Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Credit card firms report dismal earnings amid prolonged rate hikes
Multiple credit cards are seen in this undated file photo. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Most Korean credit card companies reported dismal earnings performances in the first half of this year, as they have had to expand purchasing costs and set aside more allowances for bad debts amid prolonged rate hikes.
According to earnings reports from major credit card companies here, most of the companies suffered double-digit falls in their first-half net profits from a year earlier.
Shinhan Card, the nation's leading credit card firm, reported a net profit of 316.9 billion won ($247.57 million) between January and June, down 23.2 percent from a year ago, hit by the rising operating costs triggered by high-interest rates.
Woori Card suffered the biggest earnings decline during the same period. The company generated a net profit of 81.9 billion won, down 38.7 percent, after increasing spending to bolster its risk management capability.
Other credit card firms such as KB Kookmin Card and Hana Card also ended up seeing revenues decline in the first half, reporting a drop of first-half net profits by 21.5 percent and 23.7 percent, respectively, from a year ago.
As there stands a slim chance of the Bank of Korea and global monetary authorities initiating a rate cut until the end of this year, credit card companies are widely forecast to reinforce conservative management policies in the latter half as well.
Credit card companies are also expected to shoulder more commission costs amid intensifying competition in the online and mobile payment market. More customers are expanding spending via payment platforms such as Kakao Pay and Naver Pay following the COVID-19 pandemic. With more transactions made via the platforms, card firms may have to pay more commissions to them.
“The card industry will face growing uncertainties in the latter half as well due to the macroeconomic risks and consumer sentiment is unlikely to get better anytime soon,” an industry official said.