Lufax Q3 2026 Earnings Results & Report

Lufax EPS Results

• Actual EPS: -$0.27
• Consensus EPS: $10.81
• Beat/Miss: Missed by -$11.08
• One Year Ago EPS: N/A
• EPS Beat Rate: 0 of last 8 quarters

Lufax Revenue Results

• Actual Revenue: $921.68 million
• Expected Revenue: $2.22 billion
• Beat/Miss: Missed by -$1.30 billion
• YoY Revenue Growth: N/A

Lufax (NYSE:LU) Holding Ltd. (NYSE: LU) is a China-based financial services technology company that operates digital platforms for retail and small-business finance. The company connects consumers and small-business owners with financial products and services through online channels and technology-enabled processes.

Lufax’s business has historically included retail lending, wealth management and related financial services. Its platforms have provided access to consumer and small-business loans, investment products and other services offered in cooperation with financial institutions. The company uses data, risk-management tools and digital technology to support customer acquisition, credit assessment, loan servicing and financial product distribution.

Founded in 2011 with backing from Ping An Insurance Group, Lufax initially became known for its online wealth-management platform before expanding into lending and broader financial services. The company primarily serves customers in mainland China and is headquartered in Shanghai. Lufax completed its initial public offering on the New York Stock Exchange in 2020.

Lufax Q3 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Net loss widened to RMB 1.494 billion from RMB 380 million a year earlier, driven by higher credit impairment losses and RMB 773 million of tax expense, including non-cash deferred-tax-asset and withholding-tax charges.
• Neutral Sentiment: Third-quarter new loan sales rose 2.5% year over year to RMB 58.3 billion, led by consumer finance growth of 25.2% to RMB 39.7 billion, while total outstanding loans declined 11.9% year over year to RMB 167.1 billion.
• Negative Sentiment: Asset-quality volatility increased amid weak demand and intensified enforcement of debt-collection practices; the total C-M3 flow rate rose to 1.2% from 1.0% sequentially, and credit impairment losses increased 10.3% to RMB 4.511 billion.
• Neutral Sentiment: Management expects regulatory pressure to continue for several months but is shifting toward selective customer acquisition, in-house and AI-assisted collections, and stricter compliance; it said newly originated 2026 loans are performing within expectations and better than prior vintages.
• Positive Sentiment: Funding availability remained “largely sufficient,” with partner-bank quotas and willingness to lend stable; funding costs excluding consumer finance fell 20 basis points sequentially to 3.6%, according to management.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to the Lufax Holding third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question and answer session. Please note this event is being recorded. Now, I would like to hand the conference over to your speaker host today, Ms. Xinyan Liu, the company's General Manager of Board Office. Please go ahead, madam.

[Xinyan Liu, General Manager of Board Office at Lufax Holding]

Thank you very much. Hello, everyone, and thank you for joining us on today's call. Our financial and operating results were released by our Newswire services earlier today and are currently available online. Today, you will hear from our Director and CEO, Mr. Xiang Ji, who will share recent developments and provide insights into the company's overall performance. Our CFO, Ms. Liu Jia, who joined Lufax in October, will then walk you through our financial results. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements. With that, I am now pleased to turn over the call to Mr. Xiang Ji, Director and CEO of Lufax.

[Xiang Ji, Director and CEO at Lufax Holding]

Thank you, Xinyan. Thank you all for joining our third quarter 2026 earnings call. I would like to begin with two updates. First, trading in our ordinary shares on the Hong Kong Stock Exchange resumed on September 24, 2026. We thank all shareholders and the broader investor community for your patience and support throughout this process. Second, I am actually very pleased to welcome Ms. Liu Jia, who joined us as CFO in October. Ms. Liu Jia brings extensive experience in audit, banking, and financial management of listed financial technology companies. Most recently as CFO of CITIC aiBank. She will walk you through our financial results following my remarks. Let me now share an update on the macro and regulatory environment. The operating environment for small and micro business owners remained challenging in the third quarter, and financing demand stayed weak.

