AEON Credit Service (M) Bhd. · MYX:AEONCR
AEON Credit Service (M) Bhd — Shareholder Meeting (June 2021)
37 slides from AEON Credit Service (M) Bhd's shareholder meeting presentation, Jun 23, 2021
Slide 1: 24th Annual General Meeting
AEON CREDIT SERVICE (M) BERHAD 24th Annual General Meeting 23 June 2021
Slide 2: Disclaimer
Disclaimer This document has been prepared by AEON Credit Service (M) Berhad (“AEON Credit” or the “Company”) solely for the use at the presentation to analysts, fund managers and investors. The information contained in this document has not been independently verified. No representation or warranty
Slide 3: Agenda
Agenda o Financial Overview o Strategy / Moving Forward o Sustainability & CSR Activities o Responses to Questions from Minority Shareholders Watch Group (MSWG) 3
Slide 4: Financial Overview
ya, AON CREDIT SERVICE Financial Overview
Slide 5: Key Highlights
Key Highlights Challenging operating environment in 1H, sustaining with healthy asset quality and business activities recovery Total Transaction & Revenue Profit After Tax Financing Volume RM1,561.7 million RM233.9 million RM4,228.8 million -2.3% YoY -19.9% YoY -33.7% YoY Challenging Operating Lands
Slide 6: COVID-19 Countermeasures and Actions
COVID-19 Countermeasures and Actions Financial Assistance Employees’ Safety & Wellbeing Accelerating Digitalisation Payment 883k customers enjoyed • Technology infrastructure to support • Transform physical and conventional Holidays 2-months loan moratorium work from home arrangements processing to
Slide 7: COVID-19 Countermeasures and Actions
COVID-19 Countermeasures and Actions Cost efficiency improved due to prudent cost management Q4 Q4 12M 12M Cost Saving Initiatives (RM mil) YoY YoY FYE21 FYE20 FYE21 FYE20 Total Operating Income 453.2 454.9 -0.4% 1,707.0 1,744.7 -2.2% Personnel Expenses Total Impairment Loss 65.1 87.8 -25.8% 508.4 4
Slide 8: Income Statement – FYE21
Income Statement – FYE21 New sales acquired on moderate pace and gradually rejuvenating with 62% improvement seen from Q1 to Q4 Total Transaction & Financing Volume (RM mil) Yearly Movement Quarterly Movement 6,381.0 1,224.4 1,263.4 5,200.6 4,228.8 962.4 778.6 -33.7% YoY FYE19 FYE20 FYE21 Q1FYE21 Q2
Slide 9: Income Statement – FYE21
Income Statement – FYE21 Agile actions focused on asset quality, cost discipline and business recovery activities Revenue (RM mil) Profit Before Tax (RM mil) 1,598.8 1,561.7 1,365.8 472.2 390.4 324.9 -2.3% YoY -16.8% YoY FYE FYE FYE FYE19 FYE20 FYE21 19 20 21 Q1 Q2 Q3 Q4 YoY Q1 Q2 Q3 Q4 YoY (RM mil)
Slide 10: Shareholder Value & Capital Management
Shareholder Value & Capital Management Strong capital position provides ample headroom for growth Gross Financing Receivables (RM mil) ROA (%) 10,394.6 10,078.2 4.3 8,692.4 3.1 2.3 -3.0% YoY -0.8% YoY FYE19 FYE20 FYE21 FYE19 FYE20 FYE21 ROE (%) CAR (%) 22.4 24.0 22.1 18.9 18.0 13.8 -4.2% YoY +5.1% Y
Slide 11: Receivables Collection Performance
Receivables Collection Performance Successful in stabilised the collection ratio as supported by effective collection strategies and improved asset quality Receivables Collection Trend 98.0% 98.1% 98.2% 84.4% 82.6% 81.2% 76.9% 71.2% 70.3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FYE19 FYE20 FYE21 Current
Slide 12: Non-Performing Loans (NPL)
Non-Performing Loans (NPL) Asset quality strategies have been in place to minimise NPL NPL Trend Yearly Movement Quarterly Movement 2.04 1.92 2.46 1.95 2.88 2.46 1.42 3 14,000 15,000 2 2 10,395 10,078 10,518 10,259 10,222 12,000 10,078 1 8,692 12,000 0 10,000 0 9,000 -1 8,000 -2 -2 6,000 6,000 -4 -3
Slide 13: Net Credit Cost (NCC)
Net Credit Cost (NCC) Significant improvement in NCC from Q1’s 6.12% to 3.74% in Q4FYE21 as a result of impairment loss reversal benefited from better delinquency movement NCC Trend Yearly Movement Quarterly Movement 6.12 3.41 3.74 4.58 4.65 2.16 3.74 384 160 326 123 174 77 24 FYE19 FYE20 FYE21 Q1FY
Slide 14: Impairment Loss (IL) Analysis
Impairment Loss (IL) Analysis Well-governed IL against the backdrop of unprecedented macroeconomic uncertainty Yearly Movement Quarterly Movement 10,395 10,078 10,518 10,259 10,222 10,078 8,692 103,952 151,576 69,176 101,043 74,019 55,866 337,944 346,361 356,846 105,192 37,993 157,795 -29,572 -92,66
Slide 15: Dividend
Dividend Consistent dividend payout ratio of above 30% FYE19 FYE20 FYE21 Dividend RM RM RM Interim dividend (cent) 22.25 22.25 9.20 Payout amount (RM’000) 55,784 56,426 23,488 Final dividend (cent) 22.35 14.00 20.00 * Payout amount (RM’000) 56,075 35,511 51,062 * Total dividend (cent) 44.60 36.25 29
Slide 16: Strategy / Moving Forward
ya, AON CREDIT SERVICE Strategy / Moving Forward
Slide 17: Strategy (2021-2025)
Strategy (2021-2025) AEON Credit’s Strategy (2021-2025) Business model New system architecture Create new source transformation by digital to support online & Increase customer loyalty of income & expand Pursue sustainability & shift (Fusion of real & digitalization, system and by AEON Group platfor
Slide 18: Digitalisation
