X Financial Reports Fourth Quarter and Fiscal Year 2021 Unaudited Financial Results

SHENZHEN,China,March 31,2022 -- X Financial (NYSE: XYF) (the "Company" or "we"),a leading online personal finance company in China,today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31,2021.

Fourth Quarter 2021 Financial Highlights

Total net revenue in the fourth quarter of 2021 was RMB823.4 million (US$129.2 million),representing an increase of 15.0% from RMB716.3 million in the same period of 2020.

Income from operations in the fourth quarter of 2021 was RMB311.6 million (US$48.9 million),compared with loss from operations of RMB857.3 million in the same period of 2020.

Net income attributable to X Financial shareholders in the fourth quarter of 2021 was RMB145.5 million (US$22.8 million),compared with net loss attributable to X Financial shareholders of RMB655.5 million in the same period of 2020.

Non-GAAP[1] adjusted net income attributable to X Financial shareholders in the fourth quarter of 2021 was RMB183.0 million (US$28.7 million),compared with Non-GAAP adjusted net loss attributable to X Financial shareholders of RMB630.8 million in the same period of 2020.

Net income per basic and diluted American depositary share ("ADS")[2] in the fourth quarter of 2021 was RMB2.64 (US$0.41) and RMB2.58 (US$0.40),compared with net loss per basic and diluted ADS of RMB12.24 and RMB12.24,respectively,in the same period of 2020.

Non-GAAP adjusted net income per basic and adjusted diluted ADS in the fourth quarter of 2021 was RMB3.30 (US$0.52) and RMB3.24 (US$0.51),compared with Non-GAAP adjusted net loss per basic and diluted ADS of RMB11.76 and RMB11.76,in the same period of 2020.

[1] The Company uses in this press release the following non-GAAP financial measures: (i) adjusted net income (loss),(ii) adjusted net income (loss) attributable to X Financial shareholders,(iii) adjusted net income (loss) per basic ADS,and (iv) adjusted net income (loss) per diluted ADS,each of which excludes share-based compensation expense and income (loss) from financial investments. For more information on non-GAAP financial measure,please see the section of "Use of Non-GAAP Financial Measures Statement" and the table captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release.

[2] Each American depositary share ("ADS") represents six ClassA ordinary shares. On November 19,2020,a ratio change that has the same effect as a 1-for-3 reverse ADS split took effect,and as a result,one ADS currently represents six Class A ordinary shares.

Fourth Quarter 2021 Operational Highlights

The total loan amount facilitated and provided[3] in the fourth quarter of 2021 was RMB13,084 million,representing an increase of 50.9% from RMB8,673 million in the same period of 2020 and a decrease of 13.3% from RMB15,085 million in the previous quarter. Xiaoying Credit Loan[4] accounted for 100.0% of the Company's total loan amount facilitated and provided in the fourth quarter of 2021,compared with 92.2% in the same period of 2020.

The total outstanding loan balance[5] as of December 31,2021 was RMB24,912 million,compared with RMB24,509 million as of September 30,2021 and RMB13,218 million as of December 31,2020.

The delinquency rate for all outstanding loans that are past due for 31-60 days as of December 31,2021 was 1.48%,compared with 0.96% as of September 30,2021 and 0.79% as of December 31,2020.

The number of cumulative borrowers[6] was 8.2 million as of December 31,2021.

Total cumulative registered users reached 67.0 million as of December 31,2021.

[3] Represents the total amount of loans that X Financial facilitated and provided during the relevant period.

[4] Xiaoying Credit Loan is a category of online personal credit loan products facilitated and provided through our platform,including Xiaoying Card Loan and other unsecured loan products we introduce from time to time.

