on to Slide 11. The chart on the left-hand side. Cost-to-income ratio improved to 25% for the first 6 months of 2022 compared to year 2021, due to greater improvement in operational efficiency. The chart on the right-hand side, asset to equity, increased to 6.5x for the quarter since the GDR offering is complete. The asset to equity decreased to below 6x in July.
Slide 12. The consolidated ROE on an annualized basis was 3.9% for the second quarter 2022, increased from 3.5% in 2021 due to better profitability. The consolidated ROE on the right-hand side was 28% for the quarter. The calculation for ROE excludes preferred shares.
Next slide, Slide 13. The consolidated delinquency ratio on the left-hand side, at second quarter end 2022 was flat at 2.2% compared to prior quarter. Later in the presentation, I will talk about each region in more detail. Moving to the right-hand side, allowance to loan portfolio ratio also slightly down to 2.1% compared to previous quarters. Moving on to the segment review, let's look at our operation performance region by region.
On Slide 15, Taiwan loan portfolio reached TWD 312 billion in second quarter end 2022, representing 24% year-over-year increase and year-to-date was up 12%. The new disbursement for microfinancing, used car financing and lending in USD dollar-denominated business were the growth driver for this year.
Slide 16. This slide shows the change of Taiwan solar asset. Taiwan's solar net asset reached TWD 41.5 billion at second quarter end 2022, representing 24% year-over-year increase and year-to-date was up 14%. The solar asset accounts around 9% of Taiwan total assets for the quarter.
Next slide, Slide 17. This page presents trend of our Taiwan loan yield and funding costs. In recent quarters, the loan yield and funding costs slightly increased, reflecting benchmark interest rate hike this year.
Moving on to Slide 18. Revenue for our Taiwan operation for the first 6 months of 2022 reached TWD 21.6 billion (sic) [ 2.69 billion ] representing 26% year-over-year growth. The solar revenue accounts 12% of Taiwan revenue for the first 2 quarters of 2022. For the quarter-over-quarter comparison on the right-hand side, second quarter revenue grew by 9%, as more solar income was booked in the second quarter.
Turning to next slide, Slide 19. Taiwan's net profit for the first 6 months of 2022 grew by 25% compared with the same period last year. Bottom line growth in line with top line increase reflects maintained cost-to-income ratio. The second quarter Taiwan net profit grew by 7% quarter-over-quarter as operating efficiency remained for the quarter.
On the Slide 20, on the left-hand side, Taiwan delinquency ratio in second quarter 2022 was maintained at 2.0% with better recovery from delinquency for the quarter.
Next slide, Slide 21. Allowance to loan portfolio for Taiwan remained at 1.8% compared to prior quarter, which slightly increased allowance amount.
Let's start China operation on Slide 22. China total loan and receivable reached TWD 206.8 billion at second quarter end 2022, which grew by 14% year-over-year and 4% increase year-to-date. China's second quarter business momentum was affected by lockdown restrictions and concern of the economic outlook.
If you look at in local currency, which is RMB, the loan portfolio still managed to slight increase by 1% sequentially for the quarter. We expect China will gradually pick up the business momentum in the second half of 2022.
Turning to Slide 23. This page shows the loan yield and cost of fund trend for our China operation. For second quarter 2022, the loan yield decreased by 0.32 percentage points, reflecting lower funding costs and different mix of credit profile clients for the quarter.
Next slide, Slide 24. China revenue for the first 6 months of 2022 totaled TWD 14.5 billion, increased 9%. On the right-hand side, China's second quarter revenue was up 0.4% sequentially.
Moving on to Slide 24. China, for the first 6 months of 2022, net profit reached TWD 7.1 billion, increased by 15%. The higher growth compared to top line was mainly driven by more tax rebate was recognized and maintained the cost-to-income ratio this year.
On the right-hand side, China's second quarter 2022 net profit was down 15% with RMB 180 million of tax rebate on China was recognized for the first quarter compared to RMB 50 million for the second quarter.
