Profit decline helps the lending industry usher in a structural turning point

How will the new AI-assisted lending regulations catalyze the industry’s shift from scale to quality-driven growth?

Reporter Zheng Yu from China Business News, Shanghai

The assisted lending industry is entering a turning point in compliance transformation.

Since March 2026, internet financial technology companies (hereinafter referred to as “assist lending platforms”) including Qifu Technology (NASDAQ: QFIN; HKEx: 3660), Lexin (NASDAQ: LX), Xin Ye Technology (NYSE: FINV), Jiayin Technology (NASDAQ: JFIN), Xiaoying Technology (NYSE: XYF), and Yiren Zhike (NYSE: YRD) have successively disclosed their 2025 annual reports. Although their revenue and profit performances vary, their Q4 2025 results generally declined.

Zeng Gang, director of the Shanghai Financial and Development Laboratory, told China Business News that the “Notice on Strengthening the Management of Internet Assist Lending Business and Improving Financial Service Quality and Efficiency” (Jingui [2025] No. 9, hereinafter “new assist lending regulations”) that took effect in October 2025 is a trigger point but not the sole reason. The deeper logic is that internet consumer finance has entered a stock competition: user saturation, demand decline, rising customer acquisition costs, and exhausted endogenous growth drivers. The market has already reached an adjustment point; even without policy intervention, a turning point would occur.

Weak growth in the first three quarters, pressure in Q4

Looking at the full-year performance, leading assist lending platforms performed relatively steadily.

In 2025, Qifu Technology achieved revenue of 19.205 billion yuan, up 11.9% year-on-year, ranking first in the industry; net profit was 5.976 billion yuan, down slightly by 4%. Xin Ye Technology’s revenue was 13.57 billion yuan, up 3.8%; net profit was 2.55 billion yuan, up 6.6%, with both revenue and profit increasing. Lexin’s revenue was 13.152 billion yuan, with a net profit (adjusted net profit attributable to common shareholders) of 1.795 billion yuan, achieving significant year-on-year growth.

In the second tier, in terms of revenue, aside from Yiren Zhike’s total net income of 5.7192 billion yuan (about $817.8 million), down 1% from 5.8059 billion yuan in 2024, Xiaoying Technology’s revenue was 7.639 billion yuan, and Jiayin Technology’s was 6.222 billion yuan, both maintaining positive year-on-year growth. In terms of net profit, Jiayin Technology’s net profit grew 45.36% to 1.5237 billion yuan; Yiren Zhike and Xiaoying Technology saw declines in net profit.

Notably, major assist lending platforms all experienced varying degrees of contraction in Q4 2025, the first quarter after the new regulations took effect.

In Q4 2025, Qifu Technology’s revenue was 4.093 billion yuan, down 8.7% year-on-year; net profit was 1.016 billion yuan, down 29.1%. Xin Ye Technology’s revenue was 3.02 billion yuan, down 12.53%; net profit was 420 million yuan, down 38.91%. Lexin’s revenue was 3 billion yuan, down 16.8%; net profit was 214 million yuan, down 41%.

Zeng Gang said that this decline is both a one-time adjustment due to the new regulations and reveals a fundamental shift in industry growth logic. “The October new regulations lowered interest rates, impacting Q4, but cannot explain the growth slowdown seen in the first three quarters. The key is that profit declines far exceeded quarterly fluctuations, indicating that the interest rate cap, leverage constraints, and the list system have permanently changed the business model, not just temporarily restricted it.”

Zeng Gang pointed out that the era of maintaining high profits through high interest spreads has ended; platforms must adapt to the “micro-profit” new normal. This is a structural turning point, not a simple digestion phase.

In terms of loan disbursement data reflecting operational scale, the contraction trend is also evident. In Q4 2025, Qifu Technology facilitated loans totaling 70.3 billion yuan, down 15.6% quarter-on-quarter and 21.8% year-on-year; the outstanding loan balance at the end of 2025 was 126.012 billion yuan, down 8.0% year-on-year. Xin Ye Technology’s transaction volume was 38.7 billion yuan, down 28.3%; the loan balance was 68.3 billion yuan, down 2.1%. Lexin’s transaction volume was 50 billion yuan, down 3.8%; the loan balance was 96.6 billion yuan.

Some institutions face even greater pressure. Yiren Zhike’s full-year 2025 revenue was 5.719 billion yuan, a slight decrease of 1%; but net profit was only 40.5 million yuan, a 97.4% drop. The main reason is the impact of the new assist lending regulations and rising industry credit risks, prompting the company to actively shrink.

