X Financial reported a 25% sequential increase in net income to RMB 47 million ($6.9 million) for the second quarter ended June 30, 2026, even as total net revenue declined 56.3% year-over-year to RMB 993.6 million ($146.4 million). The company’s non-GAAP adjusted net income rose 104.3% sequentially to RMB 166 million, though it remained 72% below the year-ago period.
Basic earnings per American Depositary Share (ADS) stood at RMB 1.26 ($0.19), up from RMB 0.96 in the prior quarter but down from RMB 12.6 in Q2 2025. Non-GAAP adjusted basic EPS reached RMB 4.44 ($0.65). Operating costs and expenses fell 22.9% sequentially and 50% year-over-year to RMB 798.6 million ($117.7 million), supporting a 38.6% sequential rise in operating income to RMB 194.9 million ($28.7 million).
Revenue from loan facilitation service fees plummeted 85.5% year-over-year to RMB 199 million, while guarantee income more than doubled to RMB 225 million. Finance income declined 13.2% to RMB 278 million, and post-origination service fees rose 41.2% to RMB 160 million. Loan origination volume dropped 70.2% year-over-year to RMB 11.63 billion, with the number of facilitated loans falling to approximately 910,000.
Active borrowers decreased 74.8% year-over-year to about 720,258, while the outstanding loan balance contracted 61.5% to RMB 24.97 billion. Credit quality metrics showed mixed trends, with the 31- to 60-day delinquency rate improving to 1.73% from 2.61% in Q1, though the 91- to 180-day rate rose to 9.09% from 9.95%.
Management highlighted a focus on credit quality, liquidity, and balance sheet strength, with Kent Li noting that conditions remain challenging. Frank Fuya Zheng, CFO, declined to provide quantitative guidance for Q3 2026, stating that visibility remains limited. The company repurchased 2.63 million ADS for $12.49 million between January and mid-August under a $100 million buyback program, leaving approximately $35.5 million remaining capacity.
X Financial also declared a semi-annual cash dividend of $0.28 per ADS, translating to a yield of over 20% based on the prior close of $5.39. Shares rose 2.41% in pre-market trading to $5.52.
