LexinFintech (NASDAQ:LX) executives said the company navigated a major regulatory transition in the fourth quarter of 2025 by reshaping its business mix, tightening risk controls, and leaning on a diversified ecosystem that helped drive a rebound in user activity.
Chairman and CEO Jay Wenjie Xiao said the company “optimized” operations under the new regulatory framework and “successfully achieved” goals of stabilizing scale and mitigating risk. He added that the company’s multi-business ecosystem showed “differentiated advantages” during an industry adjustment period, contributing to a “significant rebound” in active users.
Quarter and full-year operating metrics
Chief financial officer James Xigui Zheng said the fourth quarter was the first period after the new regulatory framework officially came into force. The company said it followed the requirement that the comprehensive interest rate for all new loans be capped at or below 24%.
Regulatory-driven pricing changes and their impact
Zheng said fourth-quarter net income was RMB 214 million, a sequential decline he attributed to several factors discussed on the call:
- Pricing adjustments to comply with the 24% cap
- A contraction in loan volume tied to a prudent strategy to manage risk exposure
- Higher credit costs and more conservative provisioning amid increased market volatility
- Operating expenses that did not fall proportionately with revenue due to fixed costs and seasonal expense recognition
Within the credit business, Zheng said net revenue (credit facilitation service income plus tech-empowerment service income, net of credit costs and funding costs) was RMB 1.4 billion, down RMB 586 million quarter over quarter. He said the decline reflected a RMB 132 million drop in credit facilitation service income from reduced online consumer finance loan volume and lower overall pricing, as well as an approximately RMB 185 million increase in credit costs. Zheng added that tech-empowerment service income fell RMB 286 million mainly due to the wind-down of the ICP business, partially offset by growth in value-added services.
He also disclosed that the weighted average APR of new loans originated in the quarter was 21.7%, down 140 basis points from the prior quarter.
Risk trends and portfolio actions
Chief risk officer Arvin Zhanwen Qiao described a challenging backdrop following the implementation of new loan facilitation regulations, which he said contributed to liquidity tightening and headwinds across industry scale and risk. Qiao said LexinFintech maintained a “disciplined” approach, increasing the mix of prime assets and optimizing portfolio structure.
Qiao said the day-one delinquency ratio of total assets increased 7% quarter over quarter and the 90-days-plus delinquency ratio increased 3% quarter over quarter. However, he said risk indicators peaked in October and then declined modestly in November and December, with December’s day-one delinquency ratio down 8% compared with October. Xiao separately noted that since January and February 2026, several risk indicators improved, including a day-one delinquency ratio decrease of more than 10% from an October peak.
Executives outlined several risk initiatives implemented in the quarter, including:
- Accelerating risk model iteration with automated weekly updates that incorporate new default samples
- Expanding real-time data inputs (including cross-platform borrowing and delinquency history, leverage, income, and employment stability) to strengthen transaction interception and credit exposure controls for higher-risk profiles
- Enhancing early-stage delinquency management with improved identification of high-risk cohorts, adjusted repayment reminder frequency, and upgrades to auto-deduction and payment-clearing infrastructure
- Tailoring credit line allocation, pricing, and repayment strategies for prime segments, alongside more customized service and manual review for larger-ticket loans
Looking ahead, Qiao said the company plans to sustain rigorous risk controls through the first half of 2026 to reinforce the downward trajectory and bring risk back within its target risk appetite.
E-commerce, AI deployment, and shareholder returns
Xiao said the installment e-commerce business remained integrated with daily consumption scenarios, with supply chain optimization and expanded offerings across categories such as food, apparel, and household goods. He said promotional activity around Double 11 and Double 12, including interest-free initiatives, helped drive user engagement and transaction performance. Qiao added that the company provided temporary credit lines to support larger-ticket purchases, particularly in consumer electronics, and offered 12- and 24-month interest-free installment campaigns for top-tier prime customers.
Zheng reported that e-commerce net revenue (e-commerce revenue net of cost of inventory sold) increased RMB 56 million to RMB 167 million. He said gross profit was RMB 167 million and that e-commerce gross margin reached 7.8%, up 295 basis points quarter over quarter.
On AI, Xiao said customer service AI agents were deployed across credit approvals, transactions, and repayments, with response accuracy above 90% and average response time under three seconds. He highlighted a 3.4% human intervention rate in the credit approval stage and said the company aims to expand automated services to cover nighttime hours to move toward 24/7 service. Xiao and Zheng also discussed applying large models in compliance quality assurance and risk strategy generation.
Zheng said funding costs fell to 3.8% in the fourth quarter from 4.4% in the third quarter, citing ample funding supply after policy changes. He added that as of Dec. 31 the company had approximately RMB 4.0 billion in cash (including cash equivalents and restricted cash) and about RMB 12 billion in shareholders’ equity.
On capital returns, Zheng said that as of March 2026 the company had repurchased $39 million of ADSs, and Xiao said he completed a personal purchase of more than $10 million of ADSs. The board approved a dividend of $0.188 per ADS, bringing total dividends for 2025 to $0.2382 per ADS, which management said was more than a 100% increase from $0.182 in 2024. Xiao also said the dividend payout ratio was raised to 30% of semi-annual net profit starting in the second half of 2025, and management plans to continue executing the remaining portion of the current repurchase program while evaluating additional initiatives based on market dynamics and operational needs.
For early 2026, Zheng said the company expects total loan origination to remain relatively stable in the first quarter versus the fourth quarter, and he said management was not providing full-year financial guidance due to macro uncertainty and lower visibility. Executives said key variables for performance include volume mix (including the pace of revenue recognition in tech-empowerment), further proactive pricing reductions, funding costs, credit costs as risk stabilizes, and ongoing cost-reduction initiatives.
About LexinFintech (NASDAQ:LX)
LexinFintech Holdings Ltd. (NASDAQ: LX) is a China-based consumer finance and digital banking platform primarily serving young, underbanked consumers. The company’s core offering is point-of-sale installment financing, enabling eligible customers to split purchases into fixed monthly payments with transparent fees. Leveraging proprietary data analytics and credit scoring models, LexinFintech underwrites consumer loans for online purchases and provides credit lines that support a variety of retail and e-commerce transactions.
In addition to its flagship installment loan service, LexinFintech has developed wealth management and fintech-as-a-service products.
