Credit Card Companies Surpass 9 Trillion Won in Auto Installment Assets... Fierce Preemption Competition with Capital Companies

9.1 Trillion KRW in Q1 This Year, 17.04% Increase
Possibility of Surpassing 10 Trillion KRW Within This Year
Capital Companies Also Counterattack with Interest Rate Cuts Amid Aggressive Sales

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] Credit card companies' auto installment loan assets have surpassed 9 trillion won for the first time. As credit card companies, whose profitability in credit sales has deteriorated due to reduced merchant fees, aggressively enter the auto installment finance market, competition with the existing strong players, capital companies, is expected to intensify.

According to the Financial Supervisory Service's Financial Statistics Information System on the 28th, the auto installment finance assets of six credit card companies (Shinhan, KB Kookmin, Samsung, Woori, Lotte, Hana) in the first quarter of this year totaled 9.0118 trillion won. This represents a 17.04% increase compared to the previous year, with an increase of 1.3121 trillion won in one year. If this growth trend continues, it is expected that credit card companies' auto installment assets could surpass 10 trillion won within this year.

Credit card companies, urgently needing business diversification, are aggressively increasing their assets in the auto installment market. Shinhan Card ranked first with assets of 3.6027 trillion won, up 13.4% from the previous year. Following closely, KB Kookmin Card recorded 3.4838 trillion won, a 19.3% increase. Woori Card surged 45.0% from a year ago to 1.1669 trillion won, ranking third. Samsung Card recorded 597.7 billion won, a 19.9% decline from the previous year, but its assets have returned to an upward trend this year. Lotte Card increased by 96.9% to 103.2 billion won, and Hana Card, which started auto installment finance this year, recorded 57.5 billion won.

As assets increase, profits are also growing. In the first quarter of this year, the total profit of the six credit card companies engaged in auto installment finance was 70.88 billion won, up 9.2% from the previous year. Shinhan Card maintained the lead with 32.431 billion won, followed by KB Kookmin Card with 25.839 billion won. These figures represent increases of 4.8% and 16.8%, respectively, compared to the previous year. Woori Card recorded 7.981 billion won, and Lotte Card 826 million won in profits, increasing 33.9% and 187.8% respectively from a year ago. Samsung Card alone saw a 34.1% decrease to 3.676 billion won, while Hana Card earned 127 million won in profit.

In response to the aggressive operations of credit card companies, capital companies have launched countermeasures. Industry leader Hyundai Capital recently introduced an auto installment finance product with an interest rate of 2.6% for a 60-month term. Hyundai Capital's auto installment assets, which reached 14.9916 trillion won at the end of last year, decreased by 307.6 billion won to 14.684 trillion won in the first quarter of this year. However, the interest rates offered by credit card companies for new car purchases are lower. Samsung Card's auto installment interest rate is 2.5% for 60 months, the lowest in the industry.

An industry insider said, "With profitability deteriorating due to reduced merchant fees and the urgent need for business diversification, auto installment finance, which generates profits, is a market that credit card companies must aggressively target," adding, "Competition between credit card companies and capital companies over the growing auto installment finance market will become even fiercer."

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