QFIN-S：ANNUALREPORT2022.pdf

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1、Stock Code:3660(Incorporated in the Cayman Islands with limited liability)Annual Report 2022Qifu Technology,Inc.|ANNUAL REPORT 2022UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 20-F(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGE

2、ACT OF 1934OR ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2022.OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITI

3、ES EXCHANGE ACT OF 1934Date of event requiring this shell company reportFor the transition period from toCommission file number:001-38752Qifu Technology,Inc.(Exact Name of Registrant as Specified in Its Charter)N/A(Translation of Registrants Name Into English)Cayman Islands(Jurisdiction of Incorpora

4、tion or Organization)7/F Lujiazui Finance Plaza No.1217 Dongfang Road Pudong New Area,Shanghai 200122 Peoples Republic of China(Address of Principal Executive Offices)Alex Xu,Chief Financial Officer 7/F Lujiazui Finance Plaza No.1217 Dongfang RoadPudong New Area,Shanghai 200122Peoples Republic of Ch

5、inaPhone:+86 21 5835-7668Email:(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredAmerican depositary shares,eac

6、h representing two Class A ordinary shares,par value US$0.00001 per shareQFINThe Nasdaq Global Select MarketClass A ordinary shares,par value US$0.00001 per share3660The Stock Exchange of Hong Kong LimitedSecurities registered or to be registered pursuant to Section 12(g)of the Act:None(Title of Cla

7、ss)Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act:None(Title of Class)Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:As of December 31,2022,there

8、were 322,792,063 class A ordinary shares issued and outstanding,par value US$0.00001 per share.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No If this report is an annual or transition report,indicate by check mark if the r

9、egistrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934.Yes No Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 from their obligations und

10、er those Sections.Indicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been s

11、ubject to such filing requirements for the past 90 days.Yes No Qifu Technology,Inc.|ANNUAL REPORT 2022Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during

12、the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.See the definitions of“large accelera

13、ted filer,”“accelerated filer,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark

14、 if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.The term“new or revised financial accounting standard”refers to any update issued by the Financial Accou

15、nting Standards Board to its Accounting Standards Codification after April 5,2012.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbane

16、s-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.Yes No If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correctio

17、n of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant

18、to 240.10D-1(b).Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board Other If“Other”has been checked in respo

19、nse to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.Item 17 Item 18If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No(APPLICABLE ONLY TO

20、ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan conf

21、irmed by a court.Yes No PageINTRODUCTION3FORWARD-LOOKING STATEMENTS6PART I.7 ITEM 1 IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS7 ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE8 ITEM 3 KEY INFORMATION9 ITEM 4 INFORMATION ON THE COMPANY112 ITEM 4A UNRESOLVED STAFF COMMENTS181 ITEM 5 OPERATING

22、 AND FINANCIAL REVIEW AND PROSPECTS182 ITEM 6 DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES215 ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS231 ITEM 8 FINANCIAL INFORMATION237 ITEM 9 THE OFFER AND LISTING239 ITEM 10 ADDITIONAL INFORMATION240 ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES AB

23、OUT MARKET RISK255 ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES257TABLE OF CONTENTSPART II.263 ITEM 13 DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES263 ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS264 ITEM 15 CONTROLS AND PROCEDURES265 ITEM 1

24、6 Reserved266 ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT266 ITEM 16B CODE OF ETHICS266 ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES266 ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES267 ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS267 ITEM 16F

25、CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT267 ITEM 16G CORPORATE GOVERNANCE267 ITEM 16H MINE SAFETY DISCLOSURE267 ITEM 16I DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS268 ITEM 16J INSIDER TRADING POLICIES268PART III.269 ITEM 17 FINANCIAL STATEMENTS269 ITEM 18 FINANCIAL STATEM

26、ENTS270 ITEM 19 EXHIBITS271SIGNATURES2743Qifu Technology,Inc.|ANNUAL REPORT 2022INTRODUCTIONUnless otherwise indicated and except where the context otherwise requires,references in this annual report to:“Qifu Technology,”“we,”“us,”“our,”“our Company”and“our Group”are to Qifu Technology,Inc.and its s

27、ubsidiaries,and,in the context of describing our operations and consolidated financial information,our VIEs in China and their respective subsidiaries;“360 Group”is to 360 Security Technology Inc.and its controlled affiliates and predecessors;“ADSs”are to American depositary shares,each of which rep

28、resents two of our class A ordinary shares;“China”or“the PRC”is to the Peoples Republic of China,excluding,for the purposes of this annual report only,Taiwan and the special administrative regions of Hong Kong and Macau,except where the context otherwise requires;“class A ordinary shares”are to our

29、class A ordinary shares,par value US$0.00001 per share;“Fuzhou Financing Guarantee”is to Fuzhou 360 Financing Guarantee Co.,Ltd.;“Fuzhou Microcredit”is to Fuzhou 360 Online Microcredit Co.,Ltd.;“HK Qirui”is to HK Qirui International Technology Company Limited;“shares,”or“ordinary shares”are to our c

30、lass A ordinary shares,and in the context of describing our share capital before March 31,2023,also including class B ordinary shares,par value US$0.00001 per share,as the context requires and as applicable;“RMB”or“Renminbi”is to Renminbi,the legal currency of the PRC;“Shanghai Financing Guarantee”i

31、s to Shanghai 360 Financing Guarantee Co.,Ltd.(now known as Shanghai Qiyaoxin Technology Co.,Ltd.);“Shanghai Qibutianxia”is to Shanghai Qibutianxia Information Technology Co.,Ltd.(formerly known as Beijing Qibutianxia Technology Co.,Ltd.);“Shanghai Qiyu”is to Shanghai Qiyu Information&Technology Co.

32、,Ltd.;“US$”or“U.S.dollars”is to United States dollars,the lawful currency of the United States;“U.S.GAAP”is to accounting principles generally accepted in the United States;“variable interest entities,”“VIE”or“VIEs”are to Shanghai Qiyu,Fuzhou Financing Guarantee and Shanghai Financing Guarantee;4INT

33、RODUCTION“WFOE”or“Shanghai Qiyue”is to Shanghai Qiyue Information&Technology Co.,Ltd.;and all references to“RMB”or“renminbi”are to the legal currency of China,all references to“$,”“dollars,”“US$”and“U.S.dollars”are to the legal currency of the United States,and all references to“HK$”or“Hong Kong dol

34、lars”are to the legal currency of Hong Kong.Unless otherwise stated,all translations from RMB to U.S.dollars and from U.S.dollars to RMB in this annual report were made at a rate of RMB6.8972 to US$1.00,the exchange rate on December 30,2022 set forth in the H.10 statistical release of the U.S.Federa

35、l Reserve Board.In addition,unless the context indicates otherwise,for the discussion of our business references,“180 day+vintage delinquency rate”is to a percentage,which is equal to(i)the total amount of principal for all loans facilitated by our Group in a fiscal quarter that become delinquent fo

36、r more than 180 days,less the total amount of recovered past due principal for all loans facilitated by our Group that were delinquent for more than 180 days in the same fiscal quarter,divided by(ii)the total initial principal amount of loans facilitated by our Group in such fiscal quarter;loans und

37、er Intelligent Credit Engine and other technology solutions are not included in the delinquency rate calculation;“30 day collection rate”is to a percentage,which is equal to(i)the amount of principal that is repaid in one month among the total amount of principal that is overdue as of a specified da

38、te,divided by(ii)the total amount of principal that is overdue as of such specified date;“90 day+delinquency rate”is to a percentage,which is equal to(i)the outstanding loan balance of on-and off-balance sheet loans facilitated by our Group that are 91 to 180 calendar days past due,divided by(ii)the

39、 total outstanding loan balance of on-and off-balance sheet loans facilitated by our Group across our platform as of a specific date;loans that are charged-off and loans under Intelligent Credit Engine and other technology solutions are not included in the delinquency rate calculation;“capital-light

40、 model”is to a comprehensive suite of technology-enabled loan facilitation services spanning the loan lifecycle,from borrower acquisition,technology empowerment in credit assessment to post-facilitation services,under which we currently do not take any credit risk;“Credit-Tech”is to credit technolog

41、y services,which refer to services using technology solutions to empower and enhance credit services,and are characterized by distinguished efficiency and quality;“loan facilitation volume”is to the total principal amount of loans facilitated or originated by,as the context mandates,a Credit-Tech pl

42、atform,a traditional financial institution or other market players in the credit industry;in the context of loan facilitate volume of loans facilitated or originated by us,the total principal amount of loans facilitated or originated during the given period,including loan volume facilitated through

43、Intelligence Credit Engine(ICE)and other technology solutions;5Qifu Technology,Inc.|ANNUAL REPORT 2022INTRODUCTION“outstanding loan balance”is to the total amount of principal outstanding for loans facilitated or originated by a Credit-Tech platform,as the context mandates,a traditional financial in

44、stitution or other market players in the credit industry at the end of each period;in the context of the outstanding balance of loans facilitated or originated by us,the total amount of principal outstanding for loans facilitated or originated at the end of each period,including loan balance for ICE

45、 and other technology solutions excluding loans delinquent for more than 180 days;“repeat borrower contribution”or“loan origination contributed by repeat borrowers”is to a percentage,the numerator of which is the principal amount of loans borrowed during that period by borrowers who had historically

46、 made at least one successful drawdown,and the denominator of which is the total loan facilitation volume through our platform during that period;“SME”is to small-and micro-enterprises and owners of small-and micro-enterprises;and“users with approved credit lines”are to users who have submitted thei

47、r credit applications and are approved with a credit line at the end of each period.6FORWARD-LOOKING STATEMENTSThis annual report contains forward-looking statements that relate to our current expectations and views of future events.These statements involve known and unknown risks,uncertainties and