[Xiang Ji, Director and CEO at Lufax Holding]

Cheung Kong Business School SME Development Index remained below the 50-point boom-bust baseline, indicating that the financing environment for small and micro enterprises remains under pressure. Consumer finance demand was also subdued. As of the end of September, household consumer loans declined 3.6% year-over-year. Domestic consumption remained soft. Consumer confidence continued to be cautious, and households continued to prioritize balance sheet repair. On the regulatory side, the industry continued to move towards greater standardization in the third quarter. The mid-day intensified enforcement against the debt collection industry. Both industry peers and Lufax have seen notable volatility in risk performance. The industry is currently recalibrating its compliance boundaries. Since the second quarter, tightening industry liquidity and heightened regulatory scrutiny, including collection practices, have led us to observe a rising risk across both small business owner and consumer finance lending markets.

[Xiang Ji, Director and CEO at Lufax Holding]

While we believe the tightened regulatory environment will benefit the industry in the long run, it has weighted on the near-term risk performance. In response to the changing macro and regulatory environment, we maintained a very prudent operating strategy. In the third quarter, we continued to implement our selective customer strategy, adjusted our post-loan collection approach, and continued to deepen our refined operation. Firstly, under our selective customer strategy, we proactively reduced and exited certain high-risk customer segments and adopted a more cautious approach towards some market customer segments. Second, we continue to leverage our in-house collection force and adjust our post-loan collection strategies. On the recovery side, we increased our use of traditional recovery channels and leveraged models to identify high-quality accounts, improving recovery efficiency. Our in-house collection team provides dedicated internal collection capabilities, mitigating our reliance on third-party collection service providers.

[Xiang Ji, Director and CEO at Lufax Holding]

We will continue to closely monitor regulatory development and reinforce compliance controls across the collection process, including enhanced compliance training, to ensure that all collection activities remain within the applicable legal and regulatory framework. Third, we continue to deepen our refined operation. We continue to deploy differentiated products tailored to local industry and customers across different regions. Our Industry Prism program now covers over 700 subindustries, offering industry-specific product that meets the industry-specific requirements of our customers. We have also established a dedicated direct sales team for consumer finance that targets quality salary customers. This team is moving our customer engagement model from single-product sales to a full lifecycle relationship manager approach, enabling long-term customer value realization. In addition, we are deepening our management of existing customers, leveraging our license advantage. We are building a diversified product portfolio and a multi-channel customer management system to increase repeat borrowing.

[Xiang Ji, Director and CEO at Lufax Holding]

We are also deepening our use of AI to enhance operation efficiency. Our AI-powered digital twins have added new features, providing end-to-end AI enablement from customer acquisition to customer management, and improving the efficiency and quality of our sales teams. Looking ahead, we will further extend this AI capability to risk management. On the pre-loan side, we plan to further upgrade our risk models by leveraging AI capability, enhance identification of risky customers, and drive the optimization of our customer portfolio structure. In post-loan management, we aim to further deepen collection reform, expand application of AI-driven collection, and improve collection effectiveness through intelligent assistance. Now, turning to our operating results. Total new loan sales in the third quarter were CNY 58.3 billion, up 2.5% year-over-year, and up 14.1% from the second quarter.

[Xiang Ji, Director and CEO at Lufax Holding]

Consumer finance continued to lead our growth, with new loan sales up 25.2% year-over-year to CNY 39.7 billion, representing 68.1% of total new loan sales. Our total outstanding loan balance was CNY 167.1 billion as of the end of the third quarter, broadly stable from the second quarter, and down 11.9% year-over-year. Our consumer finance loan balance grew 19.8% year-over-year to CNY 70.5 billion. Consumer products with smaller ticket sizes and short tenure carry lower risk in the current environment. Over the long term, supported by policies amid to expand domestic demand and boost consumption, we believe consumer finance continue to hold growth potential. Turning to asset quality. Our risk performance in the third quarter was negatively impacted by the macro and regulatory environment, especially the intensified enforcement actions against the debt collection industry.

[Xiang Ji, Director and CEO at Lufax Holding]

Our C-M3 flow rate for the total loan was 1.2% in the third quarter, compared to 1.0% in the second quarter. C-M3 flow rates for the unsecured and secured loans were 1.2% and 1.1% respectively, compared to 1.0% and 0.9% in the second quarter. Our DPD 30+ delinquency rate for total loans enabled, excluding consumer finance subsidiaries, was 5.5%, down from 5.8% in the second quarter, and our DPD 90+ delinquency rate was 3.2%, down from 3.7% in the second quarter. As of the end of the third quarter, the NPL ratio for consumer finance loans was 1.3%, stable from the second quarter. Now, let me turn to pricing and funding costs. The average pricing on the Rongyi loan was 20.3% in the third quarter, and the average pricing of consumer finance loans was 16.4% as we continue to implement our selective customer strategy.

