Aeon Credit Service (Asia) has reported a surge in its credit-card and personal loan business, lifting net profit 10.1 per cent to HK$112.2 million. The performance ranks Aeon as one of the most profitable finance service companies in Hong Kong, rivalling Hang Seng Bank's 24.6 per cent return on equity of about 24.26 per cent. Interest income was up 6.6 per cent to HK$406.8 million, which resulted mainly from the growth in personal loan business, the group said, and was helped higher by a drop in funding costs as interest rates declined in Hong Kong. An aggressive marketing campaign 'Cash in a flash', launched on February 12 had helped personal loans to a new high of HK$273.5 million, it said. The locally listed unit of the giant Japanese group, Aeon was reporting yesterday on results for the six months to August 20. With the number of Aeon cardholders increasing over the period by 47,000 to 770,000, Aeon Credit has begun to rival Citibank for the No 5 ranked card issuer in Hong Kong (behind HSBC, Standard Chartered, and Hang Seng). But the surge in business has not come without cost. In line with warnings from other major card issuers in Hong Kong, Aeon said yesterday that rising bankruptcy cases had resulted in the charge for bad and doubtful debts rising by 16.3 per cent to HK$79.4 million. That brought total provisioning made by the finance service company to HK$97.8 million, which represented 3.4 per cent of its total debtor balances. The company initiated a range of measures to deal with the slowdown in the recovery of Hong Kong's economy and rising level of bankruptcies, said managing director Kazuhide Kamitani. The company would make use of its 'customer relationship management' capabilities to market high revenue products to low-risk customers, he said. At the same time, it would run an analysis aimed at establishing profiles of customer spending and payment patterns. This would be built into an 'auto-judgment system for credit control', said Mr Kamitani, which could alert the collection department to take prompt collection action.