[Click eStock] "Samsung Card, Asset Quality Management After Q2 Is a Key Task"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment analyzed that there is no systemic burden on Samsung Card and that managing asset soundness will be an important task after the second quarter of this year.

Researcher Byunggun Lee of DB Financial Investment predicted in a report on the 8th that Samsung Card will achieve slightly decreased but solid performance in the first quarter of this year compared to last year. Lee said, “Renault Samsung Motors' dividends are also somewhat decreasing, and the credit card usage growth rate in March also declined slightly, resulting in a 2.3% decrease in performance compared to the same period last year,” adding, “They have continuously maintained a low asset growth rate while focusing on managing customer credit ratings, and with low funding costs, there should be no difficulty in maintaining solid performance.”

He diagnosed that managing asset soundness will be an important task after the second quarter. Lee said, “In the case of credit sales, customers rated grade 4 or higher account for 75%, so there should be no difficulty in managing soundness,” and “Credit card usage will offset negative economic effects through increased online spending, but spending in high-cost sectors such as travel and airlines will decrease, causing some increase in expense burden.” He also noted that bad debt expenses will inevitably increase slightly, leading to a slight downward revision of this year’s net income forecast. However, considering that bad debt expense increases were limited even during the 2008 financial crisis, it is explained that this will not pose a significant burden on performance.

The investment opinion was maintained as ‘Buy,’ but the target price was lowered to 37,000 KRW. Lee said, “The recent tightening of the funding market, which may cause an increase in the effective funding interest rate, is a burden factor, so it is necessary to monitor the situation,” but added, “It is important to recall that even during the 2008 financial crisis, the funding interest rate stabilized relatively quickly thanks to the power of the brand.”

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