FAST NEWS: Lexin’s profit falls despite growing loan originations

The Latest: Online lending platform LexinFintech Holdings Ltd. (LX.US) reported last Friday its revenue increased 8.7% year-on-year to 3.24 billion yuan ($455 million) in this year’s first quarter, but its net profit dropped 37.5% to 202 million yuan.

Looking Up: The company’s total registered users at the end of March reached 215 million, up 10.8% year-on-year. Its cumulative originated loans amounted to 1.17 trillion yuan, up 26.8% at the same time last year.

Take Note: The company’s total outstanding principal balance of loans reached 122 billion yuan at the end of March, up 13.5% year-on-year, while the delinquency rate for loans more than 90 days overdue edged up by 0.1 percentage point to 3%.

Digging Deeper: Lexin has transformed from an online lender into an online loan facilitator in recent years after a government crackdown on private online lending, lowering its regulatory risk. As an intermediary between consumers and banks, its role is less regulated but also less profitable. The company’s revenues and profits declined during the pandemic, but rebounded 32% and 30% last year, respectively, as demand for loans rebounded with the end of China’s Covid restrictions and the introduction of several high-quality financial institution partners.

Market Reaction: Lexin’s shares rose 2.2% to $1.87 in New York last Friday after the results were published. It currently trades near the lower end of its 52-week price range.

Translation by A. Au

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