Lexin's Ecosystem Pivot Gains Momentum as Fintech Empowerment Scales
Despite macro headwinds, Lexin's shift to fintech empowerment and e-commerce drives nearly 50% of loan volume, with improving risk metrics and a resilient outlook.
LX · Earnings Call · 2026-05-25
A Strategic Shift in Motion
In its first quarter 2026 earnings call, LexinFintech outlined a clear strategic transition: the company is deliberately moving away from its legacy online consumer finance business toward a diversified ecosystem model. While overall the macro environment remains challenging, the company reported loan volume of RMB 57.9 billion (+15.9% QoQ, +12.2% YoY) and net profit of RMB 201 million, demonstrating that diversified ecosystem is becoming a real growth engine. CEO Jay Xiao opened with a strong statement:
[Interpreted] Our unique and diversified business ecosystem, which we have been building for many years, demonstrated strong operational resilience. During the quarter, the loan volume of our installment e-commerce, off-line inclusive finance and fintech empowerment businesses accounted for nearly 50% of the total.
This is a notable pivot from the prior year, where the company was still heavily dependent on online consumer finance. The fintech empowerment business, in particular, has scaled rapidly under the ShuKe model—partnering with internet platforms and banks—and now represents a substantial part of the loan book.
Changing the Mix, Improving the Quality
CFO James Zheng detailed the financial mechanics of this pivot: while the capital-heavy credit facilitation income declined ~10% QoQ, tech empowerment service income rose by RMB 382 million. He explained: “This reflects the ongoing volume and pricing headwinds in our online consumer finance business, partially offsetting the increase in our tech empowerment service income.” — Xigui Zheng, Chief Financial Officer · 2026-05-25 The net effect is that total revenue grew 8.7% sequentially to RMB 3.3 billion. More importantly, the company's asset mix is improving—risk indicators are trending down, and the company expects this to continue. Head of Risk Management Arvin Qiao reported: “day 1 delinquency ratio decreased by about 7% quarter-over-quarter. 30-day collection rate improved month-over-month.” — Zhanwen Qiao, Head of Risk Management · 2026-05-25
This is a marked improvement from the fourth quarter of 2025, when the industry was absorbing the new regulation's impact. In the prior call, management had warned: “Q4 net profit will see a sequential decline” — Xigui Zheng, CFO · 2025-11-24 (from the 2025-11-24 call). The trajectory now suggests the company is on the path to normalization, though management remains cautious.
Risk Management and Technology as Enablers
The company's ability to pivot is underpinned by continued investment in AI and risk models. During the call, they highlighted the deployment of a credit report interpretation AI agent and an interactive credit enhancement function, which improve customer identification and pricing. This aligns with a recurring theme: the use of large model applications in risk management. Arvin noted: “On the high-risk asset management side, we leveraged large model capabilities to optimize and upgrade our high-risk asset management robots and automated risk inspection robots.” — Zhanwen Qiao, Head of Risk Management · 2026-05-25 The company is also fine-tuning its prime customer segment—loan volume from prime white-collar customers grew 56% QoQ, and prime small-business customers grew 30%.
The strategic focus on prime white collar customers is a deliberate effort to shift toward lower-risk assets, which should eventually lower credit costs and stabilize profitability across cycles.
Outlook and Shareholder Returns
Looking ahead to Q2 2026, the company expects loan originations to remain relatively stable. On the shareholder return front, management announced plans to cancel 20 million ADSs (about 12% of outstanding shares), but also temporarily suspended new buybacks due to macro uncertainties. In the Q&A, an executive clarified: “We always try to balance shareholder returns with capital efficiency. Going forward, we will stay flexible.” — Unknown Executive, Executive · 2026-05-25
This measured approach reflects the company's cautious stance in a still-uncertain regulatory environment, but the underlying strategic shift seems to be yielding results. The combination of a thriving fintech empowerment business, improving risk metrics, and a balanced shareholder-return policy makes Lexin a name to watch—even if the near-term macro backdrop remains difficult.