48、other factors that may cause our actual results,performance or achievements to be materially different from those expressed or implied by the forward-looking statements.These statements are made under the“safe harbor”provisions of the U.S.Private Securities Litigations Reform Act of 1995.You can ide

49、ntify some of these forward-looking statements by words or phrases such as“may,”“will,”“expect,”“anticipate,”“aim,”“estimate,”“intend,”“plan,”“believe,”“is/are likely to,”“potential,”“continue”or other similar expressions.We have based these forward-looking statements largely on our current expectat

50、ions and projections about future events that we believe may affect our financial condition,results of operations,business strategy and financial needs.These forward-looking statements include statements relating to:our goals and strategies;our future business development,financial conditions and re

51、sults of operations;the expected growth of the Credit-Tech industry in China;our expectations regarding demand for and market acceptance of our Credit-Tech products;our expectations regarding keeping and strengthening our relationships with borrowers,financial institution partners,data partners and

52、other parties we collaborate with;competition in our industry;and relevant government policies and regulations relating to our industry.You should read this annual report and the documents that we refer to in this annual report and have filed as exhibits to this annual report completely and with the

53、 understanding that our actual future results may be materially different from what we expect.Other sections of this annual report discuss factors which could adversely impact our business and financial performance.Moreover,we operate in an evolving environment.New risk factors emerge from time to t

54、ime and it is not possible for our management to predict all risk factors,nor can we assess the impact of all factors on our business or the extent to which any factor,or combination of factors,may cause actual results to differ materially from those contained in any forward-looking statements.We qu

55、alify all of our forward-looking statements by these cautionary statements.You should not rely upon forward-looking statements as predictions of future events.The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are mad

56、e in this annual report.Except as required by law,we undertake no obligation to update or revise publicly any forward-looking statements,whether as a result of new information,future events or otherwise,after the date on which the statements are made or to reflect the occurrence of unanticipated eve

57、nts.7Qifu Technology,Inc.|ANNUAL REPORT 2022PART I.ITEM 1 IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERSNot applicable.8ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.9Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONOUR HOLDING COMPANY STRUCTURE AND CONTRACTUAL ARRAN

58、GEMENTS WITH THE VIES AND VIES SUBSIDIARIESQifu Technology,Inc.is not a Chinese operating company but rather a Cayman Islands holding company that does not conduct business directly and has no equity ownership in the VIEs and VIEs subsidiaries.We conduct our operations in China through(i)our PRC sub

59、sidiaries and(ii)our VIEs with which we have maintained contractual arrangements.PRC laws and regulations restrict and impose conditions on foreign investment in internet-based businesses,such as the distribution of online information.For example,foreign investors are generally not allowed to own mo

60、re than 50%of the equity interests in a value-added telecommunications service provider in accordance with the Special Management Measures for the Access of Foreign Investment(Negative List)and other applicable laws and regulations.We are a Cayman Islands company and our PRC subsidiaries are conside

61、red foreign-invested enterprises.Accordingly,we operate certain of our businesses in China through our VIEs,and rely on contractual arrangements among our PRC subsidiaries,our VIEs and the nominee shareholders of our VIEs to control the business operations of our VIEs.Revenues contributed by our VIE

62、s accounted for 97%,92%and 92%of our total net revenue for the years of 2020,2021 and 2022,respectively.As used in this annual report,“we,”“us,”“our Company,”“our,”or“Qifu Technology,”refers to Qifu Technology,Inc.,its subsidiaries,and,in the context of describing our operations and consolidated fin

63、ancial information,our VIEs and their subsidiaries in China,including but not limited to Shanghai Qiyu,Fuzhou Financing Guarantee and Shanghai Financing Guarantee.Investors in our ADSs are not purchasing equity interest in our VIEs in China but instead are purchasing equity interest in a holding com

64、pany incorporated in the Cayman Islands.A series of contractual agreements,including(i)voting proxy agreements,equity interest pledge agreements and loan agreements,which provide us with effective control over our VIEs in China,(ii)exclusive business cooperation agreements,which allow us to receive

65、economic benefits from our VIEs in China,and(iii)exclusive option agreements,which provide us with the option to purchase the equity interests in,and assets of,our VIEs(collectively,“contractual arrangements”).Terms contained in each set of contractual arrangements with our VIEs and their respective

66、 shareholders are substantially similar.For more details of these contractual arrangements,see“Item 4.Information on the Company C.Organizational Structure Contractual Arrangements with our VIEs and Their Shareholders.”However,the contractual arrangements may not be as effective as direct ownership

67、in providing us with control over our VIEs and we may incur substantial costs to enforce the terms of the arrangements.All of these contractual arrangements are governed by and interpreted in accordance with PRC law,and disputes arising from these contractual arrangements between us and our VIEs wil

68、l be resolved through arbitration in China.Accordingly,these contracts would be interpreted in accordance with PRC law and any disputes arising from these contracts would be resolved in accordance with PRC legal procedures.These arrangements have not been tested in arbitral tribunals or courts.The l

69、egal system in the PRC is not as developed as in some other jurisdictions,such as the United States,and the uncertainties involved in it could limit our ability to enforce these contractual arrangements.Further,there are very few precedents and little formal guidance as to how contractual arrangemen

70、ts in the context of a VIE should be interpreted or enforced under PRC law.There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action 10ITEM 3 KEY INFORMATIONbecome necessary.See“Item 3.Key Information D.Risk Factors Risks Related to Our Corporate S

71、tructure We rely on contractual arrangements with our VIEs and the shareholders of our VIEs for all of our business operations,which may not be as effective as direct ownership in providing operational control”and“Item 3.Key Information D.Risk Factors Risks Related to Our Corporate Structure Any fai

72、lure by our VIEs or the shareholders of our VIEs to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.”There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws,regula

73、tions and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with our VIEs and its nominee shareholders.It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or

74、if adopted,what they would provide.If we or any of our VIEs is found to be in violation of any existing or future PRC laws or regulations,or fail to obtain or maintain any of the required permits or approvals,the relevant PRC regulatory authorities would have broad discretion to take action in deali

75、ng with such violations or failures.If the PRC government deems that our contractual arrangements with our VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries,or if these regulations or the interpretation of existing regulations change or are interpre

76、ted differently in the future,we could be subject to severe penalties or be forced to relinquish our interests in those operations.Our holding company,our PRC subsidiaries and VIEs,and investors of our Company face uncertainty about potential future actions by the PRC government that could affect th

77、e enforceability of the contractual arrangements with our VIEs and,consequently,significantly affect the financial performance of the VIEs and VIEs subsidiaries and our Company as a whole.For a detailed description of the risks associated with our corporate structure,please refer to risks disclosed

78、under“Item 3.Key Information D.Risk Factors Risks Related to Our Corporate Structure.”We face various risks and uncertainties related to doing business in China.Our business operations are primarily conducted in China,and we are subject to complex and evolving PRC laws and regulations.For example,we

79、 face risks associated with regulatory approvals on offshore offerings,anti-monopoly regulatory actions,and oversight on cybersecurity and data privacy,as well as the lack of inspection by the Public Company Accounting Oversight Board,or the PCAOB,on our auditors,which may impact our ability to cond

80、uct certain businesses,accept foreign investments,or list on a United States or other foreign exchange.These risks could result in a material adverse change in our operations and the value of our ADSs,significantly limit or completely hinder our ability to continue to offer securities to investors,o

81、r cause the value of such securities to significantly decline.Pursuant to the Holding Foreign Companies Accountable Act,if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years

82、,the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.On December 16,2021,the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate co

83、mpletely registered public accounting firms headquartered in mainland China and Hong Kong,including our auditor.In May 2022,the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of this annual report on Form 20-F for the fiscal year ended December 31,2

84、021.On December 15,2022,the PCAOB issued a report that vacated its December 16,2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable 11Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONto inspect or investigate completely registered

85、public accounting firms.For this reason,we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F.Each year,the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong,a

86、mong other jurisdictions.If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our fi

87、nancial statements filed with the Securities and Exchange Commission,we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.There can be no assurance that we would not be identified as a Commission-Identified Issue

88、r for any future fiscal year,and if we were so identified for two consecutive years,we would become subject to the prohibition on trading under the HFCAA.See“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China The PCAOB had historically been unable to inspect our auditor i

89、n relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections”and“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China O

90、ur ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.The delisting of the ADSs,or the threat of their being delisted,may materially and adversely affect the value of your invest

91、ment.”PRC governments significant authority in regulating our operations and its oversight and control over offerings conducted offshore by,and foreign investment in,China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors.I

92、mplementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless.For more details,see“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China The PRC governments significant oversight and discretion o

93、ver our business operation could result in a material adverse change in our operations and the value of the ADSs.”Risks and uncertainties arising from the legal system in China,including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China,cou

94、ld result in a material adverse change in our operations and the value of our ADSs.For more details,see“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections ava

95、ilable to us.”12ITEM 3 KEY INFORMATIONPERMISSIONS REQUIRED FROM THE PRC GOVERNMENT AUTHORITIES FOR OUR OPERATIONSWe conduct our business primarily through our subsidiaries,our VIEs and their subsidiaries in China.Our operations in China are governed by PRC laws and regulations.As of the date of this

96、 annual report,our PRC subsidiaries,our VIEs or their subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company,our PRC subsidiaries and our VIEs in China,including,among others,financing gua

97、rantee business license owned by Fuzhou Financing Guarantee,value-added telecommunications license owned by Shanghai Qiyu,the incorporation approval of and the value-added telecommunications license owned by Fuzhou Microcredit.Given the uncertainties of interpretation and implementation of relevant

