By Kang Seung-woo
Staff reporter
South Korea's credit card companies have seen a sharp rise in net profit on the back of the fast economic rebound.
The Financial Supervisory Service (FSS) announced Monday that six credit card firms earned 494.3 billion won ($435.97 million) in the first quarter of 2010, up 17.9 percent from 419.2 billion won over the same period last year.
This year's amount included Hana SK Card, which became an independent unit from Hana Financial Group last November.
If the new-born card company's loss of 13.3 billion won is counted out, the net earnings in the January to March period would be a year-on-year 21.1-percent growth.
Shinhan Card ran away with the lead at 262.6 billion won in net income, followed by Samsung Card and Hyundai Card at 116.6 billion won and 69.4 billion won, repsectively.
As of the end of March, the average default rate for card firms dropped by 0.27 percentage point to 1.96 percent. The rate measures overdue card bills against total charges, in the first three months.
The operating profits from the six companies jumped by 65.7 billion won to 3.3 trillion won from a year earlier because interest costs and bad debts were down 23.8 billion won and 30.4 billion won, respectively.
South Korean card holders paid a combined 125 trillion won on credit, up 11.4 percent or 12.8 trillion won from last year ― 99.90 trillion won in credit purchases and 25.10 trillion won in cash advances.
Overseas spending picked up, advancing 32.8 percent more than a year ago, and accounting for 1.1 percent in total card spending.
Payment by check card also leapt 34.6 percent to 10.80 trillion won from the previous year.
``Despite the robust performance in the first quarter, card firms are likely to see a setback in the second quarter both in profitability and financial soundness as a result of the cutthroat competition to lower card fees, which caused a fall in profit margin,'' said an official at the financial regulator.
``We will keep closely monitoring them to maintain sound management.''