Credit card firms' net falls 18.6 pct in H1

By Lee Minji
SEOUL, Aug. 28 (Yonhap) -- South Korean credit card companies saw their earnings drop 18.6 percent in the first half of the year from a year earlier due mainly to increased costs to cover loan losses, the financial regulator said Sunday.
The combined net profit of six credit card companies came to 701.6 billion won (US$647.9 million) in the January-June period, compared with 861.7 billion won a year earlier, the Financial Supervisory Service (FSS) said in a statement.
The figure does not include earnings of KB Kookmin Card, which was spun off from top lender Kookmin Bank in early March.
The weaker bottom line came mainly due to increased loan-loss provisions amid tightened regulatory supervision on card firms' risk management. If excluding the costs to cover loan losses, the tallied companies' net profit gained 12.5 percent on-year to 969.2 billion won, the FSS said.
The six credit card companies set aside 533.9 billion won in loan-loss reserves during the first half, more than three-fold from the 159 billion won they set aside a year earlier.
The average default rate of the six companies reached 1.74 percent, down from 1.84 percent a year earlier. But it came in higher than the 1.68 percent registered at the end of December, the regulator said.
As of the end of June, local credit card firms' combined assets totaled 76.6 trillion won, up from 68.2 trillion won a year earlier. Purchases made by credit cards in the first half stood at 273.9 trillion won, increasing 9.6 percent from the same period last year.
The FSS said there are weak chances of a deterioration in credit card firms' financial health, but said it would push to prevent excessive market competition and tighten supervision in a bid to brace against economic uncertainties at home and abroad.
Since July, the regulator has been conducting weekly reviews of credit card companies on a number of categories such as loan increases and marketing costs, in a bid to limit the on-year growth of card firms' lending and individual users' limit to 5 percent.
mil@yna.co.kr