Lufax Shares Plunge 0.29% to 2025 Low on Governance Woes, Earnings Slumps

Lufax Holding Ltd (LU) shares fell 0.29% on Monday, marking their lowest level since September 2025, with an intraday decline of 1.17%. The decline reflects ongoing investor concerns over corporate governance and strategic challenges, despite recent efforts to stabilize operations and reduce credit risk.

The company’s stock has been pressured by a protracted conflict with its auditor, PricewaterhouseCoopers (PwC), which was terminated in January 2024 following disagreements over related-party transactions. The abrupt severance of the relationship raised red flags about transparency, leading to a 22% three-day drop in U.S.-listed shares and a Hong Kong stock suspension. Analysts noted the episode underscored broader governance risks in China’s fintech sector, where regulatory scrutiny and opaque practices often deter foreign investment.

Strategic moves to mitigate risk, including the sale of 469 million yuan in non-performing loans, have aimed to strengthen Lufax’s balance sheet. However, these efforts have been overshadowed by persistent earnings declines, with net income turning negative in early 2024. A shift toward conservative lending has reduced growth potential, while competitive pressures from traditional banks and rivals have further strained profitability. Valuation metrics, such as a P/E ratio of 3 and P/S ratio of 0.5, remain unattractive compared to peers.

Institutional investor activity has been mixed, with Macquarie Group Ltd increasing its stake in September 2024—a rare sign of confidence. Yet, other major holders, including Sumitomo Mitsui Trust Holdings Inc., had reduced positions earlier in the year, reflecting cautious sentiment. Lufax’s roadmap includes expanding AI-driven offerings and resuming dividends by late 2025, contingent on earnings recovery. However, the path to stabilization remains clouded by China’s economic slowdown and unresolved governance issues.