KUALA LUMPUR (Dec 21): Aeon Credit Service (M) Bhd’s net profit fell 19.17% to RM83.63 million for its third financial quarter ended Nov 30, 2022 (3QFY2023) from RM103.46 million a year earlier, impacted by higher impairment losses on financing receivables.

As a result, earnings per share (EPS) fell to 32.76 sen for 3QFY2023 from 40.53 sen for 3QFY2022, its filing with Bursa Malaysia showed on Wednesday (Dec 21).

Despite the lower net profit, the consumer financing provider reported an 11% increase in its quarterly revenue to RM417.84 million from RM376.47 million a year earlier, mainly due to stronger loan and financing growth.

No dividend was declared for the quarter under review.

Aeon Credit’s total operating expenses for 3QFY2023 grew 53.8% year-on-year to RM279.7 million from RM181.9 million mainly due to higher impairment losses on financing receivables of RM143.41 million million compared with RM33.09 million the prior year.

The ratio of total operating expenses against revenue was recorded at 66.9% for 3QFY2023 compared with 48.3% for 3QFY2022. The group’s nominal value of borrowings rose slightly to RM7.57 billion from RM7.52 billion previously.

Other income decreased by 16.4% to RM42.2 million versus RM50.46 million a year ago, mainly from bad debt recoveries.

The group saw its total transaction and financing volume rise 30.3% to RM1.55 billion from RM1.19 billion.

“The gross financing receivables of RM10.59 billion as at Nov 30, 2022 was higher by RM987.16 million compared with Nov 30, 2021,” said Aeon Credit, adding that net financing receivables after allowance for impairment loss increased to RM9.79 billion from RM8.915 billion.

Non-performing loans (NPL) ratio stood at 2.52% compared with 1.75% as at Nov 30, 2021.

For the cumulative nine months (9MFY2023), Aeon Credit’s net profit slipped 5.76% to RM322.345 million from RM342.04 million a year earlier, while revenue was up 3.93% to RM1.21 billion from RM1.16 billion in 9MFY2022.

Looking ahead, Aeon Credit remains cautiously optimistic that its business revenue will gradually be improved to pre-Covid-19 pandemic levels.

“Accordingly, the group 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.

“The group is committed to building its long term business sustainability and growth agenda and will be continuously enhancing its information technology capabilities to strengthen the digitalisation of its operations. Barring any unforeseen circumstances, the group expects to be able to maintain its financial performance by putting in place the appropriate measures for the financial year ending Feb 28, 2023,” it added.

Aeon Credit shares closed six sen or 0.48% lower at RM12.52 on Wednesday, valuing the group at RM3.2 billion.