AEON CREDIT SERVICE (M) BHD: Navigating Financial Challenges Amid Growth

In the dynamic landscape of Malaysia’s financial sector, AEON Credit Service (M) Bhd, a key player listed on Bursa Malaysia, has recently reported a mixed financial performance for the first quarter of 2026. Despite achieving higher revenue, the company faced a significant drop in net profit, primarily due to increased impairment losses and strategic investments.

Financial Performance Overview

For the quarter ending May 31, 2025, AEON Credit’s net profit fell by 27.1% to RM77.55 million, down from RM106.41 million in the same period the previous year. This decline was largely attributed to a RM15.92 million loss from its associate, Aeon Bank, which is investing heavily in digital banking infrastructure. These investments, while costly in the short term, are aimed at positioning Aeon Bank for long-term growth through enhanced digital offerings.

Despite the profit dip, AEON Credit’s revenue saw a robust increase of 14.9% year-on-year, reaching RM599.92 million. This growth was driven by a 13.9% rise in total transaction and financing volume, which climbed to RM2.25 billion. The company’s strategic focus on expanding into the middle-income segment and targeted marketing campaigns contributed to a 22% and 23% growth in payment business and personal financing, respectively.

Operational Challenges and Strategic Focus

The company’s operating expenses surged by 24% to RM411.16 million, primarily due to higher impairment losses on financing receivables, which jumped to RM229.43 million. This increase in costs also impacted the loan loss coverage ratio, which slightly decreased to 217% from 222% the previous year. Additionally, the non-performing loan ratio edged up to 2.57%, prompting AEON Credit to implement corrective measures to manage credit risks effectively.

In response to these challenges, AEON Credit has adopted a cautious business stance, influenced by global trade uncertainties, geopolitical tensions, and inflationary pressures. The company remains committed to growing quality assets and closely monitoring credit risks, ensuring a balanced approach to financial stability and growth.

Looking Ahead

As AEON Credit navigates these financial hurdles, its focus on strategic investments and market expansion positions it well for future opportunities. The company’s emphasis on digital transformation and customer-centric solutions underscores its commitment to maintaining a competitive edge in Malaysia’s evolving financial landscape.

With a market capitalization of RM2.88 billion and a price-to-earnings ratio of 7.77, AEON Credit continues to be a significant player in the financial services sector, dedicated to providing reliable credit solutions to its clients. As it moves forward, the company’s ability to adapt to market dynamics and manage operational challenges will be crucial in sustaining its growth trajectory.