Lufax Holding (LU) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw a challenging macroeconomic environment for small business owners, with key SME indices declining and business conditions weakening.

• Total income for Q2 2024 was RMB5,976 million, down 36% year-over-year; net loss was RMB730 million.

• Asset quality improved across both Puhui and consumer finance segments, with lower delinquency and non-performing loan ratios; take rate increased to 9.3% from 7.0% year-over-year.

• Strategic focus shifted toward consumer finance, which showed stable demand and growth, while Puhui loan demand remained weak.

• Strengthened collaboration with Ping An Group is expected to enhance branding, technology, and channel resources.

Financial highlights

• Q2 2024 total income: RMB5,976 million, down 36% year-over-year, mainly due to a 44.8% drop in outstanding loan balance.

• Net loss for Q2 was RMB730 million.

• Technology platform-based income dropped 51% to RMB2 billion; net interest income decreased 19.3% to RMB2.7 billion.

• Guarantee income declined 26% to RMB850 million.

• Sales and marketing expenses dropped 46% year-over-year; credit impairment losses decreased 14.6%.

Outlook and guidance

• Loan growth recovery depends on macroeconomic improvement; consumer finance expected to remain stable.

• Take rate by balance is expected to rise further as the 100% guarantee model expands.

• Funding costs are projected to continue decreasing, supported by favorable monetary policy and Ping An Group synergies.

• Operational efficiency improvements are planned through technology and digitalization.

• Focus remains on operational caution and supporting small and micro enterprises in China.