Consumer finance firm Aeon Credit Service (Asia) posted a 12 per cent year-on-year rise in net profit for the nine months to November 20, thanks to higher income from insurance sales, lower loan losses and gain on investments disposal.
The listed issuer of credit cards and consumer loans recorded HK$225.8 million net profit for the period, up from HK$201.7 million in the year-earlier period. Revenues were flat at HK$835.7 million. Operating profit before impairment allowances fell 1.2 per cent to HK$450 million. Net profit in the three months to November 20 rose 19.3 per cent year on year to HK$81.94 million.
The main drivers of the nine-month profit growth include a HK$25 million reduction in loan impairment losses and allowances to HK$214 million, a HK$13.7 million fall in interest expense to HK$76.5 million, a HK$8.2 million rise in insurance sales income to HK$29.3 million and a HK$8.2 million increase in recoveries of advances and receivables written-off earlier.
The booking of a HK$14.1 million gain on disposal of investments in a credit card business and a firm that finances instalment sales of consumer goods also helped. Both are in Taiwan.
Aeon attributed lower bad loan provisioning and write-offs to "proactive collection" and "cautious approval procedures". Interest expense dropped because of lower interest rates.
Partly offsetting the items driving up profit were a HK$29.6 million rise in operating expenses to HK$327 million, and a HK$9.8 million decline in interest income to HK$749.3 million.
Expenses were pushed higher by the hiring of more staff for the expansion of its branch network, insurance business and lending to small businesses on the mainland, as well as higher marketing expenses.
Aeon's share price gained 3.3 per cent yesterday to close at HK$7.85 after the results.