98、laws and regulations and the enforcement practice by relevant government authorities,we may be required to obtain additional licenses,permits,filings or approvals for the functions and services of our platform in the future.For more detailed information,see“Item 3.Key Information D.Risk Factors Risk

99、s Related to Doing Business in China We may be adversely affected by the complexity,uncertainties and changes in PRC regulation of internet-related businesses and companies,and any lack of requisite approvals,licenses or permits applicable to our business may have a material adverse effect on our bu

100、siness and results of operations.”Furthermore,we and our VIEs will be required to obtain permissions from or complete the filing procedures with the China Securities Regulatory Commission,or the CSRC,and may be required to go through cybersecurity review by the Cyberspace Administration of China,or

101、the CAC,in case of any future issuance of securities to foreign investors.Any failure to obtain or delay in obtaining such approval or completing such procedures would subject us to sanctions by the CSRC,CAC or other PRC regulatory authorities.These regulatory authorities may impose fines and penalt

102、ies on our operations in China,limit our ability to pay dividends outside of China,limit our operating privileges in China,delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business,financial

103、 condition,results of operations,and prospects,as well as the trading price of our ADSs.See“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China The PRC governments significant oversight and discretion over our business operation could result in a material adverse change in

104、 our operations and the value of the ADSs”and“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China The approval of and filing with the CSRC or other PRC government authorities will be required if we conduct offshore offerings in the future,and we cannot predict whether or f

105、or how long we will be able to obtain such approval or complete such filing.”CASH AND ASSET FLOWS THROUGH OUR ORGANIZATIONQifu Technology,Inc.is a holding company with no material operations of its own.We conduct our operations in China primarily through our subsidiaries and VIEs in China.As a resul

106、t,although other means are available for us to obtain financing at the holding company level,Qifu Technology,Inc.s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and service fees paid by our VIEs.13Qifu Technol

107、ogy,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONIf any of our subsidiaries incurs debt on its own behalf in the future,the instruments governing such debt may restrict its ability to pay dividends to Qifu Technology,Inc.In addition,our PRC subsidiaries are permitted to pay dividends to Qifu Technol

108、ogy,Inc.only out of their retained earnings,if any,as determined in accordance with PRC accounting standards and regulations.Further,our PRC subsidiaries and consolidated variable interest entities are required to make appropriations to certain statutory reserve funds or may make appropriations to c

109、ertain discretionary funds,which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.For more details,see“Item 5.Operating and Financial Review and Prospects B.Liquidity and Capital Resources Holding Company Structure.”For risks relating to the fund

110、flows of our operations in China,see“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have,and any limitation on the ability of our

111、 PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.”Under PRC laws and regulations,our PRC subsidiaries and consolidated variable interest entities are subject to certain restrictions with respect to paying dividends or otherwise tran

112、sferring any of their net assets to us.Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange,or the SAFE,and payment of withholding tax.As a result of these PRC laws and regulat

113、ions,amounts restricted include paid-in capital,capital reserve and statutory reserves of the PRC entities of our Companys which is RMB2,740.4 million,RMB8,283.6 million and RMB14,436.1 million(US$2,093.0 million)as of December 31,2020,2021 and 2022,respectively.Our PRC subsidiaries,our VIEs and the

114、ir subsidiaries generate their revenue primarily in Renminbi,which is not freely convertible into other currencies.As a result,any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us.In addition,under the Enterprise Income Tax Law of the PRC,or the E

115、IT Law,and its implementation rules,profits of a FIE generated in or after 2008 that are distributed to its immediate holding company outside Mainland China are subject to withholding tax at a rate of 10%,unless the foreign holding companys jurisdiction of incorporation has a tax treaty with China t

116、hat provides for a reduced rate of withholding tax.For example,a holding company in Hong Kong,subject to approval of the PRC local tax authority,will be eligible to a 5%withholding tax rate under the Arrangement Between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Doub

117、le Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital if such holding company is considered to be a non-PRC resident enterprise and holds at least 25%of the equity interests in the PRC FIE distributing the dividends.However,if the Hong Kong holding company is not c

118、onsidered to be the beneficial owner of such dividends under applicable PRC tax regulations,such dividend will remain subject to withholding tax at a rate of 10%.See also“Item 3.Key Information D.Risk Factors Risks Related to Doing Business in China Governmental control of currency conversion may li

119、mit our ability to utilize our net revenue effectively and affect the value of your investment,”and“Item 5.Operating and Financial Review and Prospects B.Liquidity and Capital Resources Holding Company Structure.”Our PRC subsidiaries have not paid dividends and will not be able to pay dividends unti

120、l any of them generates accumulated profits and meets the requirements for statutory reserve funds.14ITEM 3 KEY INFORMATIONUnder PRC law,Qifu Technology,Inc.may provide funding to our PRC subsidiaries only through capital contributions or loans,and to our VIEs only through loans,subject to satisfact

121、ion of applicable government registration and approval requirements.Qifu Technology,Inc.has extended loans to our PRC subsidiaries and VIEs since 2018.The related cash flows include(i)a net funding of RMB67.2 million to PRC subsidiaries in 2020,a net repayment of RMB51.7 million by PRC subsidiaries

122、in 2021,and a net funding of RMB7.7 million(US$1.1 million)to PRC subsidiaries in 2022;and(ii)a net funding of RMB3.6 million,RMB205.5 million to VIEs in 2020 and 2021,respectively,and a net repayment RMB1,588.3 million(US$230.3 million)by VIEs in 2022.Our VIEs may transfer cash to our relevant WFOE

123、 by paying service fees according to the exclusive business cooperation agreements.Our VIEs agree to pay our WFOE service fees,the amount of which are subject to adjustment at our WFOEs sole discretion taking into consideration of the complexity of the services,the actual cost that may be incurred f

124、or providing such services,as well as the value and comparable price on the market of the service provided,among others.Our WFOE would have the exclusive ownership of all the intellectual property rights created as a result of the performance of the exclusive business cooperation agreement,to the ex

125、tent permitted by applicable PRC laws.In 2020,2021 and 2022,service fees charged and paid to our WFOE by our VIEs in China amounted to RMB89.7 million,RMB5,001.9 million and RMB420.3 million(US$60.9 million),respectively.In 2020,2021 and 2022,service fees charged and paid to our other PRC subsidiari

126、es by our VIEs in China amounted to RMB286.4 million,RMB616.5 million and RMB3.3 million(US$0.5 million),respectively.In 2020 and 2021,our VIEs in China extended loans to our PRC subsidiaries with a net cash outflow of RMB20.0 million and RMB3,658.3 million,respectively.In 2022,our PRC subsidiaries

127、paid up the outstanding loans and started to extend loans to our VIEs in China with a net cash outflow of RMB859.9 million(US$124.7 million).In 2020,2021 and 2022,the total amount of service fees charged and paid to our VIEs in China by our PRC subsidiaries under the shared service agreement was RMB

128、20.3 million,RMB258.2 million and RMB103.1 million(US$14.9 million),respectively.In 2020,2021 and 2022,no assets other than cash flows discussed above were transferred through our organization.For the years ended December 31,2020,2021 and 2022,dividends of nil,nil and US$146.4 million were paid to s

129、hareholders of record as of designated record dates.We intend to declare and distribute a recurring cash dividend every fiscal quarter,starting from the third fiscal quarter of 2021,at an amount equivalent to approximately 15%to 20%of our Companys net income after tax for such quarter based upon our

130、 operations and financial conditions,and other relevant factors,subject to adjustment and determination by the board of directors of Qifu Technology,Inc.Since we currently have sufficient cash at Qifu Technology,Inc.to pay dividends,we intend to reinvest undistributed profits of our subsidiaries in

131、our operations in China.See“Item 8.Financial Information A.Consolidated Statements and Other Financial Information Dividend Policy.”For PRC and United States federal income tax considerations of an investment in our ADSs,see“Item 10.Additional Information E.Taxation.”15Qifu Technology,Inc.|ANNUAL RE

132、PORT 2022ITEM 3 KEY INFORMATIONFor purposes of illustration,the following discussion reflects the hypothetical taxes that might be required to be paid within Mainland China,assuming that we determine to pay a dividend from PRC subsidiaries to overseas entities in the future:Taxation Scenario(1)(Stat

133、utory Tax and Standard Rates)Hypothetical pre-tax earnings(2)100%Tax on earnings at statutory rate of 25%(3)(25)%Net earnings available for distribution75%Withholding tax at standard rate of 10%(7.5)%Net distribution to Parent/Shareholders67.5%Notes:(1)For purposes of this example,the tax calculatio

134、n has been simplified.The hypothetical book pre-tax earnings amount,not considering book to tax adjustment,is assumed to equal taxable income in China.(2)Assume all the profits of VIEs could be distributed to the PRC subsidiaries in a tax free manner.(3)Certain of our subsidiaries and VIEs and their

135、 subsidiaries qualifies for a 15%preferential income tax rate in China.However,such rate is subject to qualification,is temporary in nature,and may not be available in a future period when distributions are paid.For purposes of this hypothetical example,the table above reflects a maximum tax scenari

136、o under which the full statutory rate would be effective.Selected Financial DataOur Selected Combined and Consolidated Financial DataThe following selected consolidated statements of operations data for the years ended December 31,2020,2021 and 2022,selected consolidated balance sheet data as of Dec

137、ember 31,2021 and 2022 and selected consolidated cash flow data for the years ended December 31,2020,2021 and 2022 have been derived from our audited consolidated financial statements included elsewhere in this annual report.Our selected combined and consolidated balance sheets data as of December 3

138、1,2018,2019 and 2020 and the selected combined and consolidated statements of operations data and cash flow data for the year ended December 31,2018 and 2019 have been derived from our audited combined and consolidated financial statements not included in this annual report.Our combined and consolid

