BY ANNETE
APPADURAY
KUALA LUMPUR: AEON Credit Service (M)
Bhd plans to make its insurance business one of its core segments within the next
three years, says its chairman Datuk Abdullah Mohd Yusof.
“There is huge potential for our
insurance business. With a [six million] customer base from our sister
companies of AEON Co (M) Bhd and AEON BiG (M) Sdn Bhd, we hope to make it one
of our core segments [in three years],” Abdullah said, adding that the group
needs to build the requisite infrastructure for growth of the segment.
“We [operate as an] insurance agent,
and we are currently [working with] Prudential Malaysia, Chubb Insurance Malaysia
Bhd and Tokio Marine Insurans (M) Bhd,” he told reporters after the group’s annual general meeting yesterday.
Abdullah added that for the financial
year ended Feb 28, 2017 (FY17), the group’s insurance segment contributed RM11 million
to its overall revenue of RM1.1 billion. That’s just 1% of its total top line.
The group’s main revenue
contribution for FY17 came from its personal financing segment at RM270.7
million, while its motor financing segment clocked in at RM245.6 million,
followed by its easy payments division at RM121.9
million. The group’s credit card segment contributed RM107 million to overall
revenue for FY17.
Abdullah said the group intends to tap
into the huge growth potential of the Malaysian insurance market, but could not
comment on specific growth targets for the segment.
“[We have to adhere to] an agency’s restriction
of two life insurance providers and two general insurance providers. But we
plan to expand the segment by doing cross-selling across our existing customer database,”
said the group’s executive director and chief financial officer Lee Kit Seong.
Meanwhile, the group plans to launch
its e-money platform nationwide by the end of the current FY18, under which the
group will offer innovative prepaid cards to customers.
“We [now] already have a test
programme within AEON Group for the [e-money platform], so once the systems
have been stabilised, we will launch the [e-money segment] nationwide,
hopefully by the end of the current financial year,” Lee said.
Under the platform, the group will
issue prepaid cards that will enable customers to earn reward points from
spending, and give them access to exclusive merchant privileges. Besides retail
customers at AEON stores, it is aimed at the untapped market of cash users.
“This will be a potential core
business for us because now [there is an increase in the use of ] mobile
payments, and [it is also in line with] Bank Negara Malaysia’s aim to move
towards a cashless society,” Lee added.
Yesterday, AEON Credit shareholders approved
the group’s proposed renounceable rights issue of a three-year minimum 3.5%
irredeemable convertible unsecured loan stocks (Iculs) on the basis of two
Iculs for every one existing AEON Credit share held to raise RM432 million.
According to Lee, RM155 million of
the proceeds from the rights issue will be used to repay long-term loans, while
RM272.4 million will go towards working capital to finance the group’s new
receivables.
The remaining RM4.6 million will be
used to finance the rights issue exercise.
The company also got shareholders’
nod for its proposed bonus issue of 72 million new shares, on the basis of one
bonus share for every two existing shares.