Turning to next slide, Slide 26. On the left-hand side, China delinquency ratio in second quarter was up 0.2 percentage points to 2.2% compared to prior quarter. On the right-hand side, recovery from delinquency increased for the quarter compared to the prior 2 quarters.
Next slide, Slide 27. China's allowance to portfolio ratio for the second quarter 2022 was at 2.2% remained sufficient.
Moving to ASEAN on Slide 28. The ASEAN total loan and receivable at second quarter end 2022 reached TWD 88.8 billion, up 23% year-over-year and 16% increase year-to-date. Thailand, Vietnam and Malaysia remain the main growth driver for the ASEAN this year.
Let's turn to next slide, Slide 29. The left-hand side, the ASEAN revenue for the first 2 quarters 2022 totaled TWD 4.8 billion, grew 28% compared to same period last year. On the right-hand side, ASEAN second quarter revenue was up 10% sequentially.
Moving to Slide 30. ASEAN's first 6 months of 2022 net profit reached TWD 1.5 billion, increased by 34% due to improved cost-to-income ratio this year. On the right-hand side, ASEAN's second quarter 2022 net profit was also up 4% sequentially.
The last slide, Slide 31. On the left-hand side, ASEAN's delinquency ratio in second quarter decreased 0.4 percentage points to 3.0% compared to first quarter 2022, mainly due to improvement of Vietnam and Malaysia operation.
On the right-hand side, ASEAN's allowance to portfolio ratio for the second quarter of 2022, that's 3.3%.
And this also bring us to the end of my presentation for today. Thank you for your time. Now I would like to turn the call to operator to open the line to questions. Operator?
And ladies and gentlemen, we will now begin our question-and-answer session. [Operator Instructions] Now our first question is coming from Chung of Credit Suisse.
A few questions for me. And the first one is I really want to focus on asset quality and your guidance for credit cards. In the Chinese session, I think management mentioned about increasing or raising general provision guidance for second half to 1.6% from 1.3%. Just want to follow up on that.
I mean, do you have a guidance for China's total credit cost for this year? I mean, if you have anything -- any insight you can share on a specific I think the CFO mentioned on Chinese call that there is a -- one of the reasons for raising general provision is an increase in delinquent loan and also a potential increase in expected loss. So I just wanted to hear management's thought or any insight on specific provision and hence total provision guidance for the full year?
And second part to that question is, is there a target reserve to loan? I mean, over the last few quarters, we've seen a declining reserve to loan ratio for your China business? And is there a plan or target at this point to increase that over the next few quarters? And what is the target?
My second question is the China portfolio growth guidance of 10% this year. Is there a specific area, sector or segment that you expect to see less growth this year? Or is it just a broad China portfolio grows more than the...Just these 2 questions first.
Okay. I think I will answer your second question first because it's easier. About this revised portfolio growth guidance for China right now, according to our CEO in the Chinese session, which will be around 10%, I think this is an overall because, as you know, our business coverage in China is very diversified in terms of geographical, in terms of customer, so there's no specific section that has much difference. So this is the overall like -- or just full year growth, which will be around 10%.
Yes, 10% will be our new China portfolio growth guidance. About this asset quality and our delinquency ratio, GP, general provision ratio and the allowance ratio, I think according to our CFO's guidance in the Chinese session for the first 2 quarters, the 1.8% actually is for China. This is for China GP ratio.
So the revised, like 1.5% to 1.6% GP ratio, which is also for China, like our estimated new GP ratio the first 3 quarters. So we already tried to factor in the new development of the third quarter status about the China asset quality. So that's all for China.
And about this optimal allowance to portfolio ratio currently for China is about 2.2%. I think so far, we still need to see what's the asset quality evolvement in the future, like for the next 2 quarters. So it's difficult to like say is this 2.2% will be like a fixed number. And -- because we also need to take into consideration what's the following quarters about the new delinquency situation.
And although our like loss ratio for China still remain very stable for those delinquent cases, which is around like 40-something percent. And this has still remained very stable. But given probably there's still -- we are not sure whether this new delinquency will continue to slightly increase because of the macro situation, there is still some -- although the overall pandemic impact already gradually minimized going forward.