139、ated financial statements are prepared and presented in accordance with U.S.GAAP.16ITEM 3 KEY INFORMATIONYou should read the summary combined and consolidated financial information in conjunction with our combined and consolidated financial statements and related notes and“Item 5.Operating and Finan

140、cial Review and Prospects”included elsewhere in this annual report.Our historical results are not necessarily indicative of our results expected for future periods.Years Ended December 31,20182019202020212022RMBRMBRMBRMBRMBUS$(in thousands,except for per share data)Selected Combined and Consolidated

141、 Statements of Operations Data:Net revenueCredit driven services(1)4,170,2718,013,39111,403,67510,189,16711,586,2511,679,849Loan facilitation and servicing fees-capital heavy3,807,2426,273,1314,596,5552,326,0272,086,414302,502Financing income267,8441,309,6162,184,1802,184,1283,487,951505,705Revenue

142、from releasing of guarantee liabilities25,169285,4074,506,9355,583,1355,899,153855,297Other services fees70,016145,237116,00595,877112,73316,345Platform services(1)276,7471,206,4562,160,2796,446,4784,967,679720,245Loan facilitation and servicing fees-capital light58,348814,5811,826,6545,677,9414,124

143、,726598,029Referral services fees211,087375,551265,300620,317561,37281,391Other services fees7,31216,32468,325148,220281,58140,825Total net revenue4,447,0189,219,84713,563,95416,635,64516,553,9302,400,094Operating costs and expenses:(2)Facilitation,origination and servicing666,0671,083,3721,600,5642

144、,252,1572,373,458344,119Funding costs71,617344,999595,623337,426504,44873,138Sales and marketing1,321,9502,851,5191,079,4942,090,3742,206,948319,977General and administrative560,702428,189455,952557,295412,79459,850Provision for loans receivable44,474486,991698,701965,4191,580,306229,123Provision fo

145、r financial assets receivable53,989166,176312,058243,946397,95157,697Provision for accounts receivable and contract assets83,707230,280237,277324,605238,06534,516Provision for contingent liabilities4,794,1273,078,2244,367,776633,268Expense on guarantee liabilities734,730Total operating costs and exp

146、enses2,802,5066,326,2569,773,7969,849,44612,081,7461,751,688Income from operations1,644,5122,893,5913,790,1586,786,1994,472,184648,406Interest income(expense),net10,026(41,707)77,169126,256182,30126,431Foreign exchange(loss)gain(2,563)(24,875)101,53435,549(160,225)(23,230)Investment gain(loss)10,115

147、(19,888)(2,883)Other income,net7,696140,278112,88464,590268,00038,856Income before income tax benefit1,659,6712,967,2874,081,7457,022,7094,742,372687,580Income tax expense(466,360)(465,983)(586,036)(1,258,196)(736,804)(106,827)17Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONYears Ende

148、d December 31,20182019202020212022RMBRMBRMBRMBRMBUS$(in thousands,except for per share data)Net income1,193,3112,501,3043,495,7095,764,5134,005,568580,753Net loss attributable to non-controlling interests29189717,21218,6052,697Deemed dividend(3,097,733)Net(loss)income attributable to ordinary shareh

149、olders of the Company(1,904,422)2,501,5953,496,6065,781,7254,024,173583,450Net(loss)income per ordinary share attributable to ordinary shareholders of Qifu Technology,Inc.Basic(9.39)8.6611.7218.8212.871.87Diluted(9.39)8.3111.4017.9912.501.81Net(loss)income per ADSs attributable to ordinary sharehold

150、ers of Qifu Technology,Inc.Basic(18.78)17.3223.4437.6425.743.74Diluted(18.78)16.6222.8035.9825.003.62Weighted average shares used in calculating net income per ordinary shareBasic202,751,277288,827,604298,222,207307,265,600312,589,273312,589,273Diluted202,751,277300,938,470306,665,099321,397,753322,

151、018,510322,018,510Notes:(1)Starting from 2019,we report revenue streams in two categories credit driven services and platform services,to provide more relevant information.We also revised the comparative period presentation to conform to current period classification.(2)Share-based compensation expe

152、nses were allocated as follows:Years Ended December 31,20182019202020212022RMBRMBRMBRMBRMBUS$(in thousands,except for per share data)Facilitation origination and servicing150,17755,60172,19275,20973,94510,720Sales and marketing15,7006,8058,16412,3404,328628General and administrative441,504188,022220

153、,805166,373121,46417,611Total607,381250,428301,161253,922199,73728,95918ITEM 3 KEY INFORMATIONThe following table presents our selected combined and consolidated balance sheet data as of the dates indicated.As of December 31,20182019202020212022RMBRMBRMBRMBRMBUS$(in thousands)Selected Combined and C

154、onsolidated Balance Sheets Data:Current assets:Cash and cash equivalents1,445,8022,108,1234,418,4166,116,3607,165,5841,038,912 Restricted cash567,7941,727,7272,355,8502,643,5873,346,779485,237 Security deposit prepaid to third-party guarantee companies795,700932,983915,144874,886396,69957,516 Accoun

155、ts receivable and contract assets,net1,791,7452,332,3642,394,5283,097,2542,868,625415,912 Financial assets receivable,net1,193,6211,912,5543,565,4823,806,2432,982,076432,360 Loans receivable,net811,4339,239,5657,500,6299,844,48115,347,6622,225,202Total current assets7,342,01919,503,48821,876,04227,7

156、57,22334,097,4664,943,667Land use rights,net1,018,908998,185144,723Total non-current assets7,716852,1132,511,2635,747,7726,245,704905,543Total assets7,349,73520,355,60124,387,30533,504,99540,343,1705,849,210Current liabilities:Payable to investors of the consolidated trusts-current300,3414,423,7173,

157、117,6342,304,5186,099,520884,347 Guarantee liabilities-stand ready1,399,1742,212,1254,173,4974,818,1444,120,346597,394 Guarantee liabilities-contingent734,7303,543,4543,285,0813,418,391495,620 Income tax payable432,0661,056,2191,227,314624,112661,01595,838Total current liabilities2,893,7819,667,1871

158、3,384,50814,143,18616,749,9182,428,510 Payable to investors of the consolidated trusts-noncurrent3,442,5001,468,8904,010,5974,521,600655,570Total non-current liabilities15,7583,473,6841,521,7074,145,2004,661,955675,920Total shareholders equity4,440,1967,214,7309,481,09015,216,60918,931,2972,744,780T

159、otal liabilities and equity7,349,73520,355,60124,387,30533,504,99540,343,1705,849,21019Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONThe following table presents our selected combined and consolidated cash flow data for the years ended December 31,2018,2019,2020,2021 and 2022.Years En

160、ded December 31,20182019202020212022RMBRMBRMBRMBRMBUS$(in thousands)Summary Combined and Consolidated Cash Flow Data:Net cash provided by operating activities285,1162,973,0755,325,8105,789,7005,922,515858,683Net cash provided by/(used in)investing activities327,649(8,860,441)892,770(6,064,328)(7,355

161、,975)(1,066,515)Net cash provided by/(used in)financing activities457,4307,707,858(3,282,400)2,263,7203,204,068464,548Net increase in cash and cash equivalents1,057,1671,822,2542,938,4161,985,6811,752,416254,076Cash,cash equivalents,and restricted cash at the beginning of year956,4292,013,5963,835,8

162、506,774,2668,759,9471,270,073Cash,cash equivalents,and restricted cash at the end of year2,013,5963,835,8506,774,2668,759,94710,512,3631,524,149We present our financial results in RMB.We make no representation that any RMB or U.S.dollar amounts could have been,or could be,converted into U.S.dollars

163、or RMB,as the case may be,at any particular rate,or at all.The RPC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.Unless otherwise noted,all translations from Ren

164、minbi to U.S.dollars and from U.S.dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00,the noon buying rate as of December 30,2022.Financial Information Related to Our Consolidated Variable Interest EntitiesThe following table presents the condensed consolidated sche

165、dule of financial position,results of operations and cash flow data for our Company,our consolidated VIEs and other subsidiaries as of the dates or for the periods presented,as the case may be.20ITEM 3 KEY INFORMATIONFor the Year Ended December 31,2022VIEsThe CompanySubsidiaries(1)EliminationsConsol

166、idated Total(RMB in thousands)Total net revenues15,362,6361,697,675(506,381)16,553,930Total operating costs and expenses11,681,63517,468889,024(506,381)12,081,746Income(loss)from operations3,681,001(17,468)808,6514,472,184Income(loss)before income tax expense3,856,803(34,045)919,6144,742,372Equity i

167、n earnings of subsidiaries and VIEs4,058,2183,249,264(7,307,482)Net income(loss)3,230,6594,024,1734,058,218(7,307,482)4,005,568Net income(loss)attributable to ordinary shareholders of the Company3,249,2644,024,1734,058,218(7,307,482)4,024,173For the Year Ended December 31,2021VIEsThe CompanySubsidia

168、ries(1)EliminationsConsolidated Total(RMB in thousands)Total net revenues15,657,6936,646,999(5,669,047)16,635,645Total operating costs and expenses14,279,28751,2331,187,973(5,669,047)9,849,446Income(loss)from operations1,378,406(51,233)5,459,0266,786,199Income(loss)before income tax expense1,567,515

169、(56,749)5,511,9437,022,709Equity in earnings of subsidiaries and VIEs5,838,4741,077,675(6,916,149)Net income(loss)1,060,4215,781,7255,838,516(6,916,149)5,764,513Net income(loss)attributable to ordinary shareholders of the Company1,077,6755,781,7255,838,474(6,916,149)5,781,725For the Year Ended Decem

