AsianFin -- Chinese fintech giant Ant Group reported a sharp 60.5% decline in net profit for the three months ending March 31, falling to 4.74 billion yuan ($662.7 million), according to Reuters calculations based on figures released by stakeholder Alibaba on Friday.

Alibaba, which holds a 33% stake in Ant, said the profit decrease was largely driven by investments in new growth initiatives and technologies, as well as a decline in the fair value of certain investments. The e-commerce group reports Ant’s profit one quarter in arrears, reflecting its investment accounting.

Both Alibaba and Ant were co-founded by billionaire Jack Ma, with Ant operating as a leading provider of digital payment services, wealth management, and other financial technology offerings in China.

The earnings highlight the trade-off between near-term profitability and strategic investment for Ant, as the company focuses on expanding technology and product capabilities while navigating regulatory pressures in China’s fintech sector.

Analysts note that while the profit drop is significant, Ant’s ongoing investments could strengthen its long-term growth potential, particularly in areas such as digital banking, insurance, and cross-border payments.

The results also underscore the close financial and operational ties between Alibaba and Ant, with Alibaba continuing to benefit from Ant’s performance while also being affected by fluctuations in Ant’s quarterly earnings.