New regulations implemented, regulatory interviews conducted, Lexin faces the strictest compliance test

Article by｜Bullet Finance

Spring 2026, for China’s loan facilitation (助贷) industry, is destined to be a watershed season.

On March 13, a notice from the State Administration of Financial Regulation drew widespread attention—five loan facilitation platforms’ operating entities, including Fenqile, Qifu Zaitiao, and others, were collectively summoned for interviews. Persistent issues such as misleading marketing, unclear interest and fee charges, and non-compliant collections were singled out for focused attention.

Just two days later, on March 15, the State Administration of Financial Regulation and the People’s Bank of China jointly released the “Provisions on Clearly Stating the Comprehensive Financing Cost for Personal Loan Business.” The regulation makes it clear that starting August 1, 2026, all personal loan businesses must present the annualized comprehensive financing cost to borrowers in full through a single standardized “one-sheet disclosure.” The upper limit on the comprehensive interest rate is firmly locked at within 24%.

The regulator’s “combination of measures” came swiftly and in quick succession.

Against this backdrop, on March 19, the parent company of the Fenqile platform—Lexin—released its fourth-quarter financial report and its full-year financial report.

This is Lexin’s first complete quarterly set of results since the new loan-facilitation rules took effect on October 1, 2025. What it reveals goes far beyond fluctuations in one company’s performance—it is the end of an old model and the pain of a new beginning.

1. New rules take effect, and the pain intensifies

On October 1, 2025, the State Administration of Financial Regulation’s “Notice on Strengthening the Management of Internet Loan Facilitation Business by Commercial Banks” was formally implemented. It clearly requires that the comprehensive financing cost of loan facilitation business must not exceed 24%, and it strictly prohibits disguising interest rate increases through ways such as fee-splitting and unclear interest and fee charges.

The comprehensive decline in Lexin’s data in its Q4 2025 financial report first fully presents the impact this policy has brought to the company.

The financial report shows that in Q4 2025, Lexin achieved revenue of 3.043 billion yuan, down 16.8% year over year from Q4 2024. Net profit attributable to ordinary shareholders of the company was 214 million yuan, down 41% year over year; quarter over quarter it fell 13.1%. Adjusted net profit attributable to ordinary shareholders was 239 million yuan, down 38.9% year over year.

From the specific business perspective, after the new rules took effect, the company’s three core businesses driven by the loan-facilitation model showed trends of credit contraction, “tech slimming,” and an e-commerce breakthrough. The days when scale growth was the norm have already come to an end.

In Q4 2025, the credit matching business with the highest revenue share for Lexin achieved revenue of 2.485 billion yuan, down 8.4% year over year. The decline was due to reduced loan facilitation conveniences and service fee income: the annualized interest rate for off-balance-sheet loans fell and the issuance volume contracted, causing this segment’s revenue to drop from 1.624 billion yuan to 1.293 billion yuan.

The technology-enabled business, which had originally been expected to deliver strong results for Lexin, achieved revenue of 170 million yuan, down 71.7% year over year, and its share of business revenue also fell from 16.45% in Q4 2024 to 5.59% in the same period this year.

After the new rules took effect, high-priced loan businesses accelerated their clearing. On the one hand, Lexin’s own credit scale contracted, reducing the demand for traffic steering. On the other hand, partner financial institutions strengthened their independent risk-control capabilities, lowering reliance on external technology services. The two factors combined led to a cliff-like drop in revenue from the technology-enabled business.

The brightest business in the financial report is the installment e-commerce business. In Q4 2025, it achieved revenue of 388 million yuan, up 12.5% year over year, and its share of the company’s total revenue also rose from 9.43% in the same period of 2024 to 12.75% this year.

But behind these impressive figures lies an awkward reality: the installment e-commerce business currently accounts for a small proportion of Lexin’s overall business. In 2025, its full-year revenue was only 1.509 billion yuan, representing just 11.5% of total revenue—about one-sixth of the revenue from the credit matching business (9.562 billion yuan).

In other words, although Lexin’s installment e-commerce is growing and performs better than other businesses in terms of growth, it still cannot hold up the overall picture, nor has it been able to stop the company’s downward performance trend.

