KUALA LUMPUR, Dec 24 ― Aeon Credit Service (M) Bhd’s shares on Bursa Malaysia went up in the early session today after posting a better-than-expected third quarter financial results ended November 30, 2021 (Q3 FY2022).

As at 11.10am, the counter, which emerged as top gainers, jumped 38 sen to RM13.68, with 50,700 shares changing hands.

In a filing with Bursa Malaysia yesterday, Aeon Credit said other income for the current quarter was higher at RM50.46 million, mainly due to improved bad debt recoveries, insurance commission, and interest or profit income from deposits with licensed financial institutions.

RHB Research, in a note, expects Aeon Credit's pre-impairment operating profit (PIOP) to improve in the quarters ahead, as branches become fully operational while credit cost continues to normalise on improved asset quality.

In a separate note, Kenanga Research said the better results was mainly attributed to lower-than-expected impairment losses, fuelled by write-back on credit loss expected earlier.

"Looking ahead, we expect receivables/volume recovery and lower impairments, as the management’s stringent asset quality control bears fruit. Moving forward, we expect continued recovery in its transaction and financing volume, building on its 11 per cent year-to-date year-on-year growth.

"We also expect gross receivables to follow suit, fuelled by resumption in consumption and Aeon credit's year-end marketing campaigns. That said, we project a weaker 4QFY22 vis-a-vis 3QFY22, mainly on lower write-backs, as we still expect receivables growth quarter-on-quarter,” it said.

Kenanga said Aeon Credit management's stringent asset quality control should allow it to maintain its healthy non-performing loan (NPL) percentage of 1.75 per cent and current collection ratio of 98.5 per cent.

"That said, we might see NPL inching up and collection inching down marginally due to the floods, but any impact should be negligible,” it added. ― Bernama