Aeon Credit Service (m) Bhd. · MYX:AEONCR

Aeon Credit Service (m) Bhd — Q4 FYE20 Earnings Presentation

38 slides from Aeon Credit Service (m) Bhd's earnings presentation, Apr 9, 2020

  1. Slide 1: Q4 / 12M FYE20 Results Update

    Listing Board Bursa Malaysia Securities Berhad, Main Market Stock Name/ Code AEONCR/ 5139 Q4 / 12M FYE20 Results Update 9 April 2020 1

  2. Slide 2: Forward-looking Statements

    Forward-looking Statements This document has been prepared by AEON Credit Service (M) Berhad (“AEON Credit” or the “Company”) solely for the use at the presentation to analyst and fund managers. The information contained in this document has not been independently verified. No representation or warr

  3. Slide 3: Table of Content

    Table of Content Financial Overview Key Strategic Focus Slide no. 4 Slide no. 20 3

  4. Slide 4: Financial Overview

    JEON AEON Credit Service (M) Berhad Financial Overview

  5. Slide 5: Financial Overview : 12M FYE20

    Financial Overview : 12M FYE20 12M 12M YoY FYE19 FYE20 Change PAT RM354.6M RM292.0M -17.6% PAT (prior to IL provision) RM663.0M RM742.4M 12.0% Profitability ROE 22.1% 18.0% -4.1% ROE (prior to IL provision) 35.4% 38.1% 2.7% Transaction & Financing Volume RM5.201 B RM6.381 B 22.7% Gross Financing Rec

  6. Slide 6: Income Statement – Yearly

    Income Statement – Yearly Rising revenue underpinned by robust sales growth Total Transaction & Financing Volume Revenue (RM mil) (RM mil) 6,381.0 1,700.0 1,598.8 5,200.6 1,500.0 1,365.8 1,235.1 4,048.0 3,616.0 4,015.0 1,102.0 1,300.0 1,100.0 965.2 900.0 +22.7% YoY 700.0 +17.1% YoY 500.0 300.0 FYE F

  7. Slide 7: Income Statement – Quarterly

    Income Statement – Quarterly Top-line and bottom-line showed uptrend improvements Total Transaction & Financing Volume Revenue (RM mil) (RM mil) 1,645.5 404.5 413.3 402.5 420.0 1,584.0 1,562.5 1,588.9 400.0 378.6 1,400.7 +3.6% QoQ +2.7% QoQ 380.0 359.5 360.0 +17.5% YoY 340.0 +14.9% YoY 320.0 300.0 Q

  8. Slide 8: Balance Sheet

    Balance Sheet Receivables continue to grow steadily; Lower Capital Adequacy Ratio (“CAR”) due to redemption of Perpetual Notes / Sukuk Gross Financing Receivables ROA (RM mil) (%) 10,394.7 5.0 4.1 4.3 10,000.0 8,692.4 4.5 4.0 4.0 7,156.3 4.0 3.1 8,000.0 6,438.7 3.5 6,000.0 5,404.9 3.0 2.5 4,000.0 +1

  9. Slide 9: Total Transaction & Financing Volume – Yearly

    Total Transaction & Financing Volume – Yearly Most products registered positive gains; Total volume increased 22.7% YoY Volume (RM mil) FYE18 FYE19 FYE20 YoY Products (%) 6,800 88 6,400 15 Credit Card +25.6 6,000 347 30 15 5,600 5,200 954 Personal Financing +8.6 4,800 288 721 Motorcycle Financing +2

  10. Slide 10: Total Transaction & Financing Volume – Quarterly

    Total Transaction & Financing Volume – Quarterly Motorcycle & Auto Financing led the gains Volume (RM mil) Q4 Q3 Q4 FYE19 FYE20 FYE20 QoQ YoY Products 2,000 (%) (%) Credit Card +6.9 +18.6 33 1,600 4 23 3 92 94 Personal Financing -4.2 -2.8 12 8 260 65 236 Motorcycle Financing +1.4 +15.3 1,200 184 428

  11. Slide 11: Total Financing Receivables

    Total Financing Receivables Resilient expansion amid challenging environment Gross Receivables (RM mil) Receivables Movement (%) QoQ YoY Q4 Q3 Q4 Credit card +3.7 +20.3 FYE19 FYE20 FYE20 Personal Financing +1.8 +17.0 12,000 Motorcycle Financing +4.8 +25.8 52 11,000 56 352 Auto Financing +4.5 +18.7 3

  12. Slide 12: Receivables Collection

    Receivables Collection Healthy portfolio with stable collection trend Receivables Collection Trend 100.00 97.58 97.40 97.62 97.97 98.14 97.90 98.01 98.06 90.00 82.04 81.73 83.13 82.58 82.80 81.06 81.80 81.24 80.00 72.24 72.93 71.24 70.28 70.70 70.31 68.34 69.32 70.00 60.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