But still in China, there still has some smaller micro lockdowns, and we cannot -- like we cannot just -- I mean, we still need to take into consideration whether the next 2 quarters, the new development about this lockdown situation.
So, so far, as we can see for now, just as our CFO mentioned, probably for the first 3 quarters, we need to slightly adjust up our provision ratio to continue to make a more adequate allowance level. So I think put it simple, if the delinquency ratio remained at similar level, I think probably this 2.2% will be quite sufficient, yes.
Is it correct to assume to say that at this stage, there's an increase in general provision, but there's no plan to increase specific provisions on the delinquency loss ratio because that is stable at 40%, like you said?
If our [Audio Gap] pool increased, we also need to set aside more individual provision. And this allowance -- 2.2% of allowance ratio is combined these 2 numbers.
Okay. Sharon, can I follow up that. Historically, your loss --- your specific loss ratio, you mentioned 40% is stable. And we can...
And 10% delinquent case.
For delinquent case. So historically, what is the range of that loss ratio?
This loss ratio gradually improved to the current 40-something percent. I think at the -- probably like back to 3, 4 years ago, that ratio is still as high as like 50 something. So we continue to gradually improve this loss ratio.
For benchmark, like our Taiwan loss ratio is -- has been maintained at around -- So this will be the, I think, the optimal goal for every operating region.
And next question is coming from Yafei Tian of Citigroup.
I just wanted to have a little bit of more generic as far as a little bit more specific question. I guess the more generic question is really to help investors understand on the ground what is your customers' situation at the moment coming from 2 angles. Number one, what's your credit demand like, right? So clearly, management has revised down the loan growth in China. I just wanted to see to what degree does that reflect a longer-term decrease in credit demand given the macro slowdown in Mainland China.
So is that 10% something that's just limited to this year because of COVID lockdown? Or do you think that longer term, the Mainland China growth could actually be at a new level of maybe low to mid-teens longer term?
And then secondly is to think about the asset quality question again. So just to put some numbers around it, right? So you mentioned on the call that back in June, the collection rate has come back to 99%. So does that mean that the delinquency rate in China, this 2.2% that we are seeing in second quarter is actually a high watermark, i.e., we shouldn't be expecting more or rising delinquent rate going forward?
And I just want to marry that 2.2% with the new guidance of 1.5%, 1.6%. So how does the math work? Is it simply your expected delinquency rate times recovery rate times 2 because you cover it at 2x. So is that -- I just wanted to understand what is the underlying delinquency assumption for that 1.5%, 1.6% generic provision that management is guiding to?
For the first question, I think about the China currently the credit demand situation. I think as you can see, because there are 2 major reasons why our CEO just adjust our full year growth guidance compared to in the earlier of the year because we have this major like lockdown impact from the pandemic in the May and April. So that affects our second quarter result performance.
And the other major reason is as everybody can see the economic slowdown occur like globally. So China also faced this kind of a macro situation. So I think, yes, for our customers, those SME business owners, they tend to be relatively more conservative about the new investment. So yes, we do see some slowdown of the credit demand. But as we mentioned in the presentation, although we face this kind of situation, but we still manage to have some sequential growth for the second quarter.
And we also expect there's a chance that the second half will have a slightly or gradually pick up of this market demand. So we will see. So that's the reason why we adjust on this growth guidance from about 15% to 10% for China now.
And about this asset quality and account receivable collection, we already mentioned by our CFO in the Chinese session. I think he also like remind investors that during the May -- April, May, Shanghai lockdown, this account receivable collection rate was as low as like 97 point something, and that's down from the pre lockdown, which should be above 99%.
But although in the recent 2 months -- a couple of months like June, July, it's already recovery like back to 98.7% or even around 99%. But still, I think it's too early to say whether this will continue to improving or it will just remain at around this level. Even with the recent -- the most recent collection rate level, like 90% -- about 99% is still not satisfactory enough.
