KB Kookmin, Lotte, and Woori Card Implement Voluntary Retirement... "Will Workforce Adjustments Expand?"

Three of Eight Specialized Card Companies Opt for Voluntary Retirement
Next Year’s Merchant Fee Reduction and Stricter Loan Regulations
Industry Downturn... Will Demand for Workforce Adjustment Increase?

[Asia Economy Reporter Ki Ha-young] As the year-end approaches, voluntary retirement continues in the card industry. With card fees set to be reduced again next year, concerns are growing that additional workforce adjustments to cut costs will continue.

According to the industry on the 25th, among the eight specialized card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana, BC Card), KB Kookmin, Lotte, and Woori Card have either completed or are in the process of voluntary retirement.

Woori Card has decided to conduct a small-scale voluntary retirement targeting employees born in 1966-1967 and those at the team leader level, under the condition of paying 36 months' salary. Woori Card also conducted voluntary retirement last year, receiving about 10 applications.

Lotte Card recently announced voluntary retirement for employees with more than 10 years of service. Depending on the length of service, they will pay between 32 to 48 months' base salary and up to 20 million KRW for tuition fees. Last year, about 200 employees applied for voluntary retirement under the same conditions at Lotte Card.

KB Kookmin Card carried out voluntary retirement last month under the condition of paying up to 36 months' salary, with about 10 applicants. BC Card, Shinhan Card, Hyundai Card, and Hana Card are reportedly not planning additional voluntary retirement within this year.

The reason the card industry is adjusting its workforce is analyzed to be in preparation for a worsening business environment next year due to reductions in merchant fees and decreased card loan profits. In fact, card companies achieved strong performance this year. The cumulative net profit of the eight specialized card companies for the third quarter of this year increased by 32.2% compared to the previous year, reaching 2.2269 trillion KRW.

However, starting next year, card merchant fee rates will be reduced by up to 0.3 percentage points. The actual reduction amount is 470 billion KRW. Card companies, which are already operating at a loss in their core credit sales business, will inevitably face profitability deterioration. Additionally, with the financial authorities' plan to strengthen household debt management, card loans will be included in the Debt Service Ratio (DSR) regulation from next year, leading to a projected reduction in card loan volume. This means that the lending business, which has so far offset losses from fee income, will also face difficulties. There are concerns that cost burdens such as funding costs will increase due to the rise in the base interest rate.

An industry official lamented, "Considering the future rise in funding interest rates, decrease in loan income due to household debt regulations, and increase in bad debts, it seems inevitable that profitability will deteriorate."

Financial Services Commission Chairman Ko Seung-beom is delivering opening remarks at the ruling party and government meeting on card fee reform held at the National Assembly on the 23rd. Photo by Yoon Dong-joo doso7@

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