[5] Represents the total amount of loans outstanding for loans X Financial facilitated and provided at the end of the relevant period. Loans that are delinquent for more than 60 days are charged-off and are excluded in the calculation of delinquency rate by balance,except for Xiaoying Housing Loan. As Xiaoying Housing Loan is a secured loan product and the Company is entitled to payment by exercising its rights to the collateral,the Company does not charge off Xiaoying Housing Loans delinquent for more than 60 days. Xiaoying Housing Loan was launched in July 2015 and ceased in February 2019,and all the outstanding loan balance of housing loan as of December 31,2020 and 2021 were overdue more than 60 days. To make the delinquency rate by balance comparable,the Company excludes Xiaoying Housing Loan in the calculation of delinquency rate.

[6] Represents borrowers who made at least one transaction during that period from the commencement of the Company's loan facilitation business to a certain date on the Company's platform.

Fiscal Year 2021 Financial Highlights

Total net revenue in 2021 was RMB3,626.5 million (US$569.1 million),representing an increase of 65.4% from RMB2,193.0 million in 2020.

Income from operations in 2021 was RMB1,311.0 million (US$205.7 million),compared with loss from operations of RMB1,430.3 million in 2020.

Net income attributable to X Financial shareholders in 2021 was RMB825.4 million (US$129.5 million),compared with net loss attributable to X Financial shareholders of RMB1,308.5 million in 2020.

Non-GAAP adjusted net income attributable to X Financial shareholders in 2021 was RMB913.8 million (US$143.4 million),compared with non-GAAP adjusted net loss attributable to X Financial shareholders of RMB1,228.4 million in 2020.

Net income per basic and diluted American depositary share ("ADS") was RMB15.06 (US$2.36) and RMB14.70 (US$2.31) in 2021,compared with net loss per basic and diluted American depositary share ("ADS") of RMB24.42 and RMB24.42,in 2020.

Non-GAAP adjusted net income per basic and adjusted diluted ADS was RMB16.68 (US$2.62),and RMB16.26 (US$2.55) in 2021,compared with non-GAAP adjusted net loss per basic and adjusted diluted ADS of RMB22.92 and RMB22.92,in 2020.

Fiscal Year 2021 Operational Highlights

The total loan amount facilitated and provided in 2021 was RMB51,859 million,representing an increase of 74.7% from RMB29,676 million in 2020.

The total loan amount facilitated and provided of Xiaoying Credit Loan in 2021 was RMB51,representing an increase of 115.6% from RMB24,058 million in 2020. Xiaoying Credit Loan accounted for 100.0% of the Company's total loan amount facilitated and provided in 2021,compared with 81.1% in 2020.

Mr. Justin Tang,the Founder,Chief Executive Officer and Chairman of the Company,commented,"We are very pleased to conclude 2021 with another solid quarter of financial results,delivering profitability for the full year. Both our top and bottom lines for the fourth quarter significantly improved over the same period of 2020. Despite a challenging macro economy and regulatory environment in 2021,we have successfully turned our business back on track and maintained steady growth momentum compared with 2020. The total loan amount facilitated and provided in 2021 increased by 75% year-over-year to RMB52 billion from RMB30 billion. With a very focused product strategy and effective cost control initiatives,we turned profitable in 2021 and our bottom line outperformed the full year of 2019,the year before the COVID-19 outbreak."

"In the fourth quarter of 2021,we invested RMB315 million and become an indirect minority shareholder of Newup Bank of Liaoning,a PRC company and non-state-owned bank ("Newup Bank"). We are exploring opportunities to cooperate with Newup Bank to better serve Small-Medium Companies ("SMEs") and we are confident that,based on our advantages in technology and risk management capabilities,the co-operation with Newup Bank could bring more possibilities to our business to jointly empower and support the development of the economy in China."

"Heading into 2022,we expect regulatory uncertainties to subside with clearer guidelines from authorities. The Chinese government has affirmed the value of Fintech industry to address people's inclusive financial needs and support the development of SMEs. We remain cautiously optimistic about our business outlook while being prepared for any macro uncertainties that may emerge in 2022."

"In order to pass on our confidence to the market and increase shareholders value,our board has been timely evaluating,based on current market environment,regulatory policy and condition of business operation,multiple ways of returning profits to our shareholders,including share repurchase as well as cash dividend distribution. Recently,our board approved a US$15 million share repurchase plan,which reflects our confidence in the Company's fundamentals,strategy and sustainable growth. We are looking forward to an increase of shareholder value in the future."

