Last Year, Bansa's Net Profit 164.3 Billion KRW... 1.02% Decrease from Previous Year

[Asia Economy Reporter Kangwook Cho] Last year, the net profit of value-added network operators (VANs) slightly decreased. Although operating revenue increased, operating expenses rose at a greater rate.

According to the '2019 VAN Business Performance' data released by the Financial Supervisory Service on the 21st, the net profit of 13 VAN companies, which account for most (98.2%) of the revenue in the VAN business market last year, was 164.3 billion KRW, down 1.7 billion KRW (1.02%) from the previous year.

Despite an increase in revenue from other business sectors such as electronic payment gateway (PG), operating expenses increased more significantly.

In fact, operating revenue last year was 2.448 trillion KRW, an increase of 102.7 billion KRW (4.4%) compared to the previous year (2.3453 trillion KRW). Among this, revenue from the VAN business sector was 1.3069 trillion KRW, down 108 billion KRW (7.6%) from the previous year (1.4149 trillion KRW). This was due to a decrease in terminal sales following the mandatory conversion of registered terminals, causing VAN product revenue (109.2 billion KRW) to drop by 32.6 billion KRW (23.0%) compared to the previous year. On the other hand, revenue from other business sectors increased by 210.7 billion KRW (22.6%) to 1.1411 trillion KRW compared to the previous year (930.4 billion KRW), driven by growth in PG business revenue due to the expansion of online shopping transactions.

Operating expenses last year were 2.2554 trillion KRW, an increase of 109.1 billion KRW (5.1%) compared to the previous year (2.1463 trillion KRW). Among these, product costs such as the purchase of registered terminals and promotional expenses (275.8 billion KRW) decreased by 15.5 billion KRW (5.3%) compared to the previous year (291.3 billion KRW) due to the completion of the mandatory conversion of registered terminals in 2018. However, other operating expenses increased by 158.6 billion KRW (13.6%) from 1.1653 trillion KRW in the previous year to 1.3293 trillion KRW, mainly due to increased fees for major merchants related to the PG business.

The financial condition of VAN companies was generally favorable, with increases in assets such as current assets and retained earnings.

As of the end of last year, the assets of VAN companies were 2.3923 trillion KRW, an increase of 288.8 billion KRW (13.7%) compared to the end of the previous year. This was mainly due to a 19.3% increase in current assets (249.1 billion KRW), including cash equivalents (214.7 billion KRW, 53.6%).

Liabilities increased by 156.4 billion KRW (22.1%) to 864.8 billion KRW, and equity increased by 132.4 billion KRW (9.5%) to 1.5275 trillion KRW.

The Financial Supervisory Service stated, "We will encourage VAN companies to diversify their revenue sources by utilizing their assets, facilities, and know-how in building payment infrastructure, while strengthening monitoring to prevent excessive competition within the VAN market and enhance payment stability in the changing payment market environment."

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