M40 strategy boosts AEON Credit’s 4Q profit

PETALING JAYA: AEON Credit Service (M) Bhd’s strategy to provide more loans to the middle 40% (M40) income earners helped to lift its net profit by over 10% year-on-year (y-o-y) in the fourth quarter ended Feb 28, 2025 (4Q25).

AEON Credit announced yesterday that fourth-quarter net profit rose to RM130.97mil, driven by personal financing and vehicle financing. Meanwhile, revenue increased by 14.6% y-o-y to RM575.04mil.

The group’s transaction and financing volume surged by 16.7%, reaching RM2.16bil in 4Q25. Correspondingly, its gross financing receivables rose by 15.4%, reaching RM14.12bil.

Apart from the focus on penetrating the M40 segment, AEON Credit’s financials also benefited from its refined product offerings of vehicle financing, collaborative campaigns with AEON Group and ongoing efforts to promote digital onboarding.

The fourth-quarter bottomline growth was, however, partially offset by higher impairment losses on financing receivables that reflected an increase of RM71.30mil mainly contributed by higher receivables.

This was along with increased other operating expenses in line with higher sales and revenue generated costs. The board of directors has recommended a final single-tier dividend of 14.50 sen per share, scheduled for payment on July 24.

The total dividend payable for the financial year 2025 (FY25) amounts to RM146.80mil, with a payout ratio of 39.6%.

Despite the positive fourth-quarter bottomline, AEON Credit’s full-year net profit fell by 12.6% y-o-y to RM370.61mil.

This was amid a 15.1% increase in FY25 revenue to RM2.2bil, driven by a 15.3% increase in transaction and financing volume that reached RM8.41bil. The drop in FY25 net profit occurred after accounting for a RM68.33mil share of losses from AEON Bank, an associate company.

The group’s non-performing loans ratio recorded a marginal increase to 2.64% in FY25, compared to 2.57% in FY24.

“AEON Credit remains committed to prudent credit risk management, with a strong emphasis on maintaining asset quality.

“This includes strengthening credit assessment policies through the introduction of a new credit limit multiplier policy, implementing enhanced training programmes to improve credit judgment skills, and proactively monitoring and managing underperforming portfolios.”