Aeon Credit eyeing higher contribution from insurance business

KUALA LUMPUR: Aeon Credit Service (M) Bhd which received the nod from its shareholders for a proposed right issue, will be expanding its insurance segment to become one of its core businesses.
Aeon Credit which serves as an insurance agent to Prudential, Chubb Insurance Malaysia Bhd and Tokio Marine intends to improve cross selling of insurance products within its existing customer base of six million, which includes its sister companies Aeon Co (M) Bhd and Aeon BiG (M) Sdn Bhd.
The company which plans to raise RM432 million from the rights issue, will channel part of the RM272.4 million (to be used for working capital) for development of the insurance segment, along with IT and digital marketing.
Aeon Credit chairman Datuk Abdullah Mohd Yusof told reporters after the company’s AGM and EGM that the insurance market holds a lot of potential.
“We want it to be a bit of a core business. We have to build the infrastructure and in good time (we will roll out),” he said, adding that it may happen in the next three years.
Currently, the insurance segment is a minor contributor to Aeon Credit’s revenue, having only contributed RM11 million to the total revenue of RM1.1 billion.
Aeon Credit is also looking to rollout another potential core business segment, which is e-money, by the end of the current financial year.
“This will be a potential core business for us as everybody now uses mobile payment and e-money. Even Bank Negara’s direction is to move to cashless, so this is an opportunity for us,” said CFO Lee Kit Seong.
As for the IT segment, Lee said the non-bank lender will be pumping in capital into improving its common system, which in turn will improve operations efficiency.
Aeon Credit is also in the midst of digitalising the operations of its 64 branches and service centres. 62 branches have been converted, the process is still ongoing for two branches, namely the one in 1 Utama and the other in City Square, Johor Baru.
The company’s other segments include personal financing, easy payment, vehicle financing and credit card.
Going forward, Abdullah said the company is hopeful of maintaining a double digit growth for this year amidst a challenging economic backdrop.
Aeon Credit registered 16.1% growth in net profit to RM265.03 million from RM228.22 million for the financial year ended Feb 28. Revenue grew by 14.2% to RM1.10 billion from RM956.23 million.