Before the lockdown, actually, we should achieve like more than 99%. So I think it's too early to say, and we need to continue to monitor. And we will share -- we'll keep you updated.
And about this new provision rate. I mean the general provision rate adjust up to 1.5%, 1.6%. That's so far based on our most updated delinquency data, I mean, the most recent our observation about the existing asset quality situation. So I think it's still quite dynamic. We need to factor in the more new development in the next few -- in the following quarters. So I think we are not able to say whether this will continue to maintain at this exact number. Yes.
So if I may follow up on that. I know the situation is still quite uncertain, right? But if I recall when COVID first happened, that generic provision rate was at around 1.7% for the full year of '20 -- maybe in first quarter of '20, second quarter might be even slightly higher. I don't remember the exact, right. So this 1.5, 1.6 is still below that, rate.
But just from what we are reading and sensing from the macro data perspective, things are a little bit worse, right, compared to when COVID first happened. So I guess the market concern is that is this going to be a gradual creeping up of provisions, or how do we get comfort around what is the right level of provision based on some of the early indicators that you are seeing?
Actually, it's really difficult to say because I think the COVID still not totally out of the picture yet. They still have some new cases, new situation, although the overall impact gradually like minimized. But I think we cannot rule out this any new COVID situation come back.
So -- but if you compare the 2020 credit cost around 1.7%, I think because, can you remember, if we compare to like the provision ratio in 2019 when the COVID first outbreak, actually, it's much, much higher than this 1.7%. Just starting from the second half of the 2019, we will see a very obvious improvement and well control about this COVID impact. So we gradually adjust down this provision.
And I think 1.7 probably already reflect some of the reverse of the over provision in the 2019. So I think, yes, I think in general, it's really difficult to see whether from the next 2 quarters, our general provision ratio will be higher than 1.6 or lower than 1.6 or maintain around this level. It really depends on how the next few quarters about our delinquency situation stands.
Next question is from Gurpreet Sahi of Goldman Sachs.
If I can shift from China and take you to leverage. So leverage has come down, as Vic rightly alluded to, to less than 6% with the GDR raising. So what can we expect in terms of the new range that the management would target on these assets to equity? What is the bottom? And what can be the cap?
So we can think about when we would be next coming to market. So that's the first one. So I'll let you answer that and maybe move to the next one later on.
I think our company's policy about the leverage is still we want to maintain at around 7x the maximum. And so our historical experience is that every new equity fundraising, we plan to support our next like a few years of the growth, depending on the growth rate. So yes, I think, it can support our growth till like 7x.
Okay. Understood. And then second, following up on the solar comments from Vic. Strong growth. And I see on Slide 16, the net assets in solar around 41 billion now. So can I ask, these are net assets on our balance sheet. How much is the total solar business? Like what I'm trying to ask is, is this the net capital that our firm is using for kind of getting the solar revenues? Should we treat it as equity invested into solar business?
Basically, our solar business, we target to maintain the average around 5x. We tend to be more conservative for this specific business unit. And so it's about the equity for the solar business. And...
Sorry, I didn't catch your answer. So basically, at the group level, we have like TWD 120 billion of equity. So of which, I think nearly TWD 40 billion we can assume is dedicated towards the solar business?
[indiscernible]. Because right now our solar business, we have several subsidiary company to own those solar assets. And also part of the solar asset owned by our major China -- Taiwan subsidiary is not just dedicated to solar business. So I don't have this number. Just on high level, our solar business, every individual project, we try to maintain the leverage around 5x.
Leverage 5x. So then this TWD 40 billion is what? Is it the total asset for gross asset?
40 billion is the net asset.
Which means it net out all the borrowings against it, right? The lower number?
I think I need to like further dig into the details, so I can get back to you just on the high level, yes.
Okay. Good. And then final one on consumers. The business in Taiwan, the current business, how is it going? And also if you can touch upon the other consumer businesses in terms of growth, how they are faring, like the used car financing in Taiwan and in parts of China -- in parts of ASEAN, sorry.
