LexinFintech Profit Plunge
LexinFintech Reports 80 Percent Profit Drop Amid Strict Funding Tightening and Asset Quality Focus
Anonymous
Key Points
1
Gross profit dropped 61.0% year over year to RMB496 million, even as revenue fell 11.2%, due to higher provisions: contingent guarantee provisions rose 31.2% to RMB1,052 million and financing receivable provisions rose 60% to RMB410 million.
2
Non-lending segments now account for more than half of total volume, with installment retail transaction volume up 6.3% QoQ and TO B intelligent technology transaction volume up 8% QoQ; cumulative registered users reached 253 million, up 1.4% QoQ and 7.2% YoY.
3
Lexin repurchased about US$39 million of ADSs under its US$50 million share buyback program during the quarter.
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The board changed the dividend policy to an annual evaluation cycle and targets paying 30% of total net income as cash dividends.
LexinFintech's second-quarter 2026 earnings collapsed, with net income plummeting 80.2% year-over-year to just RMB101 million on revenue of RMB3.19 billion, TipRanks reported. The Chinese fintech firm is battling sector-wide funding constraints and has deliberately tightened lending to protect asset quality.
Despite the profit crash, loan originations edged up 4.8% to RMB55.4 billion, while outstanding loan principal fell 11.4%. Non-lending businesses—installment e-commerce and tech services—now drive more than half of transaction volume, signaling a strategic pivot away from core lending as the firm hunkers down through industry turmoil.
Provisions Surge as Gross Profit Halves
Gross profit cratered 61% year-over-year to RMB496 million, even though revenue fell just 11.2%, TipRanks noted. The gap widened because provisions skyrocketed. Contingent guarantee provisions jumped 31.2% to RMB1,052 million, while financing receivable provisions surged 60% to RMB410 million.
Lexin is bracing for deeper losses ahead. The company warned of significantly lower Q3 loan originations and flagged the potential for a net loss in the coming quarter as regulatory uncertainty and tight credit conditions persist.
Installment E-Commerce Surges While Core Lending Falters
Income from credit facilitation and tech-empowerment services plummeted, but installment e-commerce platform revenue climbed roughly 60.8%. Non-lending segments—retail transaction volume jumped 6.3% quarter-over-quarter and intelligent B2B technology volume rose 8%—now anchor the business model.
Cumulative registered users hit 253 million, up 1.4% sequentially and 7.2% year-over-year, MarketScreener reported. This diversification into higher-margin non-lending services is central to Lexin's multi-year ecosystem strategy as it tightens risk controls.
Dividend Policy Shifts and Buyback Pauses
Lexin reshaped its capital allocation policy to weather the downturn. The board switched to annual dividend evaluations and committed to paying 30% of total net income as cash dividends, MarketScreener reported.
The company repurchased about US$39 million of American Depositary Shares during Q2 under its US$50 million buyback program. Lexin's leadership stressed cost discipline, enhanced liquidity management, and AI-driven efficiency as the bedrock for long-term resilience amid industry headwinds.
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