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AEON Credit Set To Launch Digital Islamic Bank By This Year

KUALA LUMPUR: AEON Credit Service (M) Bhd plans to roll out the digital Islamic bank in the first half of this year, further expanding the AEON Living Zone to bolster financial inclusivity.

AEON Credit Service (M) Bhd said the strong performance was underpinned by robust revenue growth with solid receivable growth across key products.

The AEON Living Zone, an eco-system built on the AEON Group of Companies in Malaysia, aims to provide comprehensive lifestyle and financial services solutions to the local community while fostering app-based customer acquisition.

Additionally, the company will also prioritise completing its digital onboarding process for credit cards and launching a new mobile app to transform customer acquisition and experience in the financial year ending February 25, 2025 (FY25).

In a statement, AEON Credit said the company will remain cautious given rising geopolitical tension, inflationary pressures and prevailing volatility in the global financial markets.

“AEON Credit will continue to be prudent, placing emphasis on growing quality assets while accessing the inherent credit risks within its financial portfolios,” it said.

On earnings, AEON Credit’s transaction and financing volume registered an increase of 15.9 per cent to RM1.85 billion for the fourth quarter (Q4) ended February 29 2024 (FY24) compared to RM1.60 billion recorded in the same quarter in FY23.

This was primarily driven by vehicle financing, personal financing and payment business, which were also supported by the company’s strategic festive season marketing campaigns.

“The expansion of our acquisition channels, including the set up of physical booth and online channels, contributed further to the increase in transaction and financing volume,” AEON Credit noted in the statement.

Profit before tax (PBT) for Q4 FY24 increased by 25.3 per cent to RM162.60 million compared to RM129.81 million in Q4 FY23.

Profit after tax (PAT) rose by 24.7 per cent to RM118.92 million compared to RM95.34 million recorded in the preceding year’s corresponding quarter.

For the full year, AEON Credit’s revenue grew 16.6 per cent to RM1.91 billion in FY24, compared to RM1.64 billion recorded in FY23.

This increase was due to higher transaction and financing volume that grew by 16.9 per cent to RM7.30 billion year-on-year (YoY).

Profit before tax (PBT) and profit after tax (PAT) grew to RM565.17 million and RM424.02 million, respectively, translating to earnings per share (EPS) at 81.08 sen and a return on average equity (ROE) of 16.7 per cent.

AEON Credit said the strong performance was underpinned by robust revenue growth with solid receivable growth across key products.

However, this was partially offset by higher impairment losses on financing receivables that reflected an increase of RM122.08 million and increased other operating expenses in line with higher sales and revenue-generated costs.

The board has recommended the payment of a final single-tier dividend of 14 sen
per share to be paid on July 25 2024, subject to shareholders’ approval at the upcoming annual general meeting.

The total dividend payable for FY24 amounted to RM144.25 million compared to RM126.38 million last year, marking a 14.1 per cent increase with a payout ratio of 34.0 per cent.

AEON Credit’s gross financing receivables increased by 12.9 per cent to RM12.23 billion YoY, driven by strong demand across our products.

The launch of a pre-assessment and digital onboarding processes that are backed by an AI-based scoring model to improve decision-making accuracy and provide a seamless onboarding experience contributed to this growth.

Due to the company’s strong asset recovery efforts and implementation of a risk-based collection strategy, the non-performing loans (NPL) ratio reduced to 2.57 per cent in FY24 compared to 2.89 per cent in FY23.

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