KUALA LUMPUR: Aeon Credit Service (M) Bhd 's results for the first quarter ended May 31, 2024 (Q1 FY25) came in within RHB Research and consensus' expectations following their strong growth momentum.
RHB Research noted the company's financing receivables maintained its growth momentum, and asset quality indicators showed year-on-year (YoY) improvements.
Non-interest income grew 16 per cent YoY, largely due to the strong 13 per cent YoY growth in financing receivables, though the cost-income ratio creeped up to 40 per cent after a 27 per cent YoY increase in operating expenditure.
Credit costs, however, reduced 0.7 per cent to 3.2 per cent, partly driven by better collection productivity.
These led to a seven per cent increase in net profit despite the absence of associate losses in 1QFY24.
The firm maintained a 'buy' call on the stock with a higher target price of RM8.80 from RM7.90 previously.
The company's non-performing loans (NPL) dropped 0.7 per cent YoY to 2.46 per cent.
"The group attributes this to its numerous strategies aimed at improving collection productivity, including recruiting new external collection agencies and introducing nascent collection-linked incentives for staff.
"Credit costs have also shown a YoY decline, and management expects this to moderate further, while loan loss coverage remains ample at 222 per cent," it added.
AEON Bank had its public launch on May 26 with a savings account and debit card among its maiden products.
The digital bank's focus for the first year will be to gain traction among customers already within the AEON ecosystem.
Aeon Credit expects losses to widen in subsequent quarters as customer acquisitions pick up.