Lufax (LU) Dives 0.91% to 3-Year Low on Governance Woes, Credit Risks

Lufax Holding Ltd (LU) fell 0.91% on Thursday, marking its lowest intraday price since October 2025 amid a 3.41% decline during the session. The fintech firm’s shares have faced sustained pressure due to ongoing governance concerns, strategic adjustments, and challenges in managing credit risk, despite recent efforts to stabilize its operations.

Lufax’s decision to offload $64 million in non-performing loans to Ping An Asset Management in 2025 aimed to reduce its loan portfolio by 18% and strengthen its balance sheet. While this move signaled a proactive approach to credit risk management, it also highlighted the sector’s competitive pressures and the company’s struggle to maintain asset quality in a saturated market.

Institutional investor activity has reflected mixed sentiment. Macquarie Group Ltd increased its stake in LU in September 2025, contrasting with sales by other institutions earlier in the year. Lufax’s dividend reduction to CN¥0.0312 from CN¥0.039 in the same period raised concerns over financial flexibility, potentially deterring income-focused investors and exacerbating volatility in its stock.

Governance issues have persisted as a key drag on investor confidence. A 2025 scandal involving questionable related-party transactions with Ping An Group led to the suspension of its Hong Kong-listed shares and the termination of its auditor, PwC. The company’s subsequent engagement of Ernst & Young and Deloitte for audits and internal evaluations underscores the urgency of restoring regulatory compliance and transparency, though progress has been slow to rebuild trust.

Lufax’s deepening reliance on Ping An Group, including partnerships for loan management and insurance product sales, presents both strategic advantages and risks. While these ties provide access to Ping An’s resources, they also amplify concerns over over-dependence and potential conflicts of interest. The company’s recent pivot to consumer lending aligns with broader macroeconomic trends but introduces higher credit risks, complicating its ability to balance growth with asset quality.

Analysts remain divided on Lufax’s long-term prospects. Despite a 7% rally in late September 2025 following updates on compliance efforts, the stock has underperformed since its 2020 IPO, reflecting skepticism about its capacity to resolve governance issues and achieve sustainable growth. For Lufax to regain investor trust, it must demonstrate consistent earnings improvements, resume Hong Kong trading, and reduce its dependence on Ping An while maintaining profitability.