QFIN Rides the AI Wave Differently: Inside a Credit-Lender's Pivot to Quality

Regulatory storm forces Qifu Holdings to rebalance toward high-quality borrowers while leaning on AI and overseas expansion.

QFIN · Earnings Call · 2026-05-26

The Deliberate Shrink

Qifu Holdings (QFIN) is managing a tough quarter with a long-term lens. Total net revenue fell to RMB3.91 billion, down from RMB4.69 billion a year ago, and non-GAAP net income dropped 11.6% sequentially to roughly RMB950 million. CFO Alex Xu said the company is navigating “another quarter of challenging market conditions and the tightening regulatory scrutiny.” The industry is consolidating after new loan-facilitation rules, and QFIN is deliberately prioritizing health over volume. The strategy is already showing up in cleaner risk metrics: “Our FPD7, a leading risk indicator for new loans, declined by approximately 20% in Q1 compared with Q4 last year.” — Haisheng Wu, Chief Executive Officer (CEO) · 2026-05-26 The C2M2 ratio fell 17% sequentially to 0.8%, back to mid-2025 levels. This is a continuation of the discipline management flagged in prior calls — “we will put risk management as our top priority” was the mantra as far back as August 2025.

The Turn to Quality

The core of QFIN’s response is a pivot to high-quality users. Management is spending 40% more on acquiring these borrowers while slashing spend on riskier segments. In the Q&A, CEO Haisheng Wu highlighted the payoff: “the share of high quality users in our new customer loan volume jumped 25 percentage points from Q3” — Haisheng Wu, Chief Executive Officer (CEO) · 2026-05-26. But this mix shift comes at a price: average IRR fell from 19.5% to 18.7%. Wu acknowledged the deliberate trade-off, framing it as an investment rather than a concession.

It is a trade-off between near term profit and long term sustainable value. By building the capabilities we are also reshaping our business model making it healthier and better positioned to navigate a more complex and fast changing market environment.
Haisheng Wu, Chief Executive Officer (CEO) · 2026-05-26

The company is betting that as smaller platforms exit — “Some smaller platform may not survive in the future,” as CFO Xu put it in November 2025 — QFIN will emerge with a stronger, higher-quality book. The emphasis on risk metrics extends across the credit cycle, with upgraded A-, B-, and C-scorecards that incorporate new behavioral features. “We have strong conviction in our intrinsic value.” — Zuoli Xu, Chief Financial Officer (CFO) · 2026-05-26 The CFO added that share buybacks are again on the table, given the valuation gap.

AI Native: An Operational Edge

QFIN is pursuing AI not as a data-center story but as an operational lever. The company is pushing to become an AI native organization, with 98.4% of technical staff using AI coding tokens and AI agents already deployed at a city commercial bank. Tech solutions loan volumes reached RMB9.96 billion in Q1, up 7-fold year over year. This is a different AI narrative from the global rush into data center AI — QFIN is using AI to improve underwriting, collections, and financial inclusion, not to build models. It’s a quieter, more defensive application, but one that could deliver compounding efficiency gains.

Overseas Optionality

The second wing of QFIN’s strategy is overseas expansion. The company launched in a new emerging market in Q1 and is localizing risk models in the U.K. and Latin America. CEO Wu stressed patience: “We are very patient about the long term opportunity. We will leverage global capital, cutting-edge technology, and local expertise.” The team is expected to grow to ~200 people by year-end, and management is exploring multiple markets, from Europe to Southeast Asia. This is a long-arc bet, but it diversifies the company’s concentration in a single regulatory regime.

The Bottom Line

QFIN’s story is isolated from the macro tape—global keywords are dominated by tariffs and AI infrastructure, none of which apply here. Instead, the company is fighting its own credit cycle, and the early signs are encouraging. With net cash of RMB10.79 billion and a market cap that CFO Xu calls “very attractive,” the setup is asymmetric: a disciplined operator with improving risk metrics and a potential buyback catalyst, but still facing an uncertain regulatory environment. For investors willing to look past the near-term profit decline, QFIN offers a uniquely positioned play on Chinese consumer-credit consolidation.