The deeper issue is the fragility of the business model. While the Fenqile Mall has expanded into multiple categories, it still heavily depends on the 3C category and is deeply affected by the smartphone and digital product upgrade cycle.

Moreover, when facing e-commerce giants such as JD.com and Tmall, Fenqile’s bargaining power within the supply chain is not necessarily superior. Depending on the loan facilitation business to survive, it cannot form an independent and self-contained profit cycle. Whether it can become the company’s second growth curve remains in doubt.

In addition, in Q4 2025, Lexin had 4.5 million active users, down 3.8% year over year. By the end of 2025, Lexin managed loans outstanding (in-loan balance) of 96.6 billion yuan, down 13.6 billion yuan compared with the same period of 2024—a decline of 12.4%, with the scale shrinking by over 10 billion yuan.

These data reflect not only the industry’s policy-imposed hard constraints on Lexin’s business model, but also expose the real pressure of the company’s new-and-old business handover during its transition period.

2. Growth is weak, yet dividends are increased against the trend

When core business continues to shrink and growth momentum faces a slowdown, Lexin’s dividend strategy, however, shows an “aggressive posture.”

In 2025, Lexin increased its dividend payout ratio twice within half a year—from 20% to 25%, and then to 30%. Full-year dividends per share were $0.382. This means that dividends per share increased by more than double compared with $0.182 in 2024.

On the surface, this seems like a signal of strong cash flow and sincere commitment to returning value to shareholders. But when Lexin’s dividend strategy is compared directly with the company’s fundamentals, contradictions become apparent.

In 2025, Lexin achieved full-year revenue of 13.152 billion yuan, down 7.4% year over year. Revenue from the core credit matching business was 9.562 billion yuan, down 13.07% year over year; this business accounted for 72.7% of total revenue. The full-year loan issuance amount was 205 billion yuan, down 3.2% year over year.

With multiple operating metrics declining, why did Lexin increase dividends against the trend? In response, “Bullet Finance” attempted to further understand Lexin, but as of the time of publication, no response had been received.

It is worth noting that Lexin’s gross profit fell in 2025—from 5.026 billion yuan in 2024 to 4.469 billion yuan. However, net profit attributable to ordinary shareholders of the company increased by 52.4% year over year in 2025—from 1.1 billion yuan in 2024 to 1.677 billion yuan.

Comparing the financial reports for 2024 and 2025, it is not hard to see that the core driver behind Lexin’s net profit rising against the trend comes from non-operating income and cost optimization.

The fair value changes of financial guarantee derivative instruments and fair value loans changed from a loss of 979 million yuan in 2024 to a profit of 508 million yuan in 2025. Just this item alone contributed positive returns of 1.487 billion yuan. In addition, provisions for contingent guarantee liabilities decreased by 481 million yuan, and financing costs declined by 97 million yuan; together these offset the impact of the gross profit decline, pushing Lexin’s net profit to rise significantly in 2025.

Lexin’s large increase in net profit in 2025 mainly relied on accounting adjustments such as fair value changes and release of provisions. These have one-time characteristics and are not driven by an improvement in the profitability of core credit businesses.

If the impact of the above factors is excluded, Lexin’s operating profit would actually show a downward trend. The company faces pressure from its core businesses: user shrinkage and contraction in loans outstanding. The sustainability of future profitability still faces considerable challenges.

值得关注的是，Lexin’s $60 million share repurchase program launched in July 2025. As of March 18, 2026, only about 80% had been completed, and it had not yet been fully executed. In a critical period when continuous funding is needed for business cultivation and compliance rectification, the company chose to return large portions of profits to shareholders via dividends, rather than using them to fulfill repurchase commitments or increase investment in the transformation.

Although Lexin used an intensified dividend approach to reward shareholders, the company’s share price still fell sharply over the year. From the intraday high of $11.33 on March 27, 2025, it dropped to an intraday low of $2.26 on March 23, 2026—a decline of 80%.

As of March 28, Lexin’s share price closed at $2.07, down 2.82% from the previous trading day. The company’s market capitalization was $348 million.

Clearly, investors care more about a company’s long-term growth potential than short-term dividends.

