Tuesday, 6 November 2012

Aeon Credit: Managing Director's Operations Review


Financial Review (FYE 20.2.2012)

AEON Credit Service (M) Berhad has recorded stronger annual business growth in the year ended 20 February 2012 compared to the previous year, from successful business strategies deployed under an environment of favourable market conditions.

Total revenue for the financial year of RM344.27 million represented growth of 27.7% from previous year revenue of RM269.61 million. This is attributable to growth in financing receivables achieved for credit card operations, product Easy Payment schemes and Personal Financing scheme during the year. Total transaction and financing volume of RM1.66 billion for the year represented growth of 40.9% from the previous year. Profit before tax (PBT) recorded for the year of RM128.06 million 50.6% higher than RM 85.02 million PBT in the previous year. 

The financing receivables as at end of FYE2012 was RM1.49 billion, representing growth of 34.5% from RM1.11 billion in the previous financial year. Meanwhile, non-performing loans (NPL) ratio was 1.80% as at February 2012 compared to 1.83% in February 2011, reflecting satisfactory asset quality management in spite of the sharp growth in business and receivables in the year.

Increase in annual operating costs in FYE 2012 by 17.3% is in tandem with business growth and lower than revenue growth of 27.7%. The Company was able to record improved margin of profit before tax against revenue for the year of 37.2% compared to 31.5% in the previous year due to improved cost efficiency from sharp growth in receivables in the year, lower ratio of net impairment loss charge for the financial year against total financing receivables and reduced overhead costs for depreciation and rental expenses. Average funding cost in February 2012 was lower marginally compared to February 2011 due to new funding at competitive rates in the year from various sources.

Other operating income recorded of RM24.90 million for the year was 44.4% higher than previous year. This is attributable to continued growth in fee income, especially from sales of insurance products, and increase in bad debts recovered.

Operational Review

Card Business
While 2011 was a challenging year for credit card issuers in Malaysia to increase their customer base, the Company’s  principal credit cards in circulation as at February 2012 had increased by 11.3% from the previous year based on database marketing efforts, various promotions carried out and enhancement of card benefits.  Total credit card transactions volume of RM716.61 million represents growth of 52.2% against the previous year, realised from both increase in card member base as well as higher average card usage amount.

Meanwhile, the company introduced “EPF kiosks” located at all branches and AEON shopping malls to attract increased walk-in consumer traffic and enhance opportunities for sales and cross selling of financial service products offered by the Company including credit cards and Personal Financing. The company will strive to convert more J-Card members  to AEON credit card members and enhance card benefits in collaboration with AEON Co. (M) Berhad to be a preferred credit card among its customers in FYE2013.

Easy Payment and Personal Financing Business
The Easy Payment and Personal Financing schemes saw a 33.3% annual growth in financing volume to RM940.12 million for the year under review. Database marketing activities and attractive financing rates during the year served to increase transaction volume significantly for personal financing operations, which registered 103.2% annual growth in receivables against the previous year.   

Further, the Company continued to obtain increasing volume of consumer credit applications from the growing base of merchants for the consumer durables and motorcycle financing operations during the year. The company continued to focus on growth in business for larger financing amounts from the middle income consumers, both for purchase of consumer goods and motor vehicles  as well as personal financing needs.

Future Plans

The Company anticipates to be able to sustain growth in its financial performance in the financial year ending 20 February 2013 based on its business strategies despite the lower economic growth rate forecast for 2012.

For the credit card operations, the Company intends to issue new cards targeted at the higher income group consumers in FYE2013 while strengthening card recruitment activities both at AEON shopping malls as well as through other marketing channels. 

Meanwhile, Easy Payment scheme operations will be expanded to provide equipment and other asset financing to small businesses . The Company shall expand the consumer durables financing scheme to offer financing for personal services utilised by consumers.  Financing for higher cubic capacity motorcycles and expansion of pre-owned  car financing will continue to be an area of focus as well as merchant network expansion. 

Additional branches and service centres shall be opened nationwide by the Company in FYE 2013, to facilitate greater market reach to consumers, especially for personal financing scheme operations and providing customer service.

Further, the Company shall pursue growth in fee revenue from services in FYE2013, including sale of insurance products, to complement income generation from receivables. The Company will focus on nationwide business expansion while taking necessary action towards sustainable business growth, maintaining prudent risk management policies and healthy asset quality.  


I would like to thank our customers, business partners and shareholders for your continued support and confidence in the Company. I would also like to express my sincere appreciation to the Board of Directors, management and staff of the Company for your contributions and dedication, which are essential for the future growth of the Company.

Yours sincerely,

Yasuhiro Kasai
Managing Director

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