SecProbe.io

Mail Stop 4720
 March 27, 2018

Yue (Justin) Zhang
Chief Executive Officer  and Chairman
X Financial
7-8F, Block A, Aerospace Science and Technology Plaza
No. 168, Haide  Third Avenue, Nanshan District
Shenzhen, 518067, the People's Republic of China

Re: X Financial
Amendment No. 1 to
Draft Registration Statement on Form F -1
Submitted February 28, 2018
  CIK No. 0001725033

Dear Mr. Zhang :

We have reviewed your amended draft registration statement  and have the following
comments.  In some of our comments, we may ask you to provide us with information so we
may better understand your disclosure.

Please respond to this letter by providing the requested information  and either submitting
an amended draft registration statement or  publicly  filing your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing the information you provide in response to these  comments  and your
amended draft registration statement or filed registration statement,  we may have  additional
comments.

General

1. Considering that you will enhance  disclosures in future amendments for full year 2017
financial statements, we will reevaluate your response to several comments, including
comments 12, 13, 14, 16, 18, 58 and 67, once your full year 2017 financial statements are
included.

2. We note the revi sions you have made in relation to Circulars 141 and 57.  In particular, we
note i n the third sentence of the last paragraph o n page 21 you state that “[s]ome of our loan
products, for example, our Xiaoying Housing Loan, Xiaoying Preferred Loan and our
Xiaoying Credit Card Loan's credit card cash advanced product may be deemed to have

Yue (Justin) Zhang
X Financial
March 27, 2018
Page 2

 characteristics of cash loan under Circular 141, ” however, you also state in the sec ond full
paragraph on page 25 that you “ do not believe any of the loan products [you]  currently
facilitate is explicitly prohibited in accordance with the recently promulgated requirements
under Circular 141 and Circular 57 .”  Please expand your Risk Facto r disclosure to identify
the aggregate amount and percentage of loans you facilitate that would be jeopardized if any
of the loan products you identify above are deemed prohibited.  Please also briefly describe
what if any rectification measures you can or  will you take if th ose products  are deemed
prohibited.

Business

Loan Performance, page 93

3. Please enhance your delinquency rate by balance disclosures to present delinquency rates by
major product consistent with your guarantee liability rollfoward as presented on page F -65.

Delinquency Rate by Balance, page 93

4. We note your response to comment 10 that Xiaoying  Card Loans have a higher delinquency
compared to your other products due to the features of these loans.  Please tell us, and
enhance your disclosure, to discuss the features of the Xiaoying Card Loans that contribute to
the higher delinquency compared to  your other products.  Please update your discussion to
include recent periods as well.

5. We note your response to comment 59.  Please address the following:

 On page 93 in your delinquency rate by balance discussion, you state that loans that are
delinqu ent for more than 180 days are charged -off and are included in the delinquency
rate calculation.  Considering also that you only present delinquency rates for 31 -90 days
and 91 -180 days, tell us the relevance of your disclosure that for Xiaoying Card Loan,  the
credit losses measured by 181 -days plus charge -off was nil and for Xiaoying Preferred
Loan, the credit losses measured by 181 days plus charge -off was only 0.21%; and

 Tell us why for Xiaoying Card Loan, the credit losses measured by 181 -days plus cha rge-
off was nil considering the steady increase in historical cumulative 91 -days plus past due
delinquency rates as presented on page 94 and the outstanding related guaranty liability
balances as presented on page F -65 which is based in part on expected de linquency rates.

Delinquency Rate by Vintage, page 93

6. Please enhance your delinquency rate by vintage discussion to disclose the impact on your
financial statements of delinquency rate trends in the 31 - 90 days and 91 -180 days past due
buckets and the greater historical cumulative 91 -day plus past due delinquency rates .  Please
update your discussion to include recent periods as well.

Yue (Justin) Zhang
X Financial
March 27, 2018
Page 3

Liquidity and Capital Resources, page 103

7. We note in your response to comment 16, you state that if additional capital  is needed in the
future to fund continued operations you may seek to issue equity or debt securities or obtain
credit facilities.  Please clarify in your Financing Activities discussio n why, for the six
months ended June 30, 2017, you elected to obtain a shareholder loan instead of issuing
equity or debt securities or obtain a credit facility as disclosed in your amendment.

