Despite Franchise Fee Reductions... Card Companies' Performance Last Year 'Unexpectedly Strong'

Cost Reduction, Business Diversification, and Other
Results of Tightening the Belt

[Image source]=Yonhap News

[Asia Economy Reporter Ki Ha-young] Last year, credit card companies succeeded in defending their performance despite the reduction in merchant fees. Initially, the industry had predicted an annual loss of 800 billion KRW due to the fee cuts, but it is understood that profitability was maintained through cost reduction and business diversification.

According to the card industry on the 8th, Shinhan Card, the industry leader, recorded a net profit of 508.8 billion KRW last year, a 2% decrease compared to the previous year. Samsung Card posted a net profit of 344.1 billion KRW, down 0.3% year-on-year, while KB Card recorded a net profit of 316.5 billion KRW, up 10.4% from the previous year.

Cost reduction and business diversification contributed to this performance defense. Shinhan Card's merchant fee revenue last year was 211.7 billion KRW, down 2.4% from the previous year. However, income from leasing and installment financing increased by 48.1% and 22.5% respectively year-on-year, maintaining profitability.

Samsung Card also performed well by restructuring its business to focus on profitability and promoting cost efficiency. Although a decrease in transaction volume was expected after transferring the exclusive contract with Costco to Hyundai Card, the decline in revenue was minimized by strengthening partnerships with discount stores such as E-Mart Traders.

KB Card improved its performance by accelerating the discovery of various new revenue sources such as leasing, installment financing, mid-interest loans, and overseas market expansion.

However, lower-tier card companies did not perform well. Hana Card recorded a net profit of 56.3 billion KRW last year, down 47.2% from the previous year. It appears to have been significantly affected by the fee reduction due to its higher proportion of merchant fee revenue compared to other card companies. Woori Card also recorded a net profit of 114.2 billion KRW, down 9.7% year-on-year.

This content was produced with the assistance of AI translation services.