Qfin Holdings (QFIN-S) reported a sharp year-on-year contraction in second-quarter 2026 earnings amid weaker loan demand, tighter regulation and a late-June liquidity squeeze. Net income fell 76.80% to RMB401.40 million (USD59.20 million), while total net revenue slid 31.60% to RMB3.57 billion. Non-GAAP net income declined 75.40% to RMB454.85 million. The quarter was additionally burdened by a one-off tax charge of roughly RMB500 million linked to an updated interpretation of tax rules, lifting the effective tax expense to RMB691.14 million.

Operationally, cumulative registered users rose 9.40% year on year to 301.80 million, and users with approved credit lines increased 9.00% to 65.60 million. However, risk-adjusted retrenchment by funding partners weighed on volumes: facilitation and origination loan volume dropped 25.10% to RMB63.38 billion, and total outstanding loan balance contracted 23.20% to RMB107.56 billion. Capital-light products (ICE and total tech solutions) accounted for RMB31.34 billion of quarterly volume, down 10.50% year on year. The 90-day-plus delinquency ratio stood at 2.83%; repeat borrowers generated 89.40% of funded loans, underscoring portfolio seasoning.

Cost discipline partially cushioned the revenue decline. Operating expenses fell 21.90% to RMB2.41 billion, supported by a 40.10% reduction in sales and marketing spend and lower funding costs. Even so, the wider provisioning charge of RMB931.52 million and elevated tax expense compressed GAAP net margin to 11.30% from 33.20% a year earlier. Cash generated from operations reached RMB1.09 billion, lifting total cash and short-term investments to roughly RMB10.60 billion by 30 June.

For the first half, net income was RMB1.28 billion, down 63.70% year on year, on revenue of RMB7.48 billion (-24.50%). Non-GAAP net income totalled RMB1.40 billion, implying a 18.70% margin versus 38.10% in the prior-year period.

Reflecting confidence in liquidity, the board declared a semi-annual dividend of USD0.23 per ordinary share (USD0.46 per ADS) payable on 28 September 2026 to shareholders of record on 9 September 2026 (Hong Kong time). Under its March 2025 share-repurchase programme, the company has bought back 5.60 million ADSs for USD234 million at an average price of USD41.80 per ADS, utilising around 35% of the USD677 million authorisation.

Governance was strengthened with the appointment of Professor Dong Lou, Chair Professor of Finance at HKUST, as an independent director effective 25 August 2026.

Looking ahead, management signalled a continued “prudent approach” amid industry contraction and funding pressures. For Q3 2026, Qfin forecasts GAAP net income of RMB360-460 million and non-GAAP net income of RMB400-500 million, implying a 67-73% year-on-year decline.