Card Companies' Net Profit in H1 Reaches 1.499 Trillion KRW, Up 5.8% YoY

Increase in Card Loans, Installment Card Fees, and Merchant Fees
169 Non-Card Credit Companies' Net Profit 1.5564 Trillion KRW... 3.8% Decrease YoY
FSS: "Credit Companies' Profitability and Soundness Are Good"

In the first half of this year, eight specialized credit card companies posted a net income of approximately 1.5 trillion KRW. This was thanks to increased revenue from card loans, installment payments, and merchant fees compared to last year.

According to the 'Preliminary Business Performance of Credit Specialized Financial Companies' released by the Financial Supervisory Service on the 27th, the net income of credit card companies in the first half of this year was 1.499 trillion KRW, up 5.8% (82.2 billion KRW) from the same period last year. Compared to the first half of last year, card loan income increased by 194.2 billion KRW, and installment card fee income and merchant fee income also rose by 171.1 billion KRW and 131.3 billion KRW respectively. However, during the same period, interest expenses and bad debt expenses also increased by 348.8 billion KRW and 213.1 billion KRW respectively.

The delinquency rate of credit card companies in the first half was 1.69%, up 0.06 percentage points from the end of last year (1.63%). Among these, the delinquency rate for card receivables (credit sales receivables + card loan receivables) was 1.77%, an increase of 0.04 percentage points compared to the end of last year (1.73%).

The fixed and below non-performing loan ratio, an indicator of credit card company soundness, was 1.17%, up 0.03 percentage points from the end of last year (1.14%). The fixed and below ratio for card receivables was 1.16%, up 0.07 percentage points from the end of last year (1.09%).

The bad debt provision coverage ratio was 107.5%, down 2.4 percentage points from the end of last year (109.9%). This indicates a reduction in the funds set aside to cover potential losses. All credit card companies exceeded the baseline of 100%.

The adjusted capital adequacy ratio, an indicator used to assess sound management, was 20.3%, up 0.5 percentage points from the end of last year (19.8%). All credit card companies significantly exceeded the management guidance ratio of 8%. The leverage ratio remained at 5.4 times, the same level as the end of last year. The regulatory limit for the leverage ratio is 8 times or less. If the dividend payout ratio in the previous fiscal year is 30% or more, a limit of 7 times applies.

(Source: Financial Supervisory Service)

Non-card credit finance companies' net income 1.5564 trillion KRW... down 3.8% YoY

The net income of 169 capital, lease, and new technology finance companies excluding credit card companies in the first half of this year was 1.5564 trillion KRW, down 3.8% (60.7 billion KRW) compared to the same period last year. Compared to last year, lease and rental income increased by 735.5 billion KRW, and interest income rose by 198.4 billion KRW. However, interest expenses and lease and rental costs increased by 693.5 billion KRW and 570 billion KRW respectively, worsening profitability.

The delinquency rate was 2.05%, up 0.17 percentage points from the end of last year (1.88%). The fixed and below non-performing loan ratio was 2.99%, up 0.79 percentage points from the end of last year (2.20%). This was due to factors such as improvements in the evaluation criteria for real estate project financing (PF) feasibility.

The bad debt provision coverage ratio was 130.5%, down 9.5 percentage points from the end of last year (140.0%). However, all non-card credit finance companies exceeded 100%.

The adjusted capital adequacy ratio was 18.3%, with all companies exceeding the regulatory ratio of 7%.

A Financial Supervisory Service official said, "The delinquency rate and fixed and below non-performing loan ratio of credit finance companies only slightly increased compared to the end of last year, indicating that overall profitability and asset soundness remain stable. The bad debt provision coverage ratio and adjusted capital adequacy ratio significantly exceed regulatory ratios, indicating a strong loss absorption capacity."

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