RAM Ratings affirms AEON Credit's sukuk ratings; outlook stable

RAM Ratings has affirmed the AA3/Stable rating of its Senior and the A1/Stable rating of its Subordinated Sukuk issued under AEON Credit Service (M) Berhad's (the Group) RM5 bil Sukuk Wakalah Programme. Concurrently, we have also reaffirmed the P1 rating of its RM1 bil Islamic Commercial Papers Programme. 

The affirmations reflect AEON Credit's resilient credit profile, underpinned by sound asset quality, consistently robust profitability and moderate leverage. These strengths are moderated by its sizeable exposure to lower-income borrowers, which are inherently more vulnerable to income shocks and economic downturns. The ratings also benefit from uplift, reflecting our expectations of a 'high' likelihood of support from AEON Co., Ltd, the Group's Japan-based parent and a leading retail and financial services conglomerate, that we view to have a strong credit profile. 

AEON Credit maintains a strong domestic franchise in consumer financing market and remains a leading motorcycle financier, funding about 23.6% of new motorcycle sales in FY Feb 2026. Loan growth stayed healthy, with gross receivables increasing 11.4% to RM15.7 bil and pre-tax profit rising 4.7% at RM537.5 mil. Profitability indicators remained strong, with return on assets and return on equity of 3.5% and 18.2%, respectively, placing the Group among the stronger performers in RAM's portfolio of rated financial institutions, despite absorbing losses from AEON Bank during its start-up phase, which are expected to decline over time. 

Notwithstanding the focus on non-prime borrowers, AEON Credit's asset quality has held steady, with a gross impaired financing ratio of 2.6% as at end-February 2026. Strong recurring earnings, supported by a three-year average net interest margin of 12.1%, cushion high credit costs which averaged 3.8% over the same period. Margins may ease as the Group grows its share of prime borrowers but are expec