Mr. Kent Li,President of the Company,added,"During the fourth quarter,our total loan amount facilitated and provided reached RMB13 billion,an increase of 51% year-over-year. As mentioned in our previous guidance,we saw a moderate sequential decline in the loan volume in the fourth quarter,which was mainly attributed to the year-end outstanding loan balance requirements of our institutional funding partners. In the first quarter of 2022,the level of available funds has resumed its normal pattern. Since 2020,we have shifted our product focus to Xiaoying Card Loan,which contributed 100% to the total loan amount facilitated and provided in 2021. With this focused and proven product strategy,we are confident in our ability to sustain steady growth in the loan facilitation business in 2022."

"Regarding asset quality,the delinquency rate for all outstanding loans that are past due for 31-60 days as of December 31,higher than 0.96% as of September 30,2020. This fluctuation is mainly attributed to the liquidity tightening in the fourth quarter of 2021. Since February 2022,we have seen our asset quality gradually improving as a result of ample liquidity in financial markets and our stricter risk management measures."

"In 2021,we officially commenced operation of our microcredit business in the third quarter after we received regulatory approval for our microcredit license,and during the fourth quarter,we further increased its registered capital to RMB1 billion in compliance with the regulations. We are on track with our microcredit business and look forward to creating more value for our shareholders."

Mr. Frank Fuya Zheng,Chief Financial Officer of the Company,"We are pleased to deliver solid financial results for both the fourth quarter and the full year of 2021. Total net revenue increased by 15% year-over-year to RMB823 million in the fourth quarter. We saw a significant improvement in our bottom line. In the fourth quarter,net income improved to RMB146 million from a loss of RMB656 million in the same period of 2020,and Non-GAAP adjusted net income improved to RMB183 million from a loss of RMB631 million in the same period of 2020. For the full year 2021,total net revenue increased by 65% to RMB3,626 million. Thanks to our relentless efforts on cost management,total operating costs and expenses decreased by 36% to RMB2,315 million. Net income improved to RMB825 million in 2021 from a loss of RMB1,309 million,and Non-GAAP adjusted net income improved to RMB914 million in 2021 from a loss of RMB1,228 million a year ago."

"In conclusion,we are greatly encouraged by the strong results we delivered in 2021,which fully demonstrate the resilience and growth potential of our business. Going forward,we will continue to expand and deepen our cooperation with more institutional funding partners to meet the needs of consumers and SMEs,and execute our proven strategy to drive sustainable long-term growth and returns for our partners and shareholders."

Fourth Quarter 2021 Financial Results

Total net revenuein the fourth quarter of 2021increased by 15.0%to RMB823.4million (US$129.2million) from RMB716.3 million in the same period of 2020,primarily due to an increase in the total loan amount facilitated and provided of Xiaoying Card Loanthis quarter compared with the same period of 2020.

Loan facilitation service fees under the direct model in the fourth quarter of 2021 increased by 3.2%to RMB487.8million (US$76.5million) from RMB472.6 million in the same period of 2020,primarily due to an increase in the amount of Xiaoying Card Loanfacilitated through the direct model compared with the same period of 2020.

Post-origination servicefees in the fourth quarter of 2021 increased by 129.0%to RMB94.8million (US$14.9million) from RMB41.4 million in the same period of 2020,primarily due to the cumulative effect of increased volume of loans facilitated in the previous quarters. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are being provided.

Financing incomein the fourth quarter of 2021 increased by 27.6%to RMB219.1million (US$34.4million)from RMB171.7 million in the same period of 2020,primarily due to a change in the product mix resulting from an increase in revenue generated by Xiaoying Card Loan this quarter compared with the same period of 2020,which carried a higher service fee rate; and also partially offset by a decrease in average loan balances held by the Company.

Other revenue in the fourth quarter of 2021 decreased by 28.6%to RMB21.8million (US$3.4million) from RMB30.5 million in the same period of 2020,primarily due to a decrease in commission fees from our online shopping mall.

