X Financial Maintains Disciplined Approach Amidst Challenging Conditions
X Financial reported its second-quarter 2026 earnings, highlighting a disciplined operating posture amidst challenging market conditions. The company facilitated and originated RMB 11.63 billion in loans, a decline of 70.2% year-over-year and 20.5% sequentially from the first quarter.
In line with its measured approach to originating in the current environment, X Financial continued to concentrate origination in internally operated channels where borrower quality and unit economics are strongest. The company refined underwriting criteria for newer vintages, extended automation across servicing and collections, and tightly controlled discretionary spending.
Notably, the average loan amount per transaction rose to RMB 12,712, up 8.3% from the prior quarter and 21.3% year-over-year, reflecting a shift in transaction mix toward higher-quality borrowers. X Financial served approximately 720,258 active borrowers in the quarter, down 74.8% year-over-year and 24.7% from the prior quarter.
As of June 30, the company's outstanding loan balance stood at RMB 24.97 billion, a decline of 61.5% from the same period of 2025 and 29.2% from the end of the first quarter. Credit quality trends showed encouraging sequential improvement in the second quarter, with both the 31-60 day delinquency rate (1.73%) and the 91-180 day delinquency rate (9.09%) improving from the prior quarter.
However, these rates remain well above prior year levels, and the 91-180 day rate is still elevated as earlier delinquency balances continue to season through the portfolio. X Financial's conservative stance on credit remains unchanged until improvement proves durable.
In a prepared statement, Mr. Kent Li emphasized that conditions remain challenging, and the company continues to prioritize credit quality, liquidity, and balance sheet strength over near-term origination volume. This disciplined approach has enabled X Financial to navigate the current environment effectively, despite the decline in loan originations and outstanding balances.
The company's financial performance for the second quarter was highlighted by Noah Kauffman, Chief Financial Strategy Officer, who noted that the pace of contraction moderated meaningfully from the first quarter, consistent with the measured approach to originating. X Financial's capital position and outlook were also covered in detail during the call.
