Consumer finance companies have begun releasing their interim results for the first half of 2026. A review of the data on September 1 shows that the industry ranking has shifted considerably based on revenue, profit, and asset performance. Notably, the decline at two long-established industry leaders, Zhaolian and CIB Consumer Finance, has drawn particular attention.

Against a backdrop of narrowing interest margins, strict regulatory caps on lending rates, and compliance becoming a top priority, these major consumer finance firms are now making the deliberate choice to reduce their scale and manage existing risk. Both Zhaolian and CIB Consumer Finance are moving toward the same objective, but their paths to achieving this are likely to be quite different.

Deliberate Reduction in Business Scale

Following the release of the interim reports by China Unicom and Industrial Bank, the financial data for their consumer finance subsidiaries became public. In the first half of the year, Zhaolian recorded revenue of 6.688 billion yuan, a 15.33% decrease year-on-year, with net profit at 1.381 billion yuan, down 8.18%. CIB Consumer Finance saw revenue fall 14.63% to 3.893 billion yuan and net profit decline 14.52% to 742 million yuan.

These are not the first instances of declining performance for these institutions. CIB Consumer Finance's net profit dropped 16.89% in 2023 and plummeted 79.25% in 2024. For Zhaolian, 2024 saw decreases in both revenue and net profit, while 2025 brought a situation of increased profit but decreased revenue.

Both companies have also experienced a contraction in total assets. By the end of June 2026, Zhaolian's total assets stood at 147.356 billion yuan, shrinking by nearly 20 billion yuan within six months. CIB Consumer Finance reported 62.987 billion yuan, a 22.75% decrease year-on-year and a 19.24% drop from the beginning of the period.

In terms of industry ranking, Zhaolian remains firmly in second place with assets exceeding 100 billion yuan. CIB Consumer Finance, however, has seen its total assets continuously shrink since reaching a peak in 2023. By the first half of this year, it had been overtaken by Nanyin BNP Paribas Consumer Finance and Ningbo Bank Consumer Finance. Despite this, both companies, each with over ten years of history, still hold unshakeable positions in the industry's "first tier."

Explaining the reasons for the performance slide, Wang Pengbo, chief analyst at Botong Consulting, believes that the current environment is marked by tighter industry regulation, standardized caps on credit interest rates, and a continuous narrowing of overall market interest spreads. The clearing of high-yield legacy assets and the compressed profitability of new assets have removed the foundation for overall revenue growth. This is compounded by weak consumer credit demand, intensified competition for quality customers, higher customer acquisition and operational costs, and increased provisions for the disposal of non-performing assets. These multiple factors have collectively driven down both revenue and net profit.

The institutions' own strategic adjustments have also played a significant role. Both companies have clearly signaled their intention to adopt a strategy of deleveraging and risk control, which includes curbing the scale of credit issuance. By the end of June 2026, CIB Consumer Finance's total loan balance was 61.674 billion yuan, a 23.4% reduction from 80.52 billion yuan in June 2025.

Zhaolian stated that in 2026, amid a pressuring macroeconomy and a deeply adjusted development environment, it remains committed to a prudent development approach. The company is focused on long-term, healthy growth, proactively reducing its overall scale, and working to build strong complaint-handling and core risk-control capabilities. It also aims to continue supporting the real economy and optimizing its asset structure, all to build a solid foundation for navigating economic cycles and achieving sustainable, high-quality development.

At the time of reporting, CIB Consumer Finance had not yet responded to inquiries regarding its performance.

Transition Not Yet Fully Realized

In reality, the strategic adjustments by these two established leaders are reflective of the broader choices being made across the consumer finance industry in response to current realities.

Since 2025, a wave of unprecedented regulatory scrutiny has emerged. The "Regulations on Clear Disclosure of Comprehensive Financing Costs for Personal Loans," effective August 1, 2026, and the "Measures for the Administration of Online Marketing of Financial Products," effective September 30, 2026, both impose strict requirements on fee disclosure and third-party loan assistance partnerships.

From a pricing perspective, the old model of using high interest rates to cover high risk has been explicitly curtailed by regulators. New rules for loan assistance platforms, in effect since October 1, 2025, require that the comprehensive financing cost for a borrower's single loan not exceed an annualized rate of 24%. Furthermore, some regions have provided window guidance suggesting consumer finance companies further reduce the comprehensive cost of personal loans to 20%.

