Major card firms manage to post solid profit in Q3

By Lee Kyung-min

Korea's major credit card companies have seen their net profit jump in the third quarter, due in large part to overseas expansion and business diversification into leasing and auto financing.

The better-than-expected performance came despite concerns that their bottom lines could be significantly hurt following the government-led transaction fee cut, designed to help small and medium sized enterprises (SMEs).

Shinhan Card, the largest plastic issuer by assets, reported 139.8 billion won ($120 million) in net profit in the July-September period in 2019, up 23 percent from a year ago. But the figure dropped by 6.2 percent from a quarter ago mostly due to the transaction fee cut.

The firm's net profit in the first nine months also jumped to 411 billion won, a 3.9 percent increase from the year before.

KB Kookmin Card posted 104.9 billion won in net profit in the third quarter of 2019, a 36.4 percent increase from the previous year.

The January-September figure reached 251 billion won, up 2.2 percent from the year before.

Woori Card saw the third quarter net profit at 28.3 billion won in the July-September period. The figure was up 34.9 percent from the year before but a 33.3 percent drop from the previous quarter.

The figure for the first nine months stood at 94.8 billion won, slightly up from the year before.

Their performance came as overseas expansion into South East Asian countries has translated into results. This was backed further by growth in their auto financing and other loan businesses..

“This is notable given that the government's measures to cut transaction fees would have dealt a heavy blow to earnings,” a Shinhan Card official said.

In contrast, KEB Hana Card reported only 16.2 billion won in net profit in the July-September period, down 43.1 percent from the year before.

It earned 49.8 billion won in the first nine months, down 37.8 percent from last year.

“We have not sought as much business expansion into other areas to focus on our card business. The government-led fee cut has hurt our bottom line,” a KEB Hana official said.

More mid- to low-tier card firm are expected to suffer greater losses in the coming months amid continued pressure to reduce marketing campaigns.

“The easiest way to lower corporate expenses is to lay people off. A substantial number of employees would have to bear the brunt of the economic hardship,” an industry official said.