KUALA LUMPUR (April 11): Aeon Credit Service (M) Bhd ended FY2023 with a record performance after its net profit for the fourth quarter ended Feb 28, 2023 (4QFY2023) jumped more than four times to RM95.34 million from RM23.38 million a year earlier.
Aeon Credit, whose stock became one of the top gainers on Tuesday following the release of its latest earnings, attributed the stronger quarterly net profit to lower impairment losses on financing receivables and improved bad debt recoveries, the consumer finance company’s bourse filing showed.
Impairment losses on financing receivables stood at RM117.20 million in 4QFY2023 compared to RM154.68 million a year ago, while bad debts recovered amounted to RM44.08 million in 4QFY2023, improved from RM38.46 million a year before.
As a result, earnings per share ballooned to 35.34 sen per share in 4QFY2023, from 7.17 sen per share in 4QFY2022.
Revenue for the quarter also grew by 19.2% to RM432.66 million, from RM362.97 million, mainly attributable to stronger loan and financing growth.
The group declared a financial dividend of 21 sen per share, higher than the 20 sen per share paid a year ago. The latest dividend’s ex–date falls on July 5, while payment date is on July 20.
This brings its total dividend payout for FY2023 to 49.5 sen, slightly more than 48.5 sen it paid for FY2022. It should be noted that the annual dividend payout is highest since FY2017, when it paid 63 sen per share.
For the full year of FY2023, Aeon Credit’s net profit increased by 14.3% to RM417.69 million, from RM365.42 million a year ago, as annual revenue rose 7.57% to RM1.64 billion, from RM1.52 billion previously.
The better annual profit was due to incremental increase in revenue and bad debt recoveries, coupled with the reduction in operating expenses. However, these were offset by higher impairment losses on financing receivables.
Nonetheless, the group’s loan loss coverage ratio dropped to 252% as at end-Feb 2023, as compared to 289% a year ago.
The coverage ratio is the ratio of on-balance sheet provisions for potential credit impairment losses to the volume of non-performing loans. A decline in the ratio could mean the banks are provisioning less for their bad debt.
Moving forward, the group — whose share price jumped as much as 40 sen or 3.41% to RM12.12, before halving its gains to close at RM11.92 for a market capitalisation of RM3.04 billion — remains cautiously optimistic that business sentiment will gradually be improved to pre-pandemic levels.
It will continue to closely monitor and assess the inherent credit risks in its financing portfolios, 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.