Origination and servicing expenses in the fourth quarter of 2021 decreased by 29.9%to RMB385.8million (US$60.5million) from RMB550.7 million in the same period of 2020,primarily due to the decline in collection expenses resulting from the asset quality improvement and a decrease in insurance fee paid to insurance company.

General and administrative expensesin the fourth quarter of 2021increased by 71.0%to RMB62.2million (US$9.8million) from RMB36.4 million in the same period of 2020,primarily due to an increase in share-based compensation expenses in the fourth quarter of 2021.

Sales and marketing expensesin the fourth quarter of 2021increased by 9.5%to RMB5.3million (US$0.8million) from RMB4.9 million in the same period of 2020,primarily due to an increase in marketing expenses resulting from the business expansion.

Provision foraccounts receivable and contract assetsin the fourth quarter of 2021 was RMB19.5million (US$3.1million),compared with reversal of provision for accounts receivable and contract assetsof RMB13.2 million in the same period of 2020,primarily due to an increase in accounts receivable from facilitation services as a result of the increase in total loan facilitation amount in the fourth quarter of 2021 compared with the same period of 2020.

Provision for loans receivable in the fourth quarter of 2021was RMB40.3million (US$6.3million),compared with RMB33.7 million in the same period of 2020,primarily due to an increase in loans receivable held by the Company as a result of the increase in total loan amount facilitated and provided in the fourth quarter of 2021 compared with the same period of 2020.

Income from operationsin the fourth quarter of 2021was RMB311.6million (US$48.9million),compared with loss from operations of RMB857.3million in the same period of 2020.

Income before income taxes and loss from equity in affiliatesin the fourth quarter of 2021was RMB301.1million (US$47.3million),compared with loss before income taxes and loss from equity in affiliates of RMB877.2 million in the same period of 2020.

Income tax expense in the fourth quarter of 2021was RMB154.2million (US$24.2million),compared with income tax benefit of RMB227.0 million in the same period of 2020.

Net income attributable to X Financial shareholdersin the fourth quarter of 2021was RMB145.5million (US$22.8million),compared with net loss attributable to X Financial shareholders of RMB655.5 million in the same period of 2020.

Non-GAAP adjusted net income attributable to X Financial shareholdersin the fourth quarter of 2021was RMB183.0million (US$28.7million),compared with Non-GAAP adjusted net loss attributable to X Financial shareholders of RMB630.8 million in the same period of 2020.

Net income per basic and diluted ADSin the fourth quarter of 2021was RMB2.64 (US$0.41),and RMB2.58(US$0.40),in the same period of 2020.

Non-GAAP adjusted net income per basic and diluted ADSin the fourth quarter of 2021was RMB3.30(US$0.52),and RMB3.24(US$0.51),in the same period of 2020.

Cash and cash equivalentswas RMB584.8million (US$91.8million) as of December 31,2021,compared with RMB971.8 million as of September 30,2021.

Long-term investmentswere RMB560.0million (US$87.9million) as of December 31,compared with RMB295.6 million as of December 31,primarily due to an acquisition,with a total consideration of RMB315 million,of 45% outstanding shares of Shenyang Tianxinhao Technology Limited,a PRC company,which holds 28%equity interest of Newup Bank. The Company does not have ability to take in the control or management of the affairs or the conduct of the business of Newup Bank.

Fiscal Year 2021 Financial Results

Total net revenuein 2021increased by 65.4%to RMB3,626.5 million (US$569.1million) from RMB2,193.0 million in 2020,primarily due to an increase in the total loan amount facilitated and provided of Xiaoying Card Loanthis year compared with 2020.

Loan facilitation service fees under the direct model in 2021 increased by 101.0%to RMB2,545.4 million (US$399.4million) from RMB1,266.5 million in 2020,primarily due to an increase in the amount of Xiaoying Card Loanfacilitated through the direct model during the year compared with 2020.