Digitalisation Business model transformation by digital shift Digitalise customer’s E-Application E-KYC touchpoint E-Signature 100% 15 min New feature Self-onboarding platform new sales application processing time AEON Wallet Reduce face to face Excellence customer 1 Million One stop service & conta
Slide 19: Sales & Receivables Growth Strategy
Sales & Receivables Growth Strategy Achieve sustainable balance between asset growth and receivables collection FYE21 FYE22 Reinforced a solid asset quality base Steadily driving towards healthy business expansion Analysis AEON Strategy 1: Focusing on Receivables Growth customer Speed up AEON data
Slide 20: Regionalisation
Regionalisation Localized Branch Telemarketing Regional Hub Guideline Rationalization Expansion Concept o Identify potential o Revision of branch o Setup nationwide o Establish Centralised market segment and Cash Deposit telemarketing center Regional Office Hubs Machine strategy o Prioritize Easy o
Slide 21: Sustainability & CSR Activities
Sustainability & CSR Activities
Slide 22: Sustainability & CSR Activities
Sustainability & CSR Activities Continuously supporting stakeholders AEON Credit Purple League Ampang Jaya Badminton Club Junior Media Engagement Junior Sponsorship Programme Badminton Development Programme RTM Bicarawara (2019 - 2022) (2018 - 2021) Investor Relations Briefing Employee Engagement Bu
Slide 23: Sustainability & CSR Activities
Sustainability & CSR Activities Participation in Malaysian AEON Foundation - Charity Programmes Donation to Medical Frontliners Donation to Flood Victims in Donation to Flood Victims in Hulu Langat Temerloh Festive Contactless Donation Drinking Water Contribution AEON Rider Programme via AMP Card to
Slide 24: Thank You
A\\ Thank You \\
Slide 25: Responses to Questions from MSWG
Responses to Questions from Minority Shareholders Watch Group (MSWG) via letter dated 16 June 2021
Slide 26: Questions from MSWG
Questions from MSWG Operational & Financial Matters Question 1 For Easy Payment and Personal Financing business, AEONCR had revised the product strategy and tightened the credit policies for all product offerings in response to the imposition of MCO and market impediments. 26
Slide 27: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 1 (a) What are the aspects in credit policies that During the financial year, the Company has revisited and have been tightened? reviewed various aspects of its credit policies that include, amongst others, revising debt service
Slide 28: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 1 (c) Which are the business segments (e.g., In FY2022, Personal Financing and Vehicle Financing will personal, auto, motorcycle financing) that continue to drive financing growth via digital onboarding. will drive financing gro
Slide 29: Questions from MSWG
Questions from MSWG Operational & Financial Matters Question 2 Upon the conclusion of the Moratorium Scheme to the retrenched workers and workers who suffer from pay cuts, AEONCR continued to offer Refinancing and Restructuring (R&R) scheme to customers who are still facing repayment difficulties (p
Slide 30: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 2 (a) What is the size of financing that falls under As at 28 February 2021, total R&R portfolio, comprising the R&R category compared to AEONCR’s our Restructuring, AKPK and AEON Relief Programme total financing? receivables (A
Slide 31: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 2 (c) Has there been an increase in default risk for Generally, we observed an improving trend in the the financing involved in the R&R scheme? repayment behavior of our customers who had enrolled for the R&R scheme. Overall col
Slide 32: Questions from MSWG
Questions from MSWG Operational & Financial Matters Question 3 AEONCR had provided RM151.57 million allowance (FY2020: RM103.95 million) for impairment loss on financing receivables in FY2021. 32
Slide 33: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 3 What is the breakdown of the provision made For FYE2021, the pre-emptive provision set aside for in terms of pre-emptive provision for vulnerable borrowers impacted by the COVID-19 vulnerable borrowers impacted by COVID-19 pan
Slide 34: Questions from MSWG
Questions from MSWG Operational & Financial Matters Question 4 AEONCR’s non-performing loans ratio (NPL) increased 54 basis points to 2.46% as at the end of FY2021, from 1.92% in FY2020 (page 27 of IAR2021). 34
Slide 35: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 4 (a) Will the significant increase in NPL ratio During FYE2021, the Company has revised its product persist through FY2022? strategy and tightened credit policies for all its product offerings to enhance asset quality. Barring
Slide 36: Questions from MSWG
Questions from MSWG Operational & Financial Matters No. Question Answer 4 (b) What is the optimal NPL ratio that AEONCR aims to We will continue to focus on implementing effective achieve? credit management and recovery strategies besides enhancing our new asset quality to achieve a comfortable NPL
Slide 37: Thank You
A\\ Thank You \\
AEON Credit Service (M) Berhad — Shareholder Meeting (June 2021) on 6ix