Source | New Economy Observer Group

In the third quarter of this year, driven by favorable policies and market recovery, consumer confidence has improved, and market vitality has continued to strengthen. As important connectors for financial services to the real economy, the financial performance of fintech companies often serves as a barometer of market conditions.

According to the latest Q3 financial reports, the performance of the seven major listed fintech companies, including Qifutech, Lufax Holding, LexinFintech, CreditEase, Xiaoying Technology, Jinyin Fintech, and Enova International, has remained relatively stable. In Q3, five companies achieved positive revenue growth, and three companies achieved year-on-year growth in both revenue and net profit. However, some companies are still recovering from the impact of adjustments and market changes.

Regarding key business indicators such as new loans and outstanding loan balances, although there was a contraction year-on-year, the recovery in quarter-on-quarter data indicates signs of industry recovery.

Under the new normal of narrowing interest rate spreads, tighter regulation, and intensifying competition, major fintech companies are focusing on developing large AI models and expanding overseas business to achieve growth in both scale and quality. Current indications suggest that this may also drive continued differentiation within the fintech industry.

01

Revenue and Net Profit Differentiation: 5 Companies with Positive Revenue Growth, 3 with Year-on-Year Growth in Both

In terms of revenue, the landscape of the seven listed fintech companies remained largely stable in Q3. Lufax Holding, Qifutech, LexinFintech, and CreditEase secured their positions in the first tier, with quarterly revenue exceeding RMB 3 billion each. The remaining three companies fell into the second tier, with revenue around RMB 1.5 billion each.

In terms of year-on-year growth rates, except for Lufax Holding, which is still in a period of contraction and transformation, five companies achieved positive revenue growth. Among them, Xiaoying Technology and Enova International even achieved double-digit growth rates of 13.30% and 12.80%, respectively, with revenues of RMB 1.582 billion and RMB 1.479 billion, demonstrating impressive performance.

However, in terms of net profit, there was some differentiation among the seven listed fintech companies in Q3. Some companies experienced faster year-on-year growth, while others saw declines. Overall, there was a trend of growth, particularly as three companies achieved growth in both revenue and net profit.

Specifically, Qifutech achieved revenue of RMB 4.37 billion and net profit of RMB 1.799 billion, marking double growth; Xiaoying Technology recorded revenue of RMB 1.582 billion and net profit of RMB 376 million, with year-on-year growth rates of 13.30% and 8.30%, respectively; CreditEase reported revenue of RMB 3.276 billion and net profit of RMB 624 million, with year-on-year growth rates of 2.46% and 8.60%, respectively.

From the financial reports, it is evident that each fintech company attributed its steady growth in Q3 to different factors.

Wu Haisheng, CEO and Director of Qifutech, stated, 'In the past few quarters, the large-scale application of cutting-edge technologies such as large AI models has become the core driver of Qifutech's steady revenue growth and enhanced user experience. We will continue to invest in financial large model technology, focusing on enhancing the fit between the financial large model and our business, to create new business value and better serve user needs.'

Li Kan, President of Xiaoying Technology, said, 'In the third quarter, with the improvement in asset quality, we further intensified our efforts to acquire borrowers and achieved very positive results. We are satisfied with the improvement in asset quality and will continue to optimize our risk management system through advanced technology. As an important part of the economy, the personal finance market we serve should benefit from this recovery.'

Yan Dinggui, Chairman of Jinyin Technology, believes that the company's continued steady growth in transaction volume and related revenue this quarter reflects the effectiveness of its strategic layout in business innovation, risk management, and market diversification. The company has successfully leveraged technology to improve operational efficiency and user experience while closely monitoring risk resilience.

Su Xiaorui, Senior Researcher at Suxi Research, noted that in the third quarter of 2024, listed fintech companies still exhibited differentiation in financial indicators such as revenue and net profit, but there were also some commonalities. For example, delinquency rates have begun to improve, asset recovery rates have increased, and more attention is being paid to improving business quality and efficiency, integrating marginal businesses with less obvious profitability, and strengthening efforts in businesses with higher revenue contributions.