  13. Slide 13: Non-Performing Loans (“NPL”)

    Non-Performing Loans (“NPL”) Proven asset quality management – receivables up, NPL down NPL Trend 15,000 2.42 2.43 2.33 2.28 2.43 2.48 2.48 2.33 2.26 13,000 2.07 2.05 2.04 1.92 2.00 1.93 1.92 11,000 9,000 7,000 5,000 3,000 1,000 5,825 6,069 6,362 6,591 6,832 7,046 7,203 7,319 7,508 7,855 8,313 8,692

  14. Slide 14: Net Credit Cost (“NCC”)

    Net Credit Cost (“NCC”) NCC eased down in Q4 from Q3 in FYE20 as a result of impairment loss reversal benefited from the refined ECL Model NCC Trend 4.04 3.91 3.32 3.73 3.56 3.31 3.28 3.43 3.43 3.27 3.41 200 5 180 2.99 4 160 140 1.70 2.19 2.08 2.16 3 2 120 1 100 0 80 -1 60 -2 40 -3 20 47 61 51 42 55

  15. Slide 15: Refined ECL Model

    Refined ECL Model Impairment EAD PD LGD Outstanding Loss (RM) Exposure at Probability of Loss Given (RM) Default (%) Default (%) Default (%) Expected No Existing Model New Model Credit Loss NO discount practice Discount based on effective interest rate EAD 1 Calculation Portfolio Basis Account Basis

  16. Slide 16: Impairment Loss (“IL”) Analysis

    Impairment Loss (“IL”) Analysis 250,000 Written-off accounts stable despite higher financing receivables 12,000 10,033 10,395 9,597 200,000 9,144 10,000 Increased in tandem with the 8,313 8,692 7,508 7,855 financing receivables growth as well as seasonal factor – Hari 150,000 8,000 64,916 Raya Festi

  17. Slide 17: IL Analysis

    IL Analysis +RM141.94 mil IL provision for FYE20 from higher receivables Written-off increased 2% despite higher receivables FYE2019 FYE2020 YoY No Impairment loss provision RM'000 RM'000 RM'000 % 1 Provision IL from new sales 189,856 208,080 +18,224 +10 2 Movement of delinquent / repayment (157,032

  18. Slide 18: Taxation: Appeal Status Update

    Taxation: Appeal Status Update No Item Remark Status i. Filed a Notice of Appeal (Form Q) on 5 • The Company had filed a notice of • To date, hearing date has yet to be Jan 2018 to Special Commissioners of appeal to dispute the additional fixed. Income Tax (SCIT) assessments ii. Judicial Review – Le

  19. Slide 19: Dividend

    Dividend Total 36.25 cent dividend per share with dividend payout of 31.5% from PAT FYE16 FYE17 FYE18 FYE19 FYE20 Dividend RM RM RM RM RM Interim dividend (cent) 29.85 30.50 21.13 22.25 22.25 Payout amount (RM’000) 42,984 43,920 52,225 55,784 56,426 Final dividend (cent)* 29.60 32.50 20.00 22.35 14.

  20. Slide 20: Key Strategic Focus

    JEON AEON Credit Service (M) Berha' Key Strategic Focus

  21. Slide 21: FYE20 Review

    FYE20 Review FYE20 Review  Continue customer segment Asset Quality  Lifted asset quality via targeted product offerings: Platinum Card, expansion  AEON Ecosystem integration AEON risk-based pricing Personal & Customer Ecosystem Vehicles Financing  Increased AEON Member Plus  Strengthening trans

  22. Slide 22: FYE20 Review (cont’d)

    FYE20 Review (cont’d) Asset Quality Management Targeted product offerings to cater for demand from different income groups 33% 62% 74% 113% 145% FYE19 FYE20 FYE19 FYE20 FYE19 FYE20 FYE19 FYE20 FYE19 FYE20 Personal Motorcycle Settlement Objective Auto Financing Financing Business Financing Financing

  23. Slide 23: FYE20 Review (cont’d)

    FYE20 Review (cont’d) New Sales Collection Continue monitoring & accumulating better assets Total Easy Payment & Personal Financing Credit Card 99.50% 98.84% 99.47% 98.82% 99.43% 98.80% 98.78% 99.40% 98.67% 98.79% 99.34% 99.30% 98.56% 99.27% 99.19% 98.39% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

  24. Slide 24: Income range & its product focus

    FYE20 Review (cont’d) Database Integration Optimise the potential of data for targeted offerings & cross selling Data Analytics Platinum Credit Card, Super Bike, Premium Bicycle, Wellness Products 6 million & its product focus Gold Credit Card Income range AEON members to be converted Personal Finan

  25. Slide 25: Bank Negara Malaysia Review April 2020

    Bank Negara Malaysia Review 3 April 2020 Source: https://www.bnm.gov.my/index.php?rp=ar2019_en_slides 25

  26. Slide 26: COVID-19: Economic Stimulus Package

    COVID-19: Economic Stimulus Package In addition to the 1st stimulus package of RM20billion(“b”), the government has also launched RM230b of PRIHATIN package and RM10b additional financial aid to SME – bringing up the total value to RM260b. Source: https://www.pmo.gov.my/2020/04/prihatin-esp-informat