3. Regulatory summoning comes again, right when the new rules are counting down

For Lexin, 2026 is not only a year of transformation, but also a year of major compliance tests.

Until February 2026, Fenqile, Lexin’s subsidiary, still had compliance issues. One typical case is the online lending overdue incident involving Ms. Chen from Chuzhou, Anhui, reported by a news outlet, Big Wind, in February this year.

According to reports, during Ms. Chen’s time in college, from 2020 to 2021 she applied for five loans on Fenqile, totaling about 13,700 yuan, with annual interest rates ranging from 32.08% to 35.9%. In August 2022, Ms. Chen stopped repaying loans due to personal capability issues, leading to an overdue on the online loans. After more than 1,000 days, the total amount Ms. Chen had to repay, including principal and penalty interest, had reached about 26,900 yuan.

In February this year, topics such as “A woman trapped in a 400 yuan mini-loan with 36 installments” and “Borrow 13,000 yuan and repay 26,000 yuan” sparked discussions among netizens.

This case also has many疑点, such as the fact that in China, the “campus lending” business targeting college students had been shut down as early as 2017. In 2021, regulators further clarified that small-loan companies may not issue internet consumer loans to college students. So why could Ms. Chen still successfully complete multiple online loan applications through Fenqile during her college years in 2021?

Another example: the new loan-facilitation rules took effect on October 1, 2025, clearly requiring that a borrower’s annualized comprehensive financing cost must not exceed 24%. Why, in Big Wind’s February 2026 report, did Ms. Chen’s 400-yuan loan with 36 installments still show an annual interest rate of 35.6%?

Photo｜Big Wind

Similar situations are not unique. On March 13 this year, People’s Daily Online also reported a case involving Mr. Liu from Hunan. He disclosed that during his time in college, he took out multiple loans through the Fenqile platform, and among the more than ten loans, about 60% had a fee rate of 36%.

In addition, according to a recent report by Economic Observer, after traditional methods of indirectly raising interest rates via service fees, guarantee fees, and “double financing and guarantee” (双融担) were strictly prohibited, some installment platforms “package lending as consumption transactions.” By raising product prices, they not only obtain financial returns from installment loans but also earn additional profits from product markups.

Such behavior would also harm consumers’ interests and is currently in a regulatory gray area.

For the progress of the follow-up handling of what happened to Ms. Chen and Mr. Liu, and whether there is a practice of increasing product prices to earn high premiums by the Fenqile platform, “Bullet Finance” also attempted to learn more from Lexin, the parent company of Fenqile. However, as of the time of publication, no response had been received.

On March 13, regulators held centralized interviews with five loan facilitation platforms, including Fenqile and Qifu Zaitiao, requiring the relevant companies to clearly disclose loan interest and fee charges and standardize collections practices, among other things.

Two days later, the State Administration of Financial Regulation and the People’s Bank of China jointly released the “Provisions on Clearly Stating the Comprehensive Financing Cost for Personal Loan Business,” requiring that all personal loan businesses must provide disclosure of all interest and fee charges through a “one-sheet disclosure,” and that comprehensive financing cost be strictly controlled below 24%. The regulation will take effect on August 1, 2026.

For Lexin, this means there is less than half a year left for it to complete its rectification and to standardize its business.

During this period, Lexin not only needs to complete compliance adaptations for business processes and system overhauls, but also needs to drive other businesses beyond its loan matching business—from “supplementary income” to a “core engine.” Its currently weak second growth curve also makes this transformation goal full of challenges.

Looking back at Lexin’s development path, it has undoubtedly been a trendsetter in China’s financial technology wave. It was among the earliest to roll out online installment consumption, accumulating tens of millions of loan users and building a diversified ecosystem spanning credit, e-commerce, and technology. But when the era of high interest rates came to an end, transformation became unavoidable.

Overall, Lexin’s Q4 2025 and full-year financial reports revealed a harsh fact: the company’s old model has shown signs of decline, while other businesses beyond credit still appear underdeveloped. The warning sounded by the regulatory interviews and the pressure of the countdown to the implementation of the new rules are all urging Lexin to make fundamental changes.

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