Aeon Credit Service (Asia), Hong Kong's third-largest credit card issuer, is upbeat about credit business growth this year after posting a 22 per cent increase in 2004 earnings yesterday.

The Hong Kong-listed lender, which offers mainly credit card services under its own brands and affinity cards, posted a net profit of HK$146.3 million for the year ended February 20, lagging behind the average forecast of HK$162.37 million polled by Reuters.

The company, which is a subsidiary of Japan's Aeon Credit, said its credit card sales reported 8 per cent growth to HK$3.011 billion last year with personal loan sales surging 44 per cent to HK$1.376 billion.

"The rapid growth in personal loans is mainly due to the change in lending mode among Hong Kong customers from cash overdraft to personal loans," Derek Lai, director at Aeon Credit, told a media briefing yesterday.

He revealed that the company's average borrowing costs slipped to 3.7 per cent this year from 4.8 per cent a year ago, fuelled by robust demand for personal loans on the back of consumption rebound and improved employment.

On credit card business, the company expected average spending per person on lifestyle items will keep the growing momentum with the recovery of economic situation this year.

Managing Director Masanori Kosaka revealed that the company would boost its credit card issue volume by 14 per cent this year to 900,000 units and intends to launch at least five affinity credit cards.

"We will sign up with more merchants on card instalment plan and design more tailor-made market programmes to capture the upcoming demand for credit services," Kosaka said yesterday.

The credit card company plans to open five new branches this year, one of which will be in Macao. It also aims to develop leasing advisory business in Guangdong Province, as well as setting up a credit-related consultancy on the mainland.

Driven by tighter credit control and improved credit quality, Aeon reported its bad and doubtful debts dropped 8.4 per cent to HK$314.9 million last year, compared to HK$343.9 million a year ago.

The company said its total account receivables totalled HK$2.277 billion in 2004, up 17.6 per cent from the previous year. Overdue receivables ratio also fell to 8.6 per cent from 13.1 per cent in 2003. Aeon's turnover totalled HK$878.4 million, up 13.9 per cent from 2003. Net interest income also recorded a jump of 27.9 per cent to HK$464.2 million last year.

(HK Edition 04/27/2005 page4)