Intermediary Model, page 110

8. We note your response to comment 21 and your updated disclosures on pages 110 -111 of the
amended regis tration statement .  Please enhance the related disclosures in the notes to the
consolidated financial statements starting on page F -18 to reflect this disclosure as well.

Financing Income, page 111

9. We note your response to comment 39.  We further note yo ur disclosure that you recognize
interest income from loans in consolidated trusts in the “Financing Income” line item and
that you also recognize service fees paid by borrowers in the “Financing Income” line item.
Please revise to quantify the amount of interest income recognized and the amount of service
fees recognized for each period presented.

Online Consumer Finance and Investment Platforms are Filling the Gap, page 1 19

10. Please refer to comment 24 .  For greater balance and context, please revise to  discuss recent
developments in the peer -to-peer lending industry in China, such as recent lending plat form
failures, over -leveraging and issues related to the industries’ fast growth  in relation to
regulation .  We note your revised disclosure in the secti on headed “Changing Regulatory
Environment of Online Consumer Finance Market”  on page 125.

Our Borrowers and Loan Products, page 136

11. We note your response to  comment 27.  We note that you use the classification “prime
borrower” consistent with industry s tandard.  Please revise your disclosure to describe what it
means to have “sound credit history with credit records with PBOC CRC.”

Our Borrowers and Loan Products, page 137

12. We note your response to comment 29 that under the current arrangement with Zhon gAn
starting from September 2017, you would not provide guarantee services for certain of your
products.  We also note in your response to bullet 6 of comment 41 in which you state that
there are no circumstances in which guarantee services will not be pro vided.  Please
reconcile these statements and revise your disclosures as necessary.

Yue (Justin) Zhang
X Financial
March 27, 2018
Page 4

13. We note in your response to comment 30 that borrowers are allowed to have more than one
loan outstanding at the same time for all products except Xiaoying Preferred Loans .  Please
enhance your disclosure to discuss the controls you have in place to ensure that loans
subsequent to a borrower’s initial loan are not used to pay the principal and interest on earlier
loans, which could disguise potential loan impairment.   Also,  please disclose how many
loans a borrower is allowed to have, if there is a maximum cumulative loan amount any one
borrower can have, if delinquent borrowers are allowed to have additional loans, and your
controls over these processes.

Loan Facilitation Services to Other Platforms, page 143

14. We note your response  to comment 34  and revisions disclosing the range of deposits each of
the financial technology companies you cooperated with was required to pay.  Please expand
your disclosure to describe how you  determine if a deposit is required and how you calculate
the amount of the deposit.

Loan Products, page 144

15. We note that if the borrower fails to repay the investor, ZhongAn will compensate the
investor for the principal investment amount and accrued in terests within two business days
from the default date.  We also note that if the total amount of the insurance paid by
ZhongAn to the insured investors has exceeded the expected maximum payout amount for
certain period, ZhongAn will increase the insurance  premium charged to borrowers in the
next month.  Please enhance your disclosure to address the following:
 Clarify, under the terms of your contract with ZhongAn, if you also compensate
ZhongAn within two business days from default;
 Define default date; and
 Clarify if the increase in insurance premium charged to borrowers in the next month is
for all borrowers or just new borrowers.
Investment Products and Services

Other Products, page 145

16. Please refer to comment 37.  We note your revised disclosure tha t the money market products
offered on your platform are under the administration of an independent asset management
company.  Please expand your disclosure to identify the asset management company and
describe the money market funds offered.

Yue (Justin) Zhang
X Financial
March 27, 2018
Page 5

 Revenue Re cognition, page F -15

17. To provide investors with a clearer understanding of the differences in your revenue
recognition policies, please revise to disclose your revenue recognition policies in separate
sections for your Intermediary Model - Transferred to N on Institutional Investors (True
Sales) and your Intermediary Model – Institutional Investors (Consolidated Trusts)).