Right now, our major consumer, our financing skill still for the used car financing, although our like Zero Card so-called buy now, pay later still has a quite good growth momentum in Taiwan. But still accounts for a small portion. And our major consumer business in terms of portfolio percentage is still in like used car financing, and it's also serve as a major growth driver for Taiwan in the recent years, and we expect it will continue to be for the next few years. Yes.
So what is the mix, the consumer business in Taiwan, how much of the total book?
It's about 20% of the Taiwan.
[Operator Instructions] And next, we'll have Edwin Liu of CLSA for questions.
This is Edwin from CLSA. Maybe just 2 questions. Firstly, to follow up on the China growth guidance. My question is, given the July revenue momentum seems to be picking up. Just wonder, the guidance is still lower than previously. So is there something that we have seen in August that caused the guide down?
And a related question is, is this guide down related to lockdown or the zero COVID policy or more broadly related to the macro environment. Is the company seeing that the loan demand is slowing in -- across the board in Mainland China? So that would be my first question.
Secondly is on -- is going back to Taiwan portfolio. So I guess one of the growth driver is the, what we call, buy now, pay later, right? But I think that this business is relatively new, especially the online part of the business. And some people may be concerned that we haven't really gone through a full credit cycle. So how should we get comfortable in terms of the asset quality and credit control, especially the global macro environment is slowing and potentially, there may be a recession.
Okay. About this, we revise down of the China portfolio growth guidance from about 15% to 10% for this year. I think it's more to factor in our first 2 quarters, the first 2 half actual result and then plus like the macro situation as we can see. And so it's nothing about that whether we see this immediate negative development in August. It's just, as I mentioned, because the main April, like Shanghai lockdown impact had some reverse impact to our second quarter performance.
So we need to factor in this actual. And then although we do see some slowdown of the business, like market demand during the recent quarter because of the China macro like slowdown. But as I want -- I still want to mention that we still expect in the second half for the next 2 quarters, like third quarter, fourth quarter. Hopefully, we still can gradually pick up, like speed up of our growth compared to the first 2 quarters this year.
So yes, just want to factor in some of the actual and make our new growth guidance more feasible. Yes. But having said that, although we have slightly adjust down this China growth guidance from 15% to 10%. But on the other hand, we have there outperformed China and outperformed Taiwan and ASEAN. So on the consolidated level, overall, I think we still can meet our overall like guidance.
And about this buy now, pay later, I think, this is a new term, new terminology. But actually, we have been doing this kind of consumer installment financing business like 10 years ago from doing it offline by cooperating with some of our off-line vendor merchant partner. So we already accumulate some of the credit database to help us have a better manage of the credit like level for this business. And so far, our internal statistics shows that for this Zero Card business, our actual credit cost still around [Audio Gap]. So far, the asset quality still remains quite good.
But about their growth potential, although the growth rate seems very high, like 20%, 30% annual growth rate for buy now, pay later for the Zero Card business. But the absolute amount, this business still accounts for small portion, like 5% of the Taiwan business volume. So I think, yes, management will continue to take up way and to try to develop this new business opportunity for the group.
Okay. Great. I understand. Maybe I can just quickly follow up with one question. It's again related to your allowance level. So if we compare Mainland China and ASEAN, we see quite a divergent trend, right? So for Mainland China, delinquency rate is slightly increasing, but the allowance level is slightly decreasing, and it is quite the opposite for ASEAN.
So just want to understand more about the allowance policy. Assuming the same allowance policy is applied for these 2 regions, shall we consider allowance level sort of the lagging indicator of your asset quality? Or i.e., your allowance level is reflecting the historical development, but not that forward-looking?
Okay. If you turn our presentation slide, Page 27, you can see our China like allowance coverage ratio slightly decreased from last year's second quarter, 2.7%, to current quarter like 2.2%.
I think in China session, our CFO has already explained why we showed this trend because [Audio Gap] 2019, and we gradually like adjust this through the past 1 year because we continue to show quite good delinquency ratio improvement until the new China lockdown pandemic impact occurred in April, May this year.
