X Financial ((XYF)) has held its Q2 earnings call. Read on for the main highlights of the call.
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X Financial’s recent earnings call painted a picture of robust financial health, marked by impressive growth in loan origination, revenue, and net income. The company also highlighted improvements in asset quality and a strong share repurchase program. However, despite these positive indicators, X Financial acknowledged the regulatory challenges it faces, which have led to a strategic decision to moderate loan facilitation in favor of maintaining asset quality. Overall, the sentiment was largely positive, tempered with caution due to the evolving regulatory landscape.
Significant Loan Origination Growth
X Financial reported a substantial increase in loan origination, facilitating RMB 38.99 billion in loans. This represents a 10.9% sequential increase and a remarkable 71.4% growth year-over-year. The surge was primarily driven by robust borrower demand, underscoring the company’s strong market position.
Strong Revenue Performance
The company achieved total revenue of RMB 2.27 billion, marking a 17.3% sequential rise and a 65.6% increase compared to the previous year. This growth was closely linked to the increased volumes in loan origination, demonstrating X Financial’s ability to capitalize on market opportunities.
Improved Asset Quality
X Financial reported significant improvements in asset quality, with the 31- to 60-day delinquency rate improving to 1.16% from 1.29% a year ago. Additionally, the 91- to 180-day delinquency rate decreased to 2.91% from 4.38%, indicating better borrower behavior and effective risk management strategies.
Increased Net Income and Earnings Per ADS
The company’s non-GAAP adjusted net income reached RMB 593.2 million, reflecting a 58.3% year-over-year increase. Earnings per ADS saw an even more impressive rise of 85.8%, highlighting X Financial’s strong profitability and operational efficiency.
Robust Share Repurchase Program
X Financial has been actively repurchasing shares, with approximately 16.7 million Class A ordinary shares repurchased. The company has USD 68.2 million remaining under its new USD 100 million share repurchase program, demonstrating its commitment to returning capital to shareholders.
Dividend Declaration
The board approved a cash dividend of USD 0.28 per ADS as part of its semiannual dividend policy, further emphasizing the company’s focus on providing value to its shareholders.
Regulatory Challenges
The evolving regulatory environment in China presents compliance challenges for X Financial. Despite these hurdles, the company remains proactive in engaging with authorities and aligning its operations with regulatory requirements.
Moderation in Loan Facilitation
Looking ahead, X Financial plans to moderate its loan facilitation for Q3 2025, projecting a range between RMB 32 billion and RMB 34 billion. This strategic shift aims to prioritize asset quality over volume growth, reflecting the company’s cautious approach amidst regulatory changes.
Forward-Looking Guidance
In its forward-looking guidance, X Financial expressed confidence in its financial trajectory, expecting loan origination for Q3 2025 to range between RMB 32 billion and RMB 34 billion. The company emphasized its focus on maintaining asset quality and profitability, even as it navigates regulatory changes. The ongoing share repurchase program and dividend policy further underscore its commitment to capital return.
In summary, X Financial’s earnings call highlighted a period of strong financial performance, with significant growth in loan origination, revenue, and net income. While the company faces regulatory challenges, its strategic focus on asset quality and shareholder returns positions it well for future success. The overall sentiment was positive, with a note of caution due to the regulatory environment.