[Xiang Ji, Director and CEO at Lufax Holding]

On funding, our cost of funds continued to decline. Our cost of funds by balance, excluding consumer finance, was 3.6% in the third quarter, down 20 basis points sequentially and 80 basis points year-on-year. Finally, we continue to advance our compliance enhancement efforts. Under the leadership of our board of directors, we are further strengthening our internal controls and compliance standards. Going forward, we will remain prudent in our operations, focused on quality growth, and committed to delivering long-term value to shareholders. With the onboarding of Liu Jia as the CFO, I am confident that our financial reporting capability and quality will be further enhanced. With that, I will now turn the call over to Liu Jia, who will walk you through our financial results. Thank you.

[Jia Liu, CFO at Lufax Holding]

Thank you, Xiang Ji. Hello, everyone. I am pleased to join you for my first earnings call as Lufax CFO. My priorities are to deliver accurate and timely financial reporting, maintain discipline in the oversight of liquidity and capital, and support the execution of our operating strategy. I look forward to engaging with you in the quarters ahead. As I walk you through our results, please note that all amounts are in CNY and all comparisons are year-over-year. Before jumping into the details, I would like to address the net loss we previewed in our profit warning announcement on October 16th. We recorded a net loss of CNY 1.494 billion within the range of CNY 1.30 billion-CNY 1.70 billion that we indicated in the announcement, compared with a net loss of CNY 380 million a year ago. Our net loss comprised of two components.

[Jia Liu, CFO at Lufax Holding]

One is a loss before income tax of CNY 721 million, and the other is the income tax expenses of CNY 773 million. Starting with our pre-tax performance, as Xiang Ji discussed, the operating and collection environment remained challenging during the quarter, contributing to higher credit impairment losses. This increase in credit impairment losses was the main driver of our pre-tax loss. Turning to income tax, our tax expense included a charge from a reduction in deferred tax assets at our financing guarantee subsidiary. Based on our current assessment of its business performance and outlook, this was a non-cash accounting charge. We also updated our offshore funding plan in connection with the redemption arrangement for convertible promissory notes. The plan includes dividend distributions from domestic to overseas subsidiaries to meet offshore funding needs. Thus, we also recognize the additional withholding tax on those expected distributions.

[Jia Liu, CFO at Lufax Holding]

After taking into account other tax items, total income tax expenses were CNY 773 million, compared with CNY 74 million a year ago. Now let me walk through our third quarter financial results in more detail. Total income was CNY 6.180 billion, down 4.6%. Declines in technology platform-based income and the guarantee income were partially offset by growth in net interest income. Technology platform-based income was CNY 1.055 billion, down 24.1%, reflecting lower retail credit and enablement services associated with the decrease in the new loan sales and outstanding balance of off-balance-sheet loans. Net interest income was CNY 3.677 billion, up 10.3%, primarily driven by the expansion of our consumer finance and micro-lending business. Guarantee income was CNY 1.020 billion, down 24.6%, reflecting a lower average balance of off-balance-sheet loans and lower average fee rates. Other income was CNY 167 million, down 37.7%, primarily due to a decrease in account management fees caused by decreased collections.

[Jia Liu, CFO at Lufax Holding]

Investment income was CNY 261 million, compared with CNY 134 million in the same period last year, primarily reflecting change in the valuations of financial assets made with our own funds. In terms of expenses, total expenses were CNY 6.9 billion, up 1.7%. Credit impairment losses increased 10.3% to CNY 4.511 billion, reflecting higher actual losses and provision of loans and receivables. Sales and marketing expenses declined 13.7% to CNY 842 million, primarily due to the decreased outstanding balance of off-balance-sheet loans. General and administrative expenses declined 12.1% to CNY 420 million, primarily due to our continuous expense optimization and control measures. Operation and servicing expenses declined 16.1% to CNY 774 million, reflecting expense control measures and the decrease in the loan balance. Technology and analytics expenses declined 4.2% to CNY 226 million, primarily due to expense control measures.