170、ber 31,2020VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Total net revenues13,146,0521,325,097(907,195)13,563,954Total operating costs and expenses10,381,82716,453282,711(907,195)9,773,796Income(loss)from operations2,764,226(16,453)1,042,3873,790,160Income(loss)before

171、 income tax expense3,033,487(4,030)1,052,2884,081,745Equity in earnings of subsidiaries and VIEs3,500,6362,547,806(6,048,442)Net income(loss)2,547,8063,496,6063,499,739(6,048,442)3,495,709Net income(loss)attributable to ordinary shareholders of the Company2,547,8063,496,6063,500,636(6,048,442)3,496,

172、60621Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONSelected Condensed Consolidated Balance Sheets InformationAs of December 31,2022VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Cash and cash equivalents6,437,420464,323263,8417,165,584Restricted cash3,34

173、6,7793,346,779Security deposit prepaid to third-party guarantee companies396,699396,699Account receivables and contract assets,net1,933,2921,196,6523,129,944Financial assets receivable,net3,670,9193,670,919Loan receivable,net18,484,65618,484,656Land use rights,net998,185998,185Intercompany receivabl

174、es5,906,972295,1806,085,874(12,288,026)Investments in subsidiaries and VIEs18,275,77216,683,458(34,959,230)Total assets44,093,49319,041,60024,455,333(47,247,256)40,343,170Payable to investors of the consolidated trusts-current6,099,5206,099,520Guarantee liabilities-stand ready4,120,3464,120,346Guara

175、ntee liabilities-contingent3,418,3913,418,391Income tax payable614,68746,328661,015Payable to investors of the consolidated trusts-noncurrent4,521,6004,521,600Intercompany payables6,327,6355,960,391(12,288,026)Total liabilities27,325,894194,4446,179,561(12,288,026)21,411,873Total equity16,767,59918,

176、847,15618,275,772(34,959,230)18,931,29722ITEM 3 KEY INFORMATIONAs of December 31,2021VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Cash and cash equivalents4,605,8517,1171,503,3926,116,360Restricted cash2,643,5872,643,587Security deposit prepaid to third-party guarant

177、ee companies874,886874,886Accounts receivable and contract assets,net2,350,775969,9533,320,728Financial assets receivable,net4,404,2084,404,208Loans receivable,net12,703,83012,703,830Land use rights,net1,018,9081,018,908Intercompany receivables2,493,6601,711,6334,823,879(9,029,172)Investments in sub

178、sidiaries and VIEs14,032,9289,343,119(23,376,047)Total assets33,145,99715,761,81217,002,405(32,405,219)33,504,995Payable to investors of the consolidated trusts-current2,304,5182,304,518Guarantee liabilities-stand ready4,818,1444,818,144Guarantee liabilities-contingent3,285,0813,285,081Income tax pa

179、yable449,553174,559624,112Payable to investors of the consolidated trusts-noncurrent4,010,5974,010,597Intercompany payables6,493,3672,535,805(9,029,172)Total liabilities23,790,132557,9492,969,477(9,029,172)18,288,386Total equity9,355,86515,203,86314,032,928(23,376,047)15,216,60923Qifu Technology,Inc

180、.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONAs of December 31,2020VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Cash and cash equivalents3,709,74019,560689,1164,418,416Restricted cash2,355,8502,355,850Security deposit prepaid to third-party guarantee companies915,144915

181、,144Accounts receivable and contract assets,net2,624,29478,1712,702,465Financial assets receivable,net4,125,93184,8774,210,808Loans receivable,net7,553,04235,2727,588,314Intercompany receivables1,315,6461,593,585912,129(3,821,360)Investments in subsidiaries and VIEs7,940,5347,511,011(15,451,545)Tota

182、l assets24,615,8359,564,8949,479,481(19,272,905)24,387,305Payable to investors of the consolidated trusts-current3,117,6343,117,634Guarantee liabilities-stand ready4,173,4974,173,497Guarantee liabilities-contingent3,543,4543,543,454Income tax payable1,151,27576,0391,227,314Payable to investors of th

183、e consolidated trusts-noncurrent1,468,8901,468,890Intercompany payables2,411,1851,410,175(3,821,360)Total liabilities17,104,31284,3161,538,947(3,821,360)14,906,215Total equity7,511,5239,480,5787,940,534(15,451,545)9,481,09024ITEM 3 KEY INFORMATIONSelected Condensed Consolidated Cash Flows Informatio

184、nFor the Year Ended December 31,2022VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Net cash provided by(used in)operating activities2,475,105(66,836)3,514,2465,922,515Net cash(used in)provided by investing activities(7,360,063)1,583,956(4,762,234)3,182,366(7,355,975)Ne

185、t cash provided by(used in)financing activities7,419,720(1,039,580)6,294(3,182,366)3,204,068For the Year Ended December 31,2021VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Net cash provided by(used in)operating activities1,273,002(25,552)4,542,2505,789,700Net cash(us

186、ed in)provided by investing activities(6,047,434)(153,778)(3,675,260)3,812,144(6,064,328)Net cash provided by(used in)financing activities5,958,279169,291(51,706)(3,812,144)2,263,720For the Year Ended December 31,2020VIEsThe CompanySubsidiaries(1)EliminationsConsolidated Total(RMB in thousands)Net c

187、ash provided by(used in)operating activities4,935,904(1,679)391,5855,325,810Net cash provided by(used in)investing activities932,141(70,776)(59,350)90,755892,770Net cash(used in)provided by financing activities(3,364,319)86,30586,369(90,755)(3,282,400)Note:(1)The financial statement amounts for our

188、consolidated subsidiaries are prepared using same accounting policies as set out in the consolidated financial statements that equity method has been used to account for investments in VIEs.A.ReservedB.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot appli

189、cable.25Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIOND.Risk FactorsSummary of Risk FactorsAn investment in our ADSs involves significant risks.Below is a summary of material risks we face,organized under relevant headings.These risks are discussed more fully below in this Item 3.Key

190、Information D.Risk Factors.Risks Related to Our Business and IndustryRisks and uncertainties related to our business include,but not limited to,the following:The Credit-Tech industry is rapidly evolving,which makes it difficult to effectively assess our future prospects;We have a limited operating h

191、istory and are subject to credit cycles and the risk of deterioration of credit profiles of borrowers;We are subject to uncertainties surrounding regulations and administrative measures of the loan facilitation business.If any of our business practices are deemed to be non-compliant with applicable

192、laws and regulations,our business,financial condition and results of operations would be adversely affected;We are subject to uncertainties surrounding regulations and administrative measures of micro-lending business and financing guarantee business.If any of our business practices are deemed to be

193、 non-compliant with such laws and regulations,our business,financial condition and results of operations would be adversely affected;We are subject to uncertainties surrounding regulations and administrative measures of credit reporting business.If any of our business practices is deemed to be non-c

194、ompliant with such laws and regulations,our business,financial condition and results of operations would be materially and adversely affected;The pricing of loans facilitated through our platform may be deemed to exceed interest rate limits imposed by regulations;Our transaction process may result i

195、n misunderstanding among borrowers;Fraudulent activity on our platform could negatively impact our operating results,brand and reputation and cause the use of loan products facilitated by us and our services to decrease;We rely on our proprietary credit profiling model in assessing the creditworthin

196、ess of borrowers and the risks associated with loans.If our model is flawed or ineffective,or if we otherwise fail or are perceived to fail to manage the default risks of loans facilitated through our platform,our reputation and market share would be materially and adversely affected,which would sev

197、erely impact our business and results of operations;26ITEM 3 KEY INFORMATION We rely on our risk management team to establish and execute our risk management policies.If our risk management team or key members of such team were unable or unwilling to continue in their present positions,our business

198、may be severely disrupted;and Our business is subject to complex and evolving PRC laws and regulations regarding data privacy and cybersecurity,many of which are subject to change and uncertain interpretation.Any changes in these laws and regulations have caused and could continue to cause changes t

199、o our business practices and increase costs of operations,and any security breaches or our actual or perceived failure to comply with such laws and regulations could result in claims,penalties,damages to our reputation and brand,declines in user growth or engagement,or otherwise harm our business,re

200、sults of operations and financial condition.Risks Related to Our Corporate StructureRisks and uncertainties related to our corporate structure include,but not limited to,the following:We are a Cayman Islands holding company with no equity ownership in our VIEs and we conduct our operations in China

201、through(i)our PRC subsidiaries and(ii)our VIEs,with which we have maintained contractual arrangements.Investors in our ADSs thus are not purchasing equity interest in our VIEs in China but instead are purchasing equity interest in a Cayman Islands holding company.If the PRC government finds that the

202、 agreements that establish the structure for operating our business do not comply with PRC laws and regulations,or if these regulations or their interpretations change in the future,we could be subject to severe penalties or be forced to relinquish our interests in those operations.Our holding compa

203、ny,our PRC subsidiaries,our VIEs,and investors of our Company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and,consequently,significantly affect the financial performance of our VIEs and our C

204、ompany as a whole.The PRC regulatory authorities could disallow the VIEs structure pursuant to the new regulations promulgated by the PRC government,which would likely result in a material adverse change in our operations,and our class A ordinary shares or our ADSs may decline significantly in value

205、;We rely on contractual arrangements with our VIEs and the shareholders of our VIEs for all of our business operations,which may not be as effective as direct ownership in providing operational control;and Any failure by our VIEs or the shareholders of our VIEs to perform their obligations under our

206、 contractual arrangements with them would have a material adverse effect on our business.27Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONRisks Related to Doing Business in ChinaWe are also subject to risks and uncertainties relating to doing business in China in general,including,but

207、not limited to,the following:The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such insp

208、ections;Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.The delisting of the ADSs,or the threat of their being delisted,may materially and adversely affect the value of yo

