Qifu Technology: 1Q26 near-term credit cost inflection confirmed

Research evidence excerpt

Qifu Technology: 1Q26 near-term credit cost inflection confirmed

11 June 2026

Other Financial Services

Qifu Technology

credit profile client segments.

Specifically, provisioning charges declined 17% QoQ, thanks to reduced loan

origination and overall improved asset quality. While the 90-day+ delinquency rate

still picked up 0.8% to 3.5% in 1Q26, management emphasizes this is a lagging

indicator reflecting elevated risk from loans originated in late 2025. In contrast, the

Day 1 delinquency rate has been on a downward trend. Further evidence of

improved loan quality includes the C-M2 ratio, which measures outstanding

delinquency after 30 days of collection, returned to levels seen in July-August 2025,

thanks to sustained efforts in collecting overdue loans.

These improvements are primarily driven by: (1) a loan mix increasingly focused on

high-quality user segments. (2) sustained refinement of the loan risk model across

the pre-loan to post-loan process, enabling better identification of high-quality

customers and screening out potential risks.

Share buyback to resume as uncertainties subside

Management views the stock as undervalued, trading below net book value.

Despite persistent macro and regulatory uncertainties, management believes

regulation is more likely to normalize and will progressively resume the buyback

program in 2Q.

2Q26 guidance

Management anticipates further risk improvement for 2Q compared to 1Q, thanks

to the improved client quality. This is contingent on no further regulatory curbs

being imposed, a possibility management believes has lowered. Management has

provided 2Q26 non-GAAP net income guidance between RMB 900mn and RMB

980mn, which has a slightly wider high-end compared to 1Q26, and also anticipates