Woori Card, Union Stages Sit-in at CEO's Office... Performance Hits Lowest Rank

Woori Card Union "Organizational Division... Treatment at Industry's Lowest Level"
Woori Card Last Year's Net Profit 112 Billion Won... 45.4% Decrease YoY
Rising Procurement Costs and Overambitious Business 추진 Causes

Woori Card's performance last year fell back to the bottom tier of the industry. Concerns over reduced performance bonuses due to poor results have sparked labor-management conflicts.

On the 14th, according to a comprehensive report by Asia Economy, the Woori Card branch of the National Financial Industry Labor Union has been staging a sit-in in front of the CEO's office at Woori Card headquarters in Gwanghwamun, Seoul, since just before the Lunar New Year holiday. Using loudspeakers and drums, they are chanting slogans and demanding from CEO Park Wansik the payment of special bonuses, various allowance increases, the introduction of a salary band system, and improvements to parental leave. A union member at Woori Card lamented, "Discrimination between experienced hires and new recruits has caused organizational division, and the treatment is at the lowest level in the industry. Employees' morale has plummeted because they are worked to death but ignored when it comes to compensation."

Inside Woori Card, the reaction is that what was bound to happen has happened. Along with poor treatment, dissatisfaction peaked recently as half of Woori Card's executives were filled with parachute appointments from banks or holding companies within Woori Financial Group.

The decline in employee morale was clearly reflected in the performance. Among the five card companies?Shinhan, Samsung, KB Kookmin, Hana, and Woori Card?that have provisionally announced their last year's results so far, Woori Card posted the worst performance. Woori Card's net profit last year was 112 billion KRW, a sharp drop of 45.4% compared to the previous year. In the same period, Shinhan (-3.2%), Samsung (-2.1%), KB Kookmin (-7.3%), and Hana (-10.9%) showed much smaller changes in net profit, highlighting the stark difference. While Hana Card was at the bottom in 2022, Woori Card is expected to fall to last place last year.

Financial conditions worsened as the number of customers unable to repay card bills or loans due to high interest rates increased. Woori Card's delinquency rate last year was 1.22%, up 0.02 percentage points from the previous year. During the same period, non-performing loans (NPLs) classified as fixed or below with delinquency periods over three months increased by 44 billion KRW to 163 billion KRW from 119 billion KRW the previous year. The fixed-below NPL ratio rose by 0.18 percentage points to 0.99%.

The decline in Woori Card's profitability is mainly due to increased funding costs caused by high interest rates. Unlike banks, card companies do not have deposit functions and raise funds needed for their business by issuing bonds. Last year, due to a tightening bond market, the credit rating AA+ 3-year yield on specialized credit bonds (including card bonds) was in the 5% range. Compared to the 2% range in 2022, this 3% increase caused funding costs to rise accordingly. As interest expenses and delinquency rates increased, Woori Card set aside 446 billion KRW in loan loss provisions last year, a 63.1% increase compared to 2022.

Woori Card's push last year to establish its own payment network and merchant system is also evaluated to have negatively impacted its performance. Last year, Woori Card changed its merchant management system, which had relied on BC Card, to an in-house system for purposes such as managing card payment information, expanding marketing strategies, and promoting MyData (personal credit information management services). The number of Woori Card's independent merchants surpassed 1 million at the end of March last year, and the company set a goal to secure 2 million merchants within the year. In the second quarter of last year, it aggressively invested human resources by establishing a merchant sales headquarters. A Woori Card official said, "Costs related to the independent merchant initiative are being reflected in the accounting over time," adding, "We plan to conclude negotiations with the union within this month."

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