X Financial Q4 Earnings Call Highlights

Management purposely moderated originations to prioritize portfolio health, with Q4 loans of RMB 22.77 billion (down 29.5% YoY and 32.3% QoQ) and active borrowers declining about 20% year‑over‑year as the company emphasized risk discipline over volume.
Credit metrics deteriorated sharply—31–60 day delinquency rose to 2.9% and 91–180 day to 6.31%—and the company took RMB 669.3 million of credit-related provisions, driving Q4 operating income and margins to near‑zero levels versus much stronger prior periods.
Regulatory changes, notably "Notice Nine" (effectively imposing a ~24% annual cost ceiling for loans and new whitelist requirements for bank partners), introduce significant uncertainty around pricing and funding and could materially impair future results.
X Financial (NYSE:XYF) said it deliberately slowed activity in the fourth quarter of 2025 to remain aligned with evolving supervisory expectations and to prioritize credit quality as industry conditions became more challenging.
Origination activity moderated as management prioritized risk discipline
President Kan Li said the company “continued to operate with heightened discipline” in the fourth quarter, noting that after a strong first half of the year, management intentionally moderated activity in Q4 to protect portfolio health and focus on prudent risk management rather than near-term volume growth.
During the quarter, the company facilitated and originated RMB 22.77 billion in loans, which Li said represented a 29.5% decline year-over-year and a 32.3% decline from the prior quarter. For the full year 2025, X Financial facilitated and originated RMB 130.6 billion in loans, up 24.5% from RMB 104.9 billion in 2024, reflecting scale achieved earlier in the year despite the more cautious posture in the second half.
Operationally, borrower activity fell in Q4. The company served about 1.69 million active borrowers, down 20.2% from a year earlier and down 30.7% sequentially. It facilitated about 2.47 million loans in the quarter, and the average loan amount per transaction was RMB 9,226. X Financial ended the quarter with RMB 50.5 billion in outstanding loan balance, down 3.6% from the same period of 2024.
Credit metrics worsened; underwriting and collections tightened
Li said the company observed “continued credit pressure” consistent with broader market trends and a more cautious industry-wide risk posture. As of Dec. 31, the company’s 31-to-60 day delinquency rate rose to 2.9%, compared with 1.85% at the end of Q3 and 1.17% a year earlier. The 91-to-180 day delinquency rate increased to 6.31%, compared with 3.52% at the end of Q3 and 2.48% a year earlier.
In response, management said it tightened underwriting criteria, enhanced collection strategies, and adjusted capital deployment to preserve balance sheet resilience. Li said the company chose to prioritize stability and risk management as credit costs increased, acknowledging the approach affected short-term earnings but was intended to strengthen the foundation of the business.
Regulatory developments added uncertainty for pricing and funding relationships
Chief Financial Strategy Officer Noah Kauffman said the regulatory environment governing internet-based lending in China “continued to evolve meaningfully during 2025,” with regulators strengthening oversight across the consumer credit chain.
Kauffman highlighted “Notice Nine,” issued by the National Financial Regulatory Administration on April 1, 2025. He said the notice requires commercial banks to strictly control total borrowing costs and that, while it does not explicitly specify a hard cap, “in practice, a 24% per annum ceiling on total borrowing costs for a single loan is generally being implemented and enforced across the industry.” He cautioned that pricing pressure may extend beyond that level, noting that authorities have continued to tighten borrowing cost caps applicable to microcredit and consumer finance companies and those entities “may face de facto requirements set below that level.”
Kauffman said the pace and manner of implementation across different institution types and jurisdictions remain uncertain, and management said it does not have a reliable basis to predict the ultimate scope or trajectory of limitations. He also warned that if requirements are implemented as currently understood, the company’s operating results would be “adversely and materially affected relative to prior years,” adding that investors should not assume historical profitability levels are indicative of future performance, including the possibility of operating losses in future periods.
He added that Notice Nine requires commercial bank head offices to implement whitelist management systems for loan facilitation platform operators and prohibits cooperation with institutions not on those lists, introducing uncertainty around funding relationships. Separately, he cited payment institution rating measures issued by the People’s Bank of China in December 2025 as extending oversight further across the lending chain, increasing compliance burdens and costs for industry participants.