[Jia Liu, CFO at Lufax Holding]

Finance costs were CNY 122 million, up 67.1%, primarily due to lower deposit interest income, partially offset by lower loan interest expenses. Other losses were CNY 5 million, compared with CNY 10 million in the same period last year, reflecting higher foreign exchange gains in 2026 and lower government subsidies. Turning to our balance sheet. As of September 30th, 2026, we had approximately CNY 21.2 billion in cash at bank, compared with CNY 22.1 billion at the end of 2025. Net assets amounted to approximately CNY 80 billion, compared to CNY 82 billion at the end of 2025. Going forward, we remain focused on disciplining the execution, strengthening our governance and controls, and building a sustainable, higher-quality growth path for Lufax. We remain committed to our prudent strategy and to delivering long-term value to our shareholders. We appreciate your continued support. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question will come from Richard Xu with Morgan Stanley. Please go ahead.

[Richard Xu, Analyst at Morgan Stanley]

Thank you for the opportunity. I got two questions. First of all, we are basically receiving some credit losses-

[Operator]

Pardon me, Mr. Xu. Your line may be muted.

[Richard Xu, Analyst at Morgan Stanley]

Can you hear me okay?

[Operator]

We are having issues hearing Mr. Xu. We are going to move on to the next question. Our next questioner will come from Yujie Jing with China International Capital. Please go ahead.

[Yujie Jing, Analyst at China International Capital]

Can you hear me? Thanks for the opportunity to ask some more questions. I'm Yujie from CICC, and I have two questions. First, what have been the trends in the company's loan origination and asset quality following the Juzi Digital Technology incident, and when do you expect them to stabilize? Secondly, company has recognized a relatively large amount of asset impairment charges. How is collections performing now, and will the future recovery rate on the underlying loans be affected? Thanks.

[Xiang Ji, Director and CEO at Lufax Holding]

Thank you for the question from CICC. As far as first question is concerned, Q3 new loan sales reached around CNY 58.3 billion, up 2.5% year-on-year and 14% quarter-on-quarter. Consumer finance new loan sales grew 25% year-on-year to roughly CNY 40 billion, representing around 58% of total. Asset quality-wise, the consumer finance NPL ratio remains stable. C-M3 flow rate increased to 1.2% from 1.0% quarter-on-quarter due to macro and regulatory pressure, particularly enforcement actions against collection industry. We expect asset quality will gradually improve as we deepen our selective customer strategy. The macro and regulatory impact may continue for a couple of months towards the end of the year. The second question is around collection rate.

[Xiang Ji, Director and CEO at Lufax Holding]

Collection was definitely negatively impacted by the tightened industry liquidity and heightened regulatory scrutiny and intensifying enforcement actions in Q3. We think Lufax also have advantage. We have in-house collection capability to mitigate the reduced supply of third-party collection services. I think some of our peers have really suffered from the reduced supply of third-party collection services. We are basically not exactly having the same issue. At the same time, we have adjusted collection strategies to improve recovery efficiency while balancing compliance requirements, including greater use of judicial recovery channels, model-based identification of high-quality accounts, expanded use of AI-driven collection, and increased reliance on the in-house collection force. However, for those actions to take effect, we still need a couple of months to see how it's going.

[Xiang Ji, Director and CEO at Lufax Holding]

While we are not able to provide forecast for future recovery rates at the moment, we actually believe these measures will improve collection performance over time. Thank you.

[Operator]

The next question will come from Richard Xu with MS. Please go ahead.

[Richard Xu, Analyst at Morgan Stanley]

Sure. Thank you. Can you hear me okay now?

[Xiang Ji, Director and CEO at Lufax Holding]

Yes.

[Richard Xu, Analyst at Morgan Stanley]

Okay. Thanks for the opportunity. I've got two questions. First of all, we're seeing the credit losses widening inter-quarter. Just want to know, what are the key drivers? Are these drivers one-off, or are you seeing some sustaining pressures? Secondly, on the regulatory front, what's your expectation of any upcoming regulatory changes in the consumer finance and loan facilitation businesses? Would that potentially change further the Lufax business model? Thank you very much.

[Xiang Ji, Director and CEO at Lufax Holding]

Thank you, Richard. In terms of the loss, operating loss driven by increased credit impairment losses, challenging macro environment for small and micro business owners, combined with tightened regulatory oversight, especially the enhanced enforcement actions against collection industry in Q3, led to volatility in risk performance. As a result, we recorded an increased credit impairment losses and an operating loss in Q3. The other factor is additional tax expenses, primarily due to reduction of deferred tax assets based on our current assessment of certain PRC subsidiaries' operating and financial conditions, and withholding taxes as we expect to satisfy the funding needs of the company and overseas subsidiaries through dividend distribution by domestic companies. Going forward, we expect risk volatility caused by enforcement actions to be temporary. Tightened regulation will benefit the industry in the long run, but may have some negative impact in the short term.