A seasoned industry practitioner described the current situation as picking up sugar cubes in a glass house, stating that improving risk control to drive transformation is the only viable path forward.

"The consumer finance industry is in a period of deep adjustment, and shrinking balance sheets is not unique to a few institutions. The proactive move by consumer finance companies, including the leaders, to reduce volume and improve quality reflects the industry's growing pains as it transitions from an old model of scale expansion to one prioritizing quality," said Su Xiaorui, senior researcher at Sixi Zhijian.

This is also evident in the large-scale clearing of non-performing assets. This year, Zhaolian has listed 10 packages of non-performing personal consumer loans for transfer through the Credit Registration Center. The company has indicated that its credit impairment losses decreased by 18.48% year-on-year in the first half of 2026, and its provision coverage ratio remains significantly higher than the industry average.

In Su Xiaorui's view, for Zhaolian and CIB Consumer Finance, their transformation efforts have shown initial on-balance-sheet results. The rate of profit decline is slower than the decline in revenue and assets, suggesting their asset quality is improving.

However, Wang Pengbo points out that the "exchange of scale for quality" strategy has not yet fully succeeded. Based on financial data, a state of coordinated improvement in both quality and profit has not yet been achieved.

He attributes this to several factors: a limited supply of quality credit assets in the market, making it difficult for institutions to find sufficient lending targets under strict risk controls; a path dependency on previous business models causing internal adjustment frictions; continuously narrowing industry interest margins; limits on the quality client resources shareholders can provide; and ongoing operational costs associated with non-performing asset disposal. All these factors constrain the progress of the transformation.

Strengthening Direct Customer Acquisition

"The self-operated capability that this transformation requires is currently lacking in the industry," Su Xiaorui pointed out.

An examination of customer acquisition channels reveals differences between Zhaolian and CIB Consumer Finance. Zhaolian relies primarily on synergies with its shareholders. Its two main consumer finance product systems, "Haoqidai" and "Xinyongfu," offer fully online, unsecured, and low-interest credit services across numerous consumption scenarios like shopping, travel, education, and home improvement. It is also exploring ways to integrate telecommunications accounts with financial accounts in partnership with China Unicom, innovating products like the "Unicom Baitiao" by drawing on internet consumption model experience.

In contrast, CIB Consumer Finance has been shifting from its earlier "direct sales + offline" model toward a lighter-asset approach with loan assistance partners. Between 2020 and 2022, it primarily promoted large-ticket products like "Xingjiadai" and "Xingcaidai" for amounts over 100,000 yuan. Subsequently, influenced by the macro environment, the proportion of its online business loan balance has increased year by year.

According to its official website's June 2026 list of partner institutions, CIB Consumer Finance has 41 internet loan cooperation partners, including Duxiaoman, Fenqile, and WeBank, all operating in a loan assistance model. Its offline cooperation partners responsible for customer referral and credit enhancement services have been reduced to 11.

A comparison of Industrial Bank's 2025 and 2026 interim reports shows a notable shift in how CIB Consumer Finance's performance is described. Terms like "offline business adhering to its mechanism of diligent verification and door-to-door loan delivery" are no longer prominent. Instead, the emphasis is now on "continuously optimizing customer groups and business structure, accelerating the building of customer acquisition and risk control capabilities, and constructing a service system covering various customer groups and diversified consumption scenarios" and "deepening the group's collaborative marketing strategy, fully leveraging the advantages of the parent-subsidiary linkage, and effectively enhancing integrated financial service capabilities for the group's retail long-tail customer base."

"Given their different models, it's suggested that Zhaolian further optimize customer segmentation, tighten access for third-party channel customers, expand financial bond and ABS issuance to optimize funding costs, and tap into incremental scenario-based lending through its shareholder ecosystem. CIB Consumer Finance, on the other hand, needs to uphold its independent risk control bottom line, improve the assessment mechanism for loan assistance partners, absorb quality customers from its parent bank, retain some self-operated business capability, and optimize its liability structure. Only by balancing scale, risk, and returns can both companies drive a recovery in performance," Wang Pengbo stated.

Su Xiaorui added that, overall, consumer finance companies need to strengthen their long-term capacity for independent customer acquisition and risk control. They should continue to reduce high-risk business, pay close attention to compliance systems related to risk and post-loan collection, enhance the screening and dynamic management of partner institutions, and use technology as an anchor to improve the efficiency of refined customer segmentation and lightweight customer acquisition.