Aeon Credit Service (m) Bhd. · MYX:AEONCR
Aeon Credit Service (m) Bhd — Q1 FYE24 Earnings Presentation
33 slides from Aeon Credit Service (m) Bhd's earnings presentation, Jul 10, 2023
Slide 1: Q1 FYE24 Financial Results
Q1 FYE24 Financial Results 10 July 2023
Slide 2: Table of Contents
Table of Contents 03 FINANCIAL OVERVIEW 15 KEY STRATEGIES & MOVING FORWARD 25 APPENDIX
Slide 3: Financial Review
SEON mINANCIAL REVIEW ~“ a
Slide 4: Q1 FYE24 Key Highlights
Q1 FYE24 Key Highlights Resilient performance supported by sustained financing growth momentum QoQ Key Highlights Our Initiatives • Revenue grew 4.6% QoQ to RM452.7 mil • Focus on completion of digitalisation processes and AI credit attributable to higher interest income and fee income scoring model
Slide 5: Financial Performance
Financial Performance Sales growth boosted by domestic demand and marketing strategies 3M FYE23 3M FYE24 YoY Commentary Revenue RM390.6M RM452.7M 15.9% • Contributed by higher interest income of RM56.5 mil and higher fee income of RM5.6 mil PBT RM215.5M RM131.9M -38.8% • Lower YoY in both PBT and PA
Slide 6: Income Statement
Income Statement Sales and revenue growth driven by festive season demand Total Transaction & Financing Volume (RM mil) Revenue (RM mil) 23.2% YoY 14.6% QoQ 15.9% YoY 4.6% QoQ 1,832.3 Increased QoQ Higher revenue in 1,599.3 driven by higher line with higher 1,486.7 festive season 432.7 452.7 transac
Slide 7: Shareholder Value & Capital Management
Shareholder Value & Capital Management Maintaining strong CAR ratio of 27.1% for future growth Gross Receivables (RM mil) Return On Asset (%) 12.2% YoY 3.5% QoQ 2.9% YoY 0.4% QoQ Loan growth ROA reduced by 11,219.0 10,835.8 momentum driven 0.4% QoQ by higher 9,996.5 approval ratio 6.4 coupled with 3
Slide 8: Total Transaction & Financing Volume
Total Transaction & Financing Volume Vehicle Financing and Personal Financing supported by double digit growth in loan application 27.6% 25.4% 23.1% 19.8% 26.3% 23.8% 12.7% 30.8% 13.0% 26.8% 13.4% Q1 Q4 8.5% 26.9% Q1 FYE23 5.8% FYE23 3.2% 6.9% 3.0% FYE24 2.5% 0.3% 0.2% Q1 Q4 Q1 • Motorcycle Financin
Slide 9: Total Gross Financing Receivables
Total Gross Financing Receivables Growth trajectory maintained; Personal Financing grew by 5.2% 27.7% 26.4% 27.9% 26.1% 27.4% 26.2% 35.4% 34.7% 34.3% Q1 6.8% Q4 6.6% Q1 6.4% FYE23 3.9% FYE23 4.8% FYE24 5.1% 0.1% 0.1% 0.1% Q1 Q4 Q1 Increased QoQ to RM11.2 bil Volume (RM mil) QoQ YoY FYE23 FYE23 FYE24
Slide 10: Receivables Collection
Receivables Collection Maintain balanced approach of sales expansion and prudent credit management Receivables Collection Trend 98.3 98.5 96.8 97.7 97.5 97.2 97.1 85.6 83.1 82.4 81.0 79.8 79.6 70.6 78.4 75.5 72.1 69.2 67.7 67.4 62.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FYE22 FYE23 FYE24 Current Collection Rat
Slide 11: Non-Performing Loan (NPL)
Non-Performing Loan (NPL) Strengthen risk-based approach collection strategy to optimise collection performance NPL Trend 2.89 3.13 2.53 1.75 • QoQ Balance D3+ increased contributed by Motorcycle Financing and Objective Financing especially on young aged with low income customer group • Adopted AI f
Slide 12: Net Credit Cost (NCC)
