Its return on equity (ROE) has stayed at a commendable level of above 30% in each of those years, peaking at 35.98% in FY2014, before coming down to about 30% in FY2016. Still, its three-year weighted average from FY2012 to FY2015 was above 35%, making it the leader among finance stocks.

But as the Malaysian economy and consumer sentiment weakens, analysts believe its profit growth may start to moderate further even as loan growth tapers. There is also a concern that, like banks, ACSB may see its asset quality weaken.

Historically, ACSB’s loan growth has been robust, exceeding the 50% mark in FY2013 and FY2014. However, this began to taper off in late FY2015 as consumer sentiment started to wane.

“Going forward, we do not expect a pickup in loan growth as consumer sentiment remains weak,” says Alliance DBS Research in a July 1 report. The research house sees ACSB’s loans growing 18% in FY2017, similar to FY2016.

Its vehicle easy payment schemes include those for motorcycles and mainly used cars — segments that banks tend not to focus on due to the small ticket size. ACSB tends to enjoy high loan yields, proportionate to the higher risk it takes compared to banks. Its cost of funds remains relatively low, with sources of funding including term loans and bonds.

Vehicle loans accounted for 59% of its total loan book of RM5.45 billion in FY2016. Apart from vehicles, ASCB also offers general easy payment schemes (9%) for household appliances, as well as credit cards (10%) and personal financing (22%).

“Mirroring the banking sector, we believe there are concerns on asset quality. We stay cautious on ACSM’s portfolio of customers as more than 70% of its customers earn less than RM3,000 per month, which renders them as a vulnerable income group. Amid rising cost of living, we believe the debt-servicing ability of this group may face added pressure,” Alliance DBS says, maintaining a “hold” recommendation.

In the past, ACSB managed to maintain a stable non-performing loan (NPL) ratio of below 2%. However, the ratio inched up to a high of 3.1% in 3Q2015, before improving to 2.8% at the end of FY2016.

ASCB’s recent 1Q2017 results came in within analysts’ expectations. Net profit grew 7.7% to RM62.72 million in the quarter from a year ago, but fell by 7.9% in the preceeding quarter due to higher allowance for impairment losses and high overheads. Even so, its NPL ratio improved marginally to 2.42%.

Despite some concern about its growth prospects, analysts increasingly see the stock as one of the better alternatives for investors among the listed non-bank financial intitutions (NBFI) and banks. Of the five analysts tracking the stock, three have a “buy” call and two, a “hold”, Bloomberg data show. The average 12-month target price was RM15.76. The stock has appreciated 7.6% so far this year to RM14.20 on July 29.

“Besides its healthy loan growth, we also like ACSB for its decent asset quality with NPL expected to hover between 2% and 3% (on seasonality); healthy capital adequacy ratio which is expected to be at a comfortable 20% versus Bank Negara Malaysia’s capital ratio requirement of 16%; higher ROE of over 20% estimated in FY2017-FY2018, as well as decent dividend yields of 4.9%-5.3%, which are better than other NBFIs as well as most of the banking stocks,” Kenanga Investment Bank Research says in a July 1 report.