South Korean credit card companies saw their earnings slump 26.7 percent in the first nine months of the year from a year earlier due mainly to increased costs on loan losses, the financial regulator said Monday.
The combined net profit of six credit card companies came to 1.02 trillion won (US$ 904 million) in the January-September period, compared with 1.39 trillion won during the same period of last year, according to the Financial Supervisory Service (FSS).
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.
The six credit card companies set aside 863.7 billion in loan-loss reserves during the nine months, more than three times more than the 266.2 billion won reserved in the previous year.
Meanwhile, the average default rate of seven firms, including KB Kookmin Cars, stood at 1.91 percent at the end of September, up 0.17 percentage point from 1.74 percent as of the end of June, according to the FSS.
The regulator said the figure has been trending higher since the second quarter amid slowing asset growth and increased fresh delinquencies. But the figure is still below the 3.02 percent tallied in 2008 and 1.86 percent in 2009, the regulator said.