Recently, Lufax Holding Ltd, the "former leading internet finance company" that has been suspended from trading for a year, voluntarily disclosed the latest findings of a major "investigation into connected transactions."
According to the announcement, between 2017 and 2023, Lufax provided a total of 3.84 billion yuan in loans to a third-party company, Shenzhen Decheng Investment Development Co., Ltd.
Starting in 2022 and continuing into early 2023, to mitigate its own reputational risk and manage potential exposures, Lufax directed Decheng Investment, which it effectively controls, to use some of the loan funds to purchase risky or non-performing assets originally sold on the Lufax platform. This was done to compensate losses for retail investors.
The investigation team found that the accounting treatment of these compensatory transactions did not reflect their economic substance. Furthermore, three entities (including two owned by Decheng Investment) were actually controlled by Lufax but were not consolidated into its financial statements.
In a similarly covert maneuver, Lufax announced last April that from May 2023 to early 2024, a subsidiary, acting as the sole investor, invested in several trusts established and managed by an unaffiliated trust company. These trusts were then directed by Lufax to purchase certain assets from related entities.
Lufax had paid 1.37 billion yuan for this. A subsequent investigation revealed that this transaction did not comply with listing rules requiring an announcement, nor did it obtain approval from independent shareholders.
What was initially announced in early 2025 as a "short trading suspension" for Lufax ultimately evolved into a long-term halt that has now lasted a year. The suspension was triggered by its circumvention of regulatory rules for connected transactions, which caught the attention of its auditors, forcing a passive suspension and the introduction of a third-party investigation.
Lufax disclosed that it has provided the supplementary investigation results to its incoming auditor, Ernst & Young, for their audit of Lufax's financial statements from 2022 to 2024. The company is currently preparing its yet-to-be-published financial results and is actively progressing with tasks including cooperating with the audit and implementing internal control remediation measures.
In its earlier years, backed by Ping An Insurance Group, Lufax was a leading peer-to-peer lending platform in China. However, deeply impacted by increasingly stringent regulations in recent years, it began transitioning to the small and micro-enterprise service market and later ventured into the policy-encouraged consumer finance sector. Nevertheless, this loan facilitation market also faces new pressures from banks implementing "whitelist" management systems for their partner platforms.
According to Lufax's latest operational disclosure, the cumulative number of borrowers reached 29.1 million by the end of 2025, an increase of 12.5% from the end of 2024. As of that date, the total outstanding loan balance was 183.8 billion yuan, down 15.2% from the previous year-end. Within this, the outstanding balance of consumer finance loans was 59.6 billion yuan, an increase of 19% from the end of the previous year.
At the end of the period, the delinquency rates for loans facilitated by Lufax (excluding its consumer finance subsidiary) were 5.6% for over 30 days and 3.4% for over 90 days, both up from the end of the third quarter of last year. The non-performing loan ratio for its consumer finance business was 1.2%, up 0.1 percentage points from the end of the previous quarter.
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