Aeon Credit to diversify income stream

by **Cals** Wed 19 Jun 2013, 10:41

Business & Markets 2013

Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com

Wednesday, 19 June 2013 10:31

KUALA LUMPUR: AEON CREDIT SERVICE (M) BHD [], which provides financing schemes for consumers, is looking to diversify its income stream by expanding into a fee-based business, said group managing director Yasuhiro Kasai.

Currently, the company’s main income comes from its financing business.

“We are positive about the growth of our financing business, but we would also like to diversify into other non-core businesses to expand our reach in the market.

“We are focusing on e-commerce business, and we are also planning to have a new fee-based business such as a collection agency,” Kasai said after the company AGM yesterday.

Kasai said the group would be able to gather commissions based on these two businesses every time customers swiped their cards on the terminals.

The agency collection business, also known as business process outsourcing (BPO), involves collecting monies on behalf of clients, including TENAGA NASIONAL BHD [], Axiata Group Bhd (Celcom) and TELEKOM MALAYSIA BHD [].

“These are the fields that we are looking at to further expand our business … now we are looking at extending our services into other industries on top of telecommunications and electricity,” said Kasai.

He noted that the group is positive about loan growth for the current financial year ending Feb 20, 2014 (FY14), and is looking at niche markets to sustain its financing volume. A key target is small and medium enterprises that do not receive much financial support from normal loan banking institutions.

Aeon Credit reported a net profit of RM41.34 million for the first quarter (1Q) ended May 20, a 47.2% increase from the RM28.08 million recorded a year ago. The increase in net profit was achieved on a higher revenue of RM143.87 million.

The group recorded a total transaction and financing volume of RM787 million in 1Q, representing a growth of 50.2%. The 1Q growth was attributable to favourable economic environment and marketing and promotion activities. Vehicle and personal financing operations also recorded higher growth.

Non-performing loan ratio was lower at 1.57%, compared with1.68% in May last year. Other operating income was higher by 8.5% to RM9.5 million, attributable to continued growth in fee income from sales of insurance products, collection of commission and increase in bad debt recovery.

Kasai said the group will be adding 12 more Aeon Credit branches and 18 more kiosk counters around Malaysia in its current financial year.

This article first appeared in The Edge Financial Daily, on JUNE 19, 2013.