X Financial's FY2024 Form 20-F Filing: A Strategic Leap in China's Digital Lending Landscape

X Financial (NYSE: XYF), a leading Chinese online personal finance platform, recently filed its annual report on Form 20-F for the fiscal year ending December 31, 2024. This filing, submitted to the U.S. Securities and Exchange Commission (SEC) on April 25, 2025, offers critical insights into the company’s financial performance, strategic priorities, and risk landscape. For investors, this report serves as a compass to navigate X Financial’s trajectory in an increasingly competitive and regulated fintech sector.

Financial Highlights: Growth Amid Regulatory Headwinds

The Form 20-F reveals robust financial performance for FY2024. Total net revenue surged 22% year-over-year to RMB5.87 billion (US$804 million), driven by strong growth in loan facilitation services and guarantee income. Notably, Q4 2024 revenue jumped 43% to RMB1.71 billion, fueled by expanded partnerships with financial institutions and higher loan origination volumes. Net income rose 29.8% to RMB1.54 billion, while non-GAAP adjusted net income increased 20.5%, reflecting improved operational efficiency.

The company also highlighted its risk management success: delinquency rates for loans 30–60 days past due fell to 1.17% (down from 1.57% in 2023), and those 90–180 days past due dropped to 2.48%, signaling tighter underwriting standards. This is critical in a sector where defaults can quickly erode profitability.

Strategic Initiatives: AI and Regulatory Leverage

X Financial’s FY2024 report underscores its strategic focus on artificial intelligence (AI) integration and government policy alignment. The company has deployed AI-driven tools to enhance customer service, risk assessment, and operational efficiency. For instance, its new generation of AI-powered customer service robots—built using models like Alibaba’s Tongyi Qianwen—reduced response times by 30% while improving accuracy. Meanwhile, a multimodal AI risk system now achieves over 95% accuracy in contextual analysis, cutting manual review costs by 25%.

The firm also positioned itself to benefit from China’s post-pandemic economic reopening. Management cited favorable government policies, including liquidity injections and real estate sector stabilization, as tailwinds for its loan origination business. In 2025, X Financial aims to grow total loan facilitation by 30% to RMB134.4–138.4 billion, targeting prime borrowers with small credit lines via its Xiaoying Card Loan product.

Risk Factors: Navigating Cybersecurity and Geopolitical Uncertainty

The report’s risk section paints a cautious picture. Foremost among concerns is cybersecurity, as noted in Item 16K of the Form 20-F. The company disclosed increased investment in cybersecurity infrastructure but acknowledged risks tied to third-party service providers and evolving attack vectors.

AI adoption risks are also highlighted. While AI improves efficiency, the report warns of potential biases in algorithmic decision-making and the legal uncertainties around data usage. This mirrors broader SEC scrutiny of “AI-washing”—overstating AI’s capabilities to attract investors.

Geopolitical risks loom large too. The report flags potential impacts of U.S.-China trade tensions, including tariffs on tech components, and regulatory shifts in China’s fintech sector. X Financial’s reliance on institutional funding partners also exposes it to liquidity risks if macroeconomic conditions deteriorate.

Regulatory Compliance and Shareholder Returns

X Financial’s Form 20-F adheres to SEC mandates for foreign private issuers (FPIs). Notably, it includes Exhibit 11, detailing its insider trading policy, a requirement under new Item 16J. The company also addressed cybersecurity disclosures, clawback policies, and D&O independence checks.

Investors will appreciate the firm’s shareholder-friendly policies. In 2024, X Financial returned US$76 million to shareholders via dividends and buybacks, including a US$59.5 million share repurchase program. A semi-annual dividend of US$0.25 per ADS was declared in April 2025, signaling commitment to long-term value.

Conclusion: A Balancing Act Between Innovation and Risk

X Financial’s FY2024 results underscore its position as a growth engine in China’s digital lending sector. With revenue up 22%, net income rising nearly 30%, and loan volumes targeting a 30% jump in 2025, the company is executing its strategy to dominate niche markets like small-credit lending. Its AI investments and government policy alignment are clear competitive advantages.

However, risks remain formidable. Cybersecurity vulnerabilities, regulatory uncertainty, and geopolitical tensions could disrupt growth. The SEC’s focus on AI transparency and cybersecurity disclosures means X Financial must maintain rigorous oversight to avoid compliance pitfalls.

For investors, the data is compelling: a stock price rebound of 32% in the past six months (as of April 2025) reflects optimism about its growth trajectory. Yet, the firm’s ability to navigate risks—while scaling its AI and institutional partnerships—will determine whether it sustains this momentum. In a sector where innovation and regulation are in constant tension, X Financial’s 2024 report shows it’s betting on technology to stay ahead. The question now is whether execution will match ambition.