CNFinance (CNF) Q2 2025 Earnings Call: Originations Fall 85.4% as NPL Focus Intensifies

Key Takeaways

• CNFinance Holdings Limited (CNF) reduced first-half 2025 loan originations by 85.4% year over year as it prioritized nonperforming loan reduction and asset quality.
• The loan balance fell 29.6% year over year to RMB 11.2 billion as of June 30, 2025, while the number of loan transactions declined 78.1%.
• First-half interest income decreased 55% year over year to RMB 416 million. Financing costs fell 32%, and operating expenses declined 74%.
• CNFinance recorded a net loss of RMB 40.4 million, primarily reflecting an impairment loss provision of RMB 31.3 million.
• The nonperforming loan ratio reached 16.9%. Management said growth in new NPLs was contained and reported an NPL recovery rate of 103% for the first half.
• The company had signed 2,184 sales partners as of June 30, up 2% year over year. The number of partners that introduced borrowers increased 3.3% to 1,485.

Key Financial Data

Business and Operating Performance

CNFinance deliberately constrained new lending and directed resources toward mitigating risk in its existing portfolio. Management described the strategy as leveraging existing assets while optimizing new assets, acknowledging that it places pressure on near-term performance but is intended to support longer-term stability.

The company also streamlined personnel and optimized its organizational structure, contributing to the 74% reduction in operating expenses.

To stabilize funding, CNFinance introduced new institutional investors, mainly local asset management companies. It also refined existing products and launched new products designed to meet market demand.

Management Outlook

Management said CNFinance will continue to focus on three priorities: reducing NPLs through multiple recovery tools, maintaining stable funding channels, and supporting new business development. The company did not provide quantitative financial guidance.

Risks and Areas to Watch

The NPL ratio stood at 16.9%, while the RMB 31.3 million impairment provision was the main factor behind the first-half net loss. Sharp declines in originations, transactions, loan balances and interest income also highlight the near-term performance pressure associated with the company’s risk-reduction strategy.

Management additionally cited continued market challenges and emphasized the need to contain nonperforming loans and preserve stable financing channels.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Good day, and welcome to the CNFinance Holdings Limited First Half of 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to IR Manager, Matthew Lou. Please go ahead.

Matthew Lou

Thank you, and welcome to the CNFinance First Half of 2025 Financial Results Conference Call. Our Director and Vice President, Mr. Jun Qian, will walk us through the operating and financial results. After that, we will have a Q&A section.

Before we start, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminologies such as will, expects, anticipates, future, intends, plans, believes, estimates, target, going forward, outlook and similar statements.

Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law.

Now please welcome Mr. Jun Qian.

Jun Qian

[Interpreted] Hello, everyone. In the first half of 2025, amidst the complex and ever-changing market environment, CNF adhered to the guiding principle of survival first, victory first, actively tackled challenges and steadily advanced strategic adjustments and business optimizations. Now I'd like to report to you on our operational and financial performance for the first half of the year.

As of June 30, 2025, our company has signed a total of 2,184 sales partners, marking a year-on-year increase of 2%. We had an aggregate of 1,485 sales partners who have introduced borrowers to us, representing a 3.3% growth. However, due to our proactive efforts to control loan issuance and focus on reducing nonperforming loans in our existing portfolio, the number of loan transactions decreased by 78.1% year-on-year and the total loan origination dropped by 85.4%.

By the end of the second quarter, our loan balance stood at RMB 11.2 billion, a decrease of 29.6% compared to that of last year. We adhere to the strategy of leveraging existing assets and optimizing new ones, focusing our resources on risk mitigation and asset quality enhancement. Although this approach puts pressure on short-term performance, it lays a solid foundation for long-term steady growth.

In the first half of the year, our interest income was RMB 416 million, a decline of 55% year-on-year. Financing costs decreased by 32% and operating expenses fell by 74%, demonstrating the company's strong cost control capabilities. Our net loss was RMB 40.4 million, primarily due to an impairment loss provision of RMB 31.3 million.

As of June 30, 2025, the nonperforming loan ratio of the company's loan was 16.9%. Although the NPL ratio rose, the increase of new NPLs was effectively contained. Through diversified NPL reduction measures, the company achieved 103% NPL recovery rate in the first half. During the first half, the company optimized its organizational structure and streamlined personnel, resulting in a significant reduction in operating costs.

In one word, our key priorities in the first half included: first, reducing NPLs by innovating and leveraging effective reduction tools. Second, we've stabilized our funding source by bringing in a bunch of new institutional investors, mainly local AMCs to ensure smooth financing channels. Third, we have expanded into new business areas. We refined our existing products and launched new ones that meet market demands.

Facing continued market challenges, the company will uphold the survival first, victory first principle. With containing nonperforming loans and optimizing new growth as the core strategy, we will persist in the 3 key priorities; dedicating resources to NPL reduction, ensuring stable funding channels and supporting new business development.

Operator

[Operator Instructions] There are no questions at this time. I'd like to hand the call back over for any closing remarks.

Matthew Lou

Thank you, and thank you again for joining us today. If you have any further questions, you can contact us at ir@cashchina.cn. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]