Card Companies Saving on Marketing Costs Show Strong Q3 Performance... "Benefited from Contactless Consumption" (Comprehensive)

Shinhan, Samsung, and 3 Other Card Companies
Net Income of 1.2979 Trillion KRW
19.1% Increase Compared to Previous Year

Photo by Yonhap News

[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. However, given the significant uncertainties caused by COVID-19, there is a consensus that preparations are necessary.

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

All five companies have seen an increase in net income compared to last year. Shinhan Card, the industry leader, recorded a cumulative net income of 470.2 billion won for the third quarter, up 14.4% year-on-year. Samsung Card and KB Kookmin Card, fiercely competing for second place, posted 350.7 billion won and 255.2 billion won respectively, up 24.0% and 1.7% from the previous year. 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 recorded 107.4 billion won, up 13.3% year-on-year, and Hana Card achieved an impressive 129.7% increase to 114.4 billion won. Based on the third quarter alone, the ranking reversed, with Hana Card’s net income surpassing that of Woori Card.

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 won in the third quarter, a 203.1% surge compared to the previous year. Hana Card explained that improving cost efficiency through digital innovation across all sectors, including shifting offline services such as mileage to a digital and online-focused portfolio, was a key factor. Samsung Card focused on internal management by reducing high-cost, low-efficiency marketing and restructuring its business around profitability, achieving 128.1 billion won, a 41.1% increase from last year. Shinhan Card also recorded 167.6 billion won, up 19.1% year-on-year, through portfolio diversification including installment financing.

Strong Third Quarter Performance Driven by Cost Reduction and Increased Non-Face-to-Face Consumption

The strong performance is analyzed to have been most influenced by 'cost efficiency.' Due to the COVID-19 impact, sales in travel, 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, which also had an impact. 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%. Woori Card and Hana Card are also being managed stably at 0.99% and 1.09%, respectively. However, as uncertainties caused by COVID-19 continue, the industry shares the view that preparations are necessary. An industry insider said, "With the extension of the debt repayment deferral period into next year, there are concerns about increased risks, so proactive measures should be taken."

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