209、ur investment;The PRC governments significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of the ADSs;and Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protectio

210、ns available to us.Risks Related to the ADSs and our class A ordinary sharesIn addition to the risks described above,we are subject to general risks relating to our ADSs and class A ordinary shares,including,but not limited to,the following:We adopt different practices as to certain matters as compa

211、red with many other companies listed on the Hong Kong Stock Exchange;and The trading prices for our listed securities have been and are likely to continue to be volatile.28ITEM 3 KEY INFORMATIONRisks Related to Our Business and IndustryThe Credit-Tech industry is rapidly evolving,which makes it diff

212、icult to effectively assess our future prospects.The Credit-Tech industry in the PRC is in a developing stage.The regulatory framework for this market is also evolving and may remain uncertain for the foreseeable future.In addition,the Credit-Tech industry in China has not witnessed a full credit cy

213、cle.The market players in the industry,including us,may not be able to respond to the change of market situations effectively and maintain steady business growth when the industry enters a different stage.In addition,we cannot assure you that a contraction in the availability of funds will not happe

214、n at later stages of the credit cycle.As such,we may not be able to sustain our historical growth rate in the future.You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly evolving market in which we operate,along with our

215、limited operating history.These risks and challenges include our ability to,among other things:offer competitive products and services;broaden our prospective borrower base;increase the utilization of our products by existing borrowers as well as new borrowers;maintain and enhance our relationship a

216、nd business collaboration with our partners;maintain low delinquency rates of loans facilitated by us;develop and maintain cooperative relationships with financial institution partners to secure sufficient,diversified,cost-efficient funding to the drawdown requests;continue to develop,maintain and s

217、cale our platform and sustain our historical growth rates;continue to develop and improve the effectiveness,accuracy and efficiency of our proprietary credit assessment and profiling technologies;navigate through a complex and evolving regulatory environment;29Qifu Technology,Inc.|ANNUAL REPORT 2022

218、ITEM 3 KEY INFORMATION improve our operational efficiency and profitability;attract,retain and motivate talented employees to support our business growth;enhance our technology infrastructure to support the growth of our business and maintain the security of our system and the confidentiality of the

219、 information provided and utilized across our system;navigate through economic conditions and fluctuations;and defend ourselves against legal and regulatory actions,such as actions involving intellectual property or privacy claims.We have a limited operating history and are subject to credit cycles

220、and the risk of deterioration of credit profiles of borrowers.We were established in 2016 and officially launched the capital-light model in May 2018.Our business is subject to credit cycles associated with the volatility of the general economy and with the trends of the Credit-Tech industry in Chin

221、a.As we have a limited operating history,we have not experienced a full credit cycle in China.As of December 31,2020,2021 and 2022,the 90 day+delinquency rate for all loans facilitated through our platform,including those under credit-driven services and platform services,was 1.48%,1.54%and 2.03%,re

222、spectively.For more details,see“Item 5.Operating and Financial Review and Prospects A.Operating Results Loan Performance Data 90 day+delinquency rates.”To effectively manage credit risks,we expect to continue focusing on higher quality users and enhancing our technology and credit assessment capabil

223、ities.We also expect to fine-tune our services and solutions to address financial institution partners evolving needs and risk preferences.However,there can be no assurance that we will be able to successfully manage our risk exposure in an effective manner.If economic conditions deteriorate,we may

224、face an increased risk of default or delinquency of borrowers,which will result in lower returns or even losses.In the event that the creditworthiness of borrowers deteriorates,or we cannot track the deterioration of their creditworthiness,the criteria we use for the analysis of user credit profiles

225、 may be rendered inaccurate,and our credit profiling system may be subsequently rendered ineffective.This in turn may lead to higher default rates and adversely impact our results of operations.In addition,deterioration in borrowers creditworthiness,or increase in our delinquency rate may discourage

226、 our financial institution partners from cooperating with us.If our financial institution partners choose to adopt a tight credit approval and drawdown funding policy,our ability to secure funding will be materially restricted.30ITEM 3 KEY INFORMATIONWe are subject to uncertainties surrounding regul

227、ations and administrative measures of the loan facilitation business.If any of our business practices are deemed to be non-compliant with applicable laws and regulations,our business,financial condition and results of operations would be adversely affected.The laws and regulations governing the loan

228、 facilitation business are evolving,and substantial uncertainties exist with respect to their interpretation and implementation.In addition,pursuant to the Plan on Reforming State Council Institutions approved by the National Peoples Congress on March 10,2023,the China National Financial Regulatory

229、Administration(the“CNRA”)shall be established based upon the China Banking and Insurance Regulatory Commission(the“CBIRC”),which shall cease to exist,and the local financial regulatory system will undergo deep reform and establish a local financial regulatory system with the central financial manage

230、ment departments local agencies as the main body,which may lead to changes and uncertainties in rules and regulations applicable to our business after this restructuring.Uncertainties and changes in regulatory environment may increase our cost of operation,limit our options of product offerings or e

231、ven change our business model fundamentally.We have experienced,and may from time to time be required to make adjustments to our operations in order to maintain compliance with changes in laws,regulations and policies.An example is the promulgation of the Notice on Regulating and Rectifying“Cash Loa

232、n”Business,or Circular 141,and related regulations.Circular 141 issued by the Special Rectification of Internet Financial Risks Working Group and the P2P Credit Risks Rectification Working Group on December 1,2017,introduces the regulating guidance on cash loan businesses including online micro-lend

233、ing companies,P2P platforms and banking financial institutions.Circular 141 provides that a banking financial institution that offers cash loans through loan facilitation is prohibited from(i)accepting credit enhancement or other similar services from third parties that lack requisite licenses to pr

234、ovide guarantees;(ii)outsourcing credit assessment,risk management and other key functions to a loan facilitation operator;and(iii)allowing the loan facilitation operator to charge any interest or fees from the borrower.If a financial institution violates the aforementioned rules and provisions,the

235、regulatory authorities may pursue compulsory enforcement,suspend its business,cancel its qualifications,or supervise the rectifications.In extremely serious circumstances,such financial institutions business license may be revoked.For a discussion of Circular 141,please see“Item 4.Information on the

236、 Company B.Business Overview Regulation Regulation on Online Finance Services Industry Regulations on the business of loan facilitation.”On the basis of Circular 141,the Interim Measures for Administration of Internet Loans Issued by Commercial Banks,or the Internet Loans Interim Measures,provides f

237、or more comprehensive and specific provisions on the cooperation between a banking financial institution and a loan facilitation operator.In addition to prohibiting a banking financial institution from outsourcing its credit assessment and risk management functions,the Internet Loans Interim Measure

238、s also provide that“core risk management functions such as credit granting approval and contract conclusion shall be independently and effectively carried out by the commercial bank.”For a discussion of Internet Loans Interim Measures,please see“Item 4.Information on the Company B.Business Overview

239、Regulation Regulation on Online Finance Services Industry Regulations on the business of loan facilitation.”31Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONFurthermore,on October 9,2019,nine government authorities including the CBIRC,the National Development and Reform Commission,or t

240、he NDRC and the Ministry of Industry and Information Technology,or the MIIT,promulgated the Supplementary Provisions on the Supervision and Administration of Financing Guarantee Companies,or the Supplementary Financing Guarantee Provisions,which,as advised by our PRC legal counsel,for the first time

241、,explicitly requires that institutions providing services such as borrower recommendation and credit assessment for various lending institutions,including us as a Credit-Tech company,shall not provide,directly or in a disguised form,financing guarantee services without prior approval.For the compani

242、es without the relevant financing guarantee license but actually engaging in financing guarantee business,the regulatory authorities shall cease such operations and cause these companies to properly settle the existing business contracts.For a discussion of the Supplementary Financing Guarantee Prov

243、isions,please see“Item 4.Information on the Company B.Business Overview Regulation Regulations on Financing Guarantee.”Before the promulgation of Circular 141,we followed the market practice in preparing agreements used in our loan facilitations.In response to certain requirements under Circular 141

244、,the Supplementary Financing Guarantee Provisions and the Internet Loans Interim Measures,we have made several adjustments to our collaboration model with certain financial institution partners.However,we may still be deemed non-compliant with Circular 141,the Supplementary Financing Guarantee Provi

245、sions,the Internet Loans Interim Measures or other relevant rules in the following aspects of our business:Guarantee practice.We neither collected guarantee fees from our financial institution partners,nor took providing guarantees as our main operating business through our non-licensed subsidiaries

246、,while historically one of the VIEs that had not obtained the financing guarantee license provided guarantees or other credit enhancement services to certain financial institution partners.Under such model,the non-licensed VIE could be deemed as operating financing guarantee business and therefore n

247、on-compliant with Circular 141 and the Supplementary Financing Guarantee Provisions.We have completely ceased such practice through the non-licensed VIE since September 2020.Currently,third-party guarantee companies or the licensed VIE provides guarantee or other credit enhancement services to our f

248、inancial institution partners.We engage third-party guarantee companies to provide guarantee services and we at the same time,provide back-to-back guarantees for external guarantee companies.As advised by our PRC legal counsel,the back-to-back guarantee model is not prohibited by Circular 141,becaus

249、e we are not directly providing guarantee to banking financial institutions.However,in the absence of authoritative interpretation of Circular 141,we cannot assure you that all the PRC regulatory authorities will have the same view as our PRC legal counsel on this issue.Moreover,given the lack of fu

250、rther interpretations,the exact definition and scope of“providing financing guarantee business in a disguised form”under the Supplementary Financing Guarantee Provisions is unclear.Therefore,we cannot be certain that our new model will not be determined to be in violation of the Supplementary Financ

