Losses and Interest Expenses Total 1.2 Trillion Won... Credit Card Companies' H1 Net Profit Drops 13%

Card Companies' Net Profit in H1 1.4 Trillion Won... 200 Billion Won Decrease YoY
Sales Increased but Bad Debt and Interest Expenses Surge
Delinquency Rate Remains Stable

Photo by Getty Images Bank

The net profit of eight specialized credit card companies in the first half of this year decreased by nearly 13% compared to the same period last year. Although credit card usage exceeded 460 trillion won, resulting in an increase in sales of about 1.6 trillion won, the growth in interest expenses and bad debt costs offset this, hindering profit growth.

Sales Increased but Costs Rose Even More

According to the Financial Supervisory Service on the 16th, the net profit of eight specialized credit card companies?Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Hana, Woori, and BC Card?in the first half of this year was 1.4168 trillion won. This represents a 12.8% (207.5 billion won) decrease compared to the same period last year.

This is interpreted as being due to the increase in various costs exceeding the rise in sales. The total revenue of the eight specialized credit card companies in the first half of this year was 13.2182 trillion won, up 13.6% (1.5794 trillion won) from the same period last year. During the same period, total costs increased by 17.8% (1.7869 trillion won) to 11.8014 trillion won. Specifically, interest expenses increased by 692.8 billion won, and bad debt costs rose by 526.2 billion won.

Meanwhile, since the beginning of this year, the increase in the reversal amount of bad debt reserves for unused credit card agreements led to an increase in net profit after reversal of bad debt reserves (2.0059 trillion won), which rose 46.5% (636.4 billion won) compared to last year (1.3695 trillion won). The return on assets (ROA) was 1.41%, down 0.14 percentage points from 1.55% in the same period last year. However, it was higher than the average of the past five years' first halves (1.36%).

The delinquency rate (based on total claims) was 1.58%, up 0.38 percentage points from the end of last year. However, the increase in the second quarter was only 0.05 percentage points, indicating a slight slowdown in the upward trend.

Specifically, the credit sales delinquency rate was 0.87%, up 0.22 percentage points from the end of last year. However, it was similar to the previous quarter's 0.86%. The card loan delinquency rate showed a similar trend. As of the end of the first half, it was 3.67%, up 0.69 percentage points from the end of last year, but the second quarter increase was limited to 0.13 percentage points, indicating a slowdown in the rising trend.

As of the end of the first half, the bad debt provision coverage ratio was 106.4%, similar to 106.7% at the end of last year. All card companies exceeded 100%. The adjusted capital adequacy ratio was 19.9%, up 0.5 percentage points from the end of last year. All card companies exceeded the management guidance ratio (8%). The leverage ratio, which is regulated to be below 8 times, was 5.4 times, down 0.2 times from the end of last year.

Credit Card Usage Surpasses 460 Trillion Won... Loans: Cash Services Up, Card Loans Down

In the first half of this year, credit card purchase usage amounted to 461.4 trillion won, an 8.3% (35.4 trillion won) increase compared to the same period last year. Check card usage also increased by 4.9% during the same period, totaling 97.1 trillion won. As a result, the total card purchase usage in the first half reached 558.5 trillion won, up 7.7% from the first half of last year.

Card issuance also increased. As of the first half, the cumulative number of credit cards issued was 127.49 million, an increase of 3.32 million cards (2.7%) from the end of last year. The cumulative number of check cards issued was 104.98 million, a 0.2% decrease compared to last year.

Card loans decreased. As of the end of the first half, they stood at 50.8 trillion won, down 5.9% from the first half of last year. However, second-quarter usage was 25.7 trillion won, up 600 billion won (2.4%) from the first quarter. Specifically, short-term card loans (cash services) usage increased by 0.4%, while long-term card loans (card loans) decreased by 12.8%.

A Financial Supervisory Service official stated, "Considering the ongoing uncertainties in the economic and financial environment both domestically and internationally in the second half of this year, we will guide card companies to thoroughly manage asset soundness through the sale of non-performing loans and debt restructuring. We will continue monitoring the issuance market for specialized credit finance bonds and the liquidity situation of card companies, and plan to respond proactively if necessary."

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