This article first appeared in The Edge Financial Daily on July 5, 2017

KUALA LUMPUR: AEON Credit Service (M) Bhd’s net profit jumped 20.9% in the first financial quarter ended May 31, 2017 (1QFY18) to RM75.8 million from RM62.7 million in the previous corresponding period, partly boosted by bad debt recovery and commission earned from sale of insurance products.

The company’s revenue grew 15.5% to RM302.3 million in 1QFY18 from RM261.6 million a year ago.

The improvement in the group’s financial results was attributed to more operating income of RM31.2 million in 1QFY17 from RM27.6 million in 1QFY16, mainly comprising bad debts recovered, commission income from sale of insurance products and AEON Big loyalty programme processing fees.

A filing with Bursa Malaysia highlighted that AEON Credit’s receivables as at May 31 this year was RM6.7 billion, representing an increase of 17.4% from RM5.7 billion recorded a year ago while non-performing loan (NPL) ratio has been rather flat at 2.43% as at May 31, 2017, compared with 2.42% on May 31, 2016.

The group has a lower ratio of total operating expense-to-revenue at 58.2% as at May 31 compared with 60.5% a year ago, mainly attributable to higher growth in interest income and corresponding lower increase in operating expenses.

“Funding cost for 1QFY17 was higher compared with the quarter ended May 31, 2016, due to increase in borrowings of 17.7%. The nominal value of borrowings as at May 31, 2017, was RM5.4 billion compared with RM4.6 billion as at May 31, 2016,” it added.

Meanwhile, the company has set the ex-date for its one-for-two bonus issue on July 14, and entitlement date on July 18.

In separate filings with Bursa, AEON Credit announced that Krishnappan S P S Singaram, who will be tasked with a new assignment in the company, has resigned from the board. Meanwhile, Ajith Jayaram, who was the head of corporate strategy group, is now executive director, and Tetsuro Takano has been appointed as a non-independent and non-executive director.