Loan facilitation service fees under the intermediary model in 2021 decreased by 99.6%to RMB0.2million (US$0.03million),compared with RMB41.4 million in the same period of 2020,primarily due to the fact that substantially all of the institutional funding partners invested their funds in the loans facilitated under the direct model and/or the trust model,depending on their investment strategies.

Post-origination servicefees in 2021 increased by 54.8%to RMB315.6million (US$49.5million) from RMB203.8 million in 2020,primarily due to the cumulative effect of increased volume of loans facilitated during the year. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are being provided.

Financing incomein 2021 increased by 9.6%to RMB671.9million (US$105.4million)from RMB612.9 million in 2020,primarily due to a change in the product mix resulting from an increase in revenue generated by Xiaoying Card Loan in 2021 compared with 2020,which carried a higher service fee rate; and also partially offset by a decrease in average loan balances held by the Company.

Other revenue in 2021 increased by 36.6%to RMB93.4million (US$14.7million) from RMB68.3 million in 2020,primarily due to an increase in technology service fees received for providing assistant technology development services and referral service fee for introducing borrowers to other platforms.

Origination and servicing expenses in 2021 decreased by 5.2%to RMB1,963.0 million (US$308.0million) from RMB2,071.5 million in 2020,primarily due to the decline in collection expenses resulting from the asset quality improvement and a decrease in interest expenses related to a decline in average loan balances held by the Company,and partially offset by the increase in commission fees resulting from the increased in total loan amount facilitated and provided this year compared with 2020.

General and administrative expensesin 2021increased by 4.8%to RMB187.9million (US$29.5million) from RMB179.2 million in 2020,primarily due to the increase in share-based compensation expenses in 2021.

Sales and marketing expensesin 2021decreased by 41.5%to RMB20.8million (US$3.3million) from RMB35.6 million in 2020,primarily due to a continuing cost reduction in promotional and advertising activities in the first half of 2021.

Provision foraccounts receivable and contract assetsin the fourth quarter was RMB77.2million (US$12.1million),compared with RMB121.5 million in 2020,primarily due to a decrease in the average estimated default rate compared with 2020.

Provision for loans receivable in 2021was RMB76.0million (US$11.9million),compared with RMB245.2 million in 2020,primarily due toa decrease in the average estimated default rate compared with 2020,and partially offset by an increase in loans receivable held by the Company as a result of the increase in total loan amount facilitated and provided in 2021 compared with 2020.

Income from operationsin 2021was RMB1,311.0 million (US$205.7million),430.3million in 2020.

Income before income taxes and gain from equity in affiliatesin 2021was RMB1,190.8 million (US$186.9million),compared with loss before income taxes and loss from equity in affiliates of RMB1,601.5 million in 2020.

Income tax expense in 2021was RMB368.7million (US$57.9million),compared with income tax benefit of RMB299.9 million in 2020.

Net income attributable to X Financial shareholdersin 2021was RMB825.4million (US$129.5million),308.5 million in 2020.

Non-GAAP adjusted net income attributable to X Financial shareholdersin 2021was RMB913.8 million (US$143.4 million),compared with Non-GAAP adjusted net loss attributable to X Financial shareholders of RMB1,228.4 million in 2020.

Net income per basic and diluted ADSin 2021was RMB15.06(US$2.36),and RMB14.70(US$2.31),compared with net loss per basic and diluted ADS of RMB24.42 and RMB24.42,in 2020.

Non-GAAP adjusted net income per basic and diluted ADSin 2021was RMB16.68(US$2.62),and RMB16.26(US$2.55),compared with Non-GAAP adjusted net loss per basic and diluted ADS of RMB22.92 and RMB22.92,in 2020.

Cash and cash equivalentswas RMB584.8million (US$91.8million) as of December 31,compared with RMB746.4 million as of December 31,2020.

