Qfin Holdings: Navigating Credit-Tech Challenges with AI and Strategic Resilience

In the volatile landscape of China's credit-tech sector, Qfin Holdings (QFIN) has emerged as a beacon of innovation and operational discipline. Amid macroeconomic headwinds and geopolitical uncertainties, the company's strategic adaptation—centered on AI-driven risk management, a capital-light model, and a robust dividend policy—positions it as a compelling long-term investment. This article evaluates how Qfin's operational efficiency and technological foresight create value for stakeholders, even as broader market conditions test the resilience of fintech players.

AI-Driven Risk Management: A Pillar of Resilience

Qfin's ability to maintain a 1.97% 90-day+ delinquency rate in Q2 2025, despite a 4.8% quarterly decline in loan origination volume, underscores the effectiveness of its AI-powered risk frameworks. By tightening risk standards in response to global trade tensions and regulatory shifts, the company has preserved asset quality while adapting to a more cautious lending environment.

The Intelligence Credit Engine (ICE), a cornerstone of Qfin's capital-light model, now accounts for 41.4% of total loan volume. This AI-driven system leverages machine learning to assess borrower creditworthiness, optimize loan terms, and dynamically adjust risk parameters. The result? A 93.8% repeat borrower rate, reflecting strong user retention and trust in the platform's reliability.

Qfin's risk discipline is further evidenced by its 87.3% 30-day collection rate and a 5.1% Day-1 delinquency rate, metrics that outperform many regional fintech competitors. These figures highlight the company's ability to balance growth with prudence—a critical differentiator in a sector prone to overleveraging.

Capital-Light Model: Scaling Efficiency in a High-Cost Environment

Qfin's capital-light strategy, which minimizes reliance on direct lending, has enabled it to scale without overexposing its balance sheet. In Q2 2025, the ICE and technology solutions facilitated RMB35,032 million in loans, representing 41.4% of total volume. While this segment saw a 20% quarterly decline, the drop was a deliberate response to macroeconomic risks, not a failure of the model.

The company's 41.0% operating margin and 43.2% Non-GAAP operating margin in Q2 2025 reflect the scalability of its platform. By charging referral fees and leveraging AI to reduce servicing costs, Qfin generates revenue without shouldering the full burden of loan defaults. This structure is particularly advantageous in a low-interest-rate environment, where traditional lenders face margin compression.

Dividend Potential: Rewarding Shareholders Amid Uncertainty

Qfin's recent semi-annual dividend of $0.38 per Class A share (equivalent to $0.76 per ADS) and a $277 million share repurchase under its $450 million buyback plan signal confidence in its cash flow sustainability. With RMB2.62 billion in operating cash flow generated in Q2 2025, the company has ample liquidity to reward shareholders while reinvesting in AI R&D.

The dividend yield, currently ~3.2% based on a $12.00 share price, is competitive with regional fintech peers. More importantly, Qfin's guidance for Q3 2025—projecting RMB1.52–1.72 billion in net income—suggests the company can maintain payouts even as macroeconomic pressures persist.

Strategic Outlook: A Strong Buy Case

Qfin's strategic pillars—AI innovation, risk prudence, and capital efficiency—create a flywheel effect. By tightening risk standards in Q2 2025, the company improved new loan performance, which in turn strengthens its reputation with institutional partners. This trust drives further loan volume, fueling revenue growth and enabling reinvestment in AI capabilities.

For investors, the key risks include regulatory shifts in China's credit-tech sector and prolonged macroeconomic downturns. However, Qfin's proactive approach to risk management and its focus on SME and consumer credit—segments with untapped potential—mitigate these concerns.

Conclusion: A Fintech Powerhouse for the Long Term

Qfin Holdings' ability to adapt to macroeconomic turbulence while maintaining profitability and shareholder returns makes it a standout in the credit-tech space. Its AI-driven risk systems and capital-light model are not just defensive advantages—they are engines of sustainable growth. For investors seeking stable returns in an evolving fintech landscape, Qfin's strategic resilience and dividend discipline justify a strong buy recommendation.

As the company continues to refine its AI algorithms and expand its network of 275.8 million consumers, the long-term value proposition becomes even clearer. In a sector where innovation and prudence are equally vital, Qfin has proven it can excel on both fronts.