251、ing Guarantee Provisions.For additional information on potential risk related to compliance with the leverage ratio limits for financing guarantee business,please see“We are subject to uncertainties surrounding regulations and administrative measures of micro-lending business and financing guarantee

252、 business.If any of our business practices are deemed to be non-compliant with such laws and regulations,our business,financial condition and results of operations would be adversely affected.”32ITEM 3 KEY INFORMATION Payment.We have adopted a payment model and applied it to our cooperation with all

253、 financial institution partners.Under our payment model,we do not charge interests to borrowers for loans funded by our financial institution partners;instead,we charge service fees to financial institutions.In certain cases,some financial institution partners further engage us and a third-party pay

254、ment system service provider to together arrange payment clearance,pursuant to which borrowers first repay to a third-party payment system and we work together with the payment system service provider to split the total repayment amount,including principal,interest and service fees,to the portions t

255、hat financial institution partners and we are each entitled to.The third-party payment service providers are engaged per our financial institution partners request and are mainly for the purpose of general payment processing and clearance.We do not charge any fees from borrowers under our payment mo

256、del for loans funded by our financial institution partners.As advised by our PRC legal counsel,such payment model does not violate Circular 141 or the Internet Loans Interim Measures.However,in the absence of authoritative interpretation of Circular 141 and given substantial uncertainties regarding

257、the interpretation and application of current or future PRC laws and regulations,we cannot assure you that PRC regulatory authorities will ultimately take a view that is consistent with our PRC legal counsel.Product pricing.In accordance with the evolution of regulatory environments,we have lowered

258、our product pricing,which is calculated based on the internal rate of return methodology.We may further adjust our product pricing from time to time as a result of changes in regulations or our business strategies.If we are unable to keep up with the evolution of regulations and maintain compliance

259、or are deemed to price loans at a rate that exceed the regulatory limits,we could be ordered to suspend,rectify or terminate our practices or operations,subject to cancelation of qualifications,or ordered to relinquish the excessive portion of the interest income.If any of these occurs,our business,

260、financial condition,results of operations and our cooperation with financial institution partners could be materially and adversely affected as a result.For additional information on potential risks associated with product pricing,please see“The pricing of loans facilitated through our platform may

261、be deemed to exceed interest rate limits imposed by regulations.”As advised by our PRC legal counsel,Circular 141 does not have retrospective effect on the loan facilitation business conducted prior to the issuance of Circular 141,and we believe that loans we facilitated prior to the issuance of Cir

262、cular 141 or under our existing collaboration agreements executed prior to the issuance of Circular 141 are not subject to its jurisdiction.However,we cannot rule out the possibility that government authorities would still consider our guarantee practice,payment model,product pricing or other aspect

263、s of our business to be in violation of Circular 141 and there can be no assurance that the PRC government authorities will ultimately take a view that is consistent with our PRC legal counsel.To the extent that any aspect of our products or services is deemed to be non-compliant with any requiremen

264、ts of the relevant PRC laws and regulations,we may need to further adjust our current practices within a limited time period and,as a result,our business operations may be negatively impacted.33Qifu Technology,Inc.|ANNUAL REPORT 2022ITEM 3 KEY INFORMATIONIn addition,our credit assessments assistance

265、 to commercial banks mainly depends on the evaluation of information regarding personal credit status,which may be deemed as a“data-driven risk management model,”a model that regulations such as Circular 141 demand to be adopted with care and caution.We may also be deemed to engage in credit reporti

266、ng business or credit reporting function services by the PRC authorities,and may be required to involve a third-party licensed institution to ensure compliance pursuant to the Administrative Measures for Credit Reporting Business,or the Credit Reporting Measures.If such assistance is prohibited,it m

267、ay affect the subsequent collaboration between us and our financial institution partners.If we are prohibited from conducting our credit assessment,our operation will be adversely affected.See also“We are subject to uncertainties surrounding regulations and administrative measures of credit reportin

268、g business.If any of our business practices is deemed to be non-compliant with such laws and regulations,our business,financial condition and results of operations would be materially and adversely affected.”Further,if our financial institution partners cease to fund the loans,either on a temporary

269、basis to await more clarity on the new regulatory environment,or on a permanent basis for non-compliance concerns,our operation will be adversely impacted.If fewer financial institutions are willing to fund the loans,the competition for funding may become more intense,and the cost of funding may inc

270、rease,which may adversely impact our results of operations.Besides,in April 2021,we and 12 other major financial technology platforms were invited to meet with the Peoples Bank of China,or the PBOC,the CBIRC,the CSRC,the SAFE and other financial regulators to discuss the operations and compliance pr

271、actice of these platforms internet financial businesses in China.We have been making rectifications and adjustments to our operations to address the issues discussed during the meeting and results of our self-examination according to the guidance provided by the regulators.As of the date of this ann

272、ual report,we have substantially completed the rectification measures based on our self-examination results according to the guidance provided by the relevant authorities.The regulatory authorities have reviewed our rectification measures in general.The regulatory authorities have moved on to the re

273、gular regulatory supervision status from the self-examination and rectification status with respect to regulating these major financial technology platforms,including us.Our rectification results remain subject to the regulators regular supervision,and we cannot assure you that the measures we have

274、taken and rectifications we have made will satisfy the requirements from the regulators.To the extent that our rectification efforts are deemed not sufficient or unsatisfactory to the regulators,we may face further rectification orders or other administrative actions,in which case our business and o

275、perations may be materially and negatively affected.We are subject to uncertainties surrounding regulations and administrative measures of micro-lending business and financing guarantee business.If any of our business practices are deemed to be non-compliant with such laws and regulations,our busine

276、ss,financial condition and results of operations would be adversely affected.A small portion of loans facilitated on our platform are funded by Fuzhou Microcredit,the subsidiary of Shanghai Qiyu,one of our VIEs.We also provide financing guarantees to our financial institution partners through Fuzhou

277、 Financing Guarantee and Shanghai Financing Guarantee(before its financing guarantee license was cancelled upon its voluntary application),for some loans we facilitate.As a result,we are subject to a complex and evolving body of regulations in relation to these businesses.34ITEM 3 KEY INFORMATIONOn

278、August 2,2017,the PRC State Council promulgated the Regulations on the Supervision and Administration of Financing Guarantee Companies,which became effective on October 1,2017.The regulations set forth that the outstanding guarantee liabilities of a financing guarantee company shall not exceed ten t

279、imes its net assets,and that the balance of outstanding guarantee liabilities for the same guaranteed party shall not exceed 10%of a financing guarantee companys net assets,while the balance of outstanding guarantee liabilities for the same guaranteed party and its affiliated parties shall not excee

280、d 15%of a financing guarantee companys net assets.On September 16,2020,the CBIRC issued the Notice on Strengthening the Supervision and Management of Micro-Lending Companies,or Circular 86.Adopted to regulate the operations of micro-lending companies,Circular 86 provides that the total funding amoun

281、t obtained by a micro-lending company through bank loans,shareholder loans and other non-standard financing instruments shall not exceed such companys net assets.In addition,the total funding amount obtained by a micro-lending company through the issuance of bonds,asset securitization products and o

282、ther instruments of standardized debt assets shall not exceed four times of its net assets.Local financial regulatory authorities may further lower the leverage limits mentioned above.On November 2,2020,the CBIRC and the PBOC published the Interim Measures for the Administration of Online Micro-Lend

283、ing Business(Draft for Comments),or the Online Micro-Lending Draft,adding new requirements to online micro-lending business.In particular,the Online Micro-Lending Draft,among other things,strengthens the condition for licensing and other approvals for conducting online micro-lending business.Pursuan

284、t to the Online Micro-Lending Draft,to the extent a micro-lending company engages in online micro-lending business,said business shall mainly be carried out within the provincial-level administrative region to which its place of registration belongs,and shall not operate beyond such region without t

285、he approval of the banking regulator under the State Council.On December 31,2021,the PBOC issued the Regulations on Local Financial Supervision and Administration(Draft for Comments),which reaffirms that local financial organizations(including micro-lending companies and financing guarantee companie

286、s)are required to operate business within the area approved by the local financial regulatory authority,and are not allowed to conduct business across provinces in principle.Fuzhou Microcredit has obtained the approval to operate micro-lending businesses from the competent supervising authority,whic

287、h allows Fuzhou Microcredit to conduct micro-lending businesses through the internet.As of the date of this annual report,Fuzhou Microcredit had increased its registered capital to RMB5 billion,which has been fully paid.Currently,Fuzhou Microcredit can conduct cross-province business with its valid

288、license.However,if the Online Micro-Lending Draft were to be adopted in its current form,Fuzhou Microcredit may need to obtain the legal approval of the banking regulator under the State Council in order to engage in online micro-lending business across provincial-level administrative regions.The ru

289、les for licensing or approvals for cross-province online micro-lending business is yet to be formulated as of the date of this annual report.We cannot assure you that,if the authorities later promulgate such rules for micro-lending business or other rules imposing licensing or approval requirements

290、on financing guarantee business,Fuzhou Microcredit or Fuzhou Financing Guarantee will be qualified for such licenses or approvals in accordance with the requirements thereunder.If we fail to obtain the regulatory approvals to increase the authorized amounts or to 35Qifu Technology,Inc.|ANNUAL REPORT

291、 2022ITEM 3 KEY INFORMATIONestablish additional online micro-lending companies,we may not be able to obtain sufficient funding to fulfill our future growth needs.From time to time,we may need additional licenses to operate our business.Failure to obtain,renew,or retain requisite licenses,permits or

292、approvals may adversely affect our ability to conduct or expand our business.Furthermore,Fuzhou Microcredit is subject to the laws,regulations,policies and measures in Fuzhou in respect of registered capital and of loan-to-capital and other leverage ratios,among other things,and our financing guaran

293、tee companies are subject to the supervision of local financial authorities in Fuzhou,Shanghai and Tianjin where the branch office of Fuzhou Financing Guarantee is located.We may be subject to regulatory warnings,correction orders,condemnation and fines and may be required to further adjust our busi

294、ness if any of our micro-lending and financing guarantee companies is deemed to have violated national,provincial or local laws and regulations or regulatory orders and guidance.We are subject to uncertainties surrounding regulations and administrative measures of credit reporting business.If any of

295、 our business practices is deemed to be non-compliant with such laws and regulations,our business,financial condition and results of operations would be materially and adversely affected.The PRC government has adopted several regulations governing personal and enterprise credit reporting businesses.