Fourth-quarter revenue and profitability declined amid higher provisioning
For the fourth quarter of 2025, Kauffman said total net revenue was RMB 1.47 billion ($209.9 million), down 14.1% year-over-year and down 25.1% sequentially. Total operating costs and expenses were RMB 1.45 billion ($207 million), down 9.5% sequentially but up 22.3% year-over-year, which management attributed primarily to materially higher credit-related provisions.
Kauffman said credit-related provisions were the primary factor weighing on results, totaling RMB 669.3 million ($95.7 million) due to higher expected credit losses and a more conservative provisioning approach in response to elevated risk indicators. He also said the company reduced discretionary spending, including borrower acquisition and marketing expense of RMB 212.2 million ($30.3 million), which he described as a substantial reduction versus both the prior quarter and the year-ago period.
Income from operations was RMB 20.2 million ($2.9 million), down 96.2% year-over-year and down 94.4% sequentially, with operating margin at 1.4% versus 18.5% in Q3 and 30.7% a year earlier. Net income was RMB 57.2 million ($8.2 million), compared with RMB 421.2 million in Q3 and RMB 385.6 million in the year-ago quarter. Net profit margin was 3.9% versus 21.5% in the prior quarter and 22.6% a year earlier. Kauffman said return on equity declined to 2.9% due to the lower quarterly net income.
Full-year results showed higher revenue but lower margins; share repurchases continued
Chief Financial Officer Frank Fuya Zheng reported that for full-year 2025, total net revenue was RMB 7.64 billion ($1.09 billion), up 30.1% from RMB 5.87 billion in 2024. Income from operations was RMB 1.63 billion ($233.1 million), compared with RMB 1.87 billion in 2024, and operating margin was 21.3% versus 31.9% in the prior year, which Zheng attributed to higher credit-related provisions and a more cautious posture in the second half.
Net income for 2025 was RMB 1.46 billion ($209.4 million), compared with RMB 1.54 billion in 2024, and GAAP net profit margin was 19.2% versus 26.2% in 2024. On a non-GAAP basis, adjusted net income was RMB 1.56 billion ($223 million), compared with RMB 1.54 billion in 2024. Zheng also provided per-ADS figures for the full year: net income per ADS of RMB 36 ($5.15) basic and RMB 35.22 ($5.04) diluted, compared with RMB 31.98 basic and RMB 31.50 diluted in 2024.
On the balance sheet, Zheng said that as of Dec. 31, 2025, total assets were RMB 14.667 billion ($2.1 billion), total liabilities were RMB 6.83 billion ($976.5 million), and total shareholders’ equity was RMB 7.84 billion ($1.12 billion). He described the company’s balance sheet as solid and discussed cash and restricted cash figures, while also emphasizing liquidity preservation as a near-term priority.
Regarding capital returns, Zheng said that as of March 15, 2026, the company had repurchased about 3.79 million ADS under its $100 million share repurchase program for total consideration of about $53.85 million, leaving about $46.15 million remaining. The program is effective through Nov. 30, 2026, and repurchases may be modified or suspended at management’s discretion.
Looking ahead, management maintained a cautious stance given limited visibility into how regulatory measures will be implemented across jurisdictions. Zheng said the company is prioritizing asset quality, disciplined risk management, cost control, and preservation of liquidity and operational flexibility as it adapts to evolving regulatory expectations.
About X Financial (NYSE:XYF)
X Financial (NYSE:XYF) is a Beijing-based online credit marketplace focused on providing diversified financing solutions to individuals and small- and medium-sized enterprises (SMEs) in China. The company was established in 2014 and completed its initial public offering on the New York Stock Exchange in 2016. Since inception, X Financial has built a technology-driven platform that connects borrowers with a network of institutional investors, banks and other funding sources, aiming to streamline access to credit and improve lending efficiency.
The company's core offerings include consumer loans, SME loans, real estate-secured financing and wealth management products.