Card companies see earnings slideTotal earnings by Korean credit card companies declined 25.5 percent in the third quarter from a year earlier amid the slowing economy and tighter rules on card issuances, the financial watchdog said yesterday.
The combined net profit of seven stand-alone credit card firms reached 307.7 billion won ($283.6 million) in the July-September period, compared with 412.8 billion won the previous year, according to the Financial Supervisory Service.
Their earnings jumped 65.2 percent on-year in the first nine months of this year due mainly to one-off profits, but if those one-time gains worth 808.1 billion won are excluded, the net profit fell 12.3 percent, the FSS added.
Since late last year, the regulator has strengthen monitoring of card companies’ business activities to fend off possible defaults as households’ capacity to repay debt could be squeezed in the slowing economy.
The slowing economy led the delinquency rate to rise in the third quarter, spawning concerns about asset quality of credit card companies.
The average delinquency rate stood at 2.02 percent as of end-September, up from 1.96 percent at the end of June, it added.
Total credit card spending grew 6.9 percent on-year to 141.9 trillion won in the third quarter, slowing from an 8.2 percent on-year gain in the second quarter, the watchdog said.
The yearly growth has slowed since the third quarter of last year when card spending grew 14.5 percent on-year, it added.
The FSS said that local card firms are widely expected to face business setbacks, hit by sluggish domestic demand and moves to cut commissions.
The regulator said that it will beef up monitoring to prevent card firms from passing on burdens from falling profits to customers.
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