  27. Slide 27: COVID-19: Company Action Plans during MCO

    COVID-19: Company Action Plans during Movement Control Order (“MCO”) Operational Change Action Plan Manpower  Financial services industry – essential. Essential departments including Work shift rotation customer services continue operation/ work from home on rotation basis  Limited working teams &

  28. Slide 28: FYE21 Overview

    FYE21 Overview Key Strategy Objectives • Develop low cost business Digitalization model • To create Digital Business Platform with the use of • Business expansion FinTech solutions • Create excellent user experience • Capture regional’s needs & Regionalization profit maximization • To develop region

  29. Slide 29: Segmental Strategy

    Segmental Strategy Key Strategy Expected outcomes Credit  Revenue growth strategy  Increase profitability Card  Product strategy on rationalisation  Develop Tawarruq scheme & risk Personal  Diversify product scheme based pricing Financing  Increase cross selling  Improve Tele-marketing sales

  30. Slide 30: Key Takeaways & Prospects

    Key Takeaways & Prospects Factoring out the book value impact of MFRS 9, core business is growing at steady pace and key ratios are within healthy range. GDP grew 3.6% yoy in 4Q19 (4Q18: 4.4%), bringing the whole year performance to 4.3% (2018: 4.7%). This was fuelled by resilient private sector exp

  31. Slide 31: Appendices

    JEON AEON Credit Service (M) Berhad Appendices

  32. Slide 32: Performance Highlights

    Performance Highlights Q4 Q1 Q2 Q3 Q4 QoQ YoY 12M 12M YoY (RM mil) FYE19 FYE20 FYE20 FYE20 FYE20 (%) (%) FYE19 FYE20 % Total Transaction & 1,440.7 1,584.1 1,562.5 1,589.0 1,645.5 3.6 17.5 5,200.6 6,381.0 22.7 Financing Volume Credit Card 416.4 429.2 442.8 462.0 493.5 6.8 18.5 1,454.8 1,827.5 25.6 Ea

  33. Slide 33: Financial Summary

    Financial Summary Q4 Q1 Q2 Q3 Q4 QoQ YoY (RM mil) FYE19 FYE20 FYE20 FYE20 FYE20 (%) (%) Credit Card 761.6 789.7 831.3 883.8 916.9 3.7 20.4 Card Purchase 697.9 727.0 769.0 822.2 856.1 4.1 22.7 Cash Advance 63.7 62.7 62.3 61.6 60.8 -1.2 -4.5 Personal Financing 2,448.7 2,588.7 2,648.8 2,813.5 2,864.4 1

  34. Slide 34: Operating Income

    Operating Income Q4 Q1 Q2 Q3 Q4 QoQ YoY 12M 12M YoY (RM mil) FYE19 FYE20 FYE20 FYE20 FYE20 (%) (%) FYE19 FYE20 (%) Credit Card 31.8 31.7 31.8 33.2 37.9 14.3 19.2 118.8 134.6 13.3 Personal Financing 114.6 121.0 134.3 130.5 129.3 -1.0 12.8 413.3 515.1 24.6 Objective Financing 22.5 21.9 21.6 20.8 21.3

  35. Slide 35: Total Expenses

    Total Expenses Q4 Q1 Q2 Q3 Q4 QoQ YoY 12M 12M YoY (RM mil) FYE19 FYE20 FYE20 FYE20 FYE20 (%) (%) FYE19 FYE20 (%) Impairment Loss on 94.7 93.3 154.7 114.5 87.8 -23.3 -7.1 308.3 450.3 46.1 Receivables Personnel Expenses 54.2 55.1 63.6 66.3 65.1 -1.7 20.1 224.1 250.1 11.6 Advertisement & 21.7 24.0 25.1

  36. Slide 36: Financial Indicators

    Financial Indicators (RM mil) FYE17 FYE18 FYE19 FYE20 YoY PBT 351.0 398.0 472.0 390.4 -17.3% PAT 265.0 300.0 354.6 292.0 -17.6% Weighted average no. of ordinary 248.0 206.0 255.3 255.3 - shares (mil unit) Basic EPS (RM) 1.0 1.4 1.3 1.1 -15.4% NTA per share (RM) 6.6 6.4 6.0 6.1 1.7% ROE (%) 28.9 22.6

  37. Slide 37: Company Achievements

    Company Achievements The Edge Billion Ringgit Club Financial Service Sector (Below RM10 billion market capitalization) Highest Returns to Shareholders Over Three Years VISA Malaysia Awards HR Asia Awards – Malaysia Best Companies To Work For In Asia Recognition in creating workplace excellence and p

  38. Slide 38: THANK YOU

    Head Office Investor Relations Contact Level 18, UOA Corporate Tower, Mr Lee Kit Seong Avenue 10, The Vertical, Chief Financial Officer Bangsar South City, leeks@aeoncredit.com.my No. 8, Jalan Kerinchi, 03-2772 9000 59200 Kuala Lumpur. Mr Jon Ong Website : www.aeoncredit.com.my Investor Relations Ma

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