AEON Credit net profit up by 46% YoY

The gures improved despite total transaction and financing volume was lower by 26.3% due to FMCO implementations


AEON Credit Service (M) Bhd’s net profit increased 45.69% year-on-year (YoY) to RM75.48 million or 27.59 sen earnings per share for its second quarter ended Aug 31, 2021 as revenue grew by 2.9% YoY to RM374.48 million.

The improved number comes despite total transaction and financing volume was lower by 26.3% to RM708.83 million in the period due to the consecutive implementation of Full Movement Control Order (FMCO), followed by Enhanced MCO and the phases one and two of the National Recovery Plan.

Gross financing receivables as at Aug 31 amounted to RM9.63 billion was lower compared to the previous year, the financing firm’s exchange filing yesterday stated.

The net financing receivables after allowance for impairment loss was RM8.88 billion as at Aug 31 compared to RM9.42 billion in the previous year, while nonperforming loans ratio was 2.24% as at Aug 31 against the previous year’s 1.95%.

Other income for the current quarter was recorded at RM38.57 million mainly comprising bad debts recovered, insurance commission and interest/profit income from deposits with licensed financial institutions.

Meanwhile, ratio of total operating expenses against revenue was recorded at 60.3% for the current quarter, lower against the 65% in the preceding year corresponding quarter due to lower impairment losses on financing receivables of RM92.266 million versus RM112.01 million for the preceding year corresponding quarter, partially offset by higher personnel and operating expenses.

Funding cost for the current quarter was lower compared to the preceding year corresponding quarter mainly due to reduced borrowings and lower cost of funds, while the nominal value of borrowings as at Aug 31, 2021 was at RM7.87 billion compared to RM8.05 billion in the previous year.

As a result of the above, the group’s profit before tax increased by 33.5% YoY to RM102.15 million.

The company declared a 28.5 sen interim dividend payable on Nov 3.

For the year-to-date period, AEON Credit’s net profit was 205.52% higher YoY to RM238.58 million as revenue rose and the company made lower allowance for impairment losses.

AEON Credit posted a total revenue of RM785.44 million for the six months period, up 4.2% YoY, driven by the higher interest income in the period as the previous year’s revenue was impacted by Day-One net modification loss related to Aeon Relief Programme of RM28.41 million.

Moving forward, the company noted the pace of recovery will depend on the positive developments related to the pandemic, including the opening of more economic sectors, easing containment measures and the continued challenges that affect the vaccine rollout both globally and domestically.

“The company will continue to closely monitor and assess the inherent credit risks in its financing portfolio, with proactive attention focused on enhancement of asset quality, prudent cost management and improvement on financial and operational efficiencies by leveraging on its positive business fundamentals,” it said.

It is committed to strive in building its business sustainability agenda as recently announced and will continuously invest in information technology to drive the digitalisation of its operations.

“Barring any unforeseen circumstances, the company expects to be able to maintain its financial performance for the financial year ending Feb 28, 2022,” it said.