Qfin Holdings, Inc.

Q2 net revenue was CNY 3.57 billion, compared with CNY 3.91 billion in Q1 and CNY 5.22 billion a year ago. Revenue from credit-driven services was CNY 2.6 billion, while platform service revenue was CNY 969.8 million. Non-GAAP net profit was CNY 455 million, versus CNY 946 million in Q1 and CNY 1.85 billion a year ago. Loan facilitation and origination volume was approximately RMB 63.4 billion, down 2.5% sequentially, and average pricing of new loans was 18.2% versus 18.7% in Q1. C-M2 fell to 0.66% from 0.8% in Q1, the 30-day collection rate improved to 88.1% from 85.8%, and 90-day delinquency was 2.83% versus 3.5% in Q1. Sales and marketing expenses declined 13% sequentially and 40% year over year. Total new provision for risk-bearing loans was about CNY 1.72 billion, and the new provision booking ratio reached 5.36%. Cash from operations was about CNY 1.09 billion, total cash and short-term investments were CNY 10.63 billion, and leverage ratio was 2.1x. For Q3 2026, management expects non-GAAP net income of RMB 400 million to RMB 500 million, implying a year-over-year decline of 67% to 73%.

The CEO said the consumer finance industry is going through a structural shakeout driven by tighter regulation, weaker household leverage, and a late-June liquidity crisis that pressured the whole sector. He emphasized that Qfin is prioritizing compliance, risk management, and efficiency over scale, while refining user mix, funding mix, and collections to preserve resilience. He also pointed to progress in the company’s One Core, Two Wings strategy, including stronger tech solutions performance, AI agent wins with banks, and steady overseas expansion, while stressing that the company is taking a disciplined, long-term approach.

The CFO framed Q2 as a quarter shaped by industry-wide liquidity tightening and more stringent regulation, which drove lower loan volume, pricing, and profitability. He cited revenue of CNY 3.57 billion, non-GAAP net profit of CNY 455 million, a historical-high new provision booking ratio of 5.36%, and a one-off tax-related expense of about RMB 500 million that pushed the effective tax rate to 60.3%; he said the normalized rate should be around 20% going forward. He also said leverage fell to 2.1x, cash from operations was about CNY 1.09 billion, cash and short-term investments were CNY 10.63 billion, and the board approved a first-half 2026 dividend of USD 0.23 per Class A share, or USD 0.46 per ADS, with an approximately 30% payout ratio.

Analysts focused on the rise in liquidity pressure, worsening August risk trends, the ability of current provisions to absorb losses, and whether loan volume could recover if funding normalizes. Management said August risk metrics rose sharply, with early indicators up about 20% month over month and C-M2 expected to increase roughly 25% sequentially, and warned it may take 2 to 3 quarters to bring C-M2 back to a reasonable level. On provisions, management said the current level is more than sufficient even under extreme assumptions; on volume, they said July was hit by both funding constraints and tighter risk appetite, while August and September are more about deliberate caution, and they do not expect loan volume to return to Q2 levels anytime soon.