[Xiang Ji, Director and CEO at Lufax Holding]

We will actually closely monitor the macro environment for small business owners and implement prudent operation growth. I think that is also a reason why myself and the CFO expressed we will pursue a more high-quality growth rather than a scale growth purely. The second question, overall movement towards greater standardization will for sure continue in the foreseeable future. Oversight spans the full value chain from pricing, customer acquisition, risk management, post-loan operation, and data governance. Subsequently, previous business model of offsetting high risks with high fee is no longer sustainable. We see that very clearly, and that is why Lufax has embarked on a journey to transform the business model. Business impact-wise, near-term pressure on growth and profitability is for sure.

[Xiang Ji, Director and CEO at Lufax Holding]

But as far as long term is concerned, it will support healthier and more disciplined competition across industry and enhance the competitive advantage of top players with proper license and also compliant mechanisms. We think Lufax is actually better positioned because we have consumer finance license, we also have guarantee license, and micro-lending licenses. Our compliance culture is being strengthened and will basically show its value in the long term. Thank you.

[Operator]

The next question will come from Yuxin Chin with Huaxi Securities. Please go ahead.

[Yuxin Chin, Analyst at Huaxi Securities]

Hello, management. Thanks for offering me this opportunity. I am Yuxin Chin from Huaxi Securities, and I have two questions. The first one is about the funding side. Recently, funding supply in the loan facilitation industry has tightened, with some banks cutting back cooperation with loan facilitation platforms. We would like to understand whether funding supply available to Lufax remains sufficient. Have there been any material changes in partner banks' willingness to lend, credit facility quotas or funding costs? Have changes on the funding side affected the company's loan origination volume in the third quarter of 2026? How does management view the funding supply over the coming quarters? That is the first one. The second one is about the asset quality.

[Yuxin Chin, Analyst at Huaxi Securities]

We would like to understand whether the deterioration in the asset quality in the third quarter of 2026 was mainly driven by transactional loans, or are you also seeing weaker performance in newly originated loans? When does management expect asset quality to stabilize, and will the credit costs still face further upward pressure over the coming quarters? Thanks.

[Xiang Ji, Director and CEO at Lufax Holding]

Thank you. We do recognize that funding supply is under pressure for the industry, especially for some of our peers. As far as Lufax is concerned, funding supply remains largely sufficient. Major partner banks' willingness to lend and credit facility quotas remain stable. In fact, funding costs continue to decline. Cost of funds by balance, excluding consumer finance, declined to 3.6% in Q3, down 20 basis points QoQ and 80 basis points year-on-year. Leveraging on interbank markets, the funding cost for consumer finance was also stable and lower than the funding cost of Rongyi loan. We actually hold a cautiously optimistic view on future funding supply based on our license advantage, as well as our strong collaboration with our funding partners. We do expect funding availability will not pose a material constraint on our lending business. In short, on the funding side, we are doing okay.

[Xiang Ji, Director and CEO at Lufax Holding]

Asset quality-wise, the increase in credit impairment losses in Q3 was primarily attributable to actual losses related to certain existing loan assets, whose actual performance fell short of expectations. Risk performance of loans newly originated in 2026 is within our expectations, and actually better than the previous one. We do expect the risk volatility caused by enforcement action to be temporary. We will continue to implement our selective customer strategy, optimize our customer mix, and enhance post-loan measures, leveraging AI-enhanced risk models to continue improving asset quality. Thank you.

[Operator]

This concludes our question and answer session. I would now like to turn the conference back over to management for any closing remarks. Please go ahead.

[Xinyan Liu, General Manager of Board Office at Lufax Holding]

Thank you, operator. This concludes today's call. Thank you for joining the conference call today. If you have any more questions, please do not hesitate to contact Lufax IR team. Thanks again.

[Operator]

The conference is now concluded. You may now disconnect.

Participants

Executives

• Xinyan Liu, General Manager of Board Office
• Xiang Ji, Director and CEO
• Jia Liu, CFO

Analysts

• Richard Xu, Analyst at Morgan Stanley
• Yujie Jing, Analyst at China International Capital
• Yuxin Chin, Analyst at Huaxi Securities