KUALA LUMPUR (July 9): Aeon Credit Service (M) Bhd (KL:AEONCR) said it has taken measures to deal with rising bad loans as the consumer financing firm reported a 23% rise in first-quarter earnings.

The ratio of non-performing loans (NPL) edged up three basis points, or 0.03 percentage-point, to 2.60% at the end of May from a year earlier, which Aeon Credit blamed on cost-of-living pressures affecting certain customer segments, particularly younger and lower-income groups.

“Corrective actions have been taken to address the NPL ratio increase,” Aeon Credit said in an exchange filing on Thursday.

Loan loss coverage shrank but remained “healthy” at 195% versus 217% at the end of May 2025, the company noted.

Net profit for its first three months ended May 31, 2026 (1QFY2027) grew to RM95.15 million from RM77.55 million a year earlier. Revenue for the quarter increased by 8% year-on-year to RM647.57 million, driven from stronger loan and financing growth.

Total transaction and financing volume for the quarter came in at RM2.35 billion, up by 4.6% when compared to the same quarter in FY2026.

Gross financing receivables expanded 9.8% year-on-year to RM16.07 billion. After allowance for impairment loss was included, financing receivables rose to RM15.25 billion from RM13.82 billion.

Aeon Credit also noted that it continued to book losses from its digital banking associate AEON Bank (M) Bhd, with its share of losses amounting to RM17.69 million during the quarter, compared with RM15.92 million a year earlier.

Aeon Credit said it remains cautious amid external uncertainties such as geopolitical tensions in the Middle East, while focusing on growing its financing portfolio, managing credit risks and improving operational efficiency through technological enhancements.

The group also plans to leverage its wider ecosystem, including its 51%-owned subsidiary AEON360 Sdn Bhd, to strengthen customer engagement and expand its customer base.

No dividend was declared for the quarter under review.

Shares of Aeon Credit slipped three sen or 0.5% to RM5.72 at Thursday’s noon break, valuing the group at RM2.9 billion. Year-to-date, the counter has been relatively flat.