Card Companies Saving on Marketing Costs Show Strong Q3 Performance: "Benefited from Contactless Consumption"

Shinhan, Samsung, and 5 Other Card Companies
Net Income of 1.2979 Trillion KRW
19.1% Increase Compared to Previous Year

[Asia Economy Reporter Ki Ha-young] Despite the impact of the novel coronavirus disease (COVID-19), the card industry posted strong results in the third quarter of this year. This was due to increased non-face-to-face consumption and reduced marketing expenses in sectors such as travel and duty-free shops.

According to the industry on the 28th, the cumulative net income for the third quarter of this year of five recently reported card companies (Shinhan, Samsung, KB Kookmin, Woori, Hana) reached 1.2979 trillion KRW, a 19.1% increase compared to the previous year (1.0894 trillion KRW).

All five companies saw an increase in net income compared to last year. Shinhan Card, the industry leader, recorded a cumulative net income of 470.2 billion KRW for the third quarter, up 14.4% year-on-year. Samsung Card and KB Kookmin Card, fiercely competing for second place, also posted increases of 24.0% and 1.7%, respectively, with 350.7 billion KRW and 255.2 billion KRW. In the case of KB Kookmin Card, excluding one-time gains related to corporate tax adjustments in the third quarter of last year, net income increased by 14.6%. Lower-ranked card companies also achieved remarkable results. Woori Card posted 107.4 billion KRW, up 13.3% year-on-year, and Hana Card achieved a remarkable 129.7% increase to 114.4 billion KRW. Based on the third quarter alone, the ranking reversed, with Hana Card’s net income surpassing that of Woori Card.

Saved on Marketing Costs Due to COVID-19, While Non-Face-to-Face Card Consumption Flourished

Looking at the third quarter results alone, the growth of Shinhan, Samsung, and Hana Cards stands out. Even considering the base effect, Hana Card’s growth rate is overwhelming. Hana Card achieved 49.1 billion KRW in the third quarter, a 203.1% surge year-on-year. Hana Card explained that improving cost efficiency through digital innovation across all sectors, including shifting mileage and other offline services to digital and online-focused portfolios, was a key factor. Samsung Card focused on internal management by reducing high-cost, low-efficiency marketing and restructuring its business with a focus on profitability, achieving 128.1 billion KRW, a 41.1% increase from last year. Shinhan Card also recorded 167.6 billion KRW, up 19.1% year-on-year, through portfolio diversification such as installment financing.

The biggest factor behind the card industry’s strong performance is analyzed to be 'cost efficiency.' Due to the COVID-19 impact, sales in travel sectors, duty-free shops, and amusement parks declined, reducing related card service costs. Additionally, despite concerns about reduced consumer activity due to COVID-19, non-face-to-face consumption surged. For example, Shinhan Card’s cumulative credit card fee income for the third quarter increased by 2.8% year-on-year. Samsung Card also saw a 7.3% increase in card transaction volume compared to the previous year, indicating increased card usage.

Delinquency rates remain stable as financial authorities extended the COVID-19 loan maturity and interest repayment deferral measures into next year. Shinhan Card’s third-quarter delinquency rate was 1.24%, down 0.16 percentage points from the previous year. Samsung Card recorded 1.0%, and KB Kookmin Card 0.99%.

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