So -- and I think this is the mix. We gradually adjust this over provision situation for the past 2 years. And then the turning point, I think will -- should be around the first 2 quarters this year, especially in this quarter. And we do see the delinquency ratio slightly picking up, and we need to factor in this new situation. And so I think going forward, probably maintain our delinquency ratio, probably this will -- 2.2% will be optimal, like allowance ratio for China book.
And if we compare this ratio to ASEAN, that's mainly because of different asset quality development trend. For ASEAN, actually, for all the major operating regions like Thailand, Vietnam and Malaysia, the delinquency ratio is showing some improvement trend. That's quite different from China. Yes. So that's the reason why -- yes.
Next question is from Anupam Mathur of Goldman Sachs.
Can you hear me? Hello. Can you hear me?
Yes.
I just had a few questions. Firstly, on the general provisions. So the 1.5% to 1.6%, is it for Q3? Or is it for 9 months?
For 9 months.
Okay. So Q3 would be like much higher, right? Because we have to adjust for that.
Right. You're right, yes.
So then how to think about going forward, like fourth quarter or the year, like how do you think about the general provisions?
It really depends on how the asset quality evolves.
Okay. Okay. Understood. Then maybe my second question is around how to interpret this, the prepayment rate, which we say that monthly collection is improving while the delinquency trends continue to trend up. So how to interpret this collection rate versus delinquency trend? Like how do -- directionally, how to think about this?
I think our collection rate, that -- these 2 indicators, accounts receivable collection rate and delinquency ratio actually, they are looking at different stage with different time lag. And we show this improved collection rate. I think it's in June and July. It's more related to the Shanghai lockdown released.
My question is like...
If you reflect, the Shanghai lockdown problem has been solved. And -- but the delinquency ratio, so that's the reason why I say we need to continue to monitor this around 99%, whether it can continue to show improvement for the next few months. So it's too early to say.
So this, the asset quality delinquency trends, rising trends which we are seeing is a reflection of what like -- is it a reflection of April and May numbers? And like how to think about delinquency versus monthly collection?
Delinquency ratio, it's still more -- I think it's still more complete indicator to reflect our asset quality.
But does the monthly collection rate has any significance on delinquency? Like if it is improving, then when can we see delinquency improvement? Or if it is deteriorating, when can we see deterioration? It's -- what is the lag? How to think about this?
I think if we knew -- if we want to use this collection way to gauge the future delinquency ratio development trend, I think we need more months, like another 1 or 2 more months because this June and July, we had this Shanghai lockdown factor. We just -- this is improved, probably it's more related to this very specific factor.
Okay. Understood. Understood. And then on the growth side, so are there any segments we are taking a cautious approach in China, like specific customer segment or specific regions where we are not intentionally growing? I understand customer demand is weakening, but is there any segment where we are taking a more cautious approach?
No, there's no specific segment caused us to adjust this growth guidance. It's more across the board.
Okay. Okay. Understood. And maybe on Taiwan, like it has been quite phenomenal growth for us. Like -- so like is there a limit like consumer loans, how long -- how high can it grow? Because our book is becoming more and more unsecured. So how to think about risk management on the Taiwan side, where we are growing into new segments quite fast. So how to think about risk management?
As we mentioned in the presentation, I think Taiwan the better growth, mainly driven by this consumer financing, microfinancing and some U.S. lending business. And this consumer-related financing still mainly -- we are talking about this used car financing.
And we have been doing this for quite a long time already. And this used car financing is already gradually become more stable around -- compared to in the early stage, like in year 2014, '15 in this -- more than 10 years ago, this growth was as high as like 30%. But right now, already gradually normalized at around 20% level. But it's still -- it's quite a mature business in Taiwan, the used car financing. Yes.
We are now in question-and-answer session. [Operator Instructions] Ladies and gentlemen, there are currently no questions at this point, and that will be the end of this conference. We thank you very much for your participation in Chailease's conference. You may now disconnect. Goodbye.