Share Repurchase Plan

The board of directors of the Company has approved a share repurchase plan under which the Company may repurchase up to US$15 million worth of its Class A ordinary shares in the form of American depositary shares ("ADSs") over the next eighteen months,effective until September,2023. Under the share repurchase plan,the repurchase may be made from time to time through various means,including open market transactions,privately negotiated transactions,and through other legally permissible means,depending on market conditions and in accordance with applicable rules and regulations. The manner,timing and amount of any share repurchases will be determined by the Company's management in its discretion based on its evaluation of various factors. The Company expects to fund repurchases out of its existing cash balance.

Business Outlook

The Company expects total loan amount facilitated and provided for the first quarter of 2022 to be between RMB15.0 billion and RMB15.4 billion,and the range of increment in total loan amount facilitated and provided for 2022 to be from 15% to 25%. This forecast reflects the Company's current and preliminary views,which are subject to changes.

Conference Call

X Financial's management team will host an earnings conference call at 7:00 AM U.S. Eastern Time on March 31,2022 (7:00 PM Beijing / Hong Kong Time on the same day).

Dial-in details for the earnings conference call are as follows:

United States:

1-888-346-8982

Hong Kong:

852-301-84992

Mainland China:

4001-201203

International:

1-412-902-4272

Passcode:

X Financial

Please dial in ten minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until April 7,2022:

United States:

1-877-344-7529

International:

1-412-317-0088

Passcode:

1182493

Additionally,a live and archived webcast of the conference call will be available at http://ir.xiaoyinggroup.com.

About X Financial

X Financial (NYSE: XYF) (the "Company") is a leading online personal finance company in China. The Company is committed to connecting borrowers on its platform with its institutional funding partners. With its proprietary big data-driven technology,the Company has established strategic partnerships with financial institutions across multiple areas of its business operations,enabling it to facilitate and provide loans to prime borrowers under a risk assessment and control system.

For more information,please visit: http://ir.xiaoyinggroup.com.

Use of Non-GAAP Financial Measures Statement

In evaluating our business,we consider and use non-GAAP measures as supplemental measures to review and assess our operating performance. We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We believe that the use of the non-GAAP financial measures facilitates investors' assessment of our operating performance and help investors to identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income (loss) from operations and net income (loss). We also believe that the non-GAAP measures provide useful information about our core operating results,enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

We use in this press release the following non-GAAP financial measures: (i) adjusted net income,(ii) adjusted net income attributable to X Financial shareholders,(iii) adjusted net income per basic ADS,and (iv) adjusted net income per diluted ADS,each of which excludes income (loss) from financial investments and share-based compensation expense. These non-GAAP financial measuresare not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools,and when assessing our operating performance,investors should not consider them in isolation,or as a substitute forthe financial information prepared and presented in accordance with U.S. GAAP.

We mitigate these limitations by reconciling the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures,which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of GAAP and Non-GAAP results" set forth at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB6.3726 to US$1.00,the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of December 31,2021.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934,as amended. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "potential," "continue," "ongoing," "targets," "guidance" and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"),in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Any statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements that involve factors,risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include,but not limited to the following: the Company's goals and strategies; its future business development,financial condition and results of operations; the expected growth of the credit industry,and marketplace lending in particular,in China; the demand for and market acceptance of its marketplace's products and services; its ability to attract and retain borrowers and investors on its marketplace; its relationships with its strategic cooperation partners; competition in its industry; and relevant government policies and regulations relating to the corporate structure,business and industry. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the SEC. All information provided in this announcement is current as of the date of this announcement,and the Company does not undertake any obligation to update such information,except as required under applicable law.

For more information,please contact:

X Financial

Mr. Frank Fuya Zheng

E-mail: ir@xiaoying.com

Christensen

In China

Mr. Eric Yuan

Phone: +86-10-5900-1548

E-mail: eyuan@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: lbergkamp@christensenir.com

X Financial

Unaudited Condensed Consolidated Balance Sheets

(In thousands,except for share and per share data)

