Card firms flush despite fee cutsCredit card companies saw their net profits more than double in the first half of the year from the same period in 2011 despite being forced to slash their transaction fees, according to statistics by the Credit Finance Association yesterday.
KB Kookmin, Shinhan, Samsung, Hyundai, BC, Lotte, and Hana SK - the nation’s seven credit card providers - raked in a combined net profit of 1.41 trillion won ($1.26 billion) from January to June, up from 633.8 billion won in the first half of last year.
The figures exclude KEB Card, a business unit of Korea Exchange Bank.
Samsung Card was the biggest winner after posting a profit of 690 billion won, followed by top player Shinhan Card’s 423.2 billion won, KB Kookmin Card’s 96.8 billion won, Hyundai Card’s 90.4 billion won, Lotte Card’s 82.7 billion won and BC Card’s 67.6 billion won.
Market observers estimate that at the current pace, the seven firms will be able to raise a combined net profit of 2.5 trillion won this year, a sizeable jump from last year’s 1.5 trillion won.
Regarding mounting criticism that the strong earnings undermine their complaints of suffering due to a government regulation that has forced them to slash the transaction fees they charge mom-and-pop stores, officials at the association said the surge in profits was led by Samsung Card’s sale of its Everland stake, which netted it 535 billion won.
“We expect to see losses of more than 110 billion won from September to December?as we had to cut the commissions levied on small neighborhood stores from 1.8 percent to 1.5 percent starting this month in compliance with a mandate by the Financial Services Commission,” an employee at the Credit Finance Association said yesterday.
Critics have responded by lashing out at what they see as the firms’ unbridled greed.
“Even excluding [the sum] Samsung earned for offloading its interest in Everland, it still raised 155 billion won in net profit over the period, which is much higher than the 87.5 billion won gain it posted a year ago,” said Kim Yeong-min, a white-collar worker in Seoul. “And the card companies are still slashing the benefits they offer subscribers.”
Among these, Hyundai Card is scheduled on Sept. 28 to shut down a facility it has been running in Myeong-dong, central Seoul, that offers its card subscribers free financial consulting services.
Another example that has stoked customers’ ire is Hana SK Card’s decision to change the terms of its offer of discounts on gas, movie tickets and restaurants for its credit card users who spend 300,000 won in a three-month period.
From February, only those who spend this amount in a single month will be eligible for the savings.
By Kim Mi-ju [firstname.lastname@example.org]