AEON Credit Service is expanding into the middle-income segment (M40) through AEON Bank, its 50 percent-owned digital bank launched in May 2024.

The bank is one of five licensed digital banks in Malaysia and plays a central role in AEON Credit’s effort to reduce reliance on the lower-income B40 group, where repayment challenges have been mounting.

As of February 2025, AEON Bank had built up RM336 million in deposits and is gradually rolling out business banking, working capital loans and cash management services for micro, small and medium enterprises.

AEON Credit is also leveraging its strong foothold in motorcycle financing, where it holds about 25 percent of the market.

While exploring new areas of growth, the company is approaching the buy now, pay later (BNPL) segment with caution.

Usage doubled between 2023 and 2024, reaching around five million users, many of whom are young and face repayment challenges.

Because BNPL providers are not yet integrated with Bank Negara’s Central Credit Reference Information System (CCRIS), AEON Credit has said it will only enter the market once the Consumer Credit Bill 2025 is passed and regulatory safeguards are in place.

For the financial year ended February 2025, AEON Credit reported a 24.7 percent decline in net profit to RM338.6 million, despite a 15.1 percent increase in revenue to RM2.2 billion.

Higher impairment losses totaling RM187.8 million and RM68.3 million in startup losses from AEON Bank weighed on earnings.

In the first quarter of FY26, impairments rose further to RM229.4 million, alongside RM15.9 million in additional losses related to AEON Bank.

Despite the headwinds, the company maintained a loan loss coverage ratio of 217 percent and raised its dividend payout ratio to 39.6 percent, above its standard policy of 30 percent.

Featured image: Edited by Fintech News Malaysia, based on image by thanyakij-12 via Freepik