(Yicai Global) Aug. 25 -- Four leading Chinese internet finance companies listed in the United States, including Lufax Holding and 360 DigiTech, all logged declines in net profits in the second quarter amid capped interest rates.

The group includes FinVolution Group and LexinFintech Holdings and the poor earnings are caused by the rising costs of acquiring users, The Paper reported yesterday.

The decreases are driven by tightening regulations and lower interest rates. A year ago, regulators in several regions in China ordered consumer finance companies to cut their annual interest rates below 24 percent. This meant that firms had to adjust their consumer bases while bearing the surging costs of attracting users, The Paper reported, citing an industry insider.

Lufax, a wealth management platform operator backed by Ping An Insurance Group of China, posted a 38 percent slump in net profit to CNY2.9 billion (USD423.4 million) in the three months ended June from a year ago, it said in its earnings report. Revenue rose by 3 percent to CNY15.3 billion (USD2.2 billion).

Shanghai-based 360 DigiTech, a provider of consumer finance products, made CNY975 million (USD142.4 million) in net profit, down 37 percent, over the same time period. Its revenue climbed by 5 percent to CNY4.2 billion.

FinVolution, which provides underserved borrowers with loans, earned CNY585.2 million in net profit, down 6 percent. Its revenue rose by 12 percent to CNY2.7 billion.

The fourth fintech firm, Lexin, obtained CNY2.4 billion in revenue, down 26 percent. Its net profit tallied CNY167 million, or 79 percent lower than a year earlier.

Changes in the business environment were visible in the reports. Lexin had 6.1 million active users of loan products in the second quarter, down 28 percent from a year earlier. Lufax’s report showed that income from its retail credit business dropped by 25 percent in the second quarter because of sluggish additions of new loans.

An increasing number of micro-enterprises and small companies cannot repay their loans on time and people have lower consumption expectations amid the Covid-19 pandemic, which are some of the reasons for fintech firms' declines in revenue, according to an industry insider.

The financial companies have sought to lend more to small firms. Lufax gave 86.1 percent of new loans to micro-enterprises and small companies, higher than the 77.6 percent share logged a year earlier. Meanwhile, FinVolution facilitated loans of CNY10.4 billion for small companies, up 68 percent, and the sum made up 25 percent of its total over the quarter.

Editor: Emmi Laine, Xiao Yi