Last Year Card Companies' Net Profit 2.7 Trillion Won... Increased 33.9% Compared to a Year Ago

Card Company Profit and Loss Status (Unit: 100 million KRW, %) Data = Financial Supervisory Service

[Asia Economy Reporter Song Seung-seop] Last year, domestic card companies achieved a net profit increase of over 30%, driven by revenue growth in merchant fees and card loan sectors. Financial authorities announced plans to encourage additional provisioning for loan-type assets, considering both domestic and international circumstances.

According to the Financial Supervisory Service on the 28th, last year's net profit of card companies was tentatively estimated at 2.7138 trillion KRW, a 33.9% (687.4 billion KRW) increase from 2.0264 trillion KRW the previous year. This was due to a 613.8 billion KRW increase in merchant fee income from increased card usage and a 187.8 billion KRW rise in card loan revenue. Short-term card loan (cash service) usage increased by 1 trillion KRW (1.8%), while long-term card loan (card loan) usage decreased by 900 billion KRW (1.7%).

The cumulative number of credit card issuances reached 117.69 million, up 3.96 million (3.5%) from 113.73 million at the end of the previous year. The growth rate rose by about 1 percentage point from 2.5% the previous year. Due to social distancing measures from COVID-19, the proportion of new members recruited online expanded from 36.6% in 2020 to 42.5% within a year. The cumulative number of check card issuances was 106.11 million, a decrease of 3.96 million.

The total usage amount of credit and check cards was 960.6 trillion KRW, an increase of 83.3 trillion KRW (9.5%). Among this, the increase in credit card usage was 73.7 trillion KRW (10.4%), larger than the 9.6 trillion KRW (5.6%) increase in check card usage.

Total expenses increased by 876.4 billion KRW. Selling and administrative expenses rose by 171.2 billion KRW, and transaction approval fees increased by 49 billion KRW. Corporate tax expenses also increased by 248 billion KRW due to improved performance.

Soundness indicators generally remained favorable. The delinquency rate of card companies was 1.09%, down 0.20 percentage points from 1.29% at the end of the previous year. In particular, the delinquency rate for card loans fell by 0.29 percentage points from 2.89% to 2.60%. During the same period, the adjusted capital adequacy ratio decreased by 1.5 percentage points from 22.3% to 20.8%, but still significantly exceeded the regulatory ratio (8%). The leverage ratio increased from 4.9 times to 5.2 times.

To prepare for shocks, an additional 770.1 billion KRW was provisioned for loan losses, bringing the total to 9.6753 trillion KRW.

A Financial Supervisory Service official emphasized, “We will encourage increasing loss absorption capacity through additional provisioning for loan-type assets in preparation for the realization of potential non-performing loans. We also plan to guide proactive measures against liquidity risks through crisis situation analyses reflecting recent conditions.”

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