296、These regulations include the Regulation for the Administration of Credit Reporting Industry enacted by the State Council and effective in March 2013,and the Management Rules on Credit Agencies issued by the PBOC,in the same year.According to the Regulation for the Administration of Credit Reporting

297、 Industry,“credit reporting business”refers to the gathering,organizing,preserving and processing of credit information on organizations such as enterprises and public service units and individuals,as well as distribution of such information to information users,and a“credit reporting agency”refers

298、to credit reporting entity established in accordance with law and mainly engaged in credit reporting business.Entities engaged in personal/enterprise credit reporting business without such approval/completing filing formality may be subject to fine or criminal liability.On September 27,2021,the PBOC

299、 issued the Credit Reporting Measures,which took effect on January 1,2022.The Credit Reporting Measures define“credit information”to include“basic information,borrowing and lending information and other relevant information legally collected in the offering of services of finance or other activities

300、 for purposes of identifying and judging the credit standing of businesses and individuals,as well as result of analysis and evaluation based on the aforesaid information,”and define“credit reporting business”as the collection,collation,keeping and processing of credit information and provision of s

301、uch information to information users.The Credit Reporting Measures applies to entities that carry out credit reporting business and“activities relating to credit reporting business”in China.Separately,entities providing“services of credit reporting function”in the name of“credit information service,

302、credit service,credit evaluation,credit rating,credit repair,among others”are also subject to the Credit Reporting Measures.Credit Reporting Measures provides for an 18-month grace period from its effectiveness date for organizations that engage in credit reporting business to obtain the credit repo

303、rting business license and comply with its other provisions.The Credit Reporting Measures is new and significant uncertainties exist with respect to its interpretation and implementation.For example,the Credit Reporting Measures does not directly deny the legitimacy of existing data analytics or pre

304、cision marketing service providers in the financial service industry,nor does it provide a clear guidance or implementation rules on how and when these providers,if deemed to be conducting credit reporting 36ITEM 3 KEY INFORMATIONbusiness,could apply for required licenses or otherwise comply with th

305、e Credit Reporting Measures.Therefore,we cannot rule out the possibility that some aspects of our business may subsequently be deemed as incompliant and be required to be ceased or adjusted in a way that is adverse to our business and prospects.The lack of clear guidance under,and the uncertainty as

306、sociated with,the Credit Reporting Measures may also result in substantial compliance cost incurred by us.In addition,on July 7,2021,the Credit Information System Bureau of PBOC further issued a notice,or the Notice Relating to Disconnecting Direct Connection,to 13 internet platforms including us,re

307、quiring the internet platforms to achieve a complete“disconnected direct connection”in terms of personal information with financial institutions,meaning that the direct flow of personal information from internet platforms that collect such information to financial institutions is prohibited.Accordin

308、g to the relevant laws and regulations and the requirements of the regulatory authorities,we have involved a licensed credit reporting institution to ensure compliance and have substantially completed our business adjustments with respect to disconnecting direct connection for credit reporting as of

309、 the date of this annual report.In particular,we have entered into collaboration agreements with a licensed credit reporting institution to ensure the flow of personal information complies with the requirements of the Credit Reporting Measures and the Notice Relating to Disconnecting Direct Connecti

310、on.We will closely monitor the regulatory requirements,seek guidance from relevant regulatory authorities and take applicable measures in a timely manner to ensure our compliance with relevant laws and regulations applicable to us.We may incur costs and expenses to ensure compliance and to make nece

311、ssary changes to our internal policies and practices to maintain compliance with relevant laws and regulations applicable to us in the future.According to the Notice Relating to Disconnecting Direct Connection,the Credit Reporting Measures and other related laws and regulations,any failure or percei

312、ved failure by us to meet the relevant requirements may subject us to fine or criminal liability,which could have an adverse effect on our business,financial condition and results of operations.See“Item 4.Information on the Company B.Business Overview Regulation Regulations On Credit Reporting Busin

313、ess”for details.The pricing of loans facilitated through our platform may be deemed to exceed interest rate limits imposed by regulations.Circular 141 requires online platforms,micro-lending companies and other entities to charge synthetic fund costs,including the interest and fees paid by the borro

314、wers,in compliance with the rules provided by the Supreme Peoples Court,and such costs shall be within the legally allowed annualized interest rate for private lending.According to the Provisions of the Supreme Peoples Court on Several Issues concerning the Application of Law in the Trial of Private

315、 Lending Cases promulgated on September 1,2015,in the event that the sum of the annualized interest that lenders charge and the fees we and our financial institution partners charge exceeds the 24%limit,and borrowers refused to pay the portion that exceeds the 24%limit,PRC courts would not uphold ou

316、r request to demand the portion of the fees that exceeds the 24%limit from such borrowers.If the sum of the annual interest that lenders charge and the fees we and our financial institution partners charge exceeds 36%,the portion that exceeds the 36%limit is invalid.The Supreme Peoples Court issued

317、the Several Opinions on Further Strengthening the Judicial Work in the Finance Sector in August 2017,if an online lending information intermediary and a lender intentionally collude to evade the interest rate ceiling as set out by the law through disguising 37Qifu Technology,Inc.|ANNUAL REPORT 2022I

318、TEM 3 KEY INFORMATIONloan interest as loan facilitation service fees,then such arrangements shall be declared invalid.On July 22,2020,the Supreme Peoples Court and the NDRC jointly released the Opinions on Providing Judicial Services and Safeguards for Accelerating the Improvement of the Socialist M

319、arket Economic System for the New Era,or the Opinions.The Opinions set out that if the interest and fees,including interest,compound interest,penalty interest,liquidated damages and other fees,claimed by one party to the loan contract exceed the upper limit under judicial protection,the claim will n

320、ot be supported by the court,and if the parties to the loan disguise the financing cost in an attempt to circumvent the upper limit,the rights and obligations of all parties to the loan will be determined by the actual loan relationship.On August 20,2020,the Supreme Peoples Court issued the Decision

321、 on Amending the Provisions of the Supreme Peoples Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases,or the Judicial Interpretation Amendment,which was revised on January 1,2021 and amended the upper limit of private lending interest rates under judicial

322、 protection.According to the Judicial Interpretation Amendment,if the service fees or other fees that we charge are deemed to be loan interest or fees related to loans(inclusive of any default rate and default penalty and any other fee),in the event that the sum of the annualized interest that lende

323、rs charge and fees we and our financial institution partners charge exceeds four times the one-year Loan Prime Rate at the time of the establishment of the agreement,or the Quadruple LPR Limit,borrowers may refuse to pay the portion that exceeds the Quadruple LPR Limit.In that case,PRC courts will n

324、ot uphold our request to demand the payment of fees that exceed the Quadruple LPR Limit from such borrowers.If borrowers have paid the fees that exceed the Quadruple LPR Limit,such borrowers may request us to refund the portion exceeding the Quadruple LPR Limit and the PRC courts may uphold such req

325、uests.The aforementioned one-year Loan Prime Rate refers to the one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center on the 20th of each month starting from August 20,2019,and the one-year loan market quoted interest rate issued by the National Bank Interban

326、k Funding Center on March 20,2023 was 3.65%.We cannot assure you that the one-year loan market quoted interest rate and the Quadruple LPR Limit will not decrease further in the future.On December 29,2020,the Supreme Peoples Court issued the Reply to Issues Concerning the Scope of Application of the

327、New Judicial Interpretation on Private Lending,or the Supreme Peoples Court Reply,which clarified that seven types of local financial organizations,including micro-lending companies,financing guarantee companies,regional equity markets,pawnshops,financing lease companies,commercial factoring compani

328、es and local asset management companies under the regulation of local financial regulatory authorities,are financial institutions established upon approval by financial regulatory authorities.The Judicial Interpretation Amendment is not applicable to disputes arising from their engagement in relevan

329、t financial businesses.Although the Judicial Interpretation Amendment and the Supreme Peoples Court Reply provide that they do not apply to licensed financial institutions,including micro-lending companies that conduct loan and Credit-Tech business,there remain uncertainties in the interpretation an

330、d implementation of the Judicial Interpretation Amendment,including whether licensed financial institutions may be subject to its jurisdiction under Circular 141 or in certain circumstances,the basis of the calculation formula used to determine the interest limit,the scope of inclusion of related fe

331、es and insurance premiums,as well 38ITEM 3 KEY INFORMATIONas inconsistencies between the standard and level of enforcement by different PRC courts.We cannot assure you that there will not be interpretations of the Judicial Interpretation Amendment expanding its jurisdiction to cover licensed financi

332、al institutions,nor can we guarantee that there will not be any changes to the detailed calculation formula used to determine the interest limit,that our future fee rates will not be lowered as a result of the Quadruple LPR Limit,or that the Quadruple LPR Limit will not be applied to our historical

333、and legacy products where the related dispute cases are accepted by PRC courts of first instance on or after August 20,2020.In such cases,we and our financial institution partners may be required to repay certain borrowers if our historical and legacy loan products are deemed to have violated the applicable laws and regulations concerning the limit of lending interest and fee rates.Our business,re