X Financial Reports 2025 Profit Decline and Deteriorating Asset Quality Amidst Strong Revenue Growth
Summary
X Financial reported strong revenue growth in 2025, but net income declined due to a sharp increase in loan delinquency rates and credit-related provisions. The company continued significant share repurchases and increased dividends.
Key Events
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Net Income Declined Despite Revenue Growth
Total net revenues increased by 30.1% to RMB 7,639.4 million (US$1,092.4 million) in 2025, but net income decreased by 4.9% to RMB 1,464.6 million (US$209.4 million) compared to 2024.
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Significant Deterioration in Asset Quality
Delinquency rates for loans 31-60 days past due more than doubled from 1.17% in 2024 to 2.90% in 2025. Similarly, 31-90 day delinquency rates rose from 2.09% to 5.21%, and 91-180 day rates from 2.48% to 6.31%.
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Increased Credit-Related Provisions
Provision for contingent guarantee liabilities surged from RMB 241.7 million in 2024 to RMB 1,001.3 million (US$143.2 million) in 2025, reflecting higher credit risk and a more conservative provisioning stance.
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Substantial Share Repurchase Program
The company repurchased approximately US$67.9 million worth of Class A ordinary shares and ADSs in 2025. A new program for up to US$100 million was approved in May 2025, effective through November 2026.
Analysis
X Financial's 2025 annual report reveals a complex financial picture. While total net revenues grew significantly by 30.1% to RMB 7,639.4 million, net income decreased by 4.9% to RMB 1,464.6 million. This profit contraction was primarily driven by a sharp deterioration in asset quality, with delinquency rates for loans 31-60 days past due more than doubling from 1.17% in 2024 to 2.90% in 2025. Provisions for contingent guarantee liabilities, accounts receivable, and loans receivable increased substantially, reflecting a more conservative provisioning stance and challenging macroeconomic conditions in China. The company also announced a change in its independent registered public accounting firm from KPMG Huazhen LLP to Deloitte Touche Tohmatsu Certified Public Accountants LLP in May 2025, though Deloitte issued an unqualified opinion and prior material weaknesses in internal controls were remediated. Despite the operational headwinds, X Financial continued its capital return strategy, repurchasing approximately US$67.9 million in shares and increasing dividends, signaling management's confidence. However, the significant decline in profitability margins and the worsening credit quality indicators present material risks for investors.
At the time of this filing, XYF was trading at $4.65 on NYSE in the Finance sector, with a market capitalization of approximately $206.4M. The 52-week trading range was $3.30 to $20.36. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.