Capital flood helps Aeon to 5.8pc profit growth

PUBLISHED : Saturday, 28 April, 2007, 12:00am
UPDATED : Saturday, 28 April, 2007, 12:00am

Aeon Credit Service (Asia), a consumer credit finance firm, said its full-year profit rose 5.8 per cent as capital flooding into the lending market amid a boom in initial public offerings drove down funding costs.

Hong Kong-listed Aeon, a unit of Aeon Credit Japan, said net profit for the year to February 20 rose to HK$266.7 million, 63.7 HK cents a share, from HK$252 million, 60.2 HK cents a share, a year earlier.

Net interest income rose 5.4 per cent to HK$842.6 million during the period as personal loan sales grew 16 per cent after the company issued more credit cards. Average funding cost dropped 0.1 percentage point year on year to 4.7 per cent.

Aeon executive director Ban Pan yesterday said that credit cards accounted for 64.5 per cent of the company's revenue.

A total of 950,000 Aeon credit cards have been issued and the company aims to issue 110,000 cards this year, according to Mr Pan.

He said the company wanted to issue credit cards on the mainland but had to wait for developments in state policy allowing foreign companies to issue cards there.

The company derived 31.1 per cent of its funding from shareholders' equity, 17.9 per cent from structured finance and 51 per cent from borrowings from financial institutions.

Its debt-to-equity ratio was 2.35 at the end of the period.

Aeon's other operating income grew 3.3 per cent to HK$115.8 million.

'Although there was a drop in handling and late charges, the increase in commission income resulted in the increase in operating income,' the company said.

Asset quality continued to improve, it said. Impairment losses and impairment allowances stood at HK$303.1 million, a decrease of 4.1 per cent compared with a year ago.

The company plans to expand its coverage of Hong Kong by adding four outlets to its existing 28.

Shares of Aeon closed 2.81 per cent higher yesterday at HK$6.95 after the release of the earnings announcement.