02

Year-on-Year Contraction but Quarter-on-Quarter Recovery, Overall Improvement in Asset Quality

Next, let's turn to the more intuitive data on new loans and outstanding loan balances, which have stronger signaling power and can better reflect market conditions and the judgments of various fintech companies.

Most fintech companies primarily engage in cash loan facilitation businesses, and their business models have matured and changed little over the years. Quarterly variations are mainly due to differences in market forecasts and risk preferences, which determine whether to loosen or tighten lending policies and whether to expand or contract business scale.

Data shows that in Q3, the seven fintech companies generally experienced contraction in these two key business indicators.

In terms of new loans, only two companies achieved significant expansion. Specifically, Jinyin Technology increased by 10.30% year-on-year to RMB 26.7 billion, while Enova International grew by a substantial 36.73% year-on-year, although it remained the smallest in scale with only RMB 13.4 billion at the end of Q3 due to its high growth rate.

Regarding outstanding loan balances, the overall contraction was more pronounced. Among the six companies that disclosed data, only Enova International achieved significant growth, with a year-on-year increase of 50.99% to RMB 22.8 billion in outstanding loan balances.

However, further analysis of revenue and net profit data also reveals discrepancies among indicators. For example, some companies experienced double-digit growth in both revenue and net profit but saw a contraction in loan scale, while others exhibited the opposite trend.

This divergence in key indicators to some extent reflects the differences in growth strategies and risk preferences among platforms of varying sizes.

For instance, Qifutech adopted a relatively cautious business strategy this year, which is directly reflected in its marketing expenses for market expansion. According to the financial report, Qifutech's sales and marketing expenses were RMB 420 million in Q3, compared to RMB 530 million in the same period last year and RMB 366 million in the previous quarter. The report explained that the year-on-year decrease was due to more cautious customer acquisition methods, while the quarter-on-quarter increase was offset by a reduction in unit customer acquisition cost due to an increase in the number of customers acquired.

At the same time, Qifutech sought growth through technology. In Q3, Qifutech's large financial model continued to improve efficiency in internal interactions, research and development automation, and customer service, driving the company's overall intelligent and efficient operations. In September, Qifutech's large model application was selected for the report "Insights into the Application Practice of AGI in the Financial Sector" jointly released by the China Academy of Information and Communications Technology's "Foundation Casting Program" and the InfoQ Research Center, becoming a benchmark application for vertical large models in the financial industry.

The precise adaptation and efficient implementation of large models and business have increasingly demonstrated tangible benefits, bringing significant results to Qifutech in both business operations and financial performance.

Jinyin Technology and Enova International, on the other hand, seized the window of opportunity presented by the market recovery and invested heavily in customer acquisition to expand their scale. According to the financial reports, Jinyin Technology's sales and marketing expenses reached RMB 550 million in Q3, a 34.9% increase from the same period last year, primarily due to increased customer acquisition costs. Enova International's sales and marketing expenses for the quarter increased by 71% year-on-year to RMB 336 million, also primarily due to the rapid expansion of its financial services segment and increased customer acquisition marketing efforts.

In addition, some fintech companies achieved balanced and synchronized growth across all key indicators. For example, CreditEase's new loans and outstanding loan balances increased by 1.8% and 3.3%, respectively, in Q3, which is roughly in line with the 2.46% and 8.60% increases in revenue and net profit, respectively. This stable growth was primarily attributed to progress in its international business in terms of diversification and institutional cooperation.

Although year-on-year data showed some differentiation, quarter-on-quarter data still indicated overall marginal recovery in the industry.

Data shows that in terms of new loans, all six companies except LexinFintech, which remained flat between Q2 and Q3, experienced varying degrees of growth in Q3 compared to Q2. Regarding outstanding loan balances, all companies except Lufax Holding, which continued to experience significant contraction, and LexinFintech, which saw a slight contraction, experienced a rebound.

At the same time, asset quality generally showed an improving trend. For example, Qifutech's delinquency rate for loans overdue by more than 90 days dropped significantly to 2.72% in Q3; Jinyin Technology's delinquency rate for loans overdue by 61 to 90 days was 0.55% in Q3, showing a decline for the second consecutive quarter. Enova International's delinquency rates for loans overdue by 1-30 days, 31-60 days, and 61-90 days were 1.8%, 1.2%, and 1.2%, respectively, in Q3, with the first-period delinquency rate falling to 0.59%, indicating remarkable risk control effectiveness and reaching a new historical low.

