Pawnbroking profits jump as households feel the pinch

DESPITE inflation and unemployment remaining low and a higher mandated minimum wage, the rising cost of living appears to be putting some sections of Malaysian society under financial stress.

Subsidy rationalisation measures and higher sales and service taxes may be eating into disposable incomes, leading more people to pawn items for cash judging from the financial performance of Bursa Malaysia-listed pawn brokers.

The companies – Pappajack Bhd, Well Chip Group Bhd and Evergreen Max Cash Capital Bhd (EMCC) – all posted fresh highs in earnings in the just-ended third quarter (3Q25) corporate earnings season.

The biggest of the lot, Well Chip’s net profit nearly tripled year-on-year in 3Q25 to RM23.7mil on stronger contributions from both its pawnbroking services and sales of jewellery and gold, including unredeemed collateral.

Pappajack’s 3Q25 net profit was up 23% to RM8mil, while EMCC’s rose 8.6% to RM9.47mil, with both noting that profits were driven by a combination of higher loan demand, improved margins and efficiencies, and network expansion.

The non-bank microfinancing services providers’ trading activities also improved due to higher gold prices, which have attracted people with cash looking for bargains by buying unredeemed pledged pieces from their premises or via social media, eCommerce, and other online platforms.

The performance of the three listed brokers could be just the tip of the iceberg.

There were some 922 licensed pawnbrokers in the country in 2024, including Islamic operators (Ar-Rahnu) such as Bank Rakyat, Bank Islam Malaysia Bhd, Agrobank and cooperatives.

The pawnbroking industry’s value is forecast to grow from RM9bil in 2019 to above RM25bil in 2025 and hit RM34.4bil in 2027, partly driven by the fact that 15% of Malaysians are unbanked and 40% underbanked.

While pawnbrokers provide an accessible alternative for short-term financing, the recent 3Q25 numbers may be an early signal that some households are struggling.