[Click eStock] Samsung Card's Unexpected Earnings Thanks to Reduced Financial and SG&A Expenses

2Q Net Profit 110 Billion KRW... 54.2% Increase YoY

[Asia Economy Reporter Minwoo Lee] Samsung Card recorded a net profit for the second quarter of this year that increased by more than 50% compared to the same period last year. Analysts attribute this to the benefits of interest rate cuts and the company’s ability to maintain solid performance even after the COVID-19 pandemic, thereby withstanding market uncertainties.

On the 29th, Hyundai Motor Securities issued a 'Buy' investment rating and set a target price of 46,000 KRW for Samsung Card. The closing price on the previous day was 28,050 KRW. Following better-than-expected strong results in the second quarter, the positive outlook was maintained.

Samsung Card’s net profit for the second quarter of this year was 110.5 billion KRW, a 54.2% increase compared to the same period last year. This also significantly exceeded the market consensus forecast of 93.1 billion KRW. Jin-sang Kim, a researcher at Hyundai Motor Securities, analyzed, "The reduction in financial costs and selling and administrative expenses drove the profit improvement," adding, "Stable loan loss provisions and asset growth accompanied this, resulting in good quality of earnings."

While the amount used for personal credit sales decreased by 0.4% year-on-year in the first quarter due to reduced consumption, it increased by 3.1% year-on-year in the second quarter. Accordingly, market share rose to 17.6%, up 0.3% from the previous quarter. The new delinquency rate and loan loss cost ratio were stable at around 0.6% and 1.9%, respectively. In particular, the quarterly average new delinquency rate improved by 0.1% compared to the previous quarter and by 0.2% compared to the same period last year. Additionally, the borrowing interest rate in the second quarter was 2.35%, down 10 basis points (1bp = 0.01 percentage points) from the same period last year, leading to a 5.1% decrease in financial costs year-on-year.

Meanwhile, the quarterly usage amount decreased by 1.1% year-on-year. While corporate credit sales and cash services declined, card loans and installment lease businesses increased by 11.5% and 26.7%, respectively, compared to the same period last year. In the second half of the year, credit sales are expected to continue focusing on individuals, financial products on card loans, and installment leases on automobiles. By industry, sectors related to travel and leisure such as airlines and travel agencies are expected to decline, whereas online shopping is projected to maintain double-digit growth due to the expansion of non-face-to-face (untact) consumption.

Researcher Kim stated, "In addition to the existing dividend appeal and benefits from interest rate cuts, the continued strong performance after COVID-19 is impressive." He added, "Amid underlying market uncertainties, the overwhelming capital strength will serve as a solid pillar."

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