LexinFintech’s Resilient Turnaround: A Tech-Driven Play on Asian Financial Services

Beijing, May 21, 2025 — LexinFintech (NASDAQ: LK) has emerged as a compelling investment opportunity in the金融科技 sector, buoyed by its Q1 2024 earnings that underscored a strategic pivot toward risk management, technology-driven innovation, and disciplined growth. Despite headwinds from macroeconomic slowdowns and regulatory shifts in China, the company’s focus on high-margin tech services, improved asset quality, and nascent international expansion positions it as a leader in the region’s evolving financial ecosystem.

Resilient Profitability Amid Revenue Headwinds

LexinFintech’s Q1 2024 earnings revealed a stark divergence between its top and bottom lines. While total operating revenue fell 4.3% year-over-year to RMB3.1 billion, net income surged 113% to RMB430 million, driven by operational efficiencies and reduced credit provisions. The company’s strategic shift away from high-risk loan origination toward higher-margin tech services—such as its Intelligent Credit Platform (ICP) and installment e-commerce solutions—proved pivotal. Tech-empowerment service revenue alone jumped 72.8% year-over-year, while installment e-commerce GMV rose 24.7%, demonstrating the scalability of its diversified model.

This profitability rebound is no fluke. Lexin’s net profit take rate (net income as a percentage of revenue) hit 1.58% in Q1 2025, up 27 basis points from the prior quarter, signaling a sustainable margin expansion. Management’s decision to prioritize asset quality over volume—total loan originations dropped 11% year-over-year to RMB51.6 billion—has also paid off. The 90-day+ delinquency ratio improved to 3.3% in Q1 2025, down from 3.6% in late 2024, while first payment default rates stayed below 1%. These metrics suggest Lexin’s risk controls are among the strongest in the industry.

The Tech-Driven Growth Engine

Lexin’s transition from a traditional fintech lender to a technology platform provider is its clearest growth catalyst. Its ICP, which connects consumers with financial institutions, now generates 20% of total revenue and boasts an 80% customer retention rate. Meanwhile, the company’s AI-driven underwriting and fraud detection systems have reduced funding costs and provisioning expenses. The dividend payout ratio hike to 30% of net income—effective late 2025—further signals confidence in recurring tech revenue streams.

The real kicker? Lexin’s cross-ecosystem synergies. Its 232 million registered users and 4.8 million active borrowers provide a vast data pool to refine algorithms and cross-sell services. With China’s digital payments market projected to hit $30 trillion by 2027, Lexin’s tech-first model is primed to capture a growing share of this opportunity.

International Expansion: Mexico’s Double-Digit Growth

While domestic operations remain the core, Lexin’s Mexico venture—a “strong double-digit quarter-over-quarter grower” in Q1 2024—hints at untapped potential. Though still small-scale, this market entry aligns with the company’s strategy to diversify beyond China’s cyclical slowdowns. Mexico’s underpenetrated fintech market, coupled with Lexin’s proven risk-management systems, could replicate its domestic success. Look for similar moves in Southeast Asia or Latin America as the company scales.

Addressing the Loan Origination Decline

Critics may question the 11% YoY drop in loan originations. But this is a calculated trade-off: Lexin is sacrificing volume for quality. By reducing exposure to high-risk borrowers and focusing on white-collar professionals and small businesses, it’s building a more stable loan book. This approach is paying off: new loans now have a delinquency rate below 1%, and funding costs hit record lows.

Investment Thesis: A Rare Gem in Fintech

LexinFintech’s Q1 2024 results are a masterclass in resilience. It’s not just surviving the fintech shakeout—it’s thriving. With a fortress balance sheet (cash reserves + tech-driven moats), improving credit metrics, and a 30% dividend payout, this stock offers both growth and income.

The Bottom Line: LexinFintech is transitioning from a “risky lender” to a “tech-powered financial solutions leader.” With a 113% net income surge, disciplined risk management, and a playbook for global expansion, this is a buy for investors seeking asymmetric upside in Asian fintech.

Act now before the market catches on.