2. 1
Disclaimer
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should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. Neither the
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3. 2
Major issues in 1H15
Focus on Member acquisition and management to prepare for enhanced profitability going-
forward
Maintain Stability and improve customer profile through finance product's qualitative growth
Secure Loyal members and strengthen New members’ lock-in through Differentiated branding
4. 3
Business Environment
Domestic Economy Private Consumption
(unit: KRW tn)
Slow growth of card industry
• Card usage closely linked to private consumption, as a
major means of payment
Economic recovery delayed
• GDP growth rate lowered (Bank of Korea, ‘15. 7)
Low interest continued
• Competition intensified as funding cost gap narrows
2.0%
2.8%
3.3%
2.4%
2.75%
2.50%
2.00%
1.50%
2012 2013 2014 1H15
GDP growth rate Key rate
708 728 749
192
478 490 501
123
67.6% 67.3% 66.9% 64.4%
2012 2013 2014 1Q15
Private consumption Credit card usage
% of credit card usage
5. 4
Asset
Asset Portfolio Business Strategies 2015
(unit: KRW tn)
2012 2013 2014 1H15 YTD
Lump sum 4,397 4,263 4,445 4,113 -7.5%
Installment 2,208 2,133 2,470 2,488 0.7%
Cash advance 940 849 838 785 -6.3%
Card loan 2,352 2,702 3,048 3,072 0.8%
(unit: KRW bn)
Reference : E-mart E card
Strengthened New member Acquisition
• Focus on prime customer
• Expand recruiting channel strategic alliance with large
distribution company
Prime-focused Recruitment
• Provide customized benefits
• Mobile App integrating Card mgmt. and payment (1st in industry)
• Reinforce finance service marketing to prime customers
Creating a New Rule of Alliance
• SSG Point accumulated for all spending
• No hurdles e.g. Min. usage etc.
• Full line-up : check card to corporate card
→ Differentiated benefits and wide usage
6,605 6,396 6,915 6,601
3,292 3,552
3,885 3,857
9,898 9,947
10,800 10,458
66.7% 64.3% 64.0% 63.1%
2012 2013 2014 1H15
Credit purchase Finance % of Credit purchase
6. 5
Profitability
(unit: KRW bn)
① Excluding FX effects
Summary of Income Statement
2013 2014 1H14 1H15 YoY
Operating Rev①
2,527.5 2,618.0 1,268.0 1,269.4 0.1%
Card revenue 2,453.3 2,515.8 1,241.3 1,242.1 0.1%
Operating Exp①
2,307.6 2,318.0 1,093.4 1,129.0 3.3%
Card expense 1,028.2 1,041.3 498.4 529.3 6.2%
SG&A 636.5 647.0 300.3 332.7 10.8%
Interest expense 312.9 305.9 153.6 140.8 -8.3%
Bad debt expense 247.7 265.9 126.3 105.9 -16.1%
Operating income 219.9 300.0 179.2 145.1 -19.1%
Net income 163.2 205.1 137.0 110.8 -19.1%
ROA 1.8% 2.2% 2.8% 2.1% -0.7%p
Analysis on Income Statement
Operating Revenue
• Credit purchase stagnant due to consumption decrease
• Intensified competition on Finance
Operating Expense
• Increased card expense due to acquisition and marketing
to prepare for LT profitability
• Interest and bad debt expense reduction to sustain
profitability
25.7 26.2
1H14 1H15
Sales volume of credit purchase
7. 6
Asset Quality
Delinquency and Reserve Risk Management Strategies
2012 2013 2014 1H15 YTD
Total Reserve 544 594 649 596 -8.3%
Allowance 181 205 236 231 -1.9%
Reserve 363 389 413 364 -11.9%
FSS coverage 157% 144% 132% 133% 1.0%p
Qualitative growth pursued on Finance
• Pursue finance sales focused on Prime customers
• Restriction of card loan sales to sub-prime (CB 8 or lower)
(unit: KRW bn)
0.7%
0.8%
0.9% 0.9%
0.5%
0.6% 0.6% 0.6%
2012 2013 2014 1H15
30+days delinquency ratio
30+days delinquency ratio (excl. re-aged loan)
4.2 4.2 4.1 4.0 4.0 3.9
51.9% 52.0%
53.8%
56.1% 56.1%
58.2%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Avg. CB of card loan customer % of CB 1-4
8. 7
Capital Structure
Leverage
① Based on previous quarter’s total capital since 2013
2012 2013 2014 1H15 YTD
Total Asset 11,252 11,521 12,397 12,112 -2.3%
Total Capital① 2,192 2,325 2,549 2,615 2.6%
(Unit: KRW bn)
Capital Adequacy Ratio
2012 2013 2014 1H15 YTD
Adjusted
Total Asset
9,638 9,616 11,273 10,928 -3.1%
Adjusted
Total Capital
1,801 1,869 2,048 2,198 7.4%
(unit: KRW bn)
5.1X 5.0X 4.9X
4.6X
2012 2013 2014 1H15
18.7% 19.4%
18.2%
20.1%
2012 2013 2014 1H15
9. 8
Funding
Funding Portfolio by product Asset-Liability Maturity
2014 1H15
Total Funding 3,584 900
Bond 1,820 540
ABS 604 -
others 1,160 360
(unit: KRW bn)
Funding Portfolio Guidelines
• Long-term debt : 60% or more
• By Product: ABS <20%, CP <10%
• ALM ratio : 100% or more
Domestic
bond
87.6%
Domestic
ABS
4.0%
Overseas
ABS
5.0%
Loans
2.7%
CP
0.7%
2014 1H15
1.8yr
2.1yr 2.1yr
1.9yr
133.4%
158.7%
137.9% 140.7%
2012 2013 2014 1H15
Debt maturity ALM ratio
Domestic
bond
84.2%
Domestic
ABS
3.8%
Overseas
ABS
9.5%
Loans
2.5%
KRW
7.9tn
KRW
7.5tn
10. 9
Liquidity
Liquidity Position Short-term debt Coverage
Contingency framework
• Early warning and response system in place
• Daily monitoring of key market indicators
(unit: KRW bn)
Liquidity Management
• Satisfies Basel III Liquidity coverage ratio
• Diversified Credit lines by lender and tenor
(unit: KRW bn)
690 780 810 973
824
866
490
490
1,514
1,646
1,300
1,463
2012 2013 2014 1H15
Cash Credit line
2,311
1,881 2,083 2,103
65.5%
87.5%
62.4%
69.6%
2012 2013 2014 1H15
Short-term debt Short-term debt coverage ratio
11. 10
Branding Progress
2013.2
Design Library
2015.5
Music Library + UNDERSTAGE
Hyundai card Library Card Factory
2014.4
Travel Library
Visualize financial capital through industrial capital
• Demonstrates manufacturing process of “Card”, the most
advanced currency
• Design motifs on Industrial Revolution
• Provides user experience of actual card issuance