18. We note your response to comment 41.  Please address the following:
 Your disclosures on pages F -15 and F -17 do not reflect that you no longer charge such
upfront fees for any products as of the date of your response letter.  Please revise your
next amendment to reflect that you no longer charge upfront fees for any products as of
the date of this response letter, if true.  Additionally, p lease quantify the upfront fees
collected and the remaining balance of upfront fees to be col lected in the periods
presented; and
 Tell us how you have captured the increased credit risk of collecting your service fees
over the term of the loan instead of at loan origination.
19. We note your response to comment 42.  Please tell us:
 Why you do not believe borrowers are a customer as defined by ASC 606, considering it
appears you enter into separate contracts with the borrowers, the borrowers pay
consideration and the borrowers receive a benefit from your ordinary activities.  Your
analysis should distinguish the key considerations for each economic model (i.e., Direct
Model, Intermediary Model - Transferred to Non Institutional Investors (True Sales), and
Inter mediary Model – Institutional Inv estors (Consolidated Trusts));
 How you concluded that borrowers were not a customer under the Intermediary Model
considering you initially provide credit to b orrowers using your own funds;
 How the fact that the loan and pay able to investors are on balance -sheet under the
Intermediary Model – Institutional Investors (Consolidated Trusts) impacted your
analysis ; and
 What consideration is provided by your investors considering the definition of a customer
in ASC 606.
Direct Mod el, page F -16

20. We note your statement in comments 41 and 47 that there is an unconditional right to
consideration for post -origination services upon entry into the contract.  Please tell us in
greater detail why you d o not recognize a contract asset , or re ceivable , if only the passage of
time is required before payment of that consideration is due, and record a corresponding
contract liability related to your post -origination services performance obligation considering

Yue (Justin) Zhang
X Financial
March 27, 2018
Page 6

 the guidance in ASC 606 -10-45-2 and -4.  In addition, please describe to us the contractual
term that gives rise to the unconditional right to consideration and whether the unconditional
right to consideration is from the investor or the borrower.

21. We note your statement in comment 42 and yo ur disclosure on page 109 that that post -
origination services for loans facilitated under the Direct Model are within the scope of ASC
860.  Please tell us in detail how you determine if you should recognize a servicing asset or
servicing liability.

22. We no te your disclosure that revenues from post -origination services under the Direct Model
are recognized over the term of the underlying loans as the services are provided to the
investors.  Please revise to clarify if you recognize the fees over the term usi ng the straight -
line method.  If you do not, please disclose the method and tell us why this method better
matches the timing of satisfying the performance obligation.

23. We note your response to comment 48.  Please revise to provide additional informatio n
regarding the timing of collecting service fees from borrowers.  For example, consider
clarifying whether the service fees are collected in equal payments over the term of the
contrac t or whether higher payments are made during the beginning of the term.

Intermediary Model, page F -17

24. We note in your response to comment 63 that loan principal and interest collected for loans
held in consolidated trusts from monthly installments are reinvested into new loans upon
collection and that distribution to invest ors is made by the trusts at the end of the term of the
trust.  Please enhance your disclosures to clarify the terms between the trust and investors,
including the fact that principal and interest collected from monthly installments are
reinvested into new  loans.

25. We note your response to comment 68.  Please enhance your disclosure to clarify that loans
held by the consolidated trusts primarily consist of Xiaoying Housing Loans considering
their specific credit risk.

Guarantee Liabilities, page F -21

26. We note your response to comment 51.  We note that the guaranty liability recorded at loan
inception is estimated based on the Group’s expecte d payouts and also incorporates  a markup
margin and that expected payouts are estimated based on expected delinque ncy rates and
collection rates for each product type, taking into consideration historical loss experiences.
Please address the following:
 Clarify if expected payouts factor in missed payments paid by ZhongAn within two
business days from payment due date ;

Yue (Justin) Zhang
X Financial
March 27, 2018
Page 7

  Clarify how you factor in increased insurance premiums charged to borrowers when
actual payouts and collection rates exceed original estimates; and
 Clarify how you consider the impact of changes in product mix in your historical loss
experiences.
Note 3.  Fair value of assets and liabilities, page F -30

27. Based on your election of the fair value option for the loan assets and liabilities of the
consolidated trusts, please provide the required disclosure of ASC 825 -10-50 –28(d) Fair
Value Option.

28. Consid ering that obligations to investors of loans held in a consolidated trust are based on the
original contribution and you have elected the fair value option for these loans, clarify ho w
you account for the difference between the carrying value and your obli gation to distribute
the original principal contribution.

Disaggregation of revenues, page F -58

29. It appears that Xiaoying Card Loan, Xiaoying Preferred Loan and Xiaoying Housing Loan
products’ net guarantee liability payout ratios varied for the six mon ths ended June 30, 2017,
and that you present loan information by each of these three products as “key operating data”
in your discussion of your business.  Please t