X Financial (NYSE: XYF) loans plunge 70% as credit risks stay elevated
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Filing Sentiment
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Form Type
6-K
Rhea-AI Filing Summary
X Financial (NYSE: XYF) reported sharply weaker results for the quarter ended June 30, 2026, with total net revenue of RMB993.6 million, down 56.3% year-over-year and 15.5% sequentially, driven mainly by a steep drop in loan facilitation volumes.
Loan originations were RMB11.6 billion, down 70.2% year-over-year, and active borrowers fell 74.8% to 720,258. Despite this, the company remained profitable: net income was RMB47.0 million (down 91.1% year-over-year but up 23.8% quarter-over-quarter), while non-GAAP adjusted net income was RMB165.8 million, more than doubling sequentially.
Asset quality showed mixed trends. The 31–60 day delinquency rate improved quarter-over-quarter to 1.73% but rose from 1.16% a year earlier; the 91–180 day rate was 9.09%, down slightly from the prior quarter but well above 2.91% last year. Return on equity dropped to 2.4% from 27.9% a year ago. Liquidity remained solid with total cash (including restricted) of about RMB1.96 billion and an equity-to-assets ratio of 64.1%, though management highlighted that evolving PRC internet-lending regulation could materially and adversely affect future results.
Positive
- Company remained profitable with quarterly net income of RMB47.0 million and non-GAAP adjusted net income of RMB165.8 million, both improving sequentially.
- Operating margin rose to 19.6% from 12.0% in the prior quarter, supported by a 22.9% sequential reduction in total operating costs and expenses.
- Short-term asset quality indicators improved sequentially, with the 31–60 day delinquency rate falling to 1.73% from 2.61% and aggregate credit-related provisions down 35.3% quarter-over-quarter.
- Balance sheet appears strong, with total cash (including restricted) of about RMB1.96 billion, shareholders’ equity of RMB7.76 billion, and an equity-to-assets ratio of approximately 64.1%.
Negative
- Core activity has contracted severely: total loan amount facilitated fell 70.2% year-over-year to RMB11.6 billion, and active borrowers declined 74.8% to 720,258.
- Total net revenue dropped 56.3% year-over-year to RMB993.6 million, with loan facilitation service fees down 85.5%, pressuring the company’s growth profile.
- Profitability deteriorated versus last year, as net income declined 91.1% and return on equity fell to 2.4% from 27.9% in the prior-year quarter.
- Credit risk remains elevated versus a year ago: the 91–180 day delinquency rate was 9.09%, up from 2.91%, despite modest sequential improvement.
- Management disclosed that evolving PRC internet-lending regulation could materially and adversely affect operating results, and that historical profitability may not be indicative of future performance.
