Even the Top... Financial Holding Card Companies with Sluggish Performance "Not Easy"

Poor 2Q Earnings for Card Companies of 4 Major Financial Holding Groups
Double-Digit Net Profit Decline YoY
Rising Funding Costs & Economic Slowdown Persist... "Challenges Ahead Remain Significant"

Unlike the record-breaking performance of major financial holding companies in the second quarter of this year, affiliated card companies are struggling. The adverse factors that hit the industry in the first half, such as economic slowdown, reduced consumption, and increased funding costs, still seem unresolved.

According to the industry on the 28th, Shinhan Card recorded a net profit of 150.2 billion KRW in the second quarter of this year, a 37.6% decrease compared to the same period last year. This contrasts with other financial holding company-affiliated card companies, which saw net profit declines of 30-60% year-on-year in the first quarter, while Shinhan Card limited its net profit decline to 5.2%, maintaining its pride as the industry leader amid the recession. Shinhan Card explained, "Operating profits from credit sales and loan products increased evenly, and funding costs were reduced. However, net profit decreased due to the disappearance of gains from the sale of about 40 billion KRW worth of non-performing loans, which were proactively secured for liquidity in the first quarter of this year."

Among the four major financial holding company-affiliated card companies, KB Kookmin Card had the smallest decline. Its net profit in the second quarter was 110.9 billion KRW, down 12.5% year-on-year. Hana Card and Woori Card posted net profits of 52.4 billion KRW and 36 billion KRW, respectively, down 18.3% and 25% year-on-year. The total net profit of the four major financial holding company-affiliated card companies in the second quarter was 349.5 billion KRW, a 26.5% decrease from the first quarter of last year. This contrasts with the net profits of the four major banks?KB Kookmin, Shinhan, Hana, and Woori?which increased by 1.3% year-on-year to 3.1573 trillion KRW in the second quarter, supported by rising interest income. The decline is attributed to still higher funding costs compared to last year and increased loan loss provisions considering customers' weakened repayment ability amid a difficult economy caused by high interest rates and inflation.

The poor performance of the four major financial holding company-affiliated card companies is also notable compared to Samsung Card. Samsung Card recorded a net profit of 145.1 billion KRW in the second quarter, a decrease of only 6.5% year-on-year. A credit industry official explained, "Samsung Card has shown its 'management excellence' by reducing the proportion of low-yield assets in preparation for worsening business conditions, and since its capital base is large, its borrowing scale is small, making it less affected by market interest rate fluctuations."

Since the outlook for business conditions remains uncertain, the trend of year-on-year profit declines for card companies is expected to continue for the time being. A card company official said, "Although the interest rates on specialized credit finance bonds, a major funding channel, have stabilized compared to the beginning of the year, they are still in the 4% range, which is different from last year. Due to economic slowdown-induced consumption contraction and the resulting increase in delinquency rates, a difficult situation is expected to persist for the time being."

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