As of December 31,2020

As of December 31,2021

RMB

RMB

USD

ASSETS

Cash and cash equivalents

746,388

584,762

91,762

Restricted cash

852,134

407,276

63,910

Accounts receivable and contract assets,net

413,307

747,480

117,296

Loans receivable from Xiaoying Credit Loans and

Revolving Loans,net

1,236,026

2,484,073

389,805

Loans at fair value

1,585,732

389,679

61,149

Deposits to institutional cooperators,net

907,923

1,500,407

235,447

Prepaid expenses and other current assets,net

403,779

213,127

33,444

Financial guarantee derivative

297,928

11,817

1,854

Deferred tax assets,net

605,653

274,869

43,133

Long-term investments

295,615

560,038

87,882

Property and equipment,net

11,137

6,188

971

Intangible assets,net

37,440

36,817

5,777

Loan receivable from Xiaoying Housing Loans,net

47,490

12,083

1,896

Financial investments[7]

6,000

82,844

13,000

Other non-current assets

51,458

31,277

4,908

TOTAL ASSETS

7,498,010

7,342,737

1,152,234

LIABILITIES

Payable to investors at fair value

1,914,184

462,714

72,610

Payable to institutional funding partners

1,460,395

1,487,379

233,402

Guarantee liabilities

9,790

-

-

Financial guarantee derivative

130,442

565,953

88,810

Short-term bank borrowings

350,545

166,500

26,127

Accrued payroll and welfare

34,781

44,605

6,999

Other tax payable

73,077

219,544

34,452

Income tax payable

75,917

117,148

18,383

Deposit payable to channel cooperators

21,472

21,012

3,297

Accrued expenses and other current liabilities

323,748

268,967

42,207

Other non-current liabilities

27,615

12,019

1,886

TOTAL LIABILITIES

4,421,966

3,365,841

528,173

Commitments and Contingencies

Equity:

Common shares

203

207

32

Additional paid-in capital

3,068,045

3,159,523

495,798

Retained earnings (accumulated deficit)

(14,551)

810,856

127,241

Other comprehensive income

21,059

6,310

990

Total X Financial shareholders' equity

3,074,756

3,976,896

624,061

Non-controlling interests

1,288

-

-

TOTAL EQUITY

3,076,044

3,061

TOTAL LIABILITIES AND EQUITY

7,234

[7] During the year ended December 31,the Company corrected an immaterial error in its previously issued unaudited

condensed consolidated financial statements related to the measurement of the Company's financial investments. In line with

the correction,net income,non-GAAP adjusted net income for the nine months ended September 30,2021 and total assets

as of September 30,2021 have been revised from the versions previously disclosed. However,the effect of this amendment

on the Company's financial results has been immaterial in the past quarters.

X Financial

Unaudited Condensed Consolidated Statements of Comprehensive Income

Three Months Ended December 31,

Twelve Months Ended December 31,

(In thousands,except for share and per share data)

2020

2021

2021

2020

2021

2021

RMB

RMB

USD

RMB

RMB

USD

Net revenues

Loan facilitation service-Direct Model

472,566

487,774

76,542

1,266,533

2,545,432

399,434

Loan facilitation service-Intermediary Model

183

-

-

41,373

161

25

Post-origination service

41,390

94,767

14,871

203,842

315,590

49,523

Financing income

171,692

219,094

34,381

612,863

671,901

105,436

Other revenue

30,466

21,763

3,415

68,347

93,381

14,654

Total net revenue

716,297

823,398

129,209

2,192,958

3,626,465

569,072

Operating costs and expenses:

Origination and servicing

550,726

385,797

60,540

2,071,506

1,963,006

308,038

General and administrative

36,380

62,208

9,762

179,225

187,859

29,479

Sales and marketing

4,858

5,318

835

35,629

20,830

3,269

(Reversal of) provision for accounts receivable and

contract assets

(13,236)

19,529

3,065

121,485

77,248

12,122

Provision for loans receivable

33,703

40,322

6,327

245,204

76,017

11,929

(Reversal of) provision for contingent guarantee

liabilities

(1,271)

-

-

881

(24)

(4)

(Reversal of) provision for credit losses on deposits

to institutional cooperators

970,318

(509)

(80)

970,318

(8,291)