Xiaoying Technology's delinquency rate for loans overdue by 31 to 60 days was 1.02%, showing improvement both quarter-on-quarter and year-on-year. The company's Chief Financial Officer, Mr. Zheng Fuya, stated, 'I am pleased to report that our strategy of balancing business growth and profitability continues to yield results. As we continue to achieve strong profitability and implement our proven strategies, we are confident about the future.'

03

Focusing on AI+ Overseas Expansion for 'Rebalancing' Scale and Quality

Compared to the scale expansion of previous years, the pace of the fintech industry has slowed down significantly this year. Amid the 'new normal' of a recovering consumer credit market, narrowing interest rate spreads, and tighter regulation, balancing scale and quality and building sustainable growth drivers have become top priorities for the industry.

With the goal of high-quality and sustainable growth, fintech companies are intensifying their focus on AI-driven initiatives and seeking overseas expansion.

In terms of AI-driven initiatives, integrating technology into actual business scenarios and closely aligning it with business processes has become a key focus for major fintech companies. In Q3, Enova International's 'Lingshu Intelligent Marketing Platform' received the certification of 'AI Industry Innovation Scenario Application Case' after rigorous evaluation by the Digital Technology Center of the Ministry of Industry and Information Technology's Industrial Culture Development Center. It is understood that the 'Lingshu' intelligent marketing platform can meet the extensive marketing needs of different business lines while providing a solid foundation for personalized marketing.

Qifutech has further applied its large AI model to customer qualification identification. Through deep learning and precise algorithms, Qifutech's large model technology has constructed three major graphs for micro and small enterprises, covering 97.26% of their human-enterprise relationships, 81.3% of their products, and over 70% of their business principles. The combination of these three graphs not only deepens the understanding of micro and small enterprises but also provides strong support for their refined operation.

The implementation of AI technology in specific business processes provides a powerful tool for achieving a 'rebalancing' of business efficiency and asset quality in the new cycle of stock, which is also the essence of fintech. It further consolidates the technological foundation of the industry.

In addition, the layout of overseas business is already a well-known new business structure and a key to exploring incremental markets and achieving sustainable growth in the future.

According to the latest Q3 progress, some companies have already achieved notable results in the wave of fintech overseas expansion.

According to CreditEase's financial report, the company's international revenue contribution increased significantly from 3.7% in 2020 to 10.3% in 2022 and is expected to reach around 20% for the full year of 2024. In Q3, the number of new borrowers in international markets reached 671,000, a year-on-year increase of 60% and a quarter-on-quarter increase of 43%.

LexinFintech stated that it is accelerating its overseas business layout relying on its more than a decade of fintech capabilities. In Q3, in addition to the Mexican market, LexinFintech also increased its investment and operations in the Southeast Asian market. Throughout Q3, the Indonesian market experienced rapid growth, with a 31% quarter-on-quarter increase in transaction users and an 18% quarter-on-quarter increase in transaction volume.

Jinyin Technology is also betting on overseas incremental markets. In Q3, its local business partners in the Indonesian market further increased quarterly loan disbursements and new registrations compared to Q2. Jinyin believes that although the Indonesian market is highly competitive, with leading players dominating market share, overall market demand remains strong, particularly among underserved populations where there is ample room for growth.

Overall, although benefiting from a series of incremental policies that have boosted domestic consumer confidence and driven an overall marginal improvement in fintech companies' performance in Q3, there are still significant differentiations among companies in terms of growth strategies and specific performance. It is expected that under the new normal of pending demand recovery, narrowing interest rate spreads, and tighter regulation, major fintech companies will continue to 'rebalance' scale and quality driven by AI empowerment and overseas expansion efforts, with performance continuing to diverge.

*Disclaimer: The New Economy Observer Group publishes this article for the purpose of conveying more information and does not constitute any advice. Original articles may not be reproduced without authorization.

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