Lufax Holding Ltd

Lufax reported total new loan sales of RMB 51.1 billion in Q2, up 4.6% year over year and 4.8% quarter over quarter. Consumer finance new loan sales were RMB 36.9 billion, up 27.6% year over year. Total outstanding loan balance was RMB 167.3 billion, down 13.5% year over year. On asset quality, C-M3 flow rate was 1.0% versus 1.2% in Q1; unsecured C-M3 was 1.0% and secured C-M3 was 0.9%; DPD 30+ excluding consumer finance was 5.8% versus 6.1%; and consumer finance NPL ratio was 1.3% versus 1.4%. Average LONGi pricing was 20.4%, flat sequentially and slightly higher year over year, consumer finance pricing was 19%, and funding cost by balance excluding consumer finance was 3.8%, about 90 bps lower year over year. Management said total income declined 15.5% year over year, but did not provide an EPS figure in the call. Forward-looking commentary focused on continued pressure from weak SMB demand and regulatory pricing compression, while management expects growth to come from consumer finance, a broader mid- to low-risk customer mix, lower costs, and improving profitability over time. Management also said current cash is appropriate for the business, and that the dividend policy would be reviewed with the Board once profitability targets are achieved.

Xiang Ji framed the quarter as a transition back to a more normal reporting cadence and a governance reset, highlighting completed reaudits, current SEC filings, regained NYSE compliance, and a strengthened board and compliance framework. Strategically, he said Lufax will focus on growing mid- to low-risk customers, improving efficiency with AI, and maintaining a dual-engine approach across small business lending and consumer finance. His tone was cautious on the near term because of weak demand and regulatory pressure, but constructive on the medium to long term, especially for compliant players with better controls.

No separate CFO spoke; Xiang Ji covered the financial points. He said total income fell 15.5% year over year because LONGi balances declined as small business demand stayed weak and underwriting remained prudent, partly offset by consumer finance growth of nearly 20% year over year. He also said net loss narrowed meaningfully versus last year, though credit costs remained elevated relative to the income base due to the macro environment and tighter regulation. On funding, he noted cost of funding by balance excluding consumer finance was 3.8%, around 90 bps lower year over year, and said current cash is appropriate relative to the business scale and regulatory needs.

Analysts focused on strategy durability, the rising mix of consumer finance, regulatory tightening, capital return, asset quality, and the Hong Kong share suspension. Management said consumer finance is expected to remain a growth engine, but the company will keep optimizing the mix between consumer and SME lending based on market conditions. On regulation and funding stress, management said tighter rules create short-term pressure but should help compliant platforms gain share over time. On capital return, management said cash is currently appropriate and that any dividend policy review would come after profitability targets are achieved. On Hong Kong, management said it has completed the reaudits and internal control upgrades, but is still answering HKEX questions tied to the relevant filings before any resumption timeline can be provided.