(1,301)

Reversal of provision for credit losses for other

financial assets

(7,854)

(841)

(132)

(975)

(1,223)

(192)

Total operating costs and expenses

1,573,624

511,824

80,317

3,623,273

2,315,422

363,340

Income (loss) from operations

(857,327)

311,574

48,892

(1,430,315)

1,311,043

205,732

Interest income (expense),net

5,735

3,720

584

21,724

19,709

3,093

Foreign exchange gain

6,488

3,907

613

15,399

5,147

808

Fair value adjustments related to Consolidated

Trusts

(13,965)

(7,158)

(1,123)

(57,380)

(7,267)

(1,140)

Change in fair value of financial guarantee derivative

(20,049)

(26,681)

(4,187)

(163,670)

(170,339)

(26,730)

Other income (expense),920

15,761

2,473

12,709

32,506

5,101

Income (loss) before income taxes and gain

(loss) from equity in affiliates

(877,198)

301,123

47,252

(1,601,533)

1,190,799

186,864

Incometaxbenefit (expense)

226,968

(154,169)

(24,192)

299,878

(368,734)

(57,862)

Gain (loss) from equity in affiliates,net of tax

(5,242)

(1,433)

(225)

(6,806)

3,342

524

Net income (loss)

(655,472)

145,521

22,835

(1,308,461)

825,407

129,526

Less: net income attributable to non-controlling

interests

-

-

-

41

-

-

Net income (loss) attributable to X Financial

shareholders

(655,502)

825,526

Net income (loss)

(655,526

Other comprehensive income,net of tax of nil:

Foreign currency translation adjustments

(29,435)

(10,234)

(1,606)

(46,042)

(14,749)

(2,314)

Comprehensive income (loss)

(684,907)

135,287

21,229

(1,354,503)

810,658

127,212

Less: comprehensive income attributable to non-

controlling interests

-

-

-

41

-

-

Comprehensive income (loss) attributable to

X Financial shareholders

(684,544)

810,212

Net income (loss) per share—basic

(2.04)

0.44

0.07

(4.07)

2.51

0.39

Net income (loss) per share—diluted

(2.04)

0.43

0.07

(4.07)

2.45

0.38

Net income (loss) per ADS—basic

(12.24)

2.64

0.41

(24.42)

15.06

2.36

Net income (loss) per ADS—diluted

(12.24)

2.58

0.40

(24.42)

14.70

2.31

Weighted average number of ordinary shares

outstanding—basic

322,041,770

330,853,651

330,651

321,089

329,230,273

329,273

Weighted average number of ordinary shares

outstanding—diluted

322,770

338,504,460

338,460

321,089

336,881,082

336,082

X Financial

Unaudited Reconciliations of GAAP and Non-GAAP Results

Three Months Ended December 31,except for share and per share data)

2020

2021

2021

2020

2021

2021

RMB

RMB

USD

RMB

RMB

USD

GAAP net income (loss)

(655,526

Add: Share-based compensation expenses (net of tax of nil)

24,692

37,429

5,873

80,140

88,435

13,877

Non-GAAP adjusted net income (loss)

(630,780)

182,950

28,708

(1,228,321)

913,842

143,403

Net income (loss) attributable to X Financial shareholders

(655,877

Non-GAAP adjusted net income (loss) attributable to X

Financial shareholders

(630,362)

913,403

Non-GAAP adjusted net income (loss) per share—basic

(1.96)

0.55

0.09

(3.82)

2.78

0.44

Non-GAAP adjusted net income (loss) per share—diluted

(1.96)

0.54

0.08

(3.82)

2.71

0.43

Non-GAAP adjusted net income (loss) per ADS—basic

(11.76)

3.30

0.52

(22.92)

16.68

2.62

Non-GAAP adjusted net income (loss) per ADS—diluted

(11.76)

3.24

0.51

(22.92)

16.26

2.55

Weighted average number of ordinary shares outstanding

—basic

322,273

Weighted average number of ordinary shares outstanding

—diluted

322,082

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