Net Credit Cost (NCC) Continuous prudent approach on provisioning NCC Trend 5.53% 4.33% Higher annualised NCC: 0.92% 1.50% • Higher impairment loss 3.87% 2.57% provision on new sales of RM30 mil contributed by -0.81% -0.72% increase demand during 107 festive seasons 73 • Higher written-off attribute
Slide 13: Impairment Loss (IL) Analysis
Impairment Loss (IL) Analysis Higher IL attributed to higher delinquent receivables and bad debt written off 409% Expected Credit Loss (ECL) provision 281% 252% 227% attributed by: 10 • Higher IL due to higher ECL provision on new sales 145 128 143 • Higher bad debt written off by 11.4% 81 attribute
Slide 14: Cost-to-Income Ratio (CIR)
Cost-to-Income Ratio (CIR) Operational efficiency (excluding IL) improved QoQ due to prudent cost management Q1 Q4 Q1 RM mil QoQ YoY FYE23 FYE23 FYE24 Total Operating Income 449.3 481.2 501.9 4.3% 11.7% Personnel Expenses 43.1 67.4 53.0 -21.4% 22.8% Advertisement & Promotion 8.3 8.3 9.7 16.1% 16.1%
Slide 15: Key Strategies and Moving Forward
KEY STRATEGIES AND MOVING FORWARD
Slide 16: FYE2024 Indicators
FYE2024 Indicators Continual delivery of sustainable returns to shareholders Indicators Actual Remark FYE24 Q1 FYE24 • Driven by high application count for Personal Financing and Vehicle Loan Growth ±10% 12.2% Group Financing attributed to strategic marketing campaigns and strong demand • Increased
Slide 17: Key Strategies for 2023 – 2026
Key Strategies for 2023 – 2026 4 Key Pillars of focuses to drive financial inclusion and sustainable growth Receivables Enhance Customer Employee ESG & 1 2 3 4 Growth Experience Development Sustainability Strengthen card acquisition Complete digital on- Talent development & Responsible corporate fra
Slide 18: Redefined Assessment Process
Redefined Assessment Process Automate decision making to improve judgment accuracy and productivity Implement AI Scoring Model The overall approval turnaround time has shown improvement over the last two quarters Automatic Judgment process has increased from 30% in Q4FYE23 to 36% in Q1FYE24 15 m
Slide 19: Collection Management
Collection Management Enhance efficiency and productivity through a New Collection System Risk-Based Collection Approach Implemented collection risk-based scorecard model by categorising customers according to their scores and risk profiles for Personal Financing Risk Based Collection Collection S
Slide 20: Membership Expansion via AEON Living Zone
Membership Expansion via AEON Living Zone Establish common ID that connects all AEON points accounts to AEON Group Membership Platform AEON Group Membership Upgraded AEON Wallet usability and improved user experience New sign up increased QR payment increased by 102% YoY by 36% YoY 37% 34% 36% 2
Slide 21: Digital Onboarding
Digital Onboarding Driving sales and member growth via digital onboarding from application to disbursement within 1 day. End-to-End Digital Onboarding Easy payment digital onboarding with instant conditional approval live in Sep’22 and Personal Financing live in May’23 Backed by e-KYC and extern
Slide 22: AEON Consortium Digital Bank
Digital Bank Timeline for FYE22–23 Launch within 24 months from April 2022 AEON Consortium (“AEON”) People Hiring of Key Personnel completed + Dynamic & talented tech team System Development AEON Financial AEON Credit Service Co., Ltd. Service (M) System development is on schedule Berhad Sys
