LexinFintech Holdings Ltd reported a 49.7% sequential decline in second-quarter net profit as rising credit costs and funding pressures weighed on performance, while management warned of an expected loss in the third quarter.
The company posted net income of RMB 101 million for the three months ended June 30, down from RMB 201 million in the prior quarter. Revenue totaled RMB 3.19 billion, roughly flat from Q1, though net revenue combining credit and installment e-commerce segments fell 21.1% quarter-over-quarter to RMB 1.3 billion.
Loan origination volume declined 4.3% sequentially to RMB 55.43 billion, while credit business net revenue dropped 32.5% to RMB 981 million. Credit facilitation service income, a capital-heavy segment, fell 43.6% to RMB 508 million, while the capital-light tech empowerment service income decreased 14.4% to RMB 473 million. Installment e-commerce net revenue rose 58.7% to RMB 329 million, supported by a stable loan volume of RMB 2.3 billion and a gross margin increase to 14.1% from 9.4%.
Operating expenses fell 17.6% sequentially to RMB 1.2 billion, driven by a RMB 165 million reduction in sales and marketing costs. Credit costs rose 9.6% to RMB 1.4 billion, with the gross provision ratio for new capital-heavy loans at 7.8% and provision coverage at 230%. Cash and cash equivalents stood at approximately RMB 2.5 billion as of June 30, with shareholders' equity at RMB 12 billion and a current ratio of 2.03.
Delinquency metrics showed deterioration, with the day-1 delinquency ratio up 9.5% quarter-over-quarter and the 90-day-plus delinquency ratio rising from 3.5% to 3.6%. New loan FPD30 increased by 4.6% sequentially.
Management guided for a net loss in the third quarter, citing lower revenue, higher credit costs, one-time restructuring expenses, reduced loan volumes, and continued pressure on delinquency trends and collection rates. Operating costs are expected to decline by 30% to 40% over time due to organizational streamlining and AI automation. The board also shifted its dividend policy from semiannual to annual payments to optimize liquidity.
Chairman and CEO Jay Wenjie Xiao attributed the funding squeeze to industry-wide confidence crises triggered by peer risk events in late June, which led to broad-based tightening and suspension of funding supply. CFO James Xigui Zheng emphasized compliance as the company's operational bottom line, stating that operations remain subject to strict scrutiny.
Shares fell 17.54% to $0.973 in premarket trading following the results, extending a 9.32% decline from the prior close of $1.18. The stock has traded between $0.97 and $6.31 over the past 52 weeks, with a P/E ratio of 1.69 and a price-to-book multiple of 0.11.
