This article first appeared in The Edge Financial Daily, on July 1, 2016.

KUALA LUMPUR: Aeon Credit Service (M) Bhd’s net profit for the first quarter ended May 2016 (1QFY17) grew 7.7% year-on-year to RM62.73 million or 41.06 sen per share, from RM58.24 million or 37.96 sen per share a year ago.

Despite the better earnings, the financial group said the average funding cost was marginally higher compared to the previous quarter due to higher funding cost for new long-term funding.

Revenue rose 12.6% to RM261.64 million from RM232.44 million, it said in a filing with Bursa Malaysia.

The company said total financing volume of RM1.01 billion registered in 1QFY17 was 19.4% higher compared with the previous corresponding period, mainly driven by strong performance in easy payment operations, especially for vehicle financing and personal financing.

The financing receivables as at May 31 were RM5.68 billion, representing an increase of 21.6% from RM4.67 billion a year ago, with growth recorded in the vehicle financing and personal financing product segments.

Meanwhile, the non-performing loan ratio stood at 2.42% as at May 31, compared with 2.74% a year ago.

The company recorded an operating income of RM27.57 million, comprising mainly bad debts recovered, commission income from sale of insurance products, and Aeon Big loyalty programme processing fees.

“[The] ratio of total operating expense against revenue was recorded at 60.5% as compared to 61.2% in the previous quarter. The decrease was mainly attributable to lower allowance for impairment losses on financing receivables,” it added.

Moving forward, Aeon Credit expects to maintain its financial performance for the year ending February 2017 despite challenges posed by the domestic and global economies.

Aeon Credit’s share price fell six sen or 0.46% to RM12.94 yesterday, with a market value of RM1.85 billion.