Slide 23: Sustainability Focus
Sustainability Focus Embed Sustainability in AEON Credit business Sustainability Statement Shaping our future in financial services through sound, innovative and sustainable ESG practices and initiatives Environmental Economy Social Governance Carbon Emission Reduction Green and Social Financing Edu
Slide 24: Sustainability Activities – Q1 FYE24
Sustainability Activities – Q1 FYE24 Corporate Social Responsibility Activities with Local Community Bubur Lambuk Preparation with Malaysian AEON Foundation Malaysian AEON Foundation Flood Community Nationwide during Donation to Turkiye Earthquake Donation to Johor Flood Victims Ramadan Victims Mala
Slide 25: Appendix
APPENDIX | a
Slide 26: Performance Highlights
Performance Highlights Q1 Q4 Q1 (RM mil) QoQ YoY FYE23 FYE23 FYE24 Total Transaction & Financing Volume 1,486.7 1,599.3 1,832.3 14.6% 23.2% Credit Card 410.0 428.7 435.7 1.6% 6.3% Easy Payment Financing 737.6 712.0 856.7 20.3% 16.1% Personal Financing 295.0 406.4 493.1 21.3% 67.2% E-Money 44.1 52.2
Slide 27: Financial Summary
Financial Summary Q1 Q4 Q1 (RM mil) QoQ YoY FYE23 FYE23 FYE24 Credit Card 676.1 717.9 719.7 0.2% 6.4% Card Purchase 656.9 690.6 692.2 0.2% 5.4% Cash Advance 19.2 27.3 27.5 0.4% 42.7% Personal Financing 2,604.7 2,970.9 3,126.5 5.2% 20.0% Objective Financing 390.8 522.9 567.0 8.4% 45.1% Motorcycle Fin
Slide 28: Operating Income
Operating Income Q1 Q4 Q1 (RM mil) QoQ YoY FYE23 FYE23 FYE24 Credit Card 35.3 39.3 39.2 -0.1% 10.8% Personal Financing 102.8 121.4 128.8 6.1% 25.3% Objective Financing 21.7 28.2 32.0 13.5% 47.7% Motorcycle Financing 144.6 154.0 160.3 4.1% 10.9% Auto Financing 79.4 82.5 85.5 3.5% 7.6% SME Financing 0
Slide 29: Total Expenses
Total Expenses Q1 Q4 Q1 (RM mil) QoQ YoY FYE23 FYE23 FYE24 Impairment Loss on Receivables 37.3 117.2 152.5 30.2% 309.2% Personnel Expenses 43.1 67.4 53.0 -21.4% 22.8% Advertisement & Promotion (A&P) 8.3 8.3 9.7 16.1% 16.1% Other Operating Expenses 67.5 77.7 70.1 -10.0% 3.8% Operating Expenses 156.2
Slide 30: Financial Indicators
Financial Indicators Q1 Q1 FYE21 FYE22 FYE23 FYE23 FYE24 PBT (RM mil) 324.9 526.8 547.0 215.5 131.9 PAT (RM mil) 234.0 365.4 417.7 163.1 99.4 Weighted average no. of ordinary shares (mil) 255.3 255.3 255.3 255.3 255.3 Basic EPS (RM)* 0.88 1.39 1.60 2.5 1.5 NTA per share (RM) 6.6 7.8 9.1 8.7 9.5 ROE
Slide 31: Thank You
THANK YOU
Slide 32: Disclaimer
Disclaimer This document has been prepared by AEON Credit Service (M) Berhad (“AEON Credit” or the “Group”) solely for the use at the presentation to analyst, fund managers and investors. The information contained in this document has not been independently verified. No representation or warranty, w
Slide 33: Thank You
THANK YOU Mr Lee Kit Seong Ms Lee Siew Tee Investor Relations Team Chief Corporate Officer Chief Financial Officer ir_info@aeoncredit.com.my leeks@aeoncredit.com.my stlee@aeoncredit.com.my Level 18, UOA Corporate Tower, www.aeoncredit.com.my Avenue 10, The Vertical, Bangsar South City, 03-2772 9000
AEON Credit Service (M) Berhad — Q1 FYE24 Earnings Presentation on 6ix