Lufax narrows quarterly loss, but tax relief masks weaker operating profit
The NYSE-listed lender’s second-quarter net loss fell sharply, yet pretax earnings declined and the first-half deficit widened, prompting the company to skip its semiannual dividend.
Lufax Holding Ltd (NYSE:LU) reported a significant narrowing of its second-quarter net loss to RMB82 million, an 86.2 per cent improvement from the RMB594 million loss recorded in the same period last year. While the headline figure suggests a strong recovery, the improvement was primarily driven by a substantial reduction in income-tax expense, which fell to RMB112 million from RMB861 million a year earlier.
Underneath the tax benefit, core operating performance showed signs of contraction. Pretax profit declined to RMB30 million from RMB266 million, while total income decreased by 15.5 per cent to RMB6.23 billion. Total expenses fell by 12.7 per cent, with costs excluding credit impairments, finance costs and other gains or losses dropping 27.5 per cent, indicating that management has successfully tightened the cost base.
Despite the quarterly progress, the first-half net loss widened by 33.7 per cent to RMB694 million. Consequently, Lufax forwent its semiannual dividend, citing its continued loss-making status for the first half of the year. This divergence between the quarterly and half-year results highlights the ongoing challenges the company faces in stabilising its earnings trajectory.
Growth in the consumer-finance segment provided a notable bright spot within the broader portfolio. Consumer-finance originations rose by 27.6 per cent to RMB36.9 billion, and the outstanding consumer-finance balance grew by 19.9 per cent to RMB65.4 billion. Total new loans enabled increased by 4.6 per cent to RMB51.1 billion, though the overall outstanding loan balance fell 13.5 per cent to RMB167.3 billion.
Credit quality indicators presented a mixed picture. Excluding the consumer-finance subsidiary, the C-M3 flow rate declined to 1.0 per cent from 1.2 per cent, and the DPD 30+ delinquency rate fell to 5.8 per cent from 6.1 per cent. However, the DPD 90+ delinquency rate for loans excluding consumer finance increased to 3.7 per cent from 3.4 per cent, suggesting that late-stage credit performance remains a concern.
The company’s risk profile has also shifted as the loan book contracted. Lufax’s risk-bearing share of the outstanding portfolio increased to 93.2 per cent from 83.7 per cent. Although the absolute risk-bearing balance declined from RMB161.9 billion to RMB155.9 billion, the lender is now assuming a greater proportion of risk on a smaller portfolio.
According to Yahoo Finance, the company’s second-quarter results were published on 22 August 2026. The data indicates that while consumer-finance growth and lower operating costs provide a foundation for future recovery, the turnaround remains incomplete until total income and pretax earnings show sustained strength.
