KUALA LUMPUR: Aeon Credit Service (M) Bhd recorded a slight drop in its net profit for the first quarter (Q1) ended May 31, 2022 (FY23) at RM163.07 million, down 0.01 per cent year-on-year (YoY) from RM163.09 million in the same period last year.
Revenue came in five per cent lower YoY at RM390.57 million from RM411 million in Q1 FY22, mainly attributable to the decrease in average financing receivables.
In its Bursa filing, the company said gross financing receivables on May 31, 2022, of RM9.996 billion, were lower by RM61.874 million compared to the corresponding period last year.
The net financing receivables after allowance for impairment loss was RM9.284 billion versus RM9.339 as of May 31, 2021.
The non-performing loans (NPL) ratio stood at 2.53 per cent in the quarter under review compared to 1.75 per cent last year, while the loan loss coverage ratio stood at 281 per cent as compared to 409 per cent as of May 31 2021.
"Other income for the current quarter was higher at RM58.734 million mainly due to higher bad debt recoveries.
"The ratio of total operating expenses against revenue was recorded at 40 per cent for the current quarter compared to 38.6 per cent in the preceding year's corresponding quarter.
"The increase in operating expenses was mainly due to higher impairment losses on financing receivables of RM37.279 million as compared to RM23.253 million for the preceding year's corresponding quarter, partially offset by lower other operating expenses," it said in the local bourse.
Funding costs for the current quarter were lower than the preceding year's corresponding quarter, mainly due to reduced borrowings and a lower cost of funds.
The nominal value of borrowings in Q1 was RM7.371 billion, compared to RM7.878 billion in the same period last year.
The company said the global environment remains very challenging, with widespread inflation gaining traction worldwide, aggravated by the war in Ukraine continuing to disrupt global supply chain flows.
However, the reopening of borders and relaxation of quarantine requirements in Malaysia and other countries are expected to spur economic growth and consumer spending.
"The company is cautiously optimistic that business revenue will gradually improve to pre-pandemic levels.
"Nevertheless, the company will continue to closely monitor and assess the inherent credit risks in its financing portfolios, with proactive attention focused on the enhancement of asset quality, prudent cost management, and improvement of financial and operational efficiencies by leveraging on its positive business fundamentals," it said.
Aeon Credit Service is also committed to building on its business sustainability and growth agenda and will continuously enhance its information technology capabilities to drive the digitalisation of its operations.
Barring any unforeseen circumstances, the group foresees that it can maintain its financial performance by implementing the appropriate measures for the financial year ending February 28, 2023.