Bo Tong Consulting chief analyst Wang Pengbo told reporters that the core reason for the collective profit decline in Q4 2025 is the one-time adjustment caused by the implementation of the new regulations combined with industry logic reshaping. In the short term, it is a phase of active scale contraction by institutions; in the long term, interest rate caps and the list system have fundamentally changed the old model relying on high interest and high leverage expansion.

Early signs of risk indicator turning point

In Q4 2025, the overall upward trend of industry risk indicators was one of the most concerning issues.

Many companies’ overdue rate indicators increased. Except for Lexin’s 90+ days overdue rate decreasing by 0.1% quarter-on-quarter in Q3, according to disclosures from Qifu Technology and Xin Ye Technology, by the end of 2025, the overdue rates for loans over 90 days issued through their platforms were 2.71% and 2.85%, respectively, compared to 2.09% and 1.96% in Q3 2025.

Many market participants believe this is partly related to the concentrated adjustments after the new regulations, and also reflects a deep transformation from scale-driven to quality-driven industry. Notably, several leading institutions have observed marginal improvements in asset quality at the beginning of 2026, suggesting the industry may be entering a new turning point after the adjustment.

However, some internal sources from companies say that they have accelerated clearing existing risks by proactively tightening risk controls. “In Q4 2025, the company actively tightened credit thresholds and reduced high-risk customer loans, prioritizing asset quality over scale expansion. As a result, the new loan FPD30 (first month overdue over 30 days) risk indicator decreased by 18% quarter-on-quarter in Q4, with December’s FPD30 approaching the best levels in the past two years. This trend is continuing into 2026, with the overall risk indicator C-M2 in February returning to the levels of July and August 2025.”

Another assist lending platform operator also believes that overall industry risk increased in Q4, leading many companies to tighten credit and risk exposure, resulting in higher-quality new loans. Meanwhile, high-risk existing assets are gradually being cleared, and early signs of risk improvement have been observed in early 2026.

Senior researcher Su Xiaorui from Su Xi Zhiyan said that the scale indicators of disclosed assist lending companies generally contracted, and actively “braking” has become a consensus—loan volumes and outstanding balances declined; in terms of financial metrics, profitability diverged, with some companies seeing both revenue and net profit increase, others decreasing. Under asset quality pressure, risk control strategies are generally tightening.

Wang Pengbo added that after years of rapid growth, customer penetration is nearing saturation, co-debt risks are accumulating, and asset quality is under pressure. The industry is entering an adjustment cycle driven by policy and industry cycles, creating a performance inflection point.

Ongoing transformation, challenges remain

Zeng Gang told reporters that in the first half of 2026, platforms are expected to face continued revenue pressure, with declining interest rates directly reducing per-transaction income, and ongoing scale contraction. He suggested that to achieve a 20% target, platforms need to further optimize product structures, significantly increase the proportion of low-interest-rate products, and strictly control high-risk, high-priced customer segments.

The sustained decline in interest rates has already shown impacts on industry performance and valuation. Recently, listed company Focus Media announced the exit of its investment in Shuhe Technology, which reported a net loss of about 684 million yuan in Q4 2025. The valuation of Focus Media’s 54.97% stake in Shuhe Technology has been impaired by up to 73.45%.

Against the backdrop of slowing scale growth, the operating logic of fintech platforms is undergoing profound change, shifting from “scale priority” to “quality and efficiency priority.”

Qifu Technology stated it will actively reduce pricing and comply with leverage interest rate rules. In 2025, the loan volume of JinKe business increased by 448% year-on-year; there is no fixed target for 2026. The strategy focuses on high-quality customers, optimizing pricing, light-asset profit sharing, AI credit products, and expanding overseas.

Lexin is focusing on physical consumption scenarios: in Q4 2025, the transaction volume of Fenqi Le Mall increased by 94.5% year-on-year, and consumer goods increased by 383.14%, with some categories growing over 100% month-on-month. Management emphasized three points on the conference call regarding mall compliance: “Physical consumption to combat cash-out, self-operated models, and pricing aligned with mainstream e-commerce.”

Xin Ye Technology stated that in 2025, its international transaction volume reached 14 billion yuan, up 38.6% year-on-year; international business revenue was 3.3 billion yuan, up 32.0%, accounting for 24.6% of total net revenue. The international segment contributed a record 31.4% of revenue in Q4.

Zeng Gang added that in the long term, the traditional assist lending industry will completely bid farewell to the “easy money” era and transform into